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As filed with the Securities and Exchange Commission on September 25, 2013

Registration No. 333-189564

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



AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



SFX ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  7990
(Primary Standard Industrial
Classification Code Number)
  90-0860047
(I.R.S. Employer
Identification No.)



SFX Entertainment, Inc.
430 Park Avenue
New York, New York 10022
(646) 561-6400

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



Robert F.X. Sillerman
Chief Executive Officer and Chairman
SFX Entertainment, Inc.
430 Park Avenue
New York, New York 10022
(646) 561-6400

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



Copies to:

Aron Izower
Reed Smith LLP
599 Lexington Avenue
New York, New York 10022
(212) 521-5400
  Colin Diamond
F. Holt Goddard
White & Case LLP
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8200



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

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

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

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

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

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

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

 

Title of Each Class of Securities
to be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Offering Price
Per Share(2)

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration
Fee(3)

 

Common Stock, $0.001 par value

  19,166,667   $13.00   $249,166,671   $33,986

 

(1)
Includes 2,500,000 shares of common stock that the underwriters have the option to purchase to cover overallotments, if any.

(2)
Estimated solely for purpose of calculating the registration fee prusuant to Rule 457(a) of the Securities Act of 1933, as amended.

(3)
The registrant paid $23,870 of the registration fee 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 this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


Table of Contents

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and 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   September 25, 2013

 

16,666,667 Shares

SFX Entertainment, Inc.

GRAPHIC

Common Stock


This is an initial public offering of our common stock. No public market currently exists for our common stock. We are selling all of the shares of common stock offered by this prospectus. We expect the public offering price to be between $11.00 and $13.00 per share.

We have applied to list our common stock on the The Nasdaq Global Market under the symbol "SFXE."

We are an "emerging growth company," as defined under the federal securities laws, and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully read the discussion of material risks of investing in our common stock in "Risk Factors" beginning on page 15 of this prospectus.

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

 
  Per Share
  Total
 
   

Public offering price

  $             $                       
   

Underwriting discounts and commissions(1)

  $             $                       
   

Proceeds, before expenses, to us

  $             $                       
   
(1)
See "Underwriting" for a description of the compensation payable to the Underwriters.

The underwriters may also purchase up to an additional 2,500,000 shares of our common stock at the public offering price, less the underwriting discounts and commissions payable by us, to cover over-allotments, if any, within 30 days from the date of this prospectus. If the underwriters exercise this option in full, the total underwriting discounts and commissions will be $                  and our total proceeds, after underwriting discounts and commissions but before expenses, will be $                    .

The underwriters are offering the common stock as set forth under "Underwriting." Delivery of the shares will be made on or about                           , 2013.


UBS Investment Bank

 

Jefferies

 

Deutsche Bank Securities



Stifel   BTIG

                           , 2013


LOGO


LOGO



TABLE OF CONTENTS


Prospectus Summary

    1  

Risk Factors

    15  

Forward-Looking Statements

    49  

Use of Proceeds

    50  

Dividend Policy

    51  

Capitalization

    52  

Dilution

    53  

Unaudited Pro Forma Condensed Combined Consolidated Financial Information

    55  

Selected Historical Financial Information and Other Data

    78  

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

    80  

Business

    113  

Management

    135  

Executive Compensation

    142  

Certain Relationships and Related Party Transactions

    153  

Material United States Tax Considerations For Non-United States Holders of Common Stock

    156  

Principal Stockholders

    160  

Description of Capital Stock

    162  

Shares Eligible for Future Sale

    172  

Underwriting

    175  

Experts

    181  

Legal Matters

    182  

Where You Can Find More Information

    182  

Index to Consolidated Financial Statements

    F-1  


Through and including                           , 2013 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

Neither we nor any of the underwriters have authorized anyone to provide any information or to make any representations other than as contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for, and provide no assurance as to the reliability of, any information that others may give you. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

Unless derived from our financial statements or otherwise noted, the Australian Dollar, or AUD, amounts presented in this prospectus are translated at the rate of $1.00 = AUD$1.0646, the exchange rate published by Bloomberg as of September 20, 2013, unless otherwise specified to the contrary.

USE OF MARKET AND INDUSTRY DATA

This prospectus includes market and industry data that we have obtained from third-party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management's estimates and assumptions relating to such industries based on that knowledge). Management has developed its knowledge of such industries through its experience and participation in these industries. While our management believes the third party sources referred to in this prospectus are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this prospectus or ascertained the underlying economic assumptions relied upon by such sources. Internally prepared and third-party market forecasts, in particular, are estimates only and may be inaccurate, especially over long periods of time. Furthermore, references in this prospectus to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this prospectus.

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Prospectus summary

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that is important to you. Before investing in our common stock, you should read this prospectus carefully in its entirety, especially the risks of investing in our common stock that we discuss in the "Risk Factors" section of this prospectus and the financial statements and related footnotes beginning on page F-1.

In this prospectus, unless otherwise stated or the context otherwise requires, references to "SFX" and "the Company" refer to SFX Entertainment, Inc. and references to "we," "us," "our" and similar references refer to SFX Entertainment, Inc. together with its consolidated subsidiaries, in each case after giving effect to our completed acquisitions, the planned acquisitions disclosed herein, and the formation of our joint venture. To date, SFX has acquired four businesses and acquired an interest in one joint venture. SFX also expects to complete four acquisitions simultaneously with or shortly after the closing of this offering: its acquisition of (1) 100% of the worldwide business (the "ID&T Business") of ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T"), which includes the acquisition of the remaining interests in ID&T/SFX North America LLC, its North American joint venture with ID&T (the "ID&T JV"), (2) 100% of i-Motion GmbH Events & Communication ("i-Motion"), (3) 100% of Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem") and (4) a 70% equity interest in Made Event, LLC and EZ Festivals, LLC (collectively, "Made"). Although we consider these acquisitions to be "probable" within the meaning of Rule 3-05 of Regulation S-X and present information herein on a basis that assumes we complete these acquisitions, their consummation remains subject to closing conditions and other potential impediments. Therefore, we cannot provide any assurance that any of our planned acquisitions will be consummated. We discuss the terms of these acquisitions and the conditions to closing in "Risk Factors—Risks Related to Our Acquisition Strategy" and "Business—Our History and Acquisitions—Planned acquisitions."

One of SFX's completed acquisitions is Dayglow LLC and its affiliates (now known as SFX-LIC Operating LLC or "Life in Color"), which for accounting purposes has been determined to be the predecessor entity of SFX. We refer to our predecessor entity as our "Predecessor." SFX is not the same company as, or in any legal way connected to, SFX Entertainment Inc., which was sold to Clear Channel Communications Inc. in 2000, although the Company and SFX Entertainment Inc. do share similar founders and management teams.

COMPANY OVERVIEW

We believe we are the largest producer of live events and entertainment content focused exclusively on the electronic music culture ("EMC"), based on attendance and revenue. We view EMC as a global generational movement driven by a rapidly developing community of avid followers among the millennial generation. Our mission is to enable this movement by providing our fans with the best possible live experiences, music discovery and connectivity with other fans and events. We have significant and growing scale with our global live events. On a pro forma basis for our completed acquisitions, we attracted 1.3 million fans in 2012 (a 36.0% increase from 2011), and on a pro forma basis for our completed and planned acquisitions, we attracted 2.8 million fans in 2012 (a 22.2% increase from 2011). We believe the broad appeal of EMC beyond festival attendance is demonstrated by the deep engagement of our fans, which is evidenced by the time they devote to EMC-related social media and digital activities. For example, the 2012 Tomorrowland festival in Belgium had 7.9 million live views on YouTube and the official Tomorrowland long-form after movies have had over 157 million online views to date.

We present leading EMC festivals and events, many of which have more than a decade of history, passionate followers and vibrant social communities. We have presented Life in Color events and two Sensation festivals and have acquired the rights to the Tomorrowland, Mysteryland and Q-Dance

 

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festivals in North America. Through planned acquisitions, we expect to acquire the rights to those festivals worldwide, as well as the rights to Stereosonic, Electric Zoo, Decibel, Nature One, MayDay and Ruhr-in-Love, among others.

We are continually investing in our festivals and events to add new and exciting creative elements, expand into new markets, and launch new events, all in order to provide the best entertainment experiences in the world for EMC fans. Many of the festivals we have presented or expect to present have a long history and have achieved substantial popularity and success in Europe while also attracting fans globally. For example, Tomorrowland sold out all of its approximately 180,000 tickets to the 2013 festival in Belgium in one second and saw significant demand from U.S.-based fans, each seeking to purchase multiple tickets. To meet the growing demand of the EMC community in the United States and other regions around the world, we plan to introduce some of the most popular festivals and events to certain areas for the first time. At its original location in Amsterdam, Sensation has consistently sold out since its inception in 2000, including all 37,000 tickets for 2013. Our ID&T JV has held two Sensation festivals in North America in 2013, its inaugural festival in Toronto, which attracted over 24,000 attendees, and a second festival in Oakland. We have announced three additional Sensation events in North America for 2013, which will be held in Las Vegas, Miami and New York, and our first North American Tomorrowland festival, TomorrowWorld, which we will hold in September 2013.

We are also addressing the demand from the growing EMC community for music, engaging content and social connectivity between and around live events. A key component of this initiative is Beatport, which is the principal source of music for EMC DJs and a trusted destination for the growing EMC community. Beatport is a vital channel for over 200,000 registered DJs and artists to launch music and connect with fans. In addition, Beatport has a rapidly growing fan community, with approximately 40 million unique visitors in 2012 (according to Google Analytics), who primarily use the site to discover and stream music, follow DJs and keep abreast of EMC news, information and events.

The global market directly associated with electronic dance music is projected to be approximately $4.5 billion in 2013, according to the International Music Summit Business Report. Electronic music has a history of over 20 years of mainstream popularity in Europe and has more recently evolved into a widely followed genre of music in the United States and other international markets. For example, total attendance at what are currently the five largest U.S. EMC festivals grew 41% annually from 2007 to 2012 (although there is no guarantee that this growth rate will continue in the future). This compares to 2% annual revenue growth for the overall North American concert market during the same period, according to Pollstar, a concert industry trade publication. Further reflecting this trend, in 2012 the National Academy of Recording Arts and Sciences added a Dance/Electronic category for the Grammy Awards, Billboard launched a Dance/Electronic chart, and in February 2013, a Dance/Electronic song reached #1 on the Billboard Hot 100 chart for the first time. EMC festivals and events typically feature many different artists and DJs, as well as elaborate sets, lighting and special effects centered on different creative themes. These festivals and events have become highly experiential and social happenings that are enjoyed by thousands of fans. These experiences, further propelled via social media and shared by millions of fans globally, are at the heart of the generational movement that is EMC.

Our market is characterized by a high degree of ownership fragmentation, and we believe it is well positioned for consolidation. We have a disciplined acquisition strategy that utilizes our in-house expertise and experience to identify, evaluate and integrate acquisitions. We plan to implement best practices across acquired companies and provide active business development, managerial support and financial discipline to achieve operational efficiencies. This will allow us to bring our fans more and higher quality EMC experiences while preserving the unique identities of these events. We have acquired and formed, or plan to acquire simultaneously with or shortly after consummation of this offering, the following businesses in pursuit of this strategy.

 

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Asset/Status
  Ownership
  2012
Events/
Festivals

  2012 Total
Attendance
(000s)

  Description
 

BEATPORT, LLC "Beatport"

Completed

    100 %   NA     NA   Principal online resource and destination for EMC DJs and enthusiasts, offering music for purchase in multiple downloadable formats (including uncompressed, high quality audio files) and providing unique music discovery tools for DJs and fans.
 

Disco Donnie Presents "DDP"

Completed

    100 %   600 / 8     867   Promoter of EMC events in North America since 2000, including ownership interests in large EMC festivals.
 

ID&T

Planned(a)

    100 %   39 / 29     961   One of the largest content providers and producers of international EMC live events across 19 countries and four continents. ID&T-branded festivals include Tomorrowland, Mysteryland, Sensation, Q-Dance, B2S, Decibel and Defqon.1. At the same time as this acquisition, we will increase our interest in our North American joint venture with ID&T from 51% to 100%, with an economic effect as of July 1, 2013.
 

i-Motion GmbH Events & Communication "i-Motion"

Planned(b)

    100 %   7 / 5     208   Leading promoter and producer of EMC festivals and events in Germany, with key brands including Nature One, Germany's largest open-air EMC festival.
 

Life in Color
"LIC"

Completed

    100 %   138 / 4     437   Promoter and organizer of branded events that feature live music by DJs, acrobatic acts and "paint blasts."
 

Made Event, LLC and
EZ Festivals, LLC collectively, "Made"

Planned(c)

    70 %   14 / 1     130   Promoter and producer of EMC festivals and events in the United States, including Electric Zoo, held annually in New York City.
 

MMG Nightlife LLC "MMG"

Completed

    80 %   NA     NA   Management company that manages some of the most popular EMC venues in South Beach, Florida.
 

Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd collectively, "Totem"

Planned(d)

    100 %   15 / 5     247   Promoter and producer of leading Australian EMC festival, Stereosonic, a five city touring outdoor festival held annually in summer (November/December) in conjunction with a touring and promotion business.
 
(a)
If our acquisition of the worldwide business (the "ID&T Business") of ID&T does not close by October 31, 2013 (which may be extended to November 15, 2013 under certain circumstances),

 

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    One of Us Holding B.V., the seller of the ID&T Business (the "ID&T Seller"), will be entitled to terminate the stock purchase agreement and retain all acquisition consideration paid to date by us to the ID&T Seller.

(b)
If we do not complete this offering by October 16, 2013, then each party to the i-Motion share purchase agreement will be entitled to rescind the agreement by giving written notice to the other party.

(c)
If this acquisition does not close by October 31, 2013, the principals of Made are entitled to retain our advance of $3.75 million. If we fail to close this acquisition by the applicable deadline, we may be required to renegotiate the terms of the acquisition in their entirety.

(d)
If this acquisition does not close by October 31, 2013, for any reason other than a breach of the asset contribution agreement by Totem, Totem will be entitled to retain our deposit of AUD$5.0 million (or $4.8 million as of May 22, 2013).

We have agreed to the following terms in respect of the four planned acquisitions described above. We intend to use the proceeds of this offering to fund the cash portion of the consideration for these acquisitions and consummate them simultaneously with or shortly after the closing of this offering.

Under a stock purchase agreement with the ID&T Seller, we have agreed to acquire 100% of the equity interests of ID&T (the "ID&T Acquisition"). On March 20, 2013, we paid $2.5 million in cash and issued 2,000,000 shares of our common stock as consideration for an option to purchase a 75% ownership interest in the ID&T Business (the "ID&T Option"). On August 8, 2013, in connection with our exercise of the ID&T Option, we paid an advance of $10.0 million to the ID&T Seller and caused a $7.5 million non-recourse loan that ID&T/SFX North America LLC (the "ID&T JV") made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. On September 23, 2013, we signed an agreement to purchase the remaining 25% interest in the ID&T Business not covered by the ID&T Option. Upon closing the ID&T Acquisition, we will pay additional cash consideration of $50.4 million and issue to the ID&T Seller $10.4 million of our common stock at the price to the public in this offering and a $10.4 million promissory note that matures in June 2014 and bears an interest rate of 3.0%. At closing, we will also make a cash payment to settle certain working capital adjustments that we preliminarily estimate to be $5.9 million. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition. Following the closing of the ID&T Acquisition, our ownership interest in the ID&T JV will increase from 51% to 100%, with an economic effect as of July 1, 2013.

Under a share purchase agreement with i-Motion, our acquisition of the 100% ownership interest of i-Motion will cost (i) $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million, based on the exchange rate on the day prior to closing) in cash and (ii) $5.0 million (or, if greater, the U.S. dollar equivalent of €3.9 million, based on the exchange rate on the day prior to closing) in shares of our common stock at the price to the public in this offering.

We have entered into an asset contribution agreement with Totem, under which we have agreed to pay AUD$90.0 million, consisting of AUD$75.0 million (or $70.4 million) in cash and AUD$15.0 million (or $14.1 million) in shares of our common stock at the price to the public in this offering to acquire 100% of Totem. The cash payment is divided into three parts, a deposit of AUD$5.0 million (or $4.8 million as of May 22, 2013) that we funded on May 22, 2013, AUD$65.0 million (or $61.1 million) to be paid at closing and AUD$5.0 million (or $4.7 million) to be paid by February 28, 2014.

We have entered into a membership interest purchase agreement with Made, under which we have agreed to pay $35.0 million, consisting of $20.0 million in cash, $5.0 million in our common stock at the lower of $12.75 per share or the price to the public in this offering and $10.0 million in promissory notes for a 70% ownership interest in Made. On June 24, 2013, we advanced

 

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    $2.5 million towards the purchase price for this transaction, and on August 21, 2013, we advanced an additional $1.25 million towards the purchase price. We will be required to purchase in 2018 the remaining 30% that is not being sold.

We describe the terms of these planned acquisitions in greater detail under "Business—Our History and Acquisitions—Planned acquisitions."

Although, we consider each of these acquisitions to be a "probable acquisition" for the purposes of Rule 3-05 of Regulation S-X, in each case, there are substantial potential impediments that could cause us to fail to close a given acquisition or otherwise prevent it from being successful. For more information, see "Risk Factors—Risks Related to Our Acquisition Strategy."

Currently, we generate revenue from several sources. These include the sale of products on Beatport and the sale of merchandise at live events (19.6% and 26.2% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively), service revenues earned from ticket sales and food and beverage concession fees (63.9% and 56.9% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively), and other sources of service revenue including promoter fees, license fees, sponsorships and management fees (collectively, 16.5% and 16.9% of total revenue on a pro forma basis for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively). On a pro forma basis for our completed and planned acquisitions, we generated revenue of $238.6 million and Adjusted EBITDA of $14.6 million and incurred a net loss of $67.4 million for the year ended December 31, 2012, and generated revenue of $92.3 million and Adjusted EBITDA of $(15.2) million and incurred a net loss of $71.3 million for the six months ended June 30, 2013.

COMPETITIVE STRENGTHS

We believe we are the largest company exclusively focused on the EMC community, with innovative festivals, live events and premier managed venues. In addition, we attract a large and growing community of EMC followers and key influencers around the world.

History of creativity and innovation.    We create and produce what we believe are many of the most recognized and well attended EMC festivals and events in the world, including, on a historical basis, Life in Color and Sensation, and, on a pro forma basis for our completed and planned acquisitions, Tomorrowland, Mysteryland, Q-Dance, Stereosonic, Electric Zoo, Decibel, Nature One, MayDay and Ruhr-in-Love. At our events and festivals, we use artistic, interactive, performance and visual elements, in addition to the music, to create an all-encompassing and compelling fan experience. For example, Life in Color shows include acrobatic acts and "paint blasts" in addition to DJs, and our other festivals include production elements such as elaborate sets, themes, lasers, fog machines and videos. We believe the appeal of our festivals and events is demonstrated by consistent attendance growth and ticket demand that often outstrips the available capacity. For example, in 2013, Tomorrowland sold out its 180,000 tickets, which was more than triple the tickets it sold in 2009.

Active, year-round relationship with the large and growing EMC community.    We use social media, engaging content and our online property, Beatport, to maintain an active relationship with trend setters and influencers in the broader EMC community, including professional DJs, bloggers and passionate consumers. Beatport has a large community of influencers, including over 200,000 registered DJs. Beatport also has a Klout score (an aggregated measure of social media activity and influence) of 91 out of 100, comparable with other high profile music services such as Spotify (91) and iTunes (93) as of August 2013. While Beatport experienced net losses of $1.5 million in 2012 and $1.4 million in 2011, we believe our ability to create closer partnerships between Beatport and the most important EMC festivals and events will enable us to deliver more to the EMC community between and around live events.

 

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Substantial global scale and diversification.    We believe our scale and diversification enables us to serve our fans more effectively than other participants in the EMC market that have typically focused on one geographic market or a narrow portfolio of events. On a pro forma basis for our completed acquisitions in 2012, we produced 12 festivals (defined as having an attendance of 10,000 or more fans) and 738 events (defined as having attendance of fewer than 10,000 fans). On a pro forma basis for our completed and planned acquisitions in 2012, we produced 52 festivals and 813 events. Together these attracted 2.8 million attendees in 2012 and included large and small scale events, presented in 25 countries on five continents, that targeted different subsets of the EMC community. In addition, our managed EMC venues hosted over 400,000 attendees and our online properties attracted millions of users around the world in the year ended December 31, 2012.

Early access to emerging talent and trends.    Through our managed venues, Beatport and relationships with influencers, we are able to identify new trends and support new artists, introducing them across our network. Our premier managed EMC venues in South Beach, Florida have proven to be a breeding ground for some of the top DJs in the industry. Similarly, Beatport serves as an important channel for DJs to gain recognition. In addition to influential charts and other discovery tools, Beatport hosts mix contests and other programs to support aspiring DJs. For example, Zedd, one of today's leading DJs, was discovered after he won several remix contests on Beatport and has gone on to play at several of our venues and festivals.

Experienced management team.    We believe our management team's reputation and experience in music, live entertainment, consumer internet and related businesses make us a valuable partner to creative talent, independent operators and the EMC community more broadly. Members of our senior management team have previously built businesses in live events and entertainment and executed and integrated a number of acquisitions during their careers. We also believe our management's experience strengthens our ability to effectively integrate and operate our acquired businesses.

We are an early stage company that has not yet taken full advantage of these strengths, and we are not yet profitable due to the costs associated with startup activities, including making acquisitions, the limited time integrating and managing the businesses we have acquired and intend to acquire and because certain of our completed and planned acquisition targets were not yet profitable at the time of their acquisition. In addition, some of these companies have experienced increased costs in connection with their own growth strategies, resulting in declines in net income, such as ID&T, which increased revenue from 2011 to 2012, but suffered a decline in net income from €3.6 million (or $4.6 million) to €1.1 million (or $1.5 million) during the same period.

GROWTH STRATEGY

Our goal is to grow our business by supporting the development of the EMC movement. Key elements of our strategy include the following.

Enhance the fan experience.    We strive to continually enhance the experience that new and existing fans enjoy at our live events or online. Our live events include innovative and state-of-the-art sets and performer lineups, featuring both top talent and up-and-coming artists. We are pursuing many initiatives to enhance the fan experience, including continuing to invest in leading edge production, providing smart tickets/event passes, facilitating high quality travel and accommodation logistics, using wireless technologies to ease on-site logistics and social media interaction and featuring quality concessions in partnership with top-tier food and beverage partners. We plan to complement our fans' experience at live events by meeting their demand for information, quality content and connectivity with artists and the broader EMC community away from and around the events.

Grow our partnerships.    We believe the value of the experiences we offer is compelling enough to attract one or more partners willing to support multiple free events, sponsorship of festivals or our platform generally, and other fan-friendly initiatives. We are in advanced discussions with several

 

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    such partners, which we call our "revolution partners," to support these initiatives and enhance the access and experience of our fans. We and our planned acquisitions have already attracted multiple well known, corporate brand partners, such as Anheuser-Busch, Heineken, Labatt and Samsung, including for multi-event and repeat sponsorships. In addition, we received a strategic investment from WPP, one of the largest global advertising agencies, in April 2013. Going forward, we intend to expand these partnerships to enable us to offer innovative services and further enhance our fans' experience at our live events and across our digital offerings.

Bring our festivals into new markets and expand current offerings.    Many of our EMC festivals and events are well known, have an existing global following and have begun to expand geographically. We are using our considerable resources, including managerial talent and local expertise, to accelerate the expansion of our festivals and events into new geographies, many of which have an underserved EMC fan community. For example, in 2012, Tomorrowland, a festival produced by ID&T, one of our planned acquisitions, saw demand from approximately 200,000 U.S.-based fans seeking to purchase multiple tickets each, of which only 2,000 were successful. We intend to bring some of the most successful festivals in the world to North America, including TomorrowWorld, the first international version of Tomorrowland, which we will present through the ID&T JV, scheduled to be held outside Atlanta in September 2013. In response to increasing demand for our events, we are also expanding some of our festivals by increasing their length and capacity. For example, in 2010, Tomorrowland was a two-day festival, with an attendance of 45,000 per day (90,000 total). In 2013, Tomorrowland lasted three days, and we sold 60,000 tickets, the maximum capacity, for each of the three days (180,000 total).

Foster deeper engagement within the EMC community.    We believe our scale of festivals and events, combined with our new generation of executive talent, helps us support the growth of the EMC community. Creating and mixing electronic music is a collaborative process that is highly accessible given the ready availability of music and mixing tools. In addition, the music is typically enjoyed as part of a communal experience, which in turn is commonly shared and perpetuated via social media. We seek to improve our fans' experiences by responding to their growing demand to engage with EMC content and the EMC community. We also plan to create closer partnership and integration between our online properties, such as Beatport, and live EMC happenings to enhance the fan experience between and around events.

Acquire and integrate leading live event and online properties.    We seek to acquire the highest quality festivals, event operators and promoters worldwide, as well as other businesses that are important to the EMC community. We have completed four acquisitions and acquired an interest in one joint venture to date, and we plan to close four more acquisitions on or shortly after the closing of this offering. We are also in active negotiations to acquire several other businesses. To mitigate acquisition risks, we typically seek to retain management teams of the acquired companies under long-term agreements and incentivize them to continue to manage the operations and expansion of the businesses. In addition, we intend to use our senior management's expertise in live events, consumer internet and EMC broadly, to promote best practices across our entire network in order to enhance the fan experience, improve operating and financial performance and ensure the health and safety of our fans, all while allowing producers to maintain creative independence.

RISKS RELATED TO OUR BUSINESS

Investing in our common stock involves substantial risk. You should carefully consider all of the information in this prospectus prior to investing in our common stock. There are several risks related to our business that are described under the section titled "Risk Factors" elsewhere in this prospectus. Among these important risks are the following:

Our success relies, in part, on the strength of our festival and online properties' appeal to fans, and if any of them were to become less popular, our business could suffer.

 

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We can give no assurance as to when, or if, we will consummate our planned acquisitions.

We may be unsuccessful in developing and expanding our music, video and other content offerings.

We are vulnerable to the potential difficulties associated with rapid growth.

The number of EMC festivals and events may grow faster than the public's demand which could make it difficult for us to attract customers to our festivals and events.

A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue.

Our business and growth may suffer if we are unable to attract and retain key officers or employees, including our Chairman and Chief Executive Officer, Robert F.X. Sillerman, including any loss of officers or employees due to illness or other events outside of our control.

We may be unsuccessful in our future acquisition endeavors, if any, which may have an adverse effect on our business; in addition, some of the businesses we acquire may incur significant losses from operations.

We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock that would dilute your ownership.

Some of our stockholders have repurchase rights that require us to purchase their shares under certain conditions, and our financial position would be adversely impacted if those stockholders exercise such rights. See "Description of Capital Stock—Repurchase Rights" for the terms of the repurchase rights.

We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act and Section 3(a)(80) of the Exchange Act. Pursuant to Section 102 of the Jumpstart Our Business Startups Act (the "JOBS Act"), we have provided reduced executive compensation disclosure and have omitted a compensation discussion and analysis from this prospectus. Pursuant to Section 107 of the JOBS Act, we have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

Under the NASDAQ rules, a company of which more than 50% of the voting power is held by a person or group of persons acting together is a "controlled company" and may elect not to comply with certain NASDAQ corporate governance requirements. Robert F.X. Sillerman, who is our founder, Chief Executive Officer and Chairman of our board of directors, controls 58.8% of our voting power. Assuming that we sell the number of shares set forth on the cover page of this prospectus, after this offering Mr. Sillerman would control approximately 46.7% of our voting power (or 45.3% if the underwriters fully exercise their over-allotment option). Mr. Sillerman also holds unvested options to purchase 11,350,000 shares of our common stock, which, if exercised after vesting, would increase his voting power. If Mr. Sillerman were to hold greater than 50% of our voting power, we would be eligible to take advantage of this "controlled company" exemption. We do not, however, plan to take advantage of such exemption.

We have grown our business principally through acquisitions, and we have indebtedness of approximately $75.0 million as of September 24, 2013 in connection with our acquisition strategy, including $75.0 million under the First Lien Term Loan Facility. This level of indebtedness involves substantial risks, including that we may not be able to repay or refinance this indebtedness at maturity. You should read, "Risk Factors—Risks Related to our Acquisition Strategy—We have incurred significant indebtedness in connection with our growth strategy, which may grow with future acquisitions, and this increases risk for holders of our common stock and could adversely affect our profitability and financial condition" for a discussion of risks related to our level of indebtedness.

 

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OUR HISTORY

SFX was incorporated in the State of Delaware on June 5, 2012. Between June 5, 2012 and February 13, 2013, SFX was named SFX Holding Corporation. We started our business on July 7, 2011 as SFX EDM Holdings Corporation, which is now a wholly-owned subsidiary of SFX Entertainment, Inc.

Our principal executive offices are located at 430 Park Avenue, 6th Floor, New York, New York 10022 and our telephone number is (646) 561-6400.

All trademarks and product names or brands appearing in this prospectus are the property of their respective owners.

 

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The offering

Common stock offered by us   16,666,667 shares

Common stock outstanding after this
offering

 

80,513,821 shares

Option to purchase additional shares

 

The underwriters have an option to purchase a maximum of 2,500,000 additional shares of our common stock from us to cover over-allotments, if any. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Use of proceeds

 

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $178.6 million, assuming the shares are offered at $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus).

 

We intend to use $56.3 million to close the acquisition of 100% of the ownership interests in the ID&T Business, which includes the acquisition of the remaining interests in the ID&T JV.

 

We intend to use $16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million) to close the acquisition of 100% of the ownership interests in i-Motion.

 

We intend to use AUD$65.0 million (or $61.1 million) to close the acquisition of substantially all of the assets of Totem.

 

We intend to use $16.3 million to close the acquisition of 70% of the ownership interests in Made.

 

We intend to use the balance to fund working capital, capital expenditures and other general corporate purposes, which may include other acquisitions of complementary businesses.


 

 

See "Use of Proceeds."

Risk factors

 

See "Risk Factors" beginning on page 15 of this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Proposed Nasdaq Global Market symbol

 

"SFXE"

The number of shares of common stock that will be outstanding after this offering is based on 63,614,154 shares outstanding as of September 24, 2013, and excludes:

21,438,500 shares of common stock issuable upon the exercise of options to purchase common stock that were outstanding as of September 24, 2013, with a weighted average exercise price of $5.38 per share, and options to purchase approximately 665,000 shares of common stock with an exercise price equal to the price per share to the public in this offering, which we intend to issue at the pricing of this offering;

 

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233,000 shares of restricted stock to Mr. Sillerman, which we intend to issue immediately prior to the closing of this offering;

500,000 shares of common stock issuable upon the exercise of warrants to purchase common stock that were outstanding as of September 24, 2013, with a weighted average exercise price of $2.50 per share;

2,646,500 shares of common stock available for future issuance under our 2013 Equity Compensation Plan; and

approximately 2,852,800 shares of common stock (based on the midpoint of the price range set forth on the cover of this prospectus) we expect to issue in order to close our pending acquisitions.

Unless otherwise indicated, all information in this prospectus:

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

assumes the shares are offered at $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus).

We have also filed with the U.S. Securities and Exchange Commission (the "SEC") a registration statement on Form S-1 (the ``resale registration statement") relating to the offering and sale from time to time of up to 26,197,277 shares of our common stock by certain of our existing stockholders named as selling stockholders therein. The offer and sale of these shares are not included in the registration statement of which this prospectus is a part, and none of those shares will be included in this offering. In the event that any of the selling stockholders sell shares of our common stock under the resale registration statement, we will not receive any proceeds from those sales. Each of the selling stockholders have signed lock-up agreements with our underwriters that prohibit them, subject to certain exceptions, from selling their shares during the period ending 180 days after the date of this prospectus, and many of them have signed separate lock-up agreements with us. We intend for the resale registration statement to be declared effective by the SEC following the effectiveness of this prospectus and after we have closed one or more of our planned acquisitions.

 

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Summary historical consolidated financial information and other data

The following table sets forth the summary historical and pro forma consolidated financial information for SFX Entertainment, Inc. (Successor), or "SFX," and the summary historical financial information for Life in Color or "LIC" (Predecessor). The historical results of operations for SFX, as Successor, for the year ended December 31, 2011 do not reflect any of the operations of LIC, as Predecessor. The historical results of operations for SFX, as Successor, for the year ended December 31, 2012 reflect the operations of LIC only from the date of our acquisition of LIC on July 31, 2012.

We derived the summary historical consolidated financial data for SFX as of and for the years ended December 31, 2011 and December 31, 2012 from the audited consolidated financial statements you can find elsewhere in this prospectus. We derived the summary historical consolidated financial data for LIC as of and for the year ended December 31, 2011, for the period from January 1, 2012 through July 31, 2012 and as of July 31, 2012 from the audited consolidated financial statements you can find elsewhere in this prospectus. We derived the summary historical consolidated financial data for SFX as of June 30, 2013 and for the three and six months ended June 30, 2012 and 2013 from the unaudited consolidated financial statements you can find elsewhere in this prospectus.

We derived the summary unaudited pro forma condensed combined financial data for SFX for the year ended December 31, 2012 and as of and for the three and six months ended June 30, 2013 from the unaudited pro forma condensed combined financial statements you can find elsewhere in this prospectus. These pro forma financial data give effect to our completed and planned acquisitions, our issuances and sales of equity that have occurred since January 1, 2012, and our subsidiary's borrowing under the First Lien Term Loan Facility, as if each of these had occurred on January 1, 2012 (in the case of the consolidated income data) and on June 30, 2013 (in the case of the consolidated balance sheet data). You should read these data in conjunction with the information set forth under "Unaudited Pro Forma Condensed Combined Financial Information," which describes these transactions and the related adjustments in greater detail.

The financial data set forth below are only a summary and are not complete. They also do not necessarily indicate or represent anything about our future operations. You should read these summary financial data in conjunction with the disclosure under "Use of Proceeds," "Capitalization," "Unaudited Pro Forma Condensed Combined Financial Information," "Selected Historical Financial Information and Other Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the related notes thereto included elsewhere in this prospectus.

 

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  SFX Entertainment, Inc.
(Successor)
 
 
  Life in Color
(Predecessor)
 
 
   
   
   
   
   
  Pro forma
Six months
ended
June 30,
2013

 
Consolidated statement of
comprehensive income data
(in 000s except per share
amounts)

  Year ended
December 31,
2011

  Seven months
ended
July 31,
2012

  Year ended
December 31,
2011

  Year ended
December 31,
2012

  Six months
ended
June 30,
2012

  Six months
ended
June 30,
2013

  Pro forma
Year ended
December 31,
2012

 
   
 
   
   
   
   
  (Unaudited)
  (Unaudited)
  (Unaudited)
  (Unaudited)
 

Revenue

                                                 

Service revenue

  $ 9,606   $ 10,920   $   $ 24,513   $ 378   $ 22,884   $ 191,821   $ 68,159  

Sales of products

        66         302         14,669     46,803     24,148  
                                   

Total revenue

    9,606     10,986         24,815     378     37,553     238,624     92,307  
                                   

Direct Costs

                                                 

Service revenue

    (8,572 )   (7,905 )       (22,719 )   (365 )   (16,980 )   (141,524 )   (52,084 )

Sales of products

        (314 )       (300 )       (9,769 )   (31,236 )   (16,214 )
                                   

Total direct costs

    (8,572 )   (8,219 )       (23,019 )   (365 )   (26,749 )   (172,760 )   (68,298 )
                                   

Gross profit

    1,034     2,767         1,796     13     10,804     65,864     24,009  

Operating expenses

                                                 

Selling, general and administrative expenses

    (1,142 )   (2,323 )   (101 )   (17,026 )   (3,134 )   (38,374 )   (83,844 )   (61,867 )

Depreciation and

                                                 

amortization

    (41 )   (95 )       (991 )   (27 )   (7,284 )   (57,231 )   (28,459 )
                                   

Operating income/(loss)

    (149 )   349     (101 )   (16,221 )   (3,148 )   (34,854 )   (75,211 )   (66,317 )

Interest expense, net

                (34 )   3     (8,183 )   (26,210 )   (19,760 )

Other income/(expense)

    (9 )   13         98         (1,041 )   2,788     (913 )
                                   

Net income/(loss) before provision for income taxes

    (158 )   362     (101 )   (16,157 )   (3,145 )   (44,078 )   (98,633 )   (86,990 )

(Provision)/benefit for income taxes

                (67 )       (574 )   31,274     15,733  
                                   

Net income/(loss)

    (158 )   362     (101 )   (16,224 )   (3,145 )   (44,652 )   (67,359 )   (71,257 )

Less: Net income/(loss) attributable to non-controlling interests

                        (1,163 )   593     60  
                                   

Net income/(loss) attributable to SFX Entertainment, Inc.

  $ (158 ) $ 362   $ (101 ) $ (16,224 ) $ (3,145 ) $ (43,489 ) $ (67,952 ) $ (71,317 )
                                   

Loss per share—basic and diluted

    N/A     N/A   $   $ (0.44 ) $ (0.11 ) $ (0.75 ) $ (0.99 ) $ (0.87 )

Weighted average shares outstanding—basic and diluted

    N/A     N/A         37,186     29,302     57,713     68,384     81,681  

Other Financial Data:

                                                 

Adjusted EBITDA(1)

  $ (108 ) $ 1,235   $ (101 ) $ (13,021 )       $ (13,568 ) $ 14,620   $ (15,240 )

N/A—not applicable

 
   
   
  SFX Entertainment, Inc.
(Successor)
 
 
  Life in Color
(Predecessor)
 
 
   
   
   
  Pro Forma
June 30,
2013

 
Consolidated balance sheet data
(in 000s)

  December 31,
2011

  July 31,
2012

  December 31,
2011

  December 31,
2012

  June 30,
2013

 
   
 
   
   
   
   
  (Unaudited)
  (Unaudited)
 

Cash

  $ 44   $ 182   $   $ 3,675   $ 31,378   $ 87,839  

Working capital

    (595 )   (835 )   (101 )   (18,005 )   5,443     11,376  

Total assets

    1,111     1,615         66,732     252,535     566,066  

Deferred revenue

    663     830         324     12,595     32,342  

Long-term debt

    582     440             63,343     73,666  

Total liabilities

    1,727     2,107     101     28,059     114,860     211,143  

Redeemable common stock

                25,000     84,030     13,695  

Redeemable non-controlling interest

                4,794     4,834     4,834  

Stockholders' equity (deficit)

    (616 )   (492 )   (101 )   8,879     48,811     336,394  

(1)
We define Adjusted EBITDA as net income (loss) before other income (loss), interest expense, income taxes, depreciation and amortization, equity-based compensation expense, and non-recurring items. Adjusted EBITDA is not a recognized term under U.S. generally accepted accounting rules ("GAAP") and does not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity.

We present Adjusted EBITDA in this prospectus to provide investors with supplemental information regarding our financial results and operating performance. Adjusted EBITDA should not be used as an indicator of, or an alternative to, net income (as determined in accordance with GAAP) as a measure of our operating performance or to net cash provided by operating, investing or financing activities (as determined in accordance with GAAP) or as a measure of our ability to meet cash needs.

 

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    We have included Adjusted EBITDA in this prospectus because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short- and long-term operational plans. In particular, the elimination of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business.

    We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

    Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include the following:

    Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

    Adjusted EBITDA does not consider the potentially dilutive impact of share-based compensation; and

    other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, limiting their usefulness as a comparative measure.

    Because of these and other limitations, you should consider Adjusted EBITDA alongside other GAAP-based financial performance measures, including various cash flow metrics, net income (loss) and other GAAP financial results.

    The following table presents a reconciliation of Adjusted EBITDA to our net income (loss), the most comparable GAAP measure, for each of the periods indicated.

 
   
   
  SFX Entertainment, Inc.
(Successor)
 
 
  Life in Color
(Predecessor)
 
 
   
   
   
   
  Pro forma
Six months
ended
June 30,
2013

 
(in 000s)
  Year ended
December 31,
2011

  Seven months
ended July 31,
2012

  Year ended
December 31,
2011

  Year ended
December 31,
2012

  Six months
ended
June 30,
2013

  Pro forma
Year ended
December 31,
2012

 
   

Net income/(loss)

  $ (158 ) $ 362   $ (101 ) $ (16,224 ) $ (44,652 ) $ (67,359 ) $ (71,257 )

Interest expense

   
   
   
   
34
   
8,183
   
26,210
   
19,760
 

Provision/(Benefit) for income taxes

                67     574     (31,274 )   (15,733 )

Depreciation & amortization

    41     95         991     7,284     57,231     28,459  

Equity-based compensation expense

                2,209     13,999     20,256     19,814  

Other/(income) expense(a)

    9     (13 )       (98 )   1,041     (829 )   546  

Non-recurring litigation costs

                    (21 )   1,124     2,114  

Non-recurring transaction costs(b)

        791             24     7,792     1,052  

ITDA related to non-consolidated affiliates(c)

                        1,469     5  
                               

Adjusted EBITDA

  $ (108 ) $ 1,235   $ (101 ) $ (13,021 ) $ (13,568 ) $ 14,620   $ (15,240 )
                               

(a)
Other (income) expense represents gain on a sale of assets and other miscellaneous non-recurring items.

(b)
These include acquisition related costs at acquired entities. These do not include expenses incurred in connection with SFX's formation, the evaluation, negotiation and consummation of acquisitions and this offering and the resale shelf registration statement, which were $0, $0, $101, $8,330, $8,562, $8,330 and $8,562, respectively.

(c)
Represents ID&T's non-consolidated affiliates' share of interest expense, income taxes and depreciation and amortization.

 

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Risk factors

This offering and an investment in our common stock involves a high degree of risk. You should consider carefully the following risks and other information contained in this prospectus, including the consolidated financial statements and related footnotes appearing at the end of this prospectus, before you decide whether to buy our common stock. If any of the following risks actually occur, they may materially harm our business, prospects, financial condition and results of operations. In this event, the market price of our common stock could decline and you could lose part or all of your investment.

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

Our success relies, in part, on the strength of our festivals, events and online businesses, and if any of them were to become less popular, our business could suffer.

Through our completed and planned acquisitions, we produce, promote and manage electronic music culture, or EMC, festivals, events and online businesses, including Tomorrowland, Sensation, Mysteryland, Q-Dance, Stereosonic, Electric Zoo, Nature One, MayDay, Ruhr-in-Love, Life in Color and Beatport. Our growth strategy relies on the strength of these brands to attract customers to our festivals and events, both through attendance at the original festivals and in new markets, as well as to our online properties. We also rely on the strength of these brands to secure sponsorships and to facilitate growth in revenue from the sale of music and other content, as well as advertising on our online properties. Maintaining the strength of our festivals, events and online businesses will be challenging, and our relationship with our fans could be harmed for many reasons, including the quality of the experience at a particular festival, our competitors developing more popular events or attracting talent from our businesses, adverse occurrences or publicity in connection with an event and changes to public tastes that are beyond our control and difficult to anticipate. If our key properties become less popular with consumers within the EMC community, our growth strategy would be harmed, which could in turn harm our business and financial results.

Maintaining the popularity of our festivals, events and online businesses requires that we anticipate consumer preferences and offer events that appeal to the EMC community. Our customers' preferences and tastes for these events can change and evolve rapidly, and our competitors actively seek to provide new and compelling experiences at their EMC events. If we fail to anticipate or respond quickly to changes in public taste, our festivals and related offerings may become less attractive to consumers.

We can give no assurances as to when we will consummate our planned acquisitions or whether we will consummate them at all.

We intend to close four planned acquisitions simultaneously with or shortly after the closing of this offering and to use the proceeds of this offering to fund the cash portion of the consideration for those acquisitions. However, each of those acquisitions is subject to conditions and other impediments to closing, including some that are beyond our control, and we may not be able to close any of them successfully. In addition, our planned acquisitions are required to be closed within certain timeframes as described below, and if we are unable to meet the closing deadlines for a given transaction, we may forfeit deposits or other payments we have made, be forced to renegotiate the transaction on less advantageous terms and could fail to consummate the transaction at all. If for this reason or otherwise we are unable to close any planned acquisition, it would significantly alter our business strategy and impede our prospects for growth. If we are unable to close a particular planned acquisition, we will not be able to produce any of the festivals or events or have ownership or licenses of the brands owned or licensed by that acquisition target, which could include Tomorrowland, Sensation, Mysteryland, Decibel, Nature One, MayDay, Ruhr-in-Love, Electric Zoo or others. Further, we may

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not be able to identify suitable acquisition candidates to replace these acquisitions, and even if we were to do so, we may only be able to consummate them on less advantageous terms.

In addition, if we do not close a particular planned acquisition, we could lose deposits or other amounts we have paid in connection with it. For example, if our acquisition of Totem does not close by October 31, 2013 for any reason other than a breach of the asset contribution agreement by Totem, Totem will be entitled to retain our AUD$5.0 million (or $4.8 million as of May 22, 2013) deposit. Additionally, if we do not close the acquisition of 100% of the equity interests of the worldwide business (the "ID&T Business") of ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T") by October 31, 2013 (subject to an extension to November 15, 2013 if we are still "in registration" and have not received notice from our underwriters that they will not be able to complete this offering), One of Us Holding B.V., the seller of the ID&T Business (the "ID&T Seller"), will be entitled to pursue claims for damages against us and retain all acquisition consideration paid to date by us, including (i) the $10.0 million cash advance we paid on August 8, 2013, (ii) the effective cancellation of a $7.5 million non-recourse loan that was made to ID&T and (iii) the $2.5 million in cash and 2,000,000 shares of common stock we paid to acquire the ID&T Option. Further, if we fail to close our acquisition of 70% of the ownership interests in Made by October 31, 2013, the principals of Made may retain the $3.75 million advance. Finally, if we do not complete this offering by October 16, 2013, then i-Motion will have the right to rescind our share purchase agreement with them. If we do close our planned acquisitions, each of these acquisitions will be subject to the other risks inherent in our acquisitions, including the risks disclosed herein under "—Risks Related to Our Acquisition Strategy."

We may be unsuccessful in developing and expanding our music, video and other content offerings.

We intend to develop Beatport as a key point of contact between us and the EMC community. However, our plans face a number of challenges and risks. For example, we are in the nascent stage of developing additional media content, such as news, lifestyle videos and blogs, which we believe will be attractive to members of the EMC community, but we may not be successful in developing these offerings. Consumers may also decide to access similar offerings from our competitors. We also intend to increase our consumers' paid access to music, including through downloads. This strategy faces a number of challenges, including illegal downloading and other piracy, which has depressed sales in the music industry generally, competition from mainstream brands, such as iTunes and others and our inability to obtain and retain licenses to supply artist content. We may fail to enhance the consumer experience, deepen engagement with the EMC community or achieve the improvements we seek to make. Any of these occurrences may prevent us from improving our connection to our customers and bringing more traffic to the Beatport website, further developing Beatport as a key point of contact for the EMC community and increasing ticket sales for our festivals and events. If we fail to properly execute our strategy in this area, it will be harder for us to achieve the growth we expect, and our business and financial results may be adversely affected.

We are vulnerable to the potential difficulties associated with rapid growth.

We believe that our future success depends on our ability to manage the rapid growth that we expect to achieve organically and through acquisitions and the demands and additional responsibilities that our growth will place on our management.

The following factors could present us with difficulties:

a lack of sufficient executive-level personnel;

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the inability to develop and monetize our online properties;

an increased administrative burden on our employees;

the inability to attract, train, manage and retain the qualified personnel necessary to manage and operate a greater number of festivals, events and other business activities; and

the inability to integrate acquired businesses.

If we fail to address these and other challenges associated with our growth, our growth itself may slow or fail to materialize, we may grow without achieving profitability, we may have difficulty with our internal controls and procedures and the quality of our festivals, events and other offerings may decline, among other things. Any of these could harm our business and financial results.

It is possible that the popularity of electronic music and the EMC community will not continue their current growth or even decline.

We have focused our business on the broad market for electronic music and the EMC community, including electronic music festivals and events, venues, sponsorships and ecommerce. Accordingly, our growth strategy is dependent upon the continued growth of the popularity of electronic music and the EMC community. However, this growth is subject to the whims of public taste, which may change over time and which may be beyond our control. While interest in electronic music has increased significantly over the past few years, this increase in interest may not continue, and it is possible that the public's current level of interest in electronic music will decline. If either were to happen, the demand for and interest in EMC festivals, events and venues and our online properties could fail to meet our expectations or even decline. This would have a material adverse effect on our business and financial results.

The number of EMC festivals and events may grow faster than the public's demand, which could make it difficult for us to attract customers to our festivals and events.

With the growing EMC community, there has been a significant increase in the number of EMC festivals and events caused by the creation of new events and the expansion, both in geography and duration, of existing events. Our growth strategy includes increasing the number of EMC festivals and events we produce each year, as well as increasing the frequency of established events by bringing them to new cities and countries. It is possible that the proliferation of EMC festivals and events will outpace demand. Further, many of the largest festivals attract fans who travel great distances to attend. It is possible that an increase in local availability of quality EMC festivals and events will make it less likely that these fans travel to existing festivals. If either were to occur, it could make it difficult for us to achieve the increase in attendance that is part of our growth strategy or force us to offer tickets at reduced prices, either of which would adversely affect our business and financial results.

In addition, competition for advertising and sponsorships may lead to fewer sponsors of our events or lower sponsorship prices, with a resulting decrease in revenue. Our competitors may offer increased guarantees to artists and more favorable terms and ticketing arrangements to other parties, which we may be unwilling or unable to match. Even if we are willing to match our competitors' terms, the profitability of our events could decline.

We must match the innovation of our competitors.

There is currently a tremendous amount of innovation among EMC-focused businesses, including in the different experiential aspects of festivals and other live performances. These include things such as

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video presentations, lighting, special effects, sets and other creative elements. Businesses in the EMC industry compete in part on their ability to provide experiences for their audiences that are both cutting edge and compelling. Innovation in our industry is taking place both at the companies that produce festivals and events, as well as at smaller companies that are retained by producers and performers to create artistic elements to accompany the music and enhance the experience of the fans. We must be able to match the quality and inventiveness of these competitors at our own festivals and events. If we fail to do so, it could lead to reduced demand for tickets to our festivals and events, harm our reputation or the reputation of our festivals and events and adversely affect our business and financial performance.

If we are forced to cancel or postpone all or part of a scheduled festival or event, our business will be adversely impacted and our reputation may be harmed.

We incur a significant amount of up-front costs when we plan and prepare for a festival or event. Accordingly, if a planned festival or event fails to occur, we would lose a substantial amount of sunk costs, fail to generate the anticipated revenue and may be forced to issue refunds for tickets sold. If we are forced to postpone a planned festival or event, we would incur substantial additional costs in order to stage the event on a new date, may have reduced attendance and revenue and may have to refund money to ticketholders. In addition, any cancellation or postponement could harm both our reputation and the reputation of the particular festival or event.

We could be compelled to cancel or postpone all or part of an event or festival for many reasons, including such things as low attendance, technical problems, issues with permitting or government regulation, incidents, injuries or deaths at that event or festival or another similar event or festival, as well as extraordinary incidents, such as terrorist attacks, mass-casualty incidents and natural disasters or similar events. We often have cancellation insurance policies in place to cover a portion of our losses if we are compelled to cancel an event or festival, but our coverage may not be sufficient and is subject to deductibles. The occurrence of an extraordinary incident at or near the site where a festival or event will be held may make it impossible or difficult to stage the event or make it difficult for attendees to travel to the site of a festival or event. An extraordinary incident may also may make it inappropriate to hold a festival or event at a particular site or at a particular time. For example, the third day of the 2013 Electric Zoo festival was canceled after there were two fatalities, which the media reported to have been related to drug use by the individuals, during the first two days of the festival. Electric Zoo is produced by Made, and we plan to acquire 70% of the ownership interests in Made shortly after the closing of this offering and the remaining 30% in 2018. See "Business—Our Principal Assets—Made."

Costs associated with, and our ability to obtain, adequate insurance could adversely affect our profitability and financial condition.

Heightened concerns and challenges regarding property, casualty, liability, artists, business interruption and other insurance coverage have resulted from security incidents, including terrorism, along with varying weather-related conditions and incidents. As a result, we may experience increased difficulty obtaining high policy limits of coverage at reasonable costs, including coverage for acts of terrorism and weather-related property damage.

We cannot guarantee that our insurance policy coverage limits, including insurance coverage for property, casualty, liability, artists and business interruption losses and acts of terrorism, would be adequate under the circumstances should one or multiple events occur at or near any of our venues or events, or that our insurers would have adequate financial resources to pay our related claims. We

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cannot guarantee that adequate coverage limits will be available, offered at reasonable costs or offered by insurers with sufficient financial soundness. Furthermore, our insurance policies generally do not cover certain activities at our festivals and events, such as pyrotechnics and fireworks although we engage third-party professionals to manage these activities at our events and we are named as additional insureds on their insurance policies. If activities that our insurance policies do not cover result in a significant liability, our financial condition and results of operation could be harmed.

To stage festivals in multiple locations, we may be required to transport complex sets and equipment long distances, which creates increased risk that they will be damaged.

Our larger festivals require complex sets and other equipment, including those that currently exist, that we construct or that we may purchase from a supplier. We will be required to transport these sets and equipment long distances by land and sea, which creates the risk that they may be damaged or lost if there is an accident or other complication during transport. These sets and equipment are very costly to create and it would be expensive and time consuming to repair or replace them. We have insurance policies in place to cover a portion of our losses for damaged or lost sets and equipment, but our coverage may not be sufficient and is subject to deductibles. Additionally, a supplier's failure to deliver the sets and equipment to us or our loss of these sets and equipment might lead to substantial expenses and could force us to delay or cancel a festival or event. Any of these could adversely affect our business, reputation and financial results.

There is the risk of personal injuries and accidents in connection with our live music events, which could subject us to personal injury or other claims, increase our expenses and damage our brands.

There are inherent risks in live festivals and events, particularly those like ours, which involve complex staging and special effects. As a result, personal injuries and accidents have occurred in the concert industry, including some that have injured or killed employees and guests. Such incidents at our festivals, events or venues could subject us to claims and liabilities, and certain of the businesses we have acquired or plan to acquire have been subject to such claims. Incidents in connection with our live festivals and events or at any of the venues we manage could also harm our reputation with artists and fans and make it more difficult for us to obtain sponsors. Any such incident could also reduce attendance at our events, or lead to the cancelation of all or part of an event or festival, in each case leading to a decrease in our revenue. While we maintain insurance policies that provide coverage within limits that are sufficient, in management's judgment, to protect us from material financial loss for personal injuries sustained by persons at our venues or accidents in the ordinary course of business, there can be no assurance that this insurance will be adequate at all times and in all circumstances. In particular, if there were to be a major incident involving multiple deaths or injuries at one of our events or venues, it is unlikely our insurance would cover the full liability. We will be responsible for any liabilities not covered by our insurance policies, which would negatively impact our cash flows and results of operations.

In addition, we are subject to state "dram shop" laws and regulations, which generally provide that a person injured by an intoxicated person may seek to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Recent litigation of "dram shop" laws and regulations targeted at restaurant chains has resulted in significant judgments, including many recent instances of punitive damages; such laws may be extended to apply to our events and festivals. While we carry liquor liability coverage as part of our existing comprehensive general liability insurance, we may still be subject to a judgment in excess of our insurance coverage, and we may not

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be able to obtain or continue to maintain such insurance coverage at reasonable costs, if at all. Regardless of whether any claims against us are valid or whether we are liable, we may be adversely affected by publicity resulting from such laws.

Activities or conduct, such as illegal drug use, at our properties or the festivals and events we produce may expose us to liability, cause us to lose business licenses or government approvals, result in the cancelation of all or a part of an event or festival or result in adverse publicity.

We are subject to risks associated with activities or conduct, such as drug use at our festivals, events or venues that are illegal or violate the terms of our business licenses. Illegal activities or conduct at any of our events or venues may result in negative publicity, adverse consequences (including illness, injury or death) to the persons engaged in the illegal activity or others, and litigation against us. We have formed a medical procedure and safety committee, and we have developed policies and procedures aimed at ensuring that the operation of each festival and event is conducted in conformance with local, state and federal laws. Additionally, we have a "no tolerance" policy on illegal drug use in or around our facilities, and we continually monitor the actions of entertainers, fans and our employees to ensure that proper behavioral standards are met. However, such policies, no matter how well designed and enforced, cannot provide absolute assurance that the policies' objectives are achieved. Because of the inherent limitations in all control systems and policies, there can be no assurance that our policies will prevent deliberate acts by persons attempting to violate or circumvent them. The consequences of these acts may increase our costs, result in the loss or termination of leases for our venues by property owners (including governments and other parties that own the land at our venues), result in our inability to get the necessary permits and locations for our events, or lead to the cancelation of all or part of an event or festival. For example, the third day of the 2013 Electric Zoo festival was canceled after there were two fatalities, which the media reported to have been related to drug use by the individuals, during the first two days of the festival. Electric Zoo is produced by Made, and we plan to acquire 70% of the ownership interests in Made shortly after the closing of this offering and the remaining 30% in 2018. See "Business—Our Principal Assets—Made." These consequences may also make it more difficult for us to obtain or retain sponsorships, lower consumer demand for our events, subject us to liability claims, divert management's attention from our business and make an investment in our securities unattractive to current and potential investors. These outcomes could have the effect of lowering our revenue profitability and/or our stock price.

We face intense competition in the live music and media industries, which could adversely affect our business, financial condition and results of operations.

We operate in the highly competitive live music and media industries, and this competition may prevent us from maintaining or increasing our current revenue. The live music industry, including electronic dance music, competes with other forms of entertainment for consumers' discretionary spending. Within the live music industry, we compete with other promoters and venue operators to attract customers and talent to events and festivals, as well as to obtain the support of sponsors and advertisers. Our competitors include large promotion and entertainment companies, some with substantial scale, that have begun to focus on EMC, smaller promoters that focus on a single festival or event or a particular region or country, venue operators and other producers of live events. Some of our competitors are much larger than we are and have greater resources and stronger relationships with artists, venues, sponsors and advertisers than we do. Others have substantial experience in and strong relationships in the EMC community and are primarily focused on EMC. Our competitors may engage in more extensive development efforts for large-scale events, undertake more far-reaching

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marketing campaigns, adopt more aggressive pricing policies and make more attractive offers to existing and potential advertisers and sponsors.

With respect to our media offerings, we compete for the time and attention of our users with other content providers on the basis of a number of factors, including quality of experience, relevance, popularity and diversity of content, ease of use, price, accessibility, perception of the number of advertisements and brand awareness and reputation. We face competition from providers of interactive on-demand audio content and pre-recorded entertainment, such as Apple's iTunes Music Store, Rdio, Rhapsody, Spotify, Pandora and Amazon, which allow online listeners to select the audio content that they stream or purchase. The audio entertainment marketplace continues to rapidly evolve, providing listeners of online music with a growing number of alternatives and new access models. Our current and future competitors in music may have more well-established brand recognition, more established relationships with consumer product manufacturers and content licenses, greater financial, technical and other resources, more sophisticated technologies or more experience in the markets in which we compete. If we are unable to compete successfully for listeners against other providers by maintaining and increasing our presence and visibility, our Beatport music sales may fail to increase as expected or decline and our advertising sales will suffer.

We are subject to substantial governmental regulation, and our failure to comply with these regulations could adversely affect our business, financial condition and results of operations.

Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies and procedures, both domestically and internationally, which are subject to change at any time, governing matters such as:

construction, renovation and operation of our venues;

licensing, permitting and zoning, including ordinances relating to noise, traffic and pollution;

human health, safety and sanitation requirements;

the service of food and alcoholic beverages;

working conditions, labor, minimum wage and hour, citizenship and employment laws;

the United States Americans with Disability Act;

the United States Foreign Corrupt Practices Act (FCPA) and similar regulations in other countries;

historic landmark rules;

hazardous and non-hazardous waste and other environmental protection laws;

sales and other taxes and withholding of taxes;

privacy laws and protection of personally identifiable information;

marketing activities via the telephone and online; and

primary ticketing and ticket resale services.

Our failure to comply with these laws and regulations could result in fines and proceedings against us by governmental agencies and consumers, which if material, could adversely affect our business, financial condition and results of operations. In addition, the promulgation of new laws, rules and regulations could restrict or unfavorably impact our business, which could decrease demand for

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services, reduce revenue, increase costs and subject us to additional liabilities. For example, some legislatures have proposed laws in the past that would impose potential liability on us and other promoters and producers of live music events for entertainment taxes and for incidents that occur at events, particularly those that involve drugs and alcohol. Additionally, new legislation could be passed that may negatively impact our business.

From time to time, federal, state and local authorities and consumers commence investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws. We may be required to incur significant legal expenses in connection with the defense of future governmental investigations and litigation.

Our business is subject to the risks of international operations.

Following the closing of this offering and the consummation of our planned acquisitions, we will derive a significant portion of our revenue and earnings from our international operations. Operating in multiple foreign countries involves substantial risk. For example, our business activities subject us to a number of laws and regulations, such as anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy and security requirements, environmental laws, labor laws, and anti-competition regulations. As we expand into additional countries, the complexity inherent in complying with these laws and regulations increases, making compliance more difficult and costly and driving up the costs of doing business in foreign jurisdictions. Any failure to comply with foreign laws and regulations could subject us to fines and penalties, make it more difficult or impossible to do business in that country and harm our reputation. In addition, this strategy will require us to operate in countries with different business environments, labor conditions, tax obligations or other costs, and local customs, including some that conflict with each other or with which we are unfamiliar. These could make it more difficult to operate our business successfully in these countries.

Operating in multiple countries also subjects us to risk from currency fluctuations. Our primary exposure to movements in foreign currency exchange rates relates to non-U.S. dollar denominated sales and operating expenses. The weakening of foreign currencies relative to the U.S. dollar adversely affects the U.S. dollar value of our foreign currency-denominated sales and earnings. This could either reduce the U.S. dollar value of our prices or, if we raise prices in the local currency, it could reduce the overall demand for our offerings. Either could adversely affect our revenue. Conversely, a rise in the price of local currencies relative to the U.S. dollar could adversely impact our profitability because it would increase our costs denominated in those currencies, thus adversely affecting gross margins.

Moreover, the U.S. dollar amount that we have to pay to close some of our planned acquisitions is subject to change based on the exchange rate between the U.S. dollar and the Euro, in one case, and the Australian dollar, in another case. Increases in the price of these currencies would result in an increase in the U.S. dollar amount that we have to pay to consummate a given acquisition.

At this time we do not use derivative instruments, such as foreign currency forward and option contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates. Any future use of such hedging activities may not offset any or more than a portion of the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.

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A deterioration in general economic conditions and their impact on consumer and business spending, particularly by customers in our targeted millennial generation demographic, would adversely affect our revenue and financial results.

Our business and financial results are influenced significantly by general economic conditions, in particular, those conditions affecting discretionary consumer spending and corporate spending. During past economic slowdowns and recessions, many consumers reduced their discretionary spending and advertisers reduced their advertising expenditures. An economic downturn can result in reduced ticket revenue, lower customer spending and more limited and less lucrative sponsorship opportunities.

For consumers, such things as employment levels, fuel prices, interest and tax rates and inflation can significantly impact attendance and spending at our events and their willingness to purchase music from Beatport. For us, these risks may be exacerbated by the fact that our core customer demographic and the majority of attendees at our events and festivals are 18 to 34 years old, and this millennial generation is among the groups most negatively affected by the current economic slowdown. Business conditions, in particular corporate marketing and promotional spending, can also significantly impact our operating results. These factors affect our revenue from sponsorship and advertising. Accordingly, if current economic conditions fail to improve, and especially if they deteriorate, our growth and financial results will be adversely affected.

We may not successfully expand into new geographic markets and businesses, which could adversely affect our business, results of operations and financial condition.

Our growth strategy is based, in part, on the expansion of our festivals and events into new geographic markets where they have not previously taken place and into related lines of business. This strategy entails a number of risks. For example, it is not clear that these new markets will have the demand for these festivals and events that we anticipate, which could adversely affect the ticket sales or pricing for these events. There may also be unforeseen difficulties with holding festivals and events in new markets, including obtaining venues, securing requisite licenses and government approvals, and recruiting artists to the location, among other factors. It is also possible that the audiences in a new location will not find a festival to be as attractive or worthwhile as the audience in the festival's home city. In addition, the demands and time commitment necessary to stage a festival in multiple locations could make it difficult for our management to oversee that festival effectively; for this reason or otherwise, we may fail to replicate the quality of the original festival in its new location. Providing festivals in new locations may also undermine demand for a festival in its original location, because many of the fans of these festivals travel long distances to attend. Finally, EMC fans may prefer their local festivals to ones that we bring from another city or country. The failure to expand our festivals into new geographies would adversely affect our growth and results of operations. Further, because staging festivals in new locations involves substantial expense, we could suffer significant losses if these festivals fail to attract the expected audience in their new locations.

We also intend to expand into new, related lines of businesses, which will also carry risks, including that the demand for these products may be less than we anticipate and that we may fail to receive a return sufficient to cover our investment in the new business.

We also intend to partner with key companies and organizations that could sponsor both our individual events and festivals and our platform as a whole. We are actively seeking and negotiating with potential partners. However, there is significant competition for these types of relationships, and we may fail to establish them for a particular event or for our business as a whole or fail to obtain the number of sponsorships or the level of sponsorship compensation that we expect. Failing to secure or retain sponsorship partners to the degree we expect would harm our growth plan and adversely affect our revenues and financial results.

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Our operations are seasonal and our results of operations vary from quarter to quarter, so our financial performance in certain quarters may not be indicative of, or comparable to, our financial performance in other quarters.

Certain of our businesses are seasonal, and this will impact our results of operations from quarter to quarter. We expect most of our largest festivals and events to occur outdoors, primarily in the warmer months. For example, ID&T, Made and our ID&T JV stage most of their festivals in August and September, and Totem stages most of its festivals in November and December in Australia. As such, we expect our revenues from these festivals to be higher during our third and fourth quarters, and lower in our first and second quarters. Furthermore, because we expect to conduct a limited number of large festivals and events, small variations in this number from quarter to quarter can cause our revenue and net income to vary significantly for reasons that may be unrelated to the performance of our core business. In addition, other portions of our business are generally not subject to seasonal fluctuation or experience much lower seasonal fluctuation, such as the venues our MMG business manages, which receive higher revenues in the winter months as there are more travelers in Miami during the December holidays, as well as the Winter Music Conference, and our Life in Color business, which produces festivals and events primarily for college campuses during the school year. We believe our financial results and cash needs will vary significantly from quarter to quarter depending on, among other things, the timing of festivals and events, cancellations, ticket on-sales, capital expenditures, seasonal and other fluctuations in our business activity, the timing of guaranteed payments and receipt of ticket sales and fees, financing activities, acquisitions and investments and receivables management. Accordingly, our results for any particular quarter may vary for a number of reasons, including due to the seasonality of our underlying businesses, and we caution investors to evaluate our quarterly results in light of these factors.

We depend on relationships with key event promoters, executives, managers and artists, and adverse changes in these relationships could adversely affect our business, financial condition and results of operations.

Our venue management and event promotion businesses are particularly dependent upon personal relationships, as promoters and executives within entertainment companies such as ours leverage their network of relationships with artists, agents and managers to secure the rights to the performers, celebrities and events that are critical to success. Due to the importance of those industry contacts, the loss of any of our officers or other key personnel who have relationships with artists, agents or managers in the music industry could adversely affect our venue management and event promotion businesses. While we have hiring policies and procedures and conduct background checks of our promoters, executives, managers and artists, they may engage in conduct or have in the past engaged in conduct we do not endorse or that is otherwise improper, which may result in reputational harm to us. In the past, we have terminated our relationships with such personnel, but we cannot provide any assurances that we will learn of misconduct. Also, to the extent artists, agents and managers are replaced with individuals with whom our officers or other key personnel do not have relationships, our competitive position and financial condition could be harmed.

We rely on key members of management, particularly the Chief Executive Officer and Chairman, Mr. Sillerman, and the loss of their services or investor confidence in them could adversely affect our success, development and financial condition.

Our success depends, to a large degree, upon certain key members of our management, particularly our Chief Executive Officer and Chairman, Robert F.X. Sillerman. Our executive team's expertise and experience in acquiring, integrating and growing businesses, particularly those focused on live music and events, have been and will continue to be a significant factor in our growth and ability to execute our business strategy. In particular, the First Lien Term Loan Facility is personally guaranteed by Mr. Sillerman. If he ceases to serve as our Chief Executive Officer, president, chairman of our board of

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directors or other equivalent officer, a mandatory prepayment will be triggered under the First Lien Term Loan Facility, which will require certain of our subsidiaries to prepay 30% of any outstanding borrowings thereunder. The loss of any of our executive officers and directors could slow the growth of our business, or it may cease to operate at all, which may result in the total loss of your investment.

We may not be able to attract qualified personnel.

Our ability to expand operations to accommodate our anticipated growth will depend on our ability to attract and retain qualified personnel. However, competition for the types of employees we seek is intense. We face particular challenges in recruiting and retaining personnel who have experience in software engineering, mobile application development and other technical expertise, which is critical to our initiatives. Our ability to meet our business development objectives will depend in part on our ability to recruit, train and retain top quality personnel with advanced skills who understand our technology and business. We cannot provide any assurance that we will be able to attract qualified personnel to execute our business strategies or develop and expand our online properties.

When we acquire new businesses, we typically retain the existing managers and executives of the acquired companies to continue managing and operating the acquired business. We believe that they have the market expertise and network of personal relationships to best implement the growth strategies of the acquired businesses. If we are unable to retain the key personnel of the acquired businesses, we may not be able to achieve the anticipated benefits and synergies of an acquisition. If we are unable to engage and retain the necessary personnel, our business may be materially and adversely affected.

Members of our senior management team, including our Chief Executive Officer, have divided responsibilities and are not required to devote any specified amount of time to our business.

Our Chief Executive Officer and Chairman, Robert F.X. Sillerman, is also the Executive Chairman and Chief Executive Officer of Viggle Inc., which is in the business of developing products and services that encourage consumers to engage with television content. Mr. Sillerman is also a director of Circle Entertainment Inc., which is in the business of developing location-based entertainment venues. Our employment agreement with Mr. Sillerman requires that he devote his time, attention, energy, knowledge, best professional efforts and skills to the duties assigned to him by us, but he is permitted to pursue other professional endeavors and investments that do not violate the terms of his employment agreement, including provisions relative to non-competition and non-solicitation. Mr. Sillerman's employment agreement expressly permits him to engage in certain listed endeavors and investments. Any other professional endeavors to be performed by Mr. Sillerman are subject to the reasonable approval of our board of directors. Importantly, Mr. Sillerman's employment agreement does not require him to devote any specific amount of time to our Company. Accordingly, it is possible that Mr. Sillerman will fail to devote the necessary time to our Company. Similarly, under our employment agreements with Mitchell Slater, Sheldon Finkel, Timothy J. Crowhurst, our President, and Joseph F. Rascoff, our Chief Operating Officer, such officers are permitted to, and such officers have informed us that they intend to, engage in specific endeavors that are listed in their agreements or pre-approved by our board and other endeavors that do not compete with us. Such officers are not contractually required to devote any specified amount of time to our business.

We rely on third-party content, which may not be available to us on commercially reasonable terms or at all.

We contract with third parties to offer their content on our Beatport website. The licensing arrangements with these third parties are generally short-term and do not guarantee the continuation or renewal of these arrangements on reasonable terms, if at all.

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We are currently reviewing and from time to time will continue to review, our licensing arrangements and the advisability and requirements for entering into arrangements with Performing Rights Organizations and the alternatives to entering into such arrangements. Some third-party content providers and distributors, currently or in the future, may offer competing products and services and could take action to make it more difficult or impossible for us to license their content. Other content owners, providers or distributors may seek to limit our access to, increase the cost of, or otherwise restrict or prohibit our use of such content. We may be unable to continue to offer a wide variety of content at reasonable prices with acceptable usage rules or continue to expand its geographic reach.

All content on Beatport is currently provided free of digital rights management. If our requirements or business model changes, we may have to develop or license new technology to provide other solutions. There is no assurance that we will be able to develop or license such solutions at a reasonable cost and in a timely manner. In addition, certain countries have passed or may propose and adopt legislation that would force us to license our digital rights management, if any, which could weaken the protection of content and subject us to piracy and also negatively affect arrangements with our content providers.

We may be unable to adequately protect our intellectual property rights or may be accused of infringing upon intellectual property rights of third parties.

We may be unable to detect unauthorized use of, or otherwise sufficiently protect, our intellectual property rights or may be accused of infringing upon intellectual property rights of third parties.

We rely on a combination of laws and contractual restrictions with employees, customers, suppliers and others to establish and protect these proprietary rights. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use proprietary information, trademarks, or copyrighted material without authorization which, if discovered, might require legal action to correct. Furthermore, our recently acquired assets and the assets we expect to acquire in connection with our planned acquisitions (including brand names and trademark rights), may have been improperly adopted or inadequately protected prior to our acquisitions of them. This could include failures to obtain assignments of ownership or confidentiality agreements from third parties, failures to clear use of trademarks, or other failures to protect trademarks and other proprietary rights. In addition, third parties may independently and lawfully develop similar intellectual property or duplicate our services.

We will apply to register, or secure by contract when appropriate, our trademarks and service marks as they are developed and used and reserve and register domain names as we deem appropriate. While we vigorously protect our trademarks, service marks and domain names as we deem appropriate, effective trademark protection may not be available or may not be sought in every country in which we operate, and contractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain name may be available or be registered, even if available. Our failure to protect our intellectual property rights in a meaningful manner or challenges to related contractual rights could result in the erosion of brand names or the loss of rights to our owned or licensed marks and limit our ability to control marketing on or through the internet using our various domain names or otherwise, which could adversely affect our business, financial condition, and results of operations. In addition, the loss of, or inability to otherwise obtain, rights to use third-party trademarks and service marks, including the loss of exclusive rights to use third-party trademarks in territories where we present festivals, could adversely affect our business or otherwise result in competitive harm.

From time to time, we are subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of the trademarks, copyrights, patents and other intellectual property or proprietary rights of third parties. The legal proceedings and claims include notices provided to us by content owners of users' violation of the Digital Millennium Copyright Act, which obligate us to investigate and remove infringing user content from the Beatport site. We also face a risk that content licensors may bring claims for copyright infringement or breach of contract if

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Beatport users exceed the scope of the content licenses. Because EMC involves remixing and sampling of others' music, and because such remixes are typically performed publicly, if our content license agreements do not grant us or our users sufficient use rights, or if we facilitate the performance of music for which we do not have a license, our supply of such content on Beatport could expose us to claims of copyright infringement. We may not be able to successfully defend against such claims, which may result in a limitation on our ability to use the intellectual property subject to these claims and also might require us to enter into settlement or license agreements, pay costly damage awards or face an injunction prohibiting us from using the affected intellectual property in connection with our services.

In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect trade secrets or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations. Patent litigation tends to be particularly protracted and expensive.

Moreover, we use open source software in connection with Beatport. Some open source software licenses require users who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or make available any derivative works of the open source code on unfavorable terms or at no cost. While we have assessed the use of open source software in Beatport to ensure that we have not used open source software in a manner that would require us to disclose the source code to the related technology, use requiring such disclosure could inadvertently occur and any requirement to disclose our proprietary source code could be harmful to Beatport.

Regulatory and business practice developments relating to personal information of our customers and/or failure to adequately protect the personal information of our customers may adversely affect our business.

The businesses we have acquired or intend to acquire in the future maintain, or have arrangements with third parties who maintain, information on customers who purchase tickets and other products electronically through their individual websites or otherwise register on the website for access to the content provided. We are in the process of evaluating the information collected to understand if we can aggregate and reuse the contact information to inform these individuals of upcoming events, offerings and other products and services that we believe enhance the fan experience. Data protection laws and regulation may impair our ability to use these data in such ways, as certain uses may be prohibited. The use of such customer information is a significant part of our growth strategy in the future. The collection, storage and use of customer information is subject to regulation in many jurisdictions, including the United States and the European Union, and this regulation is becoming more prevalent and stringent. Further, there is a risk that data protection regulators may seek jurisdiction over our activities even in locations in which we do not have an operating entity. This may arise in a number of ways, either because we are conducting direct marketing activities in a particular jurisdiction and the local laws apply to and are enforceable against us, or because one of our databases is controlling the processing of information within that jurisdiction. We are developing but have not yet finalized a comprehensive policy aimed at ensuring adequate protection of our customers' personal information and compliance with applicable law. There is a risk that we will be unable to successfully adopt and implement this policy, which may give rise to liabilities or increased costs. In addition, we could face liability if the third parties to which we grant access to our customer data were to misuse or expose it.

In some countries, the use of cookies and other information placed on users' internet browsers or users' computing devices is currently regulated, regardless of the information contained within or referred to by the cookie. Specifically, in the European Union, this is now subject to national laws being introduced pursuant to the amended Directive 2002/58 on Privacy and Electronic Communications. The effect of these measures may require users to provide explicit consent to such a

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cookie being used. The laws being introduced pursuant to this measure are not finalized in every European Member State, and we have not determined what effect this could have on our business when we place the cookie on the user's computer or when a third party does so. The effect may be to limit the amount of information we receive in relation to each use of the service and/or to limit our ability to link this information to a unique identity, which could adversely affect our business and financial condition.

In the United States, the Federal Trade Commission ("FTC") is starting to exercise greater authority over how online consumer data is collected and maintained by businesses. Prompted by the FTC's recommendation regarding online tracking, a number of federal legislative proposals have been introduced that would allow users to opt out of online monitoring. A number of states have passed similar legislation and some states are becoming more active in enforcing these laws to protect consumers.

The laws in this area are complex and developing rapidly. For instance, we are aware that there is a proposal for a new general law within Europe, the General Data Protection Regulation, which is likely to be introduced within three years. The proposed regulation is still under discussion, and we have not yet assessed the full effect of these proposals if enacted into law in their current form. There is a risk that internet browsers, operating systems, or other applications might be modified by their developers in response to proposed legislation to limit or block our ability to access information about our users. It is possible that existing or future regulations could make it difficult or impossible for us to collect or use our customer information in the way we would like which would impede our growth strategy and potentially reduce the revenue we hope to generate. It is also possible that we could be found to have violated regulations relating to customer data, which could result in us being sanctioned, suffering fines or other punishment, being restricted in our activities and/or suffering reputational harm. Any of the foregoing could adversely affect our business and financial results.

We may be subject to disruptions, failures or cyber attacks in our information technology systems and network infrastructures that could have a material adverse effect on us.

We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our businesses. Techniques used to gain unauthorized access to private networks are constantly evolving, and we may be unable to anticipate or prevent unauthorized access to data pertaining to our customers, including credit card and debit card information and other personally identifiable information. Like all Internet services, our Beatport service, which is supported by our own systems and those of third-party vendors, is vulnerable to computer viruses, Internet worms, break-ins, phishing attacks, attempts to overload servers with denial-of-service or other attacks and similar disruptions from unauthorized use of our and third-party vendor computer systems, any of which could lead to system interruptions, delays or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information. If an actual or perceived breach of security occurs of our systems or a vendor's systems, we may face civil liability and public perception of our security measures could be diminished, either of which would negatively affect our ability to attract customers, which in turn would harm our efforts to attract and retain advertisers. We also would be required to expend significant resources to mitigate the breach of security and to address related matters.

Further, a disruption, infiltration or failure of our information technology systems or any of our data centers including the systems and data centers of our third-party vendors as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business. In addition, our ability to integrate, expand, and update our information technology infrastructure is important for our contemplated growth, and any failure to do so could have an adverse effect on our business.

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We cannot fully control the actions of third parties who may have access to the customer data we collect and the customer data collected by our third party vendors. The contemplated integration of our Beatport services with applications provided by third parties represents a significant growth opportunity for us, but we may not be able to control such third parties' use of customer data. We may be unable to monitor or control such third parties and the third parties having access to our other websites in their compliance with the terms of our privacy policies, terms of use, and other applicable contracts, and we may be unable to prevent unauthorized access to, or use or disclosure of, customer information. Any such misuse could hinder or prevent our efforts with respect to growth opportunities and could expose us to liability or otherwise adversely affect our business. In addition, these third parties may become the victim of security breaches or have practices that may result in a breach, and we could be responsible for those third party acts or failures to act.

Any failure, or perceived failure, by us or the prior owners of acquired businesses to maintain the security of data relating to our customers and employees, to comply with our posted privacy policies, our predecessors' posted policies, laws and regulations, rules of self-regulatory organizations, industry standards and contractual provisions to which we or they may be bound, could result in the loss of confidence in us, or result in actions against us by governmental entities or others, all of which could result in litigation and financial losses, and could potentially cause us to lose customers, advertisers, revenue and employees.

We depend on our ability to lease venues for our events, and if we are unable to do so on acceptable terms, or at all, our results of operations could be adversely affected.

Our business requires access to venues to generate revenue from live EMC events. For these events, we generally lease and operate a number of venues under various agreements which include leases or licenses with third parties or booking agreements, which are agreements where we contract to book the events at a venue for a specific period of time. Some of the leases may be between us and governmental entities. Our long-term success will depend in part on the availability of venues, our ability to lease these venues and our ability to enter into booking agreements upon their expiration. As many of these agreements are with third parties over whom we have little or no control, including the government, we may be unable to renew these agreements or enter into new agreements on acceptable terms or at all, and may be unable to obtain favorable agreements with venues. We may continue to expand our operations through the development of live music venues and the expansion of existing live music venues, which poses a number of risks, including:

desirable sites for live music venues may be unavailable or costly;

the attractiveness of our venue locations may deteriorate over time;

we may be unable to obtain or we may lose local government permits or approvals necessary to use a particular venue; and

a particular venue, including one we have used in the past, may determine that events or festivals like ours would be inappropriate for their property.

We depend upon unionized labor for the provision of some services at our events and any work stoppages or labor disturbances could disrupt our business.

Certain of the employees at some of the venues we manage and other independent contractors hired to assist at our festivals and events may be subject to collective bargaining agreements. The applicable union agreements typically expire and may require negotiation in the ordinary course of business. Upon the expiration of any such collective bargaining agreements, however, our partners may be unable to negotiate new collective bargaining agreements on terms favorable, and our business operations may be interrupted as a result of labor disputes or difficulties and delays in the process of

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renegotiating such collective bargaining agreements. In addition, our business operations at one or more of our venues may also be interrupted as a result of labor disputes by outside unions attempting to unionize a venue even though there is not unionized labor at that venue currently. A work stoppage at one or more of our owned and/or operated venues or at our promoted events could have a material adverse effect on our business, results of operations, and financial condition. We cannot predict the effect that a potential work stoppage would have on our business.

Our limited operating history makes it difficult to evaluate our current business and future prospects, and we may be unsuccessful in executing our business model.

We began operations as SFX EDM Holdings Corporation on July 7, 2011, and were incorporated as SFX Entertainment, Inc. in Delaware in June 2012. Without giving effect to our Predecessor, we have generated limited revenue, and our operations have consisted exclusively of indentifying, negotiating with and acquiring four companies (including our Predecessor), forming one joint venture and conducting negotiations and due diligence to acquire additional companies. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a developing company starting a new business enterprise, the difficulties that may be encountered with integrating acquired companies and the highly competitive environment in which we operate. Because we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenue to fully meet our expenses and support our anticipated activities.

We have had a history of losses, and we may be unable to achieve or sustain profitability.

We have never been profitable. We experienced net losses attributable to SFX of $0.1 million for the period from inception to December 31, 2011, $16.2 million for the year ended December 31, 2012 and $43.5 million for the six months ended June 30, 2013. We expect we will continue to incur net losses in 2013 and significant future expenses as we develop and expand our business. In addition, as a public company, we will incur additional significant legal, accounting and other expenses that we do not incur as a private company and that are not reflected in our existing financial statements. These increased expenditures will make it harder for us to achieve and maintain future profitability. We may incur significant losses in the future for a number of reasons, including unsuccessful acquisitions, costs of integrating new businesses, expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not be able to achieve or sustain profitability.

RISKS RELATED TO OUR ACQUISITION STRATEGY

A number of other companies are seeking to make acquisitions in our industry, which may make our acquisition strategy more difficult or expensive to pursue.

The emergence and growth of the EMC has brought increased media attention, and a number of companies and investors have begun making acquisitions of EMC businesses or announced their intention to do so. We compete with many of these companies, and certain of them have greater financial resources than we do for pursuing and consummating acquisitions and to further develop and integrate acquired businesses. Our strategy relies on our ability to consummate a substantial number of acquisitions to foster the growth of our core business and to establish ourselves in geographic regions and related businesses in which we do not currently operate. The increased focus on acquisitions of EMC companies may impede our ability to acquire these companies because they choose another acquirer. It could also increase the price that we must pay for these companies. Either of these outcomes could reduce our growth, harm our business and prevent us from achieving our strategic goals.

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We may be unsuccessful in identifying suitable acquisition candidates which may negatively impact our competitive position and our growth strategy.

In addition to organic growth, our future growth will be driven by our selective acquisition of additional businesses focused on the EMC community, our competitors and complementary businesses. Our growth through acquisitions, to date, has consisted of four acquisitions and one joint venture, and we are in discussions to acquire additional businesses including our planned acquisitions. We may be unable to identify other suitable targets for future acquisition or acquire businesses at favorable prices, which would negatively impact our growth strategy. We may not be able to execute our growth strategy through organic expansion, and if we are unable to identify and successfully acquire new businesses complementary to ours, we may not be able to expand into new geographic markets, develop our online properties or achieve profitability.

The due diligence process that we undertake in connection with acquisitions may not reveal all facts that may be relevant in connection with an investment.

Before making acquisitions and other investments, we conduct due diligence of the target company that we deem reasonable and appropriate based on the facts and circumstances applicable to each acquisition. The objective of the due diligence process is to assess the investment opportunities based on the facts and circumstances surrounding an investment or acquisition. When conducting due diligence, we may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. The due diligence process may at times be subjective with respect to newly-organized companies for which only limited information is available. Accordingly, we cannot be certain that the due diligence investigation that we conduct with respect to any investment or acquisition opportunity will reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. For example, instances of fraud, accounting irregularities and other deceptive practices can be difficult to detect. Executive officers, directors and employees may be named as defendants in litigation involving a company we are acquiring or have acquired. Even if we conduct extensive due diligence on a particular investment or acquisition, we may fail to uncover all material issues relating to such investment, including regarding the controls and procedures of a particular target or the full scope of its contractual arrangements. We rely on our due diligence to identify potential liabilities in the businesses we acquire, including such things as potential or actual lawsuits, contractual obligations or liabilities imposed by government regulation. However, our due diligence process may not uncover these liabilities, and where we identify a potential liability, we may incorrectly believe that we can consummate the acquisition without subjecting ourselves to that liability. For each of our acquired businesses, other than Beatport, we have acquired only the assets of the business and not assumed the liabilities. Nonetheless, it is possible that we could still be subject to litigation in respect of these acquired businesses. If our due diligence fails to identify issues specific to an investment or acquisition, we may obtain a lower return from that transaction than the investment would return or otherwise subject ourselves to unexpected liabilities. We may also be forced to write-down or write-off assets, restructure our operations or incur impairment or other charges that could result in our reporting losses. Charges of this nature could contribute to negative market perceptions about us or our shares of common stock.

We may face difficulty in integrating the operations of the businesses we have acquired and may acquire in the future.

Acquisitions have been and will continue to be an important component of our growth strategy; however, we will need to integrate these acquired businesses successfully in order for our growth strategy to succeed and for our Company to become profitable. We will implement, and the management teams of the acquired businesses will adopt, our policies, procedures and best practices,

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and cooperate with each other in scheduling events, booking talent and in other aspects of their operations. We may face difficulty with the integration of the businesses we acquire, such as coordinating geographically dispersed organizations, integrating personnel with disparate business backgrounds and combining different corporate cultures. Many of the businesses we acquire are not profitable, and we are relying on their adoption of our best practices to operate their businesses more efficiently to achieve and maintain profitability. However, we may fail in implementing our policies and procedures, or the policies and procedures may not be effective or provide the results we anticipate for a particular business. Further, we will be relying on these policies and procedures in preparing our financial and other reports as a public company, so any failure of acquired businesses to properly adopt these policies and procedures could impair our public reporting. Management of the businesses we acquire may not have the operational or business expertise that we require to successfully implement our policies, procedures and best practices.

We note in particular that the auditors for our Predecessor, Disco Productions, Inc. (now operating as SFX Disco-Operating LLC) ("DDP"), MMG, i-Motion, Made and Totem identified material weaknesses in the internal controls of these businesses that relate to the proper application of accrual based accounting under GAAP. For the six months ended June 30, 2013, our Predecessor, DDP and MMG constitute 13.9%, 37.5% and 6.2%, respectively, of our revenue. Further, we expect that future target companies may also have material weaknesses in internal controls prior to our acquiring them. The Public Company Accounting Oversight Board ("PCAOB") defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We will be relying on the proper implementation of our policies and procedures to remedy these material weaknesses, and prevent any potential material misstatements in our financial reporting. Any such misstatement could adversely affect the trading price of our common stock, cause investors to lose confidence in our reported financial information, and subject us to civil and criminal fines and penalties. A part of our growth strategy involves expanding our festivals and events into new markets. As a result, festivals and events from different businesses will be operating in similar geographic areas and/or at similar times of year, often for the first time, and these businesses will need to coordinate their strategies to avoid competing with each other for attendees or talent. If our acquired companies fail to integrate in these important ways, or we fail to adequately understand the business operations of our acquired companies, our growth and financial results will suffer.

In addition, our growth strategy also includes the development of online properties that we intend to integrate across all of our acquired businesses. This will require, among other things, the integration of the individual websites and databases of each business we have or will acquire. This will be a complex undertaking that may prove more difficult, expensive and time consuming than we expect. Even if we are able to achieve this integration, it may not achieve the benefits we anticipate. If we fail to do this properly and in a timely manner, it could harm our revenue and relationship with our fans.

We typically retain the management of the businesses we acquire and rely on them to continue running their businesses, which leaves us vulnerable in the event they leave our Company.

We seek to acquire businesses that have strong management teams that will continue to run the business after the acquisition. We often rely on these individuals to conduct the day-to-day operations of and pursue the growth of these acquired businesses. Although we typically seek to sign employment agreements with the managers of acquired businesses, it remains possible that these individuals will

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leave our organization. This would harm the prospects of the businesses they manage, potentially causing us to lose money on our investment and harming our growth and financial results.

Our current and any future joint ventures are or will be subject to certain risks inherent in these investments.

Investments in joint ventures involve certain unique risks, including, among others, risks relating to:

potential disagreements with our joint venture partner about how to manage the joint venture;

the lack of full control of the joint venture's management, and therefore its actions;

the possibility that our joint venture partner might have or develop business interests or strategies that are contrary to ours;

the potential need for us to fund future capital to the joint venture, as loans to the joint venture, as capital contributions to the joint venture, or otherwise;

the possible financial distress or insolvency of our joint venture partner, which could lead to our having to contribute its share of additional capital to the joint venture;

the cost of litigation or arbitration (including damage to reputation) in the event of a dispute with our joint venture partner;

negative business and financial performance of the joint venture because of substantial disagreements with our joint venture partner; and

preemptive dissolution of the joint venture because we or our joint venture partner choose, or become obligated, to acquire the equity interests of the other in the joint venture.

Federal and state taxation of business combinations may discourage business combinations.

Federal and state tax consequences are major considerations in any acquisition or business combination we may undertake. Currently, such transactions may be structured to result in tax-free treatment to both companies, pursuant to various federal and state tax provisions. We intend to structure any business combination to minimize the federal and state tax consequences to both us and the target entity; however, there can be no assurance that any particular business combination will meet the statutory requirements of a tax-free reorganization or that we will obtain the intended tax-free treatment upon a transfer of stock or assets. A non-qualifying reorganization could result in the imposition of both federal and state taxes, which may have an adverse effect on us and our target company, reduce the future value of the shares and potentially discourage a business combination.

We may seek to raise additional funds, finance acquisitions or develop strategic relationships by issuing capital stock that would dilute your ownership.

We have financed our operations and acquisitions in large part by issuing shares of our common stock. We expect to continue to do so in the future, which would significantly reduce the percentage ownership of our then existing stockholders, including investors in this offering. Furthermore, any future issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on your ownership interest, which could cause the market price of our common stock to decline. In addition, we could issue securities in respect of future transactions that have rights, preferences and privileges senior to those of our

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common stock. The holders of any of our debt securities or term loans would also have rights superior to the rights of our common stockholders.

We may be required to issue additional shares if certain of our acquired businesses achieve earnout thresholds, and such issuances would dilute your ownership.

We may be required to issue additional shares of our common stock to the sellers of certain acquired businesses if those businesses achieve earnout thresholds, as described below.

The former owners of MMG are entitled to receive an earnout payment based on the EBITDA of the business and assets of SFX-Nightlife Operating LLC for the year ended December 31, 2014. If this EBITDA equals or exceeds $5,270,000, the earnout payment will equal (1) $5,059,200 multiplied by (2) the actual EBITDA for the year ended December 31, 2014, divided by $5,270,000. If the EBITDA for the year ended December 31, 2014 is less than $5,270,000 but exceeds $3,372,000, the earnout payment will equal (1) $4,216,000 multiplied by (2) the difference between the actual EBITDA and $3,372,000 divided by $1,898,000. If the EBITDA is equal to or less than $3,372,000 for the year ended December 31, 2014, the former owners of MMG will not receive an earnout payment. Any earnout payment will be composed of 80% cash and 20% shares of our common stock at a price equal to a 30-day volume weighted average closing price per share if our shares are traded on any national securities exchange or the over-the-counter bulletin board.

The current owners of Totem, following our acquisition of Totem, will be entitled to receive an earnout payment based on the EBITDA of the business of SFX-Totem Operating Pty Ltd for the year ended December 31, 2014. If this EBITDA exceeds AUD$18.0 million (or $16.9 million), we will be required to make an earnout payment of AUD$10.0 million (or $9.4 million). Such earnout payment, if any, shall be paid in the form of cash and shares of our common stock at the then current market price, to be determined in our sole discretion, provided that the maximum cash payment shall not exceed AUD$5.0 million (or $4.7 million).

For a period of five years beginning in the year ended December 31, 2013, the ID&T Seller will be entitled to receive 100,000 warrants to purchase shares of our common stock each year if the ID&T JV has achieved an EBITDA of $7.0 million or more in the prior fiscal year. The warrant exercise price will equal the fair market value as determined in good faith by our board of directors but, after our initial public offering, will be based on our stock's 30-day weighted average closing price.

If we fail to repay our promissory note payable to the ID&T Seller, they could force us to transfer to them the intellectual property relating to certain of our valuable brands.

At the closing of our planned acquisition of the ID&T Business, we expect to issue to the ID&T Seller a promissory note in the principal amount of $10.4 million and maturing in June 2014. If we fail to repay this note at its maturity, subject to a 15-day cure period, the ID&T Seller could compel us to transfer to it the trademarks and related intellectual property for the Q-Dance brands. If we were to lose those trademarks, we would be unable to utilize those brands to stage festivals in the future, which could have a material adverse effect on our business and financial results. Further, certain key employees of ours who were employees of the ID&T Seller may have the option to terminate their employment with us and be immediately released from agreements that prevent them from competing against us. As a result, they would have the ability to use those brands in direct competition to our business.

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We have incurred significant indebtedness in connection with our growth strategy, which may grow with future acquisitions, and this increases risk for holders of our common stock and could adversely affect our profitability and financial condition.

At the closing of this offering, we will have a significant amount of debt. As of September 24, 2013, certain of our subsidiaries owed $75.0 million under the First Lien Term Loan Facility, which matures on September 15, 2014 (which may be extended to March 13, 2015 if certain conditions occur). We caution you that our subsidiaries may not have the funds necessary to pay principal and interest on the First Lien Term Loan Facility when it matures. Although we may seek to refinance this debt, we may not be able to do so on acceptable terms or at all. Any failure to pay these debts as they mature would adversely affect our business and the price of our common stock. In addition, the funds necessary to service this debt may divert cash from other important uses, including to fund the growth of our business and pursue our acquisition strategy.

If there were an event of default under the First Lien Term Loan Facility, the lenders could elect to declare all amounts outstanding thereunder to be due and payable immediately, with such acceleration being automatic upon certain events of default. It is possible that, if the defaulted debt is accelerated, our assets and cash flow may not be sufficient to fully repay the indebtedness or borrowings under our outstanding debt instruments, and we cannot assure you that we would be able to refinance or restructure the payments on those debt securities. In the event we are unable to repay the First Lien Term Loan Facility upon maturity, or earlier upon any default, holders of our debt, including lenders under the First Lien Term Loan Facility, will have a senior claim on the assets of certain of our subsidiaries ahead of holders of our common stock.

Upon the first closing of the planned Made acquisition, we will issue promissory notes in an aggregate principal amount of $10.0 million as part of the total consideration paid to acquire 70% of the equity interests in Made. Upon the closing of the planned acquisition of the ID&T Business, we will issue a promissory note in the principal amount of $10.4 million as part of the total consideration to be paid to the ID&T Seller.

As we continue growing our business and complete additional acquisitions, it is possible that we will increase the amount of the First Lien Term Loan Facility or otherwise incur additional indebtedness, which could have the effect of increasing the risks described above.

RISKS RELATED TO OUR INDEBTEDNESS

The First Lien Term Loan Facility requires us to make certain mandatory prepayments of principal and interest, which will reduce our ability to use that cash flow to fund our operations, capital expenditures and future business opportunities.

The First Lien Term Loan Facility requires our indirectly held wholly-owned subsidiary, SFX Intermediate Holdco II LLC (the "Borrower") to make mandatory prepayments (collectively, the "Mandatory Prepayments") equal to:

75.0% of the annual excess cash flow of our wholly-owned subsidiary SFX Intermediate Holdco I LLC ("Holdings") and its subsidiaries, which are substantially all of our current businesses for the year ended December 31, 2013, five days after audited financials are delivered;

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100% of the net proceeds from certain asset sales, casualty events, and debt issuances by Holdings and its subsidiaries (in each case, other than to the extent permitted under the First Lien Term Loan Facility); and

30.0% of the outstanding borrowings within 60 days of the date Mr. Sillerman either announces he will not serve, ceases serving as or is incapable of serving as the Chairman of our board of directors, our President, our Chief Executive Officer or other equivalent officer.

Any amounts required to be applied to Mandatory Prepayments under the First Lien Term Loan Facility as described above, would not be available to us for any other purpose, including to fund our future operations, capital expenditures and investments in future business opportunities, which may severely limit our liquidity and adversely affect our ability to grow our business and/or take advantage of unanticipated business opportunities.

The First Lien Term Loan Facility includes negative covenants that restrict certain of our subsidiaries' ability to operate their business, and this may impede our ability to respond to changes in our business or take certain important actions.

The First Lien Term Loan Facility includes customary restrictive covenants, subject to certain materiality thresholds and exceptions, including covenants limiting Holdings' and its subsidiaries' ability to:

incur certain types of indebtedness and liens;

merge with, make an investment in or acquire property or assets of another company;

make capital expenditures;

pay dividends;

repurchase shares of our outstanding stock;

negative pledge;

modify certain documents;

make loans;

dispose of assets;

prepay the principal on any other indebtedness;

liquidate, wind up or dissolve; or

enter into certain transactions with affiliates.

These restrictions could limit our ability to take certain actions necessary to properly grow and manage our business, such as obtaining future financing, making needed capital expenditures, responding to and withstanding future downturns in our business or the economy in general or otherwise conducting corporate activities that are necessary or desirable. Holdings and its subsidiaries are generally not permitted to make dividends or cash distributions to us or to finance the operations of us or any of our subsidiaries that are not subsidiaries of Holdings. We may also be prevented from taking advantage of business opportunities that arise because of limitations these restrictive covenants impose on us. If it becomes necessary or desirable to obtain a waiver or amendment of these covenants, it may be costly or time consuming for us to do so, and we may not be able to obtain a waiver or amendment on any terms at all. A breach of any of these covenants or restrictions, even as a result of events beyond our control, could result in an event of default under the First Lien Term Loan Facility.

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Fluctuations in interest rates could adversely affect our liquidity, interest expense and financial results.

The First Lien Term Loan Facility has variable interest rates. If any of the variable rates increase, our debt service costs will increase. Increased debt service costs would adversely affect our cash flow. To the extent these interest rates increase, our interest expense may increase, and we may have difficulty making interest payments and funding our other costs. While we may enter into interest hedging contracts, we may not be able to do so on a cost-effective basis, any hedging transactions entered into may not achieve their intended purpose and shifts in interest rates may have a material adverse effect on our business, financial condition and/or results of operations.

Certain events could lead to the First Lien Term Loan Facility being in default or otherwise require us to pay principal and accrued interest on this debt prior to its maturity.

The First Lien Term Loan Facility includes events of default if our subsidiaries breach their loan covenants and upon the occurrence of certain events. This could cause our subsidiaries to be required to immediately repay the principal and accrued interest owing under this facility.

For example, Mr. Sillerman has entered into a guarantee agreement (the "Sillerman Guarantee") with Barclays Bank PLC, as collateral agent for the benefit of the other lender parties, in which he personally guaranteed all our obligations under the First Lien Term Loan Facility. We will be in default of the First Lien Term Loan Facility if the Sillerman Guarantee ceases to be in full force and effect or if Mr. Sillerman breaches any material term of the Sillerman Guarantee. An event of default will also occur upon a change in control. A change in control is defined in the First Lien Term Loan Facility to include the occurrence of any of the following: (i) Holdings ceases to be wholly-owned, directly or indirectly, by us or Borrower ceases to be directly wholly-owned by Holdings; (ii) at any time prior to our initial public offering (so long as we raise net proceeds of at least $100.0 million), Mr. Sillerman and certain affiliates and senior management cease to own, directly or indirectly, at least 40% of our outstanding voting equity or any "person" or "group" other than Mr. Sillerman and certain affiliates and senior management beneficially own a greater percentage of our voting equity than Mr. Sillerman and certain affiliates; (iii) at any time after our initial public offering (so long as we raise net proceeds of at least $100.0 million) Mr. Sillerman and certain affiliates and senior management cease to own, directly or indirectly, at least 30% of our outstanding voting equity or a greater percentage of our voting equity than Mr. Sillerman and certain affiliates and senior management; or (iv) the majority of the seats (other than vacant seats) on our board of directors cease to be occupied by persons who were, on March 15, 2013, either members of our board of directors or nominated for election by a majority of our board of directors or whose election or nomination was previously approved by a majority of such directors.

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RISKS RELATED TO OUR COMMON STOCK AND THIS OFFERING

Some of our stockholders have repurchase rights that require us to purchase their shares under certain conditions, and our financial position would be adversely impacted if those stockholders exercise those rights.

We have granted certain repurchase rights to the holders of our stock. The terms of these repurchase rights, including information with respect to their expiration, are set forth in the table below.

Holder(s) of Repurchase Right
  Number of Shares   Price   Relevant Date and Trigger Events
Baron Small Cap Fund   2,500,000   $4.00/share   We have agreed to repurchase these shares upon Baron's election if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If we become required to repurchase these shares, we must do so over a ten-month period on a pro rata basis. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.

Entertainment Events Funding LLC

 

4,000,000

 

$2.50/share

 

We have agreed to repurchase these shares if the SEC has not declared effective a registration statement covering the resale of the shares of our common stock held by this investor by January 15, 2013. This investor has not exercised its repurchase right. If we are required to repurchase these shares, we must do so over a ten-month period on a pro rata basis. These repurchase rights are based on the "most favored nation" rights we granted Entertainment Events Funding LLC under its subscription agreement, which require that (until immediately prior to our initial public offering), we provide to them the same right or benefit we provide to a third-party purchasing or receiving our common stock. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.

Disco Productions, Inc.

 

1,000,000

 

$5.00/share

 

We have agreed to repurchase these shares if we do not have a registration statement declared effective or our shares are not registered pursuant to Section 12 of the Exchange Act by June 30, 2014. We believe this repurchase right will expire and be unexercisable following the closing of this offering.

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Holder(s) of Repurchase Right
  Number of Shares   Price   Relevant Date and Trigger Events

ID&T Seller

 

All shares and warrants held by the ID&T Seller or its permitted transferees issued in connection with the ID&T JV (this could include up to 2.0 million shares; warrants to purchase 500,000 shares; and, for a period of five years beginning the year ended December 31, 2013, 100,000 warrants to purchase shares of our common stock if the ID&T JV achieves an EBITDA of $7.0 million or more in the prior fiscal year).

 

$10.0 million

 

We have agreed to repurchase these securities if we do not complete our initial public offering by May 26, 2014. We believe this repurchase right will expire and be unexercisable following the closing of this offering.

ID&T Seller

 

All or any portion of the 2,000,000 shares issued in connection with the ID&T Option.

 

$10.00/share

 

We have agreed to repurchase these shares if by March 20, 2014 we have not consummated our initial public offering. We believe this repurchase right will expire and be unexercisable following the closing of this offering.

ID&T Seller

 

Approximately 868,050 shares issued in connection with our acquisition of 100% of the ID&T Business (based on the midpoint of the range set forth on the cover of this prospectus).

 

Price to the public in this offering

 

We have agreed to repurchase these shares if by March 20, 2014 we have not consummated our initial public offering. We believe this repurchase right will expire and be unexercisable following the closing of this offering.

ID&T Seller

 

4,000,000 shares plus all other equity granted to the ID&T Seller or its permitted transferees by us in connection with the ID&T JV and the ID&T Option.

 

$30 million in total or, at the option of the ID&T Seller, all of our equity interests in the ID&T JV

 

If by March 20, 2014, (i) the closing of our acquisition of 100% of the equity interests of the ID&T Business has not occurred and (ii) we have not consummated our initial public offering by that date, the ID&T Seller can require us to repurchase these equity interests. We believe that this put right will expire and be unexercisable following the closing of this offering.

Former equity holders of Beatport

 

4,930,000

 

$5.00/share

 

On or after March 15, 2014, the former equity holders of Beatport will have the right to require us to repurchase from them the shares of our common stock issued as consideration in the merger. This right will not apply to any shares that have been registered in our initial public offering at an initial offering price of at least $5.00 per share or in a subsequent resale registration or are subsequently eligible for resale under Rule 144 following such initial public offering. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.

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Holder(s) of Repurchase Right
  Number of Shares   Price   Relevant Date and Trigger Events

Insight Venture Partners V, L.P.

Insight Venture Partners V (Employee Co-Investors), L.P.

Insight Venture Partners (Cayman) V, L.P.

 

Up to 1,000,000

 

$10.00/share

 

On or after March 15, 2014, these parties can require us to repurchase shares of our common stock that we have not registered in our initial public offering or registered in a resale registration following such initial public offering, or that are not eligible for resale under Rule 144 following such initial public offering. If prior to the date that these shares are registered for resale or become subsequently eligible for resale under Rule 144 following our initial public offering, we enter into an agreement for the acquisition by any third party of beneficial ownership of more than 50% of the voting power in our voting shares (including by merger or consolidation) or the sale of all of our assets to a third-party in one or a series of related transactions, then this repurchase right will automatically accelerate and become exercisable. If we do not pay these investors the repurchase price of $10.00 per share within ten business days following receipt of notice from the investors of their exercise of this repurchase right, then the repurchase price will increase at a rate of 10% per annum (compounded quarterly) until the date of payment. We believe this repurchase right will expire and be unexercisable following the effectiveness of the resale registration statement that we filed with the SEC and expect to become effective shortly after we have closed this offering and one or more of our planned acquisitions.

Totem

 

Approximately 1,141,250 shares issued in connection with our acquisition of Totem (based on the midpoint of the range set forth on the cover of this prospectus).

 

Price to the public in this offering

 

We granted Totem the right, during the 30 calendar day period beginning on the second anniversary of the closing date, to require us to repurchase at our initial public offering price per share all of the shares of our common stock that we issued to Totem as consideration under the asset contribution agreement.
 

In addition, we granted to the former owners of MMG a put right exercisable at any time between January 1, 2015 and June 30, 2015 to require us to acquire their 20% non-dilutable interest in our subsidiary, SFX-Nightlife Operating LLC. The consideration to be paid by us upon exercise of the put right would be equal to 20% of the product of SFX-Nightlife Operating LLC's EBITDA for the 2014 fiscal year multiplied by 6.

If any of these holders of our shares exercise their repurchase rights, we may not have sufficient cash reserves to pay the amount due. If we are able to pay these amounts, the payment may impede our ability to fund other aspects of our business, including potential acquisitions, capital expenditures, other investments or our working capital requirements, which would harm our operating results and the price of our common stock.

Our Chief Executive Officer and Chairman has the ability to substantially influence, if not control, all matters submitted to stockholders for approval.

Following this offering, our Chief Executive Officer and Chairman of our board of directors, Robert F.X. Sillerman, will beneficially own shares of our common stock, in the aggregate, representing approximately 46.7% of our outstanding capital stock (or 45.3% if the underwriters fully exercise their over-allotment option). As a result, he will have the ability to substantially influence, if not control, all matters submitted to our stockholders for approval, as well as our management and affairs.

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This concentration of voting power could delay or prevent an acquisition of our company on terms that other stockholders may desire.

Our bylaws will designate, prior to the closing of our initial public offering, the state and federal courts in Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our bylaws will provide, prior to the closing of our initial public offering, that, with certain limited exceptions, unless we consent in writing to the selection of an alternative forum, the state and federal courts located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of our company owed to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our Certificate of Incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have received notice of and consented to the foregoing provisions. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it believes to be favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

Although we do not plan to take advantage of the "controlled company" exemption from certain NASDAQ corporate governance requirements, if we elect to do so in the future, our stockholders will not have the same protections afforded to stockholders of other companies.

Under the NASDAQ rules, a company of which more than 50% of the voting power is held by another person or group of persons acting together is a "controlled company" and may elect not to comply with certain NASDAQ corporate governance requirements. Robert F.X. Sillerman, who is our founder, Chief Executive Officer and Chairman of our board of directors, controls, 58.8% of our voting power. Assuming that we sell the number of shares set forth on the cover page of this prospectus, after this offering Mr. Sillerman would control approximately 46.7% of our voting power (or 45.3% if the underwriters fully exercise their over-allotment option). Mr. Sillerman also holds unvested options to purchase 11,350,000 shares of our common stock, which, if exercised after vesting, would increase his control of our voting power. If Mr. Sillerman were to hold greater than 50% of our voting power, we would be eligible to take advantage of this "controlled company" exemption. We currently do not intend to rely on this exemption, but if we were to do so in the future, we would be exempt from certain NASDAQ corporate governance requirements, including the requirements that (1) a majority of the board of directors consist of independent directors, (2) compensation of officers be determined or recommended to the board of directors by a majority of its independent directors or by a compensation committee that is composed entirely of independent directors and (3) director nominees be selected or recommended by a majority of the independent directors or by a nominating committee composed solely of independent directors. If we decide to take advantage of the controlled company exemption from certain NASDAQ corporate governance

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requirements, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements.

We are an emerging growth company within the meaning of the Securities Act of 1933, and as such, we will take advantage of certain modified disclosure requirements.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of NASDAQ, and other applicable securities rules and regulations. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.

However, we are an "emerging growth company" within the meaning of the rules under the Securities Act of 1933, as amended, or the Securities Act. For as long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including not being required to comply with the independent auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company.

We would cease to be an emerging growth company upon the earliest of: (1) the first fiscal year following the fifth anniversary of this offering, (2) the first fiscal year after our annual gross revenue is $1 billion or more, (3) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities or (4) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of that fiscal year.

We cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an emerging growth company within the meaning of the rules under the Securities Act, and we will take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies. 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 for complying with new or revised accounting standards. In other words, 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 take advantage of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards as they become applicable to public companies. We cannot predict if investors will find our common stock less attractive because we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

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If you purchase shares of common stock in this offering, you will suffer immediate dilution of your investment.

We expect the initial public offering price of our common stock to be substantially higher than the net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our net tangible book value per share after this offering. Based on an assumed initial public offering price of $12.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, you will experience immediate dilution of $10.25 per share, representing the difference between our net tangible book value per share after giving effect to this offering and the assumed initial public offering price. In addition, purchasers of common stock in this offering will have contributed approximately 52.0% of the aggregate price paid by all purchasers of our stock but will own only approximately 21.0% of our common stock outstanding after this offering. See "Dilution" for more detail.

Future sales of our common stock may cause our stock price to fall.

If our existing stockholders sell a large amount of our common stock following this offering, the market price of our common stock could decline significantly. In addition, the perception in the public market that our existing stockholders might sell shares of common stock could depress the market price of our common stock, whether or not they actually do so or plan to do so.

Immediately after this offering, 80,513,821 shares of our common stock will be outstanding. This includes the 16,666,667 shares of common stock that we are selling in this offering, which will be freely tradable in the public market immediately after this offering (unless purchased by an "affiliate," as such term is defined in Rule 144 under the Securities Act).

We expect that the remaining 63,847,154 shares, representing 79.3% of our total outstanding shares of common stock following this offering, will become available for resale in the public market as shown in the chart below. Our directors and executive officers and the holders of substantially all of our outstanding shares and vested options and participants in the directed share program have signed lock-up agreements with the underwriters covering a period of 180 days following the date of this prospectus, and certain purchasers in our directed share program will sign lock-up agreements with the underwriters covering a period of 25 days following the date of this prospectus. UBS Securities LLC, Jefferies LLC and Deutsche Bank Securities Inc. may, in their sole discretion and without notice, waive the provisions of these lock-up agreements in respect of all or any portion of these shares of common stock. As restrictions on resale end, the market price of our shares of common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell

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them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

Number of Shares
and % of Total
Outstanding

  Date Available for Sale Into Public Market
 

63,420,404 shares or 99.7%

  On the date of this prospectus. All of these shares are subject to lock-up agreements signed with the underwriters.
 

26,197,277 shares or 41.2%

  Upon the effectiveness of a registration statement we have filed on form S-1 to cover the resale of these shares from time to time in the future. We expect this registration statement to become effective shortly after the closing date of this offering and after we have closed one or more of our planned acquisitions. All of these shares are subject to lock-up agreements signed with the underwriters.
 

63,420,404 shares or 99.7%

  Up to and including 180 days after the date of this prospectus. All of these shares are subject to lock-up agreements signed with the underwriters.
 

57,048,806 shares or 89.7%

  More than 180 days after the date of this prospectus, of which 36,003,127 shares, or 56.6%, are subject to volume, manner of sale and other limitations under Rule 144. All of these shares are subject to lock-up agreements signed with the underwriters.
 

In addition, 3,552,730 shares of common stock will be eligible for sale upon exercise of vested options (including vested options to be granted immediately prior to the closing of this offering). Following this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding options under our 2013 Equity Compensation Plan. See "Executive compensation—Equity incentives." Once these shares are registered, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates.

For more information about the terms of the lock-up agreements our shareholders have agreed to with the underwriters and with us, and for more details about possible future sales of these shares, see "Shares Eligible for Future Sale."

All remaining shares of common stock held by existing stockholders, and any shares of our common stock purchased by affiliates in this offering pursuant to the directed share program described below under "Underwriting—Directed Share Program," will be subject to the restrictions imposed by Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which rules are summarized below, or another exemption.

An active, liquid and orderly trading market for our common stock may not develop, the price of our stock may be volatile, and you could lose all or part of your investment.

Prior to this offering, there has been no public market for shares of our common stock. The initial public offering price of our common stock will be determined through negotiations with the underwriters. This price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our shares of common stock following this offering. In addition, the trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. The market

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price of our common stock may decline below the initial offering price, and you may not be able to sell your common stock at or above the price you paid in this offering, or at all.

Prior to this offering, there has been no public market for our common stock, and we cannot assure you that a market for our common stock will develop or that the market price of shares of our common stock will not decline following the offering.

We cannot assure you that a trading market will develop for our common stock after this offering or, if one develops, that such trading market can be sustained. We intend to apply to have our common stock listed on the Nasdaq Global Market, but we cannot assure you that our application will be approved. In addition, we cannot predict the prices at which our common stock will trade. The initial public offering price for our common stock will be determined through our negotiations with the underwriters based on numerous factors, including the information set forth in this prospectus, our prospects and the prospects of our industry, an assessment of our management, our prospects for future earnings, the general condition of the securities markets, the recent market prices of, and demand for, publicly traded common stock of generally comparable companies and other factors deemed relevant by the underwriters and us. Neither we nor the underwriters can assure you that the initial public offering price will bear any relationship to the market price at which our common stock may trade after our initial public offering. Shares of companies offered in an initial public offering often trade at a discount to the initial offering price due to underwriting discounts and commissions and related offering expenses.

If securities or industry analysts publish inaccurate or unfavorable research about our business, our stock price 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. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price would likely decline.

We do not intend to pay dividends for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our common stock if the market price of our common stock increases. See "Dividend Policy."

The market price of our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial purchase price.

If you purchase shares of our common stock in the offering, you may not be able to resell those shares at or above the purchase price. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

actual or anticipated fluctuations in our revenue and other operating results;

the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

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actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

additional shares of our common stock being sold into the market by us or our existing stockholders or the anticipation of such sales;

announcements by us or our competitors of significant events or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments;

changes in operating performance and stock market valuations of companies in our industry;

price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

lawsuits threatened or filed against us;

developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and

other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

We have identified material weaknesses in our internal controls over financial reporting that, if not properly remediated, could result in material misstatements in our financial statements in future periods.

We are not currently required to comply with Section 404 of the Sarbanes-Oxley Act, and are therefore not required to make an assessment of the effectiveness of our internal controls over financial reporting for that purpose. However, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2012, we identified certain deficiencies relating to our internal control over financial reporting that constitute a material weakness under standards established by the PCAOB.

The PCAOB defines a material weakness as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

We have identified the following material weaknesses.

A lack of contemporaneous documentation in connection with awards of stock based compensation. This resulted in our treating certain awards granted in 2012 as having been granted in 2013 for accounting purposes.

Improperly characterizing certain acquisition transactions as having closed prior to our obtaining the control necessary for such a characterization. These acquisition transactions subsequently failed to close.

An unusually large amount of audit adjustments noted and recorded in connection with the 2012 audit, primarily in respect of accruals, cut offs and purchase accounting for consummated business transactions. In addition, certain significant transactions were not accounted for properly, one of which resulted in our restating our 2012 results to move certain amounts previously included in

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    equity to temporary equity. We believe that this was related, in part, to a lack of sufficient staff with appropriate training in GAAP and SEC rules and regulations with respect to financial reporting functions, as well as the lack of robust accounting systems.

We have taken and will take a number of actions to correct these material weaknesses including, but not limited to, adding experienced accounting and financial personnel, retaining third party consultants to review our internal controls and recommend improvements, implementing improvements to our closing procedures and consolidation processes, and improving our accounting software as it relates to accounts payable. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Internal Control Over Financial Reporting." We may need to take additional measures to fully mitigate these issues, and the measures we have taken, and expect to take, to improve our internal controls may not be sufficient to address the issues identified, to ensure that our internal controls are effective or to ensure that the identified material weakness or other material weaknesses will not result in a material misstatement of our annual or interim financial statements. In addition, other material weaknesses may be identified in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC will be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely impact our business and financial condition.

In addition, we and the auditors for our Predecessor, DDP, MMG, i-Motion, Made and Totem have identified material weaknesses in the internal controls of each of these businesses that relate to the proper application of accrual based accounting under GAAP. To remedy these material weaknesses and prevent any potential material misstatements in our financial reporting we will rely on the proper implementation of our policies and procedures, the hiring of new accounting staff at the acquired business and corporate level, the implementation of our accounting software at our acquired companies and improvements to that software generally. However, it is possible that these efforts will be unsuccessful with regard to the internal controls of one or more of these businesses. Further, future target companies may also have material weakness in internal controls at the time we acquire them.

If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, which could adversely affect the market price of our common stock.

As a public company, we will be required to maintain internal controls over financial reporting and to report any material weaknesses in such internal controls. As a public company, we will eventually be required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404. We are in the process of designing, implementing and testing the internal control over financial reporting required to comply with this obligation, which process is time consuming, costly and complicated. If in the future we identify material weaknesses in our internal control over financial reporting, including at some of our acquired companies, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

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Risk factors


We will incur increased costs as a result of operating as a public company, particularly once we cease to be an emerging growth company, and our management will be required to devote substantial time to new compliance initiatives.

As a public reporting company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act and rules subsequently implemented by the SEC and NASDAQ, on which we plan to seek to list our common stock for trading, have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage.

Pursuant to Section 404, we will be required to furnish a report by our management on our internal control over financial reporting, including, once we cease to be an emerging growth company, an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed time period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor, when required, our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

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Forward-looking statements

This prospectus contains forward-looking statements within the meaning of the U.S. federal securities laws, which involve substantial risks and uncertainties. The forward-looking statements are contained principally in the sections entitled "Prospectus Summary," "Risk Factors," "Unaudited Pro Forma Condensed Combined Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned "Risk Factors."

In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "would" and similar expressions intended to identify forward-looking statements. These statements include, but are not limited to, statements regarding:

our ability to close the acquisitions of our planned acquisition targets;

our ability to integrate the companies we have acquired and plan to acquire in the future;

our ability to identify and acquire leading EMC-related businesses;

our belief that the EMC community will grow;

our ability to increase the number of festivals and events we produce;

our ability to effectively partner Beatport more closely with live events;

our ability to produce festivals and events in-house through the ID&T JV and our planned acquisitions;

our ability to grow our music and video retailing efforts;

our ability to make, and the expected timing of, payments on our senior secured first lien credit agreement, as amended (the "First Lien Term Loan Facility");

our ability to grow EMC festival attendance;

our belief that additional or alternative venues will be readily available if necessary;

our belief that our liability insurance will provide sufficient protection;

our belief that our capital expenditure requirements and liquidity needs will be met; and

our ability to grow our online properties.

Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

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Use of proceeds

We estimate that the net proceeds to us from our issuance and sale of shares of common stock in this offering will be approximately $178.6 million (or approximately $206.5 million if the underwriters exercise their option to purchase additional shares of common stock in full), assuming an initial public offering price of $12.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $12.00 per share would increase (decrease) our net proceeds from this offering by approximately $15.5 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 the estimated underwriting discounts and commissions.

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

$56.3 million to close the acquisition of 100% of the ownership interests in the ID&T Business, including the acquisition of the remaining interests in the ID&T JV;

$16.0 million (or, if greater, the U.S. dollar equivalent of €12.6 million, based on the exchange rate on the day prior to closing) to close the acquisition of 100% of the ownership interests in i-Motion;

AUD$65.0 million (or $61.1 million) to close the acquisition of substantially all of the assets of Totem;

$16.3 million to close the acquisition of 70% of the ownership interests in Made; and

the balance, if any, to fund working capital, capital expenditures and other general corporate purposes, which may include other acquisitions of complementary businesses designed to increase our geographic footprint and our pool of executive level talent.

For additional information regarding our liquidity and outstanding indebtedness, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition (the Registrant)—Liquidity and Capital Resources."

This expected use of net proceeds of this offering represents our intentions based upon our current plans and business conditions. Our management will retain broad discretion over the allocation of any net proceeds used for capital expenditures or other general corporate purposes.

Pending use of the proceeds from this offering, we intend to invest the net proceeds in a variety of capital preservation investments, including short-term, investment-grade and interest-bearing instruments.

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Dividend policy

We have not paid any dividends on our common stock to date and do not anticipate paying any dividends on our common stock in the foreseeable future. We intend to retain earnings, if any, for the future operation and expansion of our business. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by applicable laws and other factors that our board of directors may deem relevant.

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Capitalization

The following table sets forth our capitalization as of June 30, 2013:

on an actual basis;

on a pro forma basis giving effect to our planned acquisitions, our subsidiary's borrowing of an additional $10.5 million under the First Lien Term Loan Facility and the application of those proceeds as described herein and the termination of rights held by certain of our existing stockholders to cause us to repurchase their shares; and

on a pro forma, as adjusted basis giving further effect to the issuance and sale by us of shares of our common stock in this offering at an assumed price to the public of $12.00 per share, the midpoint of the price range set forth on the cover of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

You should read the following table in conjunction with "Use of Proceeds," "Selected Historical and Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical consolidated financial statements and unaudited pro forma financial information and related notes thereto appearing elsewhere in this prospectus.

 
  As of June 30, 2013  
($ in 000s)
  Actual
  Pro Forma
  Pro Forma
As Adjusted

 
   

Debt:

                   

Current portion of long-term debt

  $   $ 23,545   $ 23,545  

Mandatorily redeemable non-controlling interest

        16,039     16,039  

First Lien Term Loan Facility and other long-term debt

    63,343     73,666     73,666  
               

Total debt

  $ 63,343   $ 113,250   $ 113,250  
               

Temporary Equity:

                   

Redeemable non-controlling interest

    4,834     4,834     4,834  

Redeemable common stock

    84,030     13,695     13,695  

Shareholders' Equity:

                   

Common stock

    44     61     78  

Additional paid-in capital

    86,454     213,169     396,062  

Due from stockholder for stock subscriptions

    (36 )   (36 )   (36 )

Accumulated deficit

    (59,814 )   (59,813 )   (59,813 )
               

Total SFX stockholders' equity

    26,648     153,381     336,291  

Non-controlling interest

    22,163     103     103  
               

Total stockholders' equity

    48,811     153,484     336,394  
               

Total capitalization

  $ 201,018   $ 285,263   $ 468,173  
               

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Dilution

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the price per share to the public in this offering and the net tangible book value per share of common stock upon the completion of this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the book value per share attributable to the existing stockholders for presently outstanding stock.

Our net tangible book value per share represents our total tangible assets less total liabilities, which is our net tangible book value, divided by our weighted average shares outstanding. As of June 30, 2013, our net tangible book value was approximately $(126.0) million, or $(2.73) per share of common stock.

After giving effect to the sale of our common stock at an assumed initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus), including the related reclassification of mezzanine equity, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our net tangible book value as of June 30, 2013 would have been approximately $140.9 million, or $1.75 per share.

This represents an immediate increase in net tangible book value of $4.48 per share to our existing stockholders and an immediate dilution of $10.25 per share to new investors purchasing shares of common stock at the price to the public in this offering.

The following table illustrates this dilution to new investors on a per share basis.

Assumed initial public offering price per share

        $ 12.00  

Net tangible book value per share as of June 30, 2013, before giving effect to this offering

  $ (2.73 )      

Increase in net tangible book value per share due to reclassification of mezzanine equity

  $ 2.07        

Increase in net tangible book value per share attributable to the sale of shares in this offering

  $ 2.41        
             

Net tangible book value per share after this offering

        $ 1.75  
             

Dilution in net tangible book value per share to new investors

        $ 10.25  
             

A $1.00 increase (decrease) in the assumed initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) our net tangible book value after this offering by $15.5 million and increase (decrease) the dilution to new investors by $0.81 per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares in full from us, the net tangible book value after the offering would be $2.03 per share, the increase in the net tangible book value per share to existing shareholders would be $4.76 and the dilution per share to new investors would be $9.97 per share, in each case assuming an initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover page of this prospectus).

The following table summarizes, as of June 30, 2013, the total number of shares of our common stock we issued and sold, the total consideration we received and the average price per share paid to us by our existing stockholders and to be paid by new investors purchasing shares of our common stock in

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Dilution


this offering. The table assumes an initial public offering price of $12.00 per share (the midpoint of the price range set forth on the cover of this prospectus) and deducts underwriting discounts and commissions and estimated offering expenses payable by us.

 
  Shares purchased   Total consideration    
 
 
  Average price
per share

 
 
  Number
  Percent
  Amount
  Percent
 
   

Existing stockholders

    63,614,154     79.2 % $ 170,492,000     48.2 % $ 2.68  

New investors

    16,666,667     20.8     182,910,000     51.8     10.97  
                       

Total

    80,280,821     100.0 % $ 353,402,000     100.0 %      
                         

Each $1.00 increase or (decrease) in the assumed initial public offering price of $12.00 per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase or decrease, as applicable, the total consideration paid by new investors and total consideration paid by all stockholders by approximately $15.5 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 and commissions payable by us. In addition, to the extent any outstanding options or warrants to purchase common stock or convertible preferred stock are exercised, new investors will experience further dilution.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters' option to purchase additional shares. If the underwriters exercise their option to purchase additional shares in full from us, our existing stockholders would own 77.0% and our new investors would own 23.0% of the total number of shares of our common stock outstanding upon the completion of this offering.

The above discussion and tables do not take into account the planned acquisitions of ID&T, i-Motion, Totem and Made, including each company's net tangible book value and shares to be issued for the acquisitions.

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Unaudited pro forma condensed combined financial information

We prepared the following unaudited pro forma condensed combined financial statements by applying certain pro forma adjustments to the historical consolidated financial statements of SFX Entertainment, Inc. The pro forma adjustments give effect to the following transactions (the "Transactions"):

our acquisition on July 31, 2012 of Dayglow LLC and its affiliates (now operating as SFX-Life in Color, LLC, or "LIC"), which is our Predecessor;

our acquisition on June 19, 2012 of Disco Productions, Inc. (now operating as SFX-Disco Operating LLC) ("DDP");

our acquisition on December 31, 2012 of an 80% ownership interest in MMG Nightlife, LLC ("MMG");

our January 1, 2013 acquisition of a 51% ownership interest in ID&T/SFX North America LLC (the "ID&T JV") and our planned acquisition of an additional 49% ownership interest in the ID&T JV;

our acquisition on March 15, 2013 of BEATPORT, LLC ("Beatport");

our planned acquisition of a 100% ownership interest in the worldwide business (the "ID&T Business") of ID&T NewHolding B.V. (such entity, together with One of Us B.V. (f/k/a ID&T Holding B.V.), "ID&T");

our planned acquisition of i-Motion GmbH Events & Communication ("i-Motion");

our planned acquisition of Totem Onelove Group Pty Ltd and Totem Industries Pty Ltd (collectively, "Totem");

our planned acquisition of a 70% ownership interest in Made Event, LLC and EZ Festivals, LLC (collectively, "Made"), with a commitment to acquire the remaining 30% in 2018;

our subsidiary's borrowing of $49.5 million under the First Lien Term Loan Facility ("First Lien Term Loan Facility") on March 15, 2013, the amendment for an additional borrowing of $15.0 million on June 5, 2013 and the amendment for an additional borrowing of $10.5 million on August 20, 2013;

the estimated net proceeds from this offering and the application of the estimated proceeds therefrom, as described under "Use of Proceeds";

the simultaneous registration for the resale by selling stockholders of certain shares of common stock issued in connection with acquisitions and in private placement transactions;

the issuance of 233,000 shares of common stock to Mr. Sillerman, which we intend to issue immediately prior to the closing of this offering; and

the exchange transaction with Mr. Sillerman on April 23, 2013, whereby we exchanged (i) 9,350,000 warrants issued to Mr. Sillerman for an equal amount of stock options and (ii) 1,000,000 shares of our common stock and 100,000 warrants with an exercise price of $0.01 per share for 1,100,000 shares of restricted stock.

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2012 and for the six months ended June 30, 2013 gives effect to the Transactions as if

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Unaudited pro forma condensed combined financial information


each of them had occurred on January 1, 2012. The unaudited pro forma condensed combined balance sheet as of June 30, 2013 gives effect to each of our planned acquisitions, our amendment of and additional borrowing under the First Lien Term Loan Facility on August 20, 2013, this offering and the use of proceeds therefrom, and the registration for the resale of shares by the selling stockholders, as if each of them had occurred on June 30, 2013.

These pro forma condensed combined financial statements include adjustments for our planned acquisitions because we believe each of these acquisitions are probable under the standards of Rule 3-05 of Regulation S-X. We note that these acquisitions have not been consummated and may never be consummated, including due to reasons outside of our control. See "Risk Factors—Risks Related to Our Acquisition Strategy" and "Business—Our History and Acquisitions—Planned acquisitions" for more information.

The historical financial statements of SFX Entertainment, Inc. and each of the businesses acquired or whose acquisition is planned appear elsewhere in this prospectus.

Our determination to consider LIC to be our Predecessor was based on several factors. First, the acquisitions of LIC and DDP were negotiated simultaneously, with DDP closing only six weeks in advance of the LIC acquisition. Second, LIC's historical operations as a producer of live EMC events and festivals are more representative of the core operations around which we are building our global EMC platform than DDP's historical operations as a promoter of live EMC events. Finally, the purchase price for our acquisition of LIC was $12.1 million, which was larger than the $9.0 million purchase price for our acquisition of DDP.

We have based the pro forma adjustments upon available information and certain assumptions that we believe are reasonable under the circumstances. We describe in greater detail the assumptions underlying the pro forma adjustments in the accompanying notes, which you should read in conjunction with these unaudited pro forma condensed combined financial statements. In many cases, we based these assumptions on preliminary information and estimates. The actual adjustments to our audited consolidated financial statements will depend upon a number of factors and additional information that will be available on or after the closing date of this offering. Accordingly, the actual adjustments that will appear in our financial statements will differ from these pro forma adjustments, and those differences may be material.

We will account for each of the acquisitions in the Transactions using the acquisition method of accounting for business combinations under GAAP. Under the acquisition method of accounting, the total consideration paid is allocated to an acquired company's tangible and intangible assets, liabilities, and any non-controlling interest based on their estimated fair values as of the acquisition date. As of the date of this prospectus, we have not completed the valuation studies necessary to finalize the acquisition date fair values of the assets acquired and liabilities assumed and the related allocation of purchase price for ID&T JV and Beatport. Accordingly, the values of the assets and liabilities set forth in these unaudited pro forma condensed combined financial statements for these businesses are preliminary. We have not completed the Transactions for our planned acquisitions and therefore the estimated purchase price and fair value of the assets acquired and liabilities assumed are preliminary. Once we complete our final valuation processes, for both our consummated and planned acquisitions, we may report changes to the value of the assets acquired and liabilities assumed, as well as the amount of goodwill, and those changes could differ materially from what we present here.

We provide these unaudited pro forma condensed combined financial statements for informational purposes only. These unaudited pro forma condensed combined financial statements do not purport to represent what our results of operations or financial condition would have been had the Transactions actually occurred on the assumed dates, nor do they purport to project our results of operations or financial condition for any future period or future date. You should read these unaudited pro forma condensed combined financial statements in conjunction with "Use of Proceeds," "Capitalization," "Selected Historical Financial Information and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the historical financial statements, including the related notes thereto, appearing elsewhere in this prospectus.

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SFX Entertainment, Inc. and Subsidiaries





UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of June 30, 2013

(in 000s)
  SFX
Entertainment,
Inc.
  ID&T   i-Motion   Totem   Made   Acquisition
Related Pro
Forma
Adjustments
  Pro Forma for
Acquisitions
  IPO   Consolidated
Pro Forma
Results
 

Assets

                                                       

Cash

  $ 31,378   $ 12,737   $ 2,154   $ 989   $ 4,109   $ (146,438 )(1) $ (95,071 ) $ 182,910 (1) $ 87,839  

Accounts receivable

    2,183     2,700     1,062     82     90         6,117         6,117  

Due from related parties

    8,129     2,735     83     138         (9,174 )(2)   1,911         1,911  

Due from promoters

    1,694                         1,694         1,694  

Prepaid expenses

    3,761         242     83     1,501         5,587         5,587  

Other current assets

    255     71,197     604     15           (61,570 )(3)   10,501         10,501  
                                       

Total current assets

    47,400     89,369     4,145     1,307     5,700     (217,182 )   (69,261 )   182,910     113,649  
                                       

Property, plant and equipment, net

    3,623     2,787     368     222     66         7,066         7,066  

Goodwill

    50,072                     66,120  (4)   116,192         116,192  

Intangible assets, net

    100,397     398     20     20     27     198,358  (5)   299,220         299,220  

Other assets

    51,043     2,924     144             (24,172 )(6)   29,939         29,939  
                                       

Total assets

  $ 252,535   $ 95,478   $ 4,677   $ 1,549   $ 5,793   $ 23,124   $ 383,156   $ 182,910   $ 566,066  
                                       

Liabilities and Equity

                                                       

Accounts payable and accrued expenses

  $ 11,082   $ 13,230   $ 1,997   $ 1,065   $ 437   $   $ 27,811       $ 27,811  

Notes payable

                        23,545  (7)   23,545         23,545  

Label and royalties payable

    13,043                         13,043         13,043  

Deferred revenue

    12,595     12,358     1,170     17     6,202         32,342         32,342  

Due to related parties

    1,121     31,004                 (31,514 )(2)   611         611  

Other current liabilities

    4,116     484     321                 4,921         4,921  
                                       

Total current liabilities

    41,957     57,076     3,488     1,082     6,639     (7,969 )   102,273         102,273  
                                       

Long-term debt

                33             33         33  

Deferred tax liabilities

    472         1                 473         473  

First lien term loan

    63,343                     10,290  (8)   73,633         73,633  

Mandatorily redeemable non-controlling interest

                        16,039  (9)   16,039         16,039  

Other liabilities

    9,088                     9,604  (4)   18,692         18,692  
                                       

Total liabilities

    114,860     57,076     3,489     1,115     6,639     27,964     211,143         211,143  
                                       

Commitments and contingencies

                                                       

Redeemable Common Stock

    84,030                     (70,335 )(9)   13,695         13,695  

Redeemable non-controlling interest

    4,834                         4,834         4,834  

Stockholder's equity/(deficit)

                                                       

Common stock

    44     38     65     1         (87 )(9)   61     17 (9)   78  

APIC

    86,454     8,810         489         117,416  (9)   213,169     182,893 (9)   396,062  

Due from stockholder for stock subscription

    (36 )                       (36 )       (36 )

Accumulated equity / (deficit)

    (59,814 )   28,841     1,123     (56 )   (846 )   (29,061 )(9)   (59,813 )       (59,813 )

Accumulated other comprehensive income

        610                 (610 )(9)            
                                       

Total SFX / Parent stockholders' equity

    26,648     38,299     1,188     434     (846 )   87,658     153,381     182,910     336,291  

Non-controlling interest in subsidiary

    22,163     103                 (22,163 )(9)   103         103  

Total stockholders' equity

    48,811     38,402     1,188     434     (846 )   65,495     153,484     182,910     336,394  
                                       

Total liabilities and stockholders' equity

  $ 252,535   $ 95,478   $ 4,677   $ 1,549   $ 5,793   $ 23,124   $ 383,156   $ 182,910   $ 566,066  
                                       

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended December 31, 2012

(in 000s except per share amounts)
  SFX
Entertainment,
Inc.

  LIC
(1/1/12-
7/31/12)

  DDP
(1/1/12-
6/19/12)

  MMG
(1/1/12-
12/31/12)

  BEATPORT
  ID&T
  i-Motion
  Totem
  Made
  Pro Forma
Adjustments

  Consolidated
Pro Forma
Results

 
   

Revenue:

                                                                   

Service revenue

  $ 24,513   $ 10,920   $ 12,858   $ 4,588   $   $ 66,964   $ 14,029   $ 42,303   $ 17,884   $ (2,238 )(2) $ 191,821  

Sales of products

    302     66     30         48,461     442     660         172     (3,330 )(2) $ 46,803  
                                               

Total revenue

    24,815     10,986     12,888     4,588     48,461     67,406     14,689     42,303     18,056     (5,568 )   238,624  
                                               

Direct costs:

                                                                   

Service

    (22,719 )   (7,905 )   (12,606 )           (47,925 )   (8,610 )   (30,020 )   (13,977 )   2,238  (2)   (141,524 )

Products

    (300 )   (314 )   (10 )       (33,393 )   (215 )   (217 )       (117 )   3,330  (2)   (31,236 )
                                               

Total direct costs

    (23,019 )   (8,219 )   (12,616 )       (33,393 )   (48,140 )   (8,827 )   (30,020 )   (14,094 )   5,568     (172,760 )
                                               

Gross profit

    1,796     2,767     272     4,588     15,068     19,266     5,862     12,283     3,962         65,864  

Selling, general and administrative expenses

    (17,026 )   (2,323 )   (1,046 )   (2,011 )   (14,641 )   (18,923 )   (3,482 )   (5,891 )   (1,040 )   (17,461 )(2)(14)   (83,844 )

Depreciation

    (75 )   (95 )           (1,277 )   (1,533 )   (107 )       (66 )       (3,153 )

Amortization

    (916 )               (483 )       (13 )   (76 )       (52,590 )(5)   (54,078 )
                                               

Operating income/(loss)

    (16,221 )   349     (774 )   2,577     (1,333 )   (1,190 )   2,260     6,316     2,856     (70,051 )   (75,211 )
                                               

Other income/(expense)

    98     13     26     21     (78 )   2,556     152                 2,788  

Interest income/(expense)

    (34 )       (373 )       37     203     24     (25 )   1     (26,043 )(8)   (26,210 )
                                               

Net income/(loss) before income taxes

    (16,157 )   362     (1,121 )   2,598     (1,374 )   1,569     2,436     6,291     2,857     (96,094 )   (98,633 )

(Provision)/benefit for income tax

    (67 )               (160 )   (98 )   (777 )   14     (145 )   32,507  (11)   31,274  
                                               

Net income/(loss)

    (16,224 )   362     (1,121 )   2,598     (1,534 )   1,471     1,659     6,305     2,712     (63,587 )   (67,359 )
                                               

Less: Net income attributable to noncontrolling interests

                        73                 520  (10)   593  
                                               

Net income/(loss) attributable to SFX Entertainment, Inc

  $ (16,224 ) $ 362   $ (1,121 ) $ 2,598   $ (1,534 ) $ 1,398   $ 1,659   $ 6,305   $ 2,712   $ (64,107 ) $ (67,952 )
                                               

Loss Per Share—Basic and Diluted

  $ (0.44 )                                                      (12) $ (0.99 )

Weighted Average Shares Outstanding

    37,186                                                        (13)   68,384  

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the six months ended June 30, 2013

(in 000s except per share amounts)
  SFX
Entertainment,
Inc.

  Beatport
01/01 - 03/15

  ID&T
  i-Motion
  Totem
  Made
  Pro Forma
Adjustments

  Consolidated
Pro Forma
Results

 
   

Revenue:

                                                 

Service revenue

  $ 22,884   $   $ 26,145   $ 5,131   $ 11,694   $ 2,305   $   $ 68,159  

Sales of products

    14,669     10,025         158             (704 )(2)   24,148  
                                   

Total revenue

    37,553     10,025     26,145     5,289     11,694     2,305     (704 )   92,307  
                                   

Direct costs:

                                                 

Service

    (16,980 )       (19,880 )   (2,890 )   (10,444 )   (1,890 )       (52,084 )

Products

    (9,769 )   (7,089 )       (60 )           704  (2)   (16,214 )
                                   

Total direct costs

    (26,749 )   (7,089 )   (19,880 )   (2,950 )   (10,444 )   (1,890 )   704     (68,298 )
                                   

Gross profit

    10,804     2,936     6,265     2,339     1,250     415         24,009  

Selling, general and administrative expenses

    (38,374 )   (4,597 )   (9,832 )   (1,866 )   (892 )   (712 )   (5,594 )(2)(14)   (61,867 )

Depreciation

    (498 )   (347 )   (727 )   (60 )   (47 )           (1,679 )

Amortization

    (6,786 )   (16 )       (7 )   (1 )       (19,970 )(5)   (26,780 )
                                   

Operating income/(loss)

    (34,854 )   (2,024 )   (4,294 )   406     310     (297 )   (25,564 )   (66,317 )
                                   

Other income/(expense)

    (1,041 )   (263 )   34,978     122             (34,709 )(2)   (913 )

Interest income/(expense)

    (8,183 )   6     (183 )   1     3     0     (11,404 )(8)   (19,760 )
                                   

Net income/(loss) before income taxes

    (44,078 )   (2,281 )   30,501     529     313     (297 )   (71,677 )   (86,990 )

(Provision)/benefit for income tax

    (574 )   (52 )   825     (155 )           15,689  (11)   15,733  
                                   

Net Income/(loss)

    (44,652 )   (2,333 )   31,326     374     313     (297 )   (55,988 )   (71,257 )
                                   

Less: Net income/(loss) attributable to noncontrolling interests

    (1,163 )       20                 1,203  (10)   60  
                                   

Net income/(loss) attributable to SFX Entertainment, Inc

  $ (43,489 ) $ (2,333 ) $ 31,306   $ 374   $ 313   $ (297 ) $ (57,191 ) $ (71,317 )
                                   

Loss Per Share—Basic and Diluted

  $ (0.75 )                                    (12) $ (0.87 )

Weighted Average Shares Outstanding

    57,713                                      (13)   81,681  

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
($ and € in 000s, except per share amounts)

In connection with our four planned acquisitions, we have preliminary agreements reflecting the following terms. However, these planned acquisitions have not yet been consummated and therefore the planned accounting treatment and estimates of fair value included in these unaudited pro forma financial statements are preliminary and may change upon the actual consummation of these transactions.

We acquired an option (the "ID&T Option") to buy a 75% ownership interest in the ID&T Business and have since signed an agreement to acquire 100% of the ID&T Business (the "ID&T Acquisition"), which includes the acquisition of the remaining interest in the ID&T JV, with an economic effect as of July 1, 2013. On March 20, 2013, we paid $2,500 in cash and issued 2,000,000 shares of our common stock to acquire the ID&T Option. We treated the $2,500 of consideration transferred on March 20, 2013 for the ID&T Option as an investment and recorded these amounts in other assets on our June 30, 2013 balance sheet. On August 8, 2013, we entered into a stock purchase agreement with One of Us Holding B.V., the seller of the ID&T Business (the "ID&T Seller"), pursuant to which we will exercise the ID&T Option. In connection with entering into this agreement, on August 8, 2013, we paid an advance of $10,000 to the ID&T Seller and we caused the $7,500 non-recourse loan that the ID&T JV made to ID&T to be transferred to the ID&T Seller, effectively cancelling the repayment obligation for that loan. Upon closing the ID&T Acquisition, we will pay additional cash consideration of $50,417, plus certain working capital adjustments that we preliminarily estimate to be $5,900. We will also issue to the ID&T Seller $10,417 of our common stock at the price to the public in this offering and a $10,417 promissory note that matures June 2014 and bears an interest rate of 3.0%. If we fail to repay this note at its maturity, the ID&T Seller could compel us to transfer to it the trademarks and related intellectual property for the Q-Dance brands. The final working capital adjustment will be based on final analysis subsequent to the close of the ID&T Acquisition.

We have entered into a share purchase agreement to acquire 100% of the i-Motion business for (i) $16,000 (or, if greater, the U.S. dollar equivalent of €12,598, based on the exchange rate on the day prior to closing) in cash, (ii) $5,000 (or, if greater, the U.S. dollar equivalent of €3,937, based on the exchange rate on the day prior to closing) in shares of common stock valued at the price to the public in this offering, and (iii) an earn out payment of $1,000 (or, if greater, the U.S. dollar equivalent of €0.79 million based on the exchange rate on the business day prior to the due date of the earn out payment) if the EBITDA of i-Motion for the fiscal years ending on December 31, 2013 and/or December 31, 2014 exceeds the lesser of $4,000, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and €3,150. Additionally, if the seller realizes a loss during the 30-day period after the 180-day lock-up period, we have agreed to guarantee the value of such shares of common stock up to $4,000 (or if, greater, the U.S. dollar equivalent of €3,150). For purposes of these unaudited pro forma condensed combined financial statements, we have used the June 30, 2013 exchange rate of $1.30101 to €1.00 to calculate the closing consideration for the i-Motion acquisition, which yields a payment of $16,391 in cash and a $5,122 in shares of common stock valued at the price to the public in this offering, $970 for the earn out payment of $1,000 (discounted over nine months at the borrowing rate under the First Lien Term Loan Facility of 8.75%), and a preliminary value of $1,636 for the price protection on our common stock and the exchange rate guarantee.

We have entered into an asset contribution agreement to acquire 100% of the Totem business for AUD$70,000 in cash (or $63,910 at June 30, 2013), an AUD$5,000 (or $4,565 at June 30, 2013) future purchase price obligation due by February 28, 2014 (for the purposes of these pro forma

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($ and € in 000s, except per share amounts)

    financial statements this payment/note has been discounted using our borrowing rate of 8.75%, to $4,313) and AUD$15,000 (or $13,695 at June 30, 2013) in shares of common stock valued at the price to the public in this offering. The seller has the right to put these shares back to us on the second anniversary of the closing of this acquisition, therefore these shares will be treated as temporary equity. Under the terms of the agreement we paid on May 22, 2013, an initial deposit of AUD$5,000 (or $4,843 at May 22, 2013). For the purposes of these unaudited pro forma condensed combined financial statements, we have assumed that the remaining cash payment to be used from the use of proceeds of this offering will be $59,067, which is composed of the AUD$70,000 (or $63,910) payment due at closing, less the initial deposit we made on May 22, 2013 of AUD$5,000 (or $4,843). The payment of AUD$5,000 (discounted to $4,313), due on February 28, 2014, has been recognized as a liability on the unaudited pro forma condensed combined balance sheet under Notes payable, as further discussed in Note 7.
    The Company also granted Totem a right to require us to repurchase all (but not less than all) of the shares of our common stock that the Company issued to Totem as consideration under the asset contribution agreement at the price per share to the public in this offering. This right will be exercisable during the 30 calendar day period beginning on the second anniversary of the closing date. The repurchase right will be exercisable beginning on the second anniversary of the closing date and continuously for 30 days thereafter, and the payment for such repurchased shares must be made by us within 45 days after the Company receive notice from Totem of its election to exercise its repurchase right.
    The asset contribution agreement contains working capital and assumed employee liability adjustments. It also contains adjustments to the cash payment due at closing based on the business' EBITDA for the fiscal year ended June 30, 2013, as follows:

      if EBITDA for such period exceeds AUD$11,200 (or $10,226), our cash payment at closing will increase by an amount equal to seven multiplied by the difference between EBITDA for the fiscal year ended June 30, 2013 less AUD$11,200 (or $10,226); or

      if EBITDA for such period is less than or equal to AUD$10,800 (or $9,860), our cash payment at closing will decrease by an amount equal to seven multiplied by the difference between AUD$10,800 (or $9,860) less EBITDA for the fiscal year ended June 30, 2013.

    Based on the financial results of Totem for the fiscal year ended June 30, 2013, the Company doesnot believe there will be a purchase price adjustment.

    Additionally, the agreement requires us to make an AUD$10,000 (or $9,130) earn out payment ifthe EBITDA of the business exceeds AUD$18,000 (or $16,434) for the year ended December 31,2014.

We have agreed to acquire a 70% ownership interest in Made for i) $20,000 in cash (we made an initial deposit of $2,500 in cash on June 24, 2013), ii) $5,000 in shares of common stock and iii) $10,000 non-interest bearing promissory notes to be paid at the earlier of March 31, 2014 or the completion of the 2013 audit. The common stock issued would be valued at the lower of $12.75 per share or the price to the public in this offering. We would be obligated to buy the remaining 30% of Made in 2018 at a price equal to the greater of $10,000 or 30% of 10 times the EBITDA for Made for 2017. However, if all or substantially all of the 2017 Electric Zoo Festival is cancelled for any reason other than a business decision not to operate the festival, the purchase price of the remaining 30% interest in Made will be calculated using Made's 2016 EBITDA. Made's 2015 EBITDA would

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($ and € in 000s, except per share amounts)

    be used if both the 2016 and 2017 Electric Zoo Festivals are cancelled. If the festivals are cancelled for the failure of the governmental agency to issue the appropriate permits, then Made's 2017 EBITDA will be used. If the price to be paid for the remaining 30% of Made is equal to $10,000, such payment will be made solely in cash and if the payment is greater than $10,000, the payment will consist of 80% in cash and 20% in shares of our common stock (at a volume weighted average price per share at the time of issuance). For the purposes of these pro forma condensed combined financial statements, we consider our obligation to purchase the remaining equity in this business as making that non-controlling interest mandatorily redeemable, and accordingly, we characterize it as a liability of ours. In addition, the minority interest holders are entitled to receive annually 40% of net income in 2013 and 30% thereafter until the final payment in 2018. For the purposes of these pro forma condensed combined financial statements, we consider these payments to be contingent consideration and part of the consideration transferred, which we preliminarily valued at $3,039. This was calculated by assuming a 1% growth rate in Made's net income and discounted using a rate of 15%, which we believe is reasonable given the uncertainty of the amount and timing of these payments. However, this is a preliminary valuation conducted by management and, upon the consummation of this planned acquisition, the fair value of this contingent consideration may change materially.

        Unless otherwise noted, dollar amounts presented in this section are translated from the Australian Dollar (AUD) and Euro (EUR) using the following rates.

 
  € (EUR)
  $ (AUD)
 
   

Profit & Loss

             

Year ended December 31, 2012

    1.286     1.036  

Six months ended June 30, 2013

    1.313     1.015  

Balance Sheet

             

June 30, 2013

    1.301     0.913  

FOOTNOTES:

(1)
The pro forma adjustment to cash reflects:

a.
the net proceeds of this offering; plus

b.
the additional borrowing under the amendment to the First Lien Term Loan Facility; less

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($ and € in 000s, except per share amounts)

    c.
    the cash we expect to pay in connection with our planned acquisitions and the cash on the balance sheet of the targeted businesses that we do not expect to receive as part of the acquisition.

Pro forma adjustments to cash:

       

Net proceeds from additional borrowing under the First Lien Term Loan Facility(a)

  $ 10,239  

Made acquisition cash consideration(b)

    (17,500 )

Totem acquisition cash consideration(c)

    (59,067 )

ID&T acquisition cash consideration(d)

    (60,417 )

i-Motion acquisition cash consideration

    (16,391 )

ID&T cash not acquired

    (3,302 )
       

Total net pro forma adjustments to cash

  $ (146,438 )
       

Net proceeds from this offering(e)

  $ 182,910  
       

(a)
The additional borrowing under of the First Lien Term Loan Facility on August 20, 2013 reflects $10,500 in borrowing, net of $210 in original issue discount and $51 in deferred charges (which is reflected as an adjustment to other assets).

(b)
Excludes $2,500 paid to the sellers of Made on June 24, 2013 as an initial deposit. Upon closing of the Made acquisition, this amount will be applied as part of the preliminary purchase price, and we will recognize a corresponding reduction in other assets. However, this amount has not been reduced by the $1,250 payment made subsequent to June 30, 2013.

(c)
Excludes $4,843 paid to the sellers of Totem on May 22, 2013 as an initial deposit. Upon closing of the Totem acquisition, this amount will be applied as part of the preliminary purchase price, and we will recognize a corresponding reduction in other assets

(d)
Excludes $2,500 paid to ID&T on March 20, 2013 for the ID&T Option, which was recorded at cost in our historical financial statements in other assets. Upon closing the acquisition of the ID&T Business, this amount will be applied as part of the preliminary purchase price, and we will recognize a corresponding reduction in other assets.

(e)
Reflects the proceeds of this offering, assuming an initial public offering price of $12.00 per share, which is the midpoint of the price range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses paid or payable by us after June 30, 2013.

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($ and € in 000s, except per share amounts)

(2)
Elimination of Intercompany Transactions—We made the following adjustments to the unaudited pro forma condensed combined balance sheet to eliminate payables and receivables between ID&T and us as of June 30, 2013.

Pro forma adjustments to Due to/from related parties:

       

Licensing fees payable to ID&T from ID&T JV

  $ 457  

Sponsorship fee payable to ID&T JV from ID&T(a)

    619  

Cancellation of $7,500 non-recourse loan made to ID&T

    7,500  

ID&T auditing fees payable to ID&T from SFX

    598  
       

Total pro forma adjustments to Due from related parties

  $ 9,174  
       

SFX equity instruments(b)

    22,340  
       

Total pro forma adjustment to Due to related parties

  $ 31,514  
       

(a)
ID&T has collected certain sponsorship fees on behalf of ID&T JV, which are to be remitted to ID&T JV.

(b)
Includes SFX equity instruments received by ID&T from us for the ID&T Option.

We made the following adjustments to the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012 and the six months ended June 30, 2013 to eliminate certain revenues and expenses that would have been eliminated if the Transactions had occurred on January 1, 2012.

 
  For the year ended
December 31, 2012

  For the six months
ended June 30, 2013

 
   

Product revenue(a)

  $ (3,330 ) $ (704 )

Product costs(a)

    3,330     704  

Service revenue(b)

    (2,238 )    

Service costs(b)

    2,238      

Selling, general, and administrative expense(c)

    586     221  

Other income / (expenses)(d)

        (34,709 )

(a)
We decreased product revenue and product costs by $3,330 for the year ended December 31, 2012 and $704 for the six months ended June 30, 2013 to align the accounting of sales tax presentation of Beatport to ours for the period prior to our acquisition of Beatport on March 15, 2013.

(b)
We made adjustments to the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2012 to eliminate transactions between LIC and DDP for the period prior to our acquisition of LIC in the amount of $2,238. From time to time, LIC and DDP have participated and will participate in the promotion and production of certain events. The revenues and costs associated with these events create intercompany amounts that will be eliminated as part of our consolidated financial statements for periods after July 31, 2012, the first date that both LIC and DDP were

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($ and € in 000s, except per share amounts)

    our consolidated subsidiaries. The adjustments in the unaudited pro forma condensed combined financial statements eliminate the intercompany amounts between the two entities on the same basis for periods prior to that date.

(c)
We eliminated from selling, general and administrative expenses approximately $586 and $221 in licensing fees for the the year ended December 31, 2012 and the six months ended June 30, 2013, respectively, associated with intellectual property that i-Motion licenses, but that we will acquire as part of the acquisition. Therefore, we have also included amortization expense for the intellectual property in these unaudited pro forma condensed combined financial statements.

(d)
We adjusted the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2013 to eliminate a $34,709 gain that ID&T recognized related to their sale of the 51% ownership in the ID&T JV to us.
(3)
Assets and Liabilities Not Acquired—We adjusted the unaudited pro forma condensed combined balance sheet to eliminate approximately $64,872 of cash and other current assets held by ID&T and approximately $29,840 in liabilities that we do not expect to assume as part of the planned acquisition of the ID&T Business. The following table details the assets and liabilities that we do not anticipate assuming as part of the acquisition of the ID&T Business and the related purchase price adjustments to goodwill, intangible assets, and non-controlling interest.

 
  ID&T
(as of
June 30, 2013)

  Assets &
liabilities not
acquired

  Assets &
liabilities
assumed

  Purchase price
adjustments

  ID&T assets
acquired and
liabilities
assumed

 
   

Cash

  $ 12,737   $ (3,302 ) $ 9,435   $   $ 9,435  

Current assets

    76,632     (61,570 )(a)   15,062         15,062  

Property, plant and equipment, net

    2,787         2,787         2,787  

Other long-term assets

    2,924         2,924         2,924  
                       

Net tangible assets

    95,080     (64,872 )   30,208         30,208  

Intangible assets, net

    398         398     76,347     76,745  

Goodwill

                25,449     25,449  
                       

Net Assets

  $ 95,478   $ (64,872 ) $ 30,606   $ 101,796   $ 132,402  
                       

Current liabilities

    (57,076 )   29,840  (b)   (27,236 )       (27,236 )

Non-controlling interest

    (103 )       (103 )       (103 )
                       

Liabilities & non-controlling interest assumed

  $ (57,179 ) $ 29,840   $ (27,339 ) $   $ (27,339 )
                       

(a)
Represents $42,372 in SFX equity related instruments and $19,198 in receivables from ID&T shareholders that we do not expect to acquire as part of the acquisition of the ID&T Business.

(b)
Represents approximately $22,340 of our equity instruments received by ID&T from us for the ID&T Option and the $7,500 advance from us in connection with the ID&T JV. We do not expect to acquire these liabilities as part of the acquisition. We caused the $7,500 advance to be transferred to the ID&T Seller on August 8, 2013, effectively cancelling the repayment obligation in respect of the advance.
(4)
Purchase Price Allocation/Goodwill—Under acquisition accounting, we recognize the assets and liabilities acquired at their fair value on the acquisition date, with any excess in purchase price over these values being allocated to goodwill.

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($ and € in 000s, except per share amounts)


For our four planned acquisitions, management has made an initial fair value estimate of the assets acquired and liabilities assumed as of June 30, 2013. These initial estimates will likely differ from the final valuation, once we have consummated the acquisition and received the valuation report of a third-party expert; and this difference could be material. We have made no adjustments to the fair value of the assets acquired (other than intangible assets) and liabilities assumed. We believe that due to the short-term nature of the majority of the assets acquired and liabilities assumed that their carrying values, as included in the historical financial statements of the entities, approximates their respective fair values. The acquired goodwill for these acquisitions is primarily related to synergies with our combined businesses and assembled workforce.



In connection with the planned acquisitions, we have made preliminary estimate of fair value of the 30% mandatorily redeemable non-controlling interests in Made. The June 30, 2013 fair value of the mandatorily redeemable non-controlling interest in Made was measured using an income approach. The equity shares of Made are not publicly traded and as such could not be determined based on active market prices. We estimated the fair value by preliminarily calculating the fair value based on our preliminary purchase price and subtracting the consideration we expect to pay for our controlling interest. In determining the fair value, we contemplated synergies that we expect to create through the planned acquisition, and we believe that the synergies created will benefit the business as a whole, including the mandatorily redeemable non-controlling interest holders', resulting in our ownership and theirs having proportionate economic interest to their respective ownership interests.



As part of our acquisition of a 51% interest in the ID&T JV on January 1, 2013, we paid $12,500 in cash, $10,000 in shares of our common stock (2.0 million shares of common stock valued at $5.00 per share as determined by sales of our common stock at $5.00 per share with unrelated third parties), and $1,820 in warrants to buy 500,000 shares of common stock at $2.50 per share, for a total purchase price of $24,320. In addition, for a period of five years beginning in the year ended December 31, 2013, the ID&T Seller will be entitled to receive 100,000 warrants to purchase shares of our common stock each year if the ID&T JV has achieved an EBITDA of $7,000 or more in the prior fiscal year. The warrants' exercise price will equal the fair market value as determined in good faith by the our board of directors, but after our initial public offering, will be based on our common stock's 30-day weighted average closing price. At the time of the acquisition, we did not forecast the ID&T JV to achieve $7,000 or more in EBITDA in 2013 and could not determine that such a threshold level of EBITDA was probable in 2014, and we were unable to estimate a fair value for these contingent EBITDA warrants thereafter. Accordingly, we assigned no value to these potential future issuance of warrants. We will continue to assess the fair value of this contingency at each reporting date and should the fair value of the warrants increase, we will include a charge in earnings at that time.



We also engaged a third-party valuation specialist to value the assets acquired and liabilities assumed of our acquisitions that occurred in 2012 and during the six months ended June 30, 2013. The valuations for the acquisitions that occurred in the first quarter of 2013 have not been completed, and therefore, the results could differ from the final valuations. These preliminary valuations and the results of operations from these businesses are included in our actual financial statements from the date of their respective acquisitions.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)


The following table shows the preliminary purchase price, estimated acquisition-date fair values of the to-be-acquired assets and liabilities assumed, non-controlling interest and calculation of goodwill for the planned acquisitions as of June 30, 2013, the date of our most recent balance sheet.

 
  ID&T
  i-Motion
  Totem
  Made
  Total
 
   

Cash consideration

  $ 62,916 (a) $ 16,391   $ 63,910   $ 20,000   $ 163,217  

Forgiveness of advance

    7,500                 7,500  

Contingent consideration(b)

        2,606     3,959     3,039     9,604  

Promissory note to seller

    9,850         4,311     9,384     23,545  

Common stock(c)

    24,797     5,122     13,695     5,000     48,614  
                       

Total Purchase Price

  $ 105,063   $ 24,119   $ 85,875   $ 37,423   $ 252,480  
                       

Net tangible assets acquired

    30,208     4,656     1,529     5,767     42,160  

Liabilities assumed

    (27,236 )   (3,489 )   (1,116 )   (6,640 )   (38,481 )

Goodwill(d)

    25,449     5,733     21,361     13,577     66,120  

Intangible assets(e)

    76,745     17,219     64,101     40,758     198,823  

Mandatorily redeemable non-controlling interest

                (16,039 )   (16,039 )

Non-controlling interest

    (103 )               (103 )
                       

Total purchase price allocation

  $ 105,063   $ 24,119   $ 85,875   $ 37,423   $ 252,480  
                       

(a)
Includes $2,500 cash paid to ID&T as consideration for the ID&T Option on March 20, 2013.

(b)
The contingent consideration for the i-Motion acquisition comprises three components, i) an earn-out payment, ii) a foreign exchange guarantee and iii) price protection related to the shares of our common stock. The earn-out is based on an earn out payment of $1,000 (or, if greater, the U.S. dollar equivalent of €787 based on the exchange rate on the business day prior to the due date of the earn out payment) if the EBITDA of i-Motion for the fiscal years ending on December 31, 2013 or December 31, 2014 exceeds the lesser of $4,000, converted into Euros based on the exchange rate on the last banking day of the respective fiscal year, and €3,150. For purposes of these unaudited pro forma condensed combined financial statements we have assumed that the EBITDA target will be met in the first year and therefore have discounted the $1,000 earn out payment for nine months at the borrowing rate under the First Lien Term Loan Facility of 8.75%, for a value of $970. The foreign exchange guarantee requires us, upon the settlements of the cash, common stock, and earn-out payments, to provide the seller with a Euro equivalent at an exchange rate of 1.27 dollars to the Euro. We preliminarily valued this foreign exchange guarantee at approximately 5% of the total value of the considerations to be paid, utilizing an option-based call model, with a preliminary value of $1,124. The price protection related to the shares of our common stock was preliminarily valued at approximately 10% of the total value of our common stock to be issued in consideration for the i-Motion acquisition using a Black Scholes model, for an estimated value of $512. All of these estimates are preliminary and have not been finalized as we have not completed the acquisition of i-Motion.

A 1% increase or decrease in the value of the foreign exchange guarantee would result in an increase or decrease in our preliminary purchase price of approximately $112. Similarly, a 1% increase or decrease in the value of the price protection related to our common stock would result in an increase or decrease in our preliminary purchase price of approximately $51.

The contingent consideration for the Made acquisition is based on the annual distribution payments to the sellers of 40% of net income in 2013 and 30% each year thereafter until the final payment in 2018. For purposes of these pro forma condensed combined financial statements, we consider these payments to be part of the consideration transferred, which we preliminarily valued at $3,039. This was calculated by assuming a 1% growth rate in Made's net income and discounted using a rate of 15%, which we believe is reasonable given the uncertainty of the amount and timing of these payments. However, this is a preliminary valuation by management and upon the consummation of this planned acquisition the fair value of this distribution payment may change materially.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

    The former owners of Totem are entitled to receive an earn-out payment of AUD$10,000 (or $9,130 as of June 30, 2012) based on the EBITDA of the business for the year ended December 31, 2014. If the EBITDA exceeds AUD$18,000 (or $16,439) for the one-year period ended December 31, 2014, we will be required to make the earn-out payment. Such earn-out payment, if any, for the purposes of these pro forma financial statements are assumed to be made on March 31, 2015. This earn-out payment is considered contingent consideration for the Totem acquisition and therefore, part of the consideration transferred. The payment of AUD$10,000 (or $9,130 as of June 30, 2012) has been preliminarily valued for these pro forma financial statements at $3,959 based on our discount rate of 8.75% and assuming a 50% probability that the required EBITDA for 2014 is achieved. All of these estimates are preliminary and have not been finalized as we have not completed the acquisition of Totem.

(c)
The fair value of the 2,000,000 shares of our common stock that we issued in connection with our acquisition of the ID&T Option was $7.19. This was determined by a third-party valuation specialist. In valuing our share price at $7.19, two approaches were utilized: an income approach and an initial public offering price analysis. Both of these approaches were weighted 60% under an initial public offering price analysis and 40% under an income approach and then a 15.0% discount for a lack of marketability was applied. For the shares to be issued to ID&T at closing and to be issued in the planned acquisitions of i-Motion, Totem and Made, there were no per share prices utilized. The preliminary estimate of equity consideration to be transferred is based on an aggregate value of equity, as stated in the contracts, at a per share price determined on the date those acquisitions are consummated. Therefore, the number of shares that will be issued in connection with those acquisitions is variable and the total equity value on the date of the acquisition is fixed.

(d)
For our four planned acquisitions, management has made an initial estimate that only $13,577 of the goodwill from the Made acquisitions will be deductible for tax purposes and the remaining goodwill of $52,543 from the other acquisitions will not. However, these estimates are preliminary, and we have not completed the required tax and legal analyses to finalize our determination of deductibility of goodwill for tax purposes. Accordingly, the values of the goodwill recognized from these planned acquisitions and their deductibility for tax purposes set forth in these unaudited pro forma condensed combined financial statements could change and those changes could differ materially from what we present here.

(e)
Includes $465 recorded on the balance sheets of the businesses we plan to acquire.

(f)
Includes $103 recorded on ID&T's balance sheet.
(5)
Intangible Assets—We based the estimated useful lives of the most significant acquired intangible assets on the amount and timing in which we expect to receive an economic benefit. We assigned these intangible assets useful lives ranging from 3 to 15 years based upon a number of factors, including contractual agreements, consumer awareness and economic factors pertaining to the combined companies.



We based our preliminary estimates of each intangible asset type/category that we expect to recognize as part of the planned acquisitions on the nature of the businesses and the contracts that we have in place with the sellers. We also based our estimates on experiences from our prior acquisitions and the types of intangible assets that we recognized as part of those acquisitions. In particular, our experience with our prior acquisitions indicates to us that fan databases, trade names/marks, and non-compete agreements compose the significant majority of intangible assets for these types of business. We based the preliminary estimated useful lives of these intangible assets on the useful lives that we have used for similar intangible assets in prior acquisitions. However, all of these estimates are preliminary, as we have not completed these acquisitions or analyzed all the facts surrounding the businesses to be acquired and therefore have not been able to finalize the accounting for these transactions.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)


The estimates of fair value and weighted-average useful lives could be impacted by a variety of factors including legal, regulatory, contractual, competitive, economic or other factors. Increased knowledge about these factors could result in a change to the estimate fair value of these intangible assets and/or the weighted-average useful lives from what we have assumed in these unaudited pro forma condensed combined financial statements. In addition, the combined effect of any such changes could result in a significant increase or decrease to related amortization expense estimates.



The figures set forth below reflect the preliminary fair value of intangible assets of the businesses we plan to acquire and their estimated useful lives.

 
  ID&T
  i-Motion
  Totem
  Made
  Total of
Planned
Acquisitions

  Estimated
Useful Lives

 
   

Fan Database

  $ 15,269   $ 3,460   $ 12,816   $ 8,146   $ 39,691     3  

Trademarks / names

    46,970     12,039     44,877     24,466     128,352     7  

Non Compete Agreements

    14,506     1,720     6,408     8,146     30,780     5  
                             

Total Intangible Assets(a)

  $ 76,745   $ 17,219   $ 64,101   $ 40,758   $ 198,823        
                             

(a)
Includes $465 recorded on the balance sheets of the businesses we plan to acquire.

The figures set forth below reflect the estimated acquisition-date fair value of intangible assets for our completed acquisitions. These intangible assets are already included in our historical consolidated balance sheet as of June 30, 2013.

 
  LIC
  Disco
  MMG
  ID&T JV
  Beatport
  Acquired
Business
Total

  Estimated
Useful Life

 
   

Supplier and label relationships

                  $ 17,900   $ 17,900     15  

Trade domain names

                    19,400     19,400     7  

Software & Technology

                    8,804     8,804     5  

Fan Database

  $ 1,120   $ 1,180                 2,300     3  

Trademarks / names

    3,290     3,180       $ 35,765         42,235     7  

Management Agreements

          $ 13,600             13,600     5  

Non Compete Agreements

    1,010     259     825         1,300     3,394     5  

Website

        14                 14     3  
                                 

Total Intangible Assets

  $ 5,420   $ 4,633   $ 14,425   $ 35,765   $ 47,404   $ 107,647        
                                 

We amortize intangible assets over their estimated useful life. The amortization of intangible assets for our planned acquisitions, shown below, assumes that the assets were acquired on January 1, 2012 and amortized over the period associated with each statement of operations.

 
  ID&T
  i-Motion
  Totem
  Made
  Total
Amortization
Expense

 
   

Six months ended June 30, 2013

  $ 7,350   $ 1,609   $ 5,982   $ 3,920   $ 18,861  

Year ended December 31, 2012

    14,701     3,217     11,965     7,839     37,722  

The following table sets forth the amortization expense of the completed acquisitions as if each of them had occurred on January 1, 2012 to arrive at the total pro forma amortization expense for the period associated with each statement of operations. The pro forma amortization for

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

    completed acquisitions is reduced by the amount of amortization expense already recognized in our historical statement of operations to arrive at the pro forma adjustment.

 
  LIC
  Disco
  MMG
  ID&T JV
  Beatport
  Acquired
Business
Total

 
   

Six months ended June 30, 2013

                                     

Pro Forma

  $ 524   $ 452   $ 1,443   $ 2,555   $ 2,922   $ 7,896  

As recorded in historical financial statements of SFX

    (524 )   (452 )   (1,443 )   (2,555 )   (1,813 )   (6,787 )
                           

Pro forma adjustment

                    1,109     1,109  
                           

For the year ended December 31, 2012

                                     

Pro forma

    1,046     899     2,885     5,109     5,845     15,784  

As recorded in historical financial statements of SFX

    (436 )   (480 )               (916 )
                           

Pro forma adjustment

  $ 610   $ 419   $ 2,885   $ 5,109   $ 5,845   $ 14,868  
                           

The following table provides the total adjustment to amortization expense for planned and completed acquisitions for the six months ended June 30, 2013 and the year ended December 31, 2012.

 
  Six months ended
June 30, 2013

  Year ended
December 31, 2012

 
   

Completed acquisitions

  $ 1,109   $ 14,868  

Planned acquisitions

    18,861     37,722  
           

Total amortization expenses

  $ 19,970   $ 52,590  
           
(6)
Other Assets—The adjustment to other assets reflects the following.

Cash consideration for ID&T Option(a)

  $ (2,500 )

Stock consideration for ID&T Option(a)

    (14,380 )

Initial cash deposit for Made acquisition

    (2,500 )

Initial cash deposit for Totem acquisition

    (4,843 )

Deferred charges in connection with First Lien Term Loan Facility

    51  
       

  $ (24,172 )
       

(a)
We will not be acquiring these assets of ID&T as part of the transaction because they represent prior consideration paid to ID&T.
(7)
Notes Payable—Reflects two notes payable to the sellers of Made (the "Made Notes"), totaling a principal amount of $10,000, to be incurred in connection with the acquisition of Made. These notes will become due on March 31, 2014 or any earlier date on which Made's 2013 audited financial statements are available. The Made Notes will not bear interest and therefore they have been discounted at our borrowing rate for the First Lien Term Loan Facility of 8.75% and for the purposes of these unaudited pro forma condensed combined financial statements been recorded as a pro forma adjustment to the balance sheet of $9,384.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)


The asset contribution agreement for the Totem acquisition provides that we pay an additional AUD$5,000 (or $4,565 as of June 30, 2013) to the sellers of Totem by February 28, 2014. For the purposes of these unaudited pro forma condensed combined financial statements this note has been discounted at our borrowing rate for the First Lien Term Facility of 8.75% and been recorded as a pro forma adjustment to the balance sheet of $4,311.


Additionally, the ID&T Acquisition agreement provides that we issue a promissory note in the principal amount of $10,417 to the ID&T Seller that matures in June 2014 and bears a stated interest rate of 3.0%. For the purposes of these unaudited pro forma condensed combined financial statements, this note has been discounted at our borrowing rate for the First Lien Term Loan Facility of 8.75%, less the stated interest rate of 3.0%, for a discount rate of 5.75%. Therefore, this note has been recorded as a pro forma adjustment to the balance sheet of $9,850. The total pro forma adjustment for the notes for the Made and ID&T acquisitions and the future purchase price obligation for the Totem acquisition is $23,545.

(8)
Long-Term Debt—On March 15, 2013, certain of our subsidiaries entered into the First Lien Term Loan Facility having a principal amount of $49,500 and bearing a variable interest rate. The rate utilized to calculate the adjustment to pro forma interest expense was 8.75%, which is the current rate in effect under the First Lien Term Loan Facility. In addition, Mr. Sillerman provided a personal guarantee of the First Lien Term Loan Facility. In connection with this personal guarantee, we issued to Mr. Sillerman warrants and common stock valued at $25,430, which is amortized over the life of the loan as interest expense along with related transaction costs that were capitalized as deferred financing fees.


On June 5, 2013, our subsidiary borrowed an additional $15,000 under the First Lien Term Loan Facility, for a total principal amount of $64,500, and on August 20, 2013, our subsidiary borrowed an additional $10,500 to bring the principal amount to $75,000. The adjustment to long-term debt of $10,290 reflects the most recent additional borrowing, net of $210 of original issue discount.


The warrants and common stock issued to Mr. Sillerman in connection with his personal guarantee of the First Lien Term Loan Facility included warrants to purchase 5,500,000 shares at $5.00 per share, warrants to purchase 750,000 shares at $7.50 per share, warrants to purchase 1,000,000 shares at $10.00 per share, and 1,000,000 shares of our common stock valued at $5.00 per share, which we based upon prior sales of our stock to unrelated investors during that time.


We used the following assumptions to calculate the fair value of the warrants issued to Mr. Sillerman in conjunction with his guarantee.

Risk-free interest rate

    1.35-1.40 %

Dividend yield

     

Volatility factors

    60 %

Weighted average expected life (in years)

    7  

As there is no publicly traded market for our common stock, we based the expected volatility of historical closing stock prices on comparable companies over the expected term of the warrants. The risk free interest for the periods within the contractual life of the warrants is based on the seven-year U.S. Treasury bond rate. The expected term of warrants is based on the maximum term of the warrants issued.

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)


We determined that these instruments issued to Mr. Sillerman in consideration for his guarantee of the term loan were the most objective indicator of the guarantee's fair value, and therefore, the fair value of the guarantee was recorded at $25,430 and accounted for as a deferred financing cost related to the First Lien Term Loan Facility. As Mr. Sillerman's guarantee to the lenders is independent of the warrants and common stock issued to him, beyond their use as an indicator of fair value, the subsequent exchange of these instruments did not impact the amortization of the guarantee over the term of the First Lien Term Loan Facility.


As part of the First Lien Term Loan Facility and the subsequent amendments, we incurred approximately $2,336 in related borrowing fees, in addition to the $1,500 in original issuance discount, and $25,430 for Mr. Sillerman's guarantee. As the term of the First Lien Term Loan Facility is approximately 18 months, these deferred financing costs are amortized over this period for pro forma purposes, as if both the original borrowing of $49,500 and the amendments for the additional borrowings of $15,000 and $10,500 had taken place on January 1, 2012.


In order to calculate the interest expense related to Mr. Sillerman's guarantee, the original issue discount and the capitalized deferred financing fees incurred in connection with the First Lien Term Loan Facility borrowing of $49,500 on March 15, 2013, the amended borrowing of $15,000 on June 5, 2013 and the additional borrowing of $10,500 on August 20, 2013, we utilized the effective interest method for calculating the actual interest expense during the respective periods, based on the value of these balances at the beginning of each month.


In connection with the First Lien Term Loan Facility, the Made and ID&T notes and the Totem future purchase price obligation, our unaudited pro forma condensed combined statement of operations includes an adjustment to interest expense, as follows.


For the year ended December 31, 2012:

Interest on First Lien Term Loan Facility, Made and ID&T notes and the Totem future purchase price obligation

  $ 8,748  

Original issue discount on First Lien Term Loan Facility, deferred financing fees, and amortization of Mr. Sillerman's guarantee

    17,295  
       

Total adjustment to interest expense

  $ 26,043  
       

For the six months ended June 30, 2013:

Interest on First Lien Term Loan Facility, Made and ID&T notes and the Totem future purchase price obligation

  $ 4,374  

Original issue discount on First Lien Term Loan Facility, deferred financing fees, and amortization of Mr. Sillerman's guarantee

    11,971  
       

Less: Amount already recognized in historical results of operations

    (4,941 )
       

Total adjustment to interest expense

  $ 11,404  
       

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
($ and € in 000s, except per share amounts)

(9)
Adjustments to Equity—The following table details the pro forma adjustments to equity accounts, temporary equity and mandatorily redeemable non-controlling interest.

 
  Common
Stock

  Additional
Paid-in-
Capital

  Non-
Controlling
Interest

  Accumulated
Other
Comprehensive
Income

  Accumulated
Equity/Deficit

  Due from
Stockholders

  Total
Equity

  Redeemable
Common Stock

  Redeemable
NCI

  Mandatory
Redeemable
NCI (Liab.)

 
   

ID&T(a)

  $ (38 ) $ 1,607   $   $ (610 ) $ (28,841 ) $   $ (27,882 ) $   $   $  

ID&T JV

        22,163     (22,163 )                              

i-Motion

    (65 )   5,122             (1,122 )       3,935              

Made

        5,000             846         5,846             16,039  

Totem

    (1 )   (489 )           56         (434 )   13,695          

Termination of repurchase rights(b)

    17     84,013                     84,030     (84,030 )        
                                           

Total

  $ (87 ) $ 117,416   $ (22,163 ) $ (610 ) $ (29,061 ) $   $ 65,495   $ (70,335 ) $