As filed with the Securities and Exchange Commission on April 23, 2018.

Registration No. 333-223786

 

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



 

AMENDMENT NO. 2
TO
FORM F-4
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933



 

BENDON GROUP HOLDINGS LIMITED

(Exact Name of Each Registrant as Specified in its Charter)



 

   
Australia   2320   N/A
(State or other jurisdiction of
Incorporation or organization)
  (Primary standard industrial
classification code number)
  (I.R.S. Employer
Identification Number)


 

c/o Bendon Limited
Building 7C, Huntley Street
Alexandria
NSW 2015, Australia
+61 2 9384 2400

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

Justin Davis-Rice, Executive Director
Bendon Group Holdings Limited
c/o Bendon Limited
Building 7C, Huntley Street
Alexandria
NSW 2015, Australia
+61 2 9384 2400

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



 

Copies to:

   
David Alan Miller, Esq.
Jeffrey M. Gallant, Esq.
Graubard Miller
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 818-8800
  Reece Walker, Esq.
McCullough Robertson
Level 32
MLC Centre, 19 Martin Place
Sydney NSW 2000
GPO Box 462, Sydney NSW 2001
Tel +61 2 8241 5600
  Nanette C. Heide, Esq.
Peter D. Visalli, Esq.
Duane Morris LLP
1540 Broadway
New York, New York 10036
Telephone: (212) 692-1000


 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the transactions contemplated by the Merger Agreement described in the included proxy statement/prospectus have been satisfied or waived.

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(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

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company x

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

 

 


 
 

TABLE OF CONTENTS

CALCULATION OF REGISTRATION FEE

       
Title of each Class of Security being registered   Amount being
Registered (1)
  Proposed
Maximum
Offering Price
Per Security (2)
  Proposed
Maximum
Aggregate
Offering Price (2)
  Amount of
Registration Fee (5)
Ordinary shares (3)     2,068,438     $ 7.15     $ 14,789,331.70     $ 1,841.27  
Ordinary shares (4)     1,017,392     $ 21.45     $ 21,823,049.82     $ 2,716.97  
Total                     $ 4,558.24  

(1) All ordinary shares being registered are issued by Bendon Group Holdings Limited, a public limited company incorporated under the laws of Australia (“Holdco”), in connection with the proposed business combination between Bendon Limited (“Bendon”) and Naked Brand Group Inc. (“Naked”), a publicly-traded Nevada corporation, as described in the proxy statement/prospectus forming a part of this registration statement. As a result of the transactions described in the proxy statement/prospectus forming a part of this registration statement, Holdco will become a publicly-traded company and Bendon and Naked will become wholly owned subsidiaries of Holdco.
(2) Determined in accordance with Rule 457.
(3) Represents Holdco Ordinary Shares to be issued to Naked stockholders in connection with the Merger Agreement as described in the proxy statement/prospectus forming a part of this registration statement.
(4) Represents Holdco Ordinary Shares issuable upon exercise of outstanding Naked options and warrants, each to purchase one share of Naked common stock. Pursuant to the terms of the options and warrants, each such option and warrant will automatically entitle the holder to purchase one ordinary share of Holdings in lieu of one share of Naked common stock upon consummation of the transactions described in the proxy statement/prospectus.
(5) Previously paid.

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


 
 

TABLE OF CONTENTS

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

PRELIMINARY — SUBJECT TO COMPLETION, DATED APRIL 23, 2018

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
OF
NAKED BRAND GROUP INC.

PROSPECTUS FOR UP TO 2,068,438 ORDINARY SHARES
AND
1,017,392 ORDINARY SHARES UNDERLYING OPTIONS AND WARRANTS
OF
BENDON GROUP HOLDINGS LIMITED

The board of directors of each of Naked Brand Group Inc., a Nevada corporation (“Naked”), Bendon Limited, a New Zealand limited company (“Bendon”), Bendon Group Holdings Limited, an Australia limited company (“Holdco”), and Naked Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Holdco (“Merger Sub”), has unanimously approved the transactions contemplated by the Agreement and Plan of Reorganization, dated as of May 25, 2017 and amended on July 26, 2017, February 21, 2018, March 19, 2018 and April 23, 2018 (as the same may be further amended, the “Merger Agreement”), by and among Naked, Bendon, Holdco, Merger Sub and Bendon Investments Ltd., a New Zealand company and at the time the owner of a majority of the outstanding shares of Bendon (the “Principal Shareholder”).

Pursuant to the Merger Agreement, Bendon and Naked will enter into a business combination transaction by means of (i) a reorganization by Holdco and Bendon (the “Reorganization”) pursuant to which all of the shareholders of Bendon will exchange all of the outstanding ordinary shares of Bendon (the “Bendon Ordinary Shares”) for ordinary shares of Holdco (“Holdco Ordinary Shares”), and (ii) immediately thereafter, a merger of Merger Sub and Naked, with Naked surviving as a wholly owned subsidiary of Holdco and the Naked stockholders receiving Holdco Ordinary Shares in exchange for all of the outstanding shares of common stock of Naked (the “Merger” and together with the Reorganization, the “Transactions”).

As a result of the Transactions, Bendon and Naked will become wholly owned subsidiaries of Holdco and the shareholders of Bendon and the stockholders of Naked will become shareholders of Holdco. Pursuant to the Merger Agreement, each outstanding share of common stock of Naked shall be converted into the right to receive 0.2 Holdco Ordinary Shares (the “Per Share Consideration”), with the shares issued to the Naked stockholders representing in the aggregate approximately nine percent of the Holdco Ordinary Shares outstanding immediately after completion of the Transactions. The outstanding options and warrants of Naked will, by their terms, automatically entitle the holders to purchase Holdco Ordinary Shares upon consummation of the Transactions, with the number of underlying shares and exercise price proportionately adjusted to reflect the Per Share Consideration. Accordingly, this prospectus covers an aggregate of 2,068,438 Holdco Ordinary Shares and 1,017,392 Holdco Ordinary Shares underlying such options and warrants of Holdco issuable to the stockholders of Naked following consummation of the Transactions.

We estimate that, immediately following completion of the Transactions, the Holdco Ordinary Shares issued to the shareholders of Bendon as a result of the Reorganization will constitute approximately 91.65% of the issued and outstanding Holdco Ordinary Shares and the Holding Ordinary Shares issued to the Naked stockholders as a result of the Merger will constitute approximately 8.35% of the issued and outstanding Holdco Ordinary Shares.

Proposals to approve the Merger Agreement and the other matters discussed in this proxy statement/prospectus will be presented at the special meeting of stockholders of Naked scheduled to be held on [•], 2018.

Naked’s common stock is currently listed on the Capital Market of The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “NAKD.” Following the Transactions, all Naked common stock will be de-listed from Nasdaq and de-registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On [•], 2018, the latest practicable date before the printing of this proxy statement/prospectus, the closing sale price of Naked common stock was $[•] per share.

Although Holdco is not currently a public company, it will become subject to the reporting requirements of the Exchange Act following the effectiveness of the registration statement of which this proxy statement/prospectus is a part, and the closing of the Merger. Holdco has applied for listing, to be effective at the time of the consummation of the Transactions, of the Holdco Ordinary Shares on Nasdaq under the symbol “NAKD.” It is a condition of the consummation of the transactions that Holdco receive confirmation from Nasdaq or the New York Stock Exchange (“NYSE”) that the Holdco Ordinary Shares have been approved for listing. This condition cannot be waived. Accordingly, if Nasdaq does not approve Holdco’s application for listing of the Holdco Ordinary Shares, the Transactions will not be completed. There can be no assurance that Nasdaq will approve Holdco’s application, and even if it does, there can be no assurance that a viable and active trading market will develop.

Holdco will be an “emerging growth company” as defined in the Jumpstart Our Business Startups of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

Holdco will also be a “foreign private issuer” as defined in the Exchange Act and will be exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, Holdco’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions under Section 16 of the Exchange Act. Moreover, Holdco will not be required to file periodic reports and financial statements with the U.S. Securities and Exchange Commission as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

This proxy statement/prospectus provides you with detailed information about the Merger Agreement and other matters to be considered at the special meeting of Naked’s stockholders. We encourage you to carefully read this entire document. You should also carefully consider the risk factors described in “ Risk Factors ” beginning on page 26 of this proxy statement/prospectus.

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

This proxy statement/prospectus is dated [•], 2018, and is first being mailed to holders on or about [•], 2018.


 
 

TABLE OF CONTENTS

NAKED BRAND GROUP INC.
180 Madison Avenue, Suite 1505
New York, New York 10016

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [•], 2018

Dear Naked Brand Group Inc. Stockholders:

You are cordially invited to attend the special meeting of stockholders of Naked Brand Group Inc. (“Naked”) at [•] a.m. local time on [•], 2018, at the offices of Duane Morris LLP, Naked’s counsel, located at 1540 Broadway, 14 th floor, New York, New York 10034.

The special meeting will be held for the following purposes:

(1) to consider and vote upon a proposal to (a) adopt the Agreement and Plan of Reorganization, dated as of May 25, 2017, as amended on July 26, 2017, February 21, 2018, March 19, 2018 and April 23, 2018 (as the same may be further amended, “Merger Agreement”), by and among Naked, Bendon Limited, a New Zealand limited company (“Bendon”), Bendon Group Holdings Limited, an Australia limited company (“Holdco”), Naked Merger Sub Inc., a Nevada corporation and a wholly owned subsidiary of Holdco (“Merger Sub”), and Bendon Investments Ltd., a New Zealand company and at the time the owner of a majority of the outstanding shares of Bendon (the “Principal Shareholder”), which, among other things, provides for (i) the consummation by Holdco and Bendon of a reorganization (the “Reorganization”), pursuant to which all of the shareholders of Bendon will exchange all the outstanding ordinary shares of Bendon (the “Bendon Ordinary Shares”) for ordinary shares of Holdco (“Holdco Ordinary Shares”), and (ii) immediately thereafter, a merger of Merger Sub and Naked, with Naked surviving as a wholly owned subsidiary of Holdco and the Naked stockholders receiving Holdco Ordinary Shares (the “Merger” and together with the Reorganization, the “Transactions”), and (b) approve the transactions contemplated by the Merger Agreement as described in this proxy statement/prospectus — we refer to this proposal as the “merger proposal”; and
(2) to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies, if, based on the tabulated vote, Naked is unable to consummate the transactions contemplated by the Merger Agreement — we refer to this proposal as the “adjournment proposal”.

No other matters may be considered at the special meeting.

These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of Naked common stock at the close of business on April 17, 2018 are entitled to notice of the meeting and to vote and have their votes counted at the meeting and any adjournments or postponements of the meeting.

After careful consideration, Naked’s board of directors has determined that each of the proposals outlined above is fair to and in the best interests of Naked and its stockholders and recommends that you vote or give instruction to vote “FOR” each proposal. Consummation of the transactions contemplated by the Merger Agreement is conditional on approval of the merger proposal.

All Naked stockholders are cordially invited to attend the special meeting in person. To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card, or submit a proxy electronically by telephone or internet, as soon as possible. If you are a holder of record of Naked common stock, you may also cast your vote in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker or bank.

A complete list of Naked stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at the principal executive offices of Naked for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.


 
 

TABLE OF CONTENTS

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card, or submit a proxy electronically by telephone or internet using the instructions provided on your proxy card, as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

By Order of the Board of Directors

/s/ Carole Hochman

Carole Hochman
Chief Executive Officer

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

This proxy statement/prospectus is dated [•], 2018 and is first being mailed to Naked Brand Group Inc. stockholders on or about [•], 2018.


 
 

TABLE OF CONTENTS

TABLE OF CONTENTS

 
SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS     1  
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS     4  
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS     8  
SELECTED HISTORICAL FINANCIAL INFORMATION     16  
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION     18  
COMPARATIVE PER SHARE DATA     24  
RISK FACTORS     26  
FORWARD-LOOKING STATEMENTS     59  
SPECIAL MEETING OF NAKED STOCKHOLDERS     60  
THE MERGER PROPOSAL     63  
THE MERGER AGREEMENT     84  
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS     94  
THE ADJOURNMENT PROPOSAL     109  
MANAGEMENT OF HOLDCO FOLLOWING THE TRANSACTIONS     110  
INFORMATION RELATED TO NAKED     119  
NAKED’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     131  
BUSINESS OF BENDON     148  
BENDON’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS     154  
BENEFICIAL OWNERSHIP OF SECURITIES     173  
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS     177  
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE     180  
DESCRIPTION OF HOLDCO SECURITIES     181  
COMPARISON OF RIGHTS OF COMMON STOCKHOLDERS OF NAKED AND ORDINARY SHAREHOLDERS OF HOLDCO     185  
PRICE RANGE OF NAKED SECURITIES AND DIVIDENDS     191  
DISSENTER’S RIGHTS     192  
SHAREHOLDER PROPOSALS     192  
OTHER STOCKHOLDER COMMUNICATIONS     192  
EXPERTS     192  
DELIVERY OF DOCUMENTS TO STOCKHOLDERS     192  
WHERE YOU CAN FIND MORE INFORMATION     193  

i


 
 

TABLE OF CONTENTS

SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS

Naked Brand Group Inc., a Nevada corporation (“Naked”), Bendon Limited, a New Zealand limited company (“Bendon”), Bendon Group Holdings Limited, an Australia limited company (“Holdco”), Naked Merger Sub Inc., a Nevada corporation (“Merger Sub”), and Bendon Investments Ltd., a New Zealand company (the “Principal Shareholder”), are parties to an Agreement and Plan of Reorganization, dated as of May 25, 2017 and amended as of July 26, 2017, February 21, 2018, March 19, 2018 and April 23, 2018 (as the same may be further amended or supplemented from time to time, the “Merger Agreement”).
Naked is an apparel and lifestyle brand company that is currently focused on innerwear products for women and men. Under its flagship brand name and registered trademark, “Naked®”, it designs, manufactures and sells men’s and women’s underwear, intimate apparel, loungewear and sleepwear through retail partners and direct to consumers through its online retail store www.wearnaked.com. See the section entitled “ Business of Naked .”
Bendon is an intimate apparel and swimwear company that has sought to deliver innovative, premium quality products throughout its 70-year history. Bendon has a portfolio of eight owned brands: Bendon, Bendon Man, Davenport, Evollove, Fayreform, Hickory, Lovable (in Australia and New Zealand) and Pleasure State, as well as three licensed brands: Heidi Klum Intimates and Swimwear, Stella McCartney Lingerie and Swimwear and Frederick’s of Hollywood Intimates and Swimwear. Bendon’s license to use the Stella McCartney brand terminates effective June 30, 2018. See the section entitled “ Business of Bendon .”
Holdco was formed to serve as a holding company for Bendon and Naked after consummation of the transactions contemplated by the Merger Agreement, and currently is wholly owned by Justin Davis-Rice, the Executive Chairman of Bendon. Merger Sub was formed solely as a vehicle for consummating the merger of Merger Sub and Naked (the “Merger”), and currently is a wholly owned subsidiary of Holdco. The Principal Shareholder is an investment vehicle, which at the time of the execution of the Merger Agreement owned a majority of the outstanding shares of Bendon. See the section entitled “ Summary of the Proxy Statement/Prospectus — The Parties.
The Merger Agreement provides for Bendon and Naked to enter a business combination transaction by means of which (i) Bendon and Holdco will undertake a reorganization (the “Reorganization” and together with the Merger, the “Transactions”) pursuant to which all of the shareholders of Bendon will exchange all the outstanding ordinary shares of Bendon (the “Bendon Ordinary Shares”) for ordinary shares of Holdco (“Holdco Ordinary Shares”), and (ii) immediately thereafter, Merger Sub will merge with and into Naked, with Naked surviving as a wholly owned subsidiary of Holdco and the Naked stockholders receiving Holdco Ordinary Shares. See the section entitled “ The Merger Proposal — Structure of the Transactions.
In the Reorganization, the shareholders of Bendon will exchange all the outstanding Bendon Ordinary Shares for 22,680,527 Holdco Ordinary Shares, subject to adjustment based on Naked’s Net Assets and Bendon’s Net Debt as of the closing date of the Transactions. Using Naked’s Net Assets and Bendon’s Net Debt as of February 28, 2018, and assuming Bendon has refinanced certain of its indebtedness as described in the section entitled “ The Merger Proposal — Refinancing ” and has completed the capital raising transactions described in the section entitled “ Bendon Management's Discussion and Analysis of Financial Condition and Results of Operations — Going Concern, ” we estimate that the shareholders of Bendon will receive approximately 22,680,527 Holdco Ordinary Shares in the Reorganization. See the section entitled “ The Merger Proposal — Structure of the Transactions ” for more information, including descriptions of the definition of “Net Assets” and “Net Debt.”
In the Merger, each outstanding share of common stock of Naked shall be cancelled and shall be automatically converted into the right to receive 0.2 Holdco Ordinary Shares (the “Per Share Consideration”), with the shares issued to the Naked stockholders representing in the aggregate approximately nine percent of the Holdco Ordinary Shares outstanding immediately after completion of the Transactions. Naked’s outstanding options and warrants to purchase shares of its common

1


 
 

TABLE OF CONTENTS

stock will be converted into options and warrants of Holdco to purchase Holdco Ordinary Shares, with the number of underlying shares and exercise price proportionately adjusted to reflect the Per Share Consideration. See the section entitled “ The Merger Proposal — Structure of the Transactions.
Bendon has had advanced discussion with the sole shareholder of FOH Online Corp. (“FOH Online”) pursuant to which the parties have specified terms by which Bendon could acquire FOH Online from such shareholder. If the transaction was to be completed, the consideration for the proposed transaction would involve Holdco issuing to the shareholder of FOH Online (or its designee) an aggregate of 1,304,917 (US$8,220,979 using share price US$6.30) Holdco Ordinary Shares, plus the assumption by Holdco of approximately US$9,500,000 of FOH Online debt. The proposed transaction would be conditioned on consummation of the Transactions and would be subject to Bendon and FOH Online obtaining various third party consents. As a result, the proposed transaction is possible but not yet probable of occurring, and the acquisition of FOH Online is not presented in the pro forma and other related sections of the proxy statement/prospectus.
Assuming the completion of the possible, but not yet probable, acquisition of FOH Online, immediately following the consummation of the Transactions, we estimate that the Naked stockholders will hold approximately 7.9% of the issued and outstanding Holdco Ordinary Shares and the shareholders of Bendon and FOH Online, would hold approximately 92.1% of the issued and outstanding Holdco Ordinary Shares.
The Merger Agreement provides that either Naked or Bendon may terminate the Merger Agreement if the Merger is not consummated by June 1, 2018 (as such date may be extended in accordance with the Merger Agreement as described in “The Merger Agreement — Termination”) , provided that this right to terminate will not be available to any party who has materially breached their obligations under the Merger Agreement, resulting in the failure of the Merger to occur on or before such date, if such breach is not cured within the time period specified within the Merger Agreement. Additionally, the Merger Agreement may be terminated, among other reasons, by either Naked or Bendon upon material breach of the other party if not cured within the time period specified within the Merger Agreement and subject to certain other conditions. See the section entitled “ The Merger Agreement — Termination .”
If (i) Naked terminates the Merger Agreement in order to enter into a definitive agreement for a Superior Proposal as described in the section “The Merger Agreement — Termination” below, in accordance with the Merger Agreement, or (ii) Bendon terminates this Agreement because the Merger has not been consummated by June 1, 2018 (as such date may be extended in accordance with the Merger Agreement as described in “The Merger Agreement — Termination”) and the failure of the Merger to occur on or before such date has resulted from a material breach by Naked of its obligations under the Merger Agreement, then Naked is required to issue to Bendon 2,500,000 shares of Naked common stock. In the event that Naked has complied with its obligations and Naked does not obtain the approval of its stockholders for the Merger, then Naked must issue Bendon 1,250,000 shares of Naked common stock.
In addition to voting on a proposal to adopt the Merger Agreement and approve the transactions contemplated thereby as described in this proxy statement/prospectus (the “merger proposal”), the stockholders of Naked will also vote on a proposal to approve, if necessary, an adjournment of the special meeting to permit further solicitation and vote of proxies if, based on the tabulated vote, Naked is unable to consummate the Transactions (the “adjournment proposal”). See the section entitled “The Adjournment Proposal .”
No vote of the security holders of Bendon is required for the approval of the Reorganization. The affirmative vote of a majority of the outstanding shares of Naked common stock is required to approve the Merger. The directors and executive officers of Naked and their affiliates beneficially own issued and outstanding shares representing 8.6% of the Naked common stock. Those individuals

2


 
 

TABLE OF CONTENTS

and certain former directors of Naked (who own in the aggregate issued and outstanding shares representing 11.4% of the Naked common stock) have entered into a support agreement pursuant to which they have agreed to vote in favor of the merger proposal.
Upon completion of the Transactions, the directors of Holdco will be Justin Davis-Rice, Bendon’s Executive Chairman and a director of Naked, Carole Hochman, currently Naked’s Chief Executive Officer, Paul Hayes and Andrew Shape. Of the directors, Paul Hayes and Andrew Shape will be considered independent directors. See the section entitled “ Management of Holdco Following the Transactions .”
Upon completion of the Transactions, the executive officers of Holdco will be Carole Hochman, Justin Davis-Rice and Howard Herman, acting as Holdco’s Executive Chairman, Chief Executive Officer and Chief Financial Officer, respectively. See the section entitled “ Management of Holdco Following the Transactions .”
We expect that (i) U.S. holders will recognize no gain or loss for U.S. federal income tax purposes in connection with the Holdco securities received, (ii) a U.S. holder’s holding period in the Holdco securities will include the holding period of the Naked securities exchanged therefor and (iii) a U.S. holder’s tax basis in the Holdco securities will be the same as the holder’s tax basis in the Naked securities, as applicable, at the time of the distribution of Holdco securities to the holder. See the section entitled “ The Merger Proposal — Material Federal Income Tax Consequences of the Transactions to Naked and Its Stockholders.

3


 
 

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

     
Q.   Why am I receiving this proxy statement/prospectus?   A.   Naked and Bendon have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus. Copies of the Merger Agreement and the amendments thereto are attached to this proxy statement/prospectus as Annexes A-1, A-2, A-3, A-4 and A-5 , and Naked encourages its stockholders to read it in its entirety. Naked’s stockholders are being asked to consider and vote upon a proposal to adopt the Merger Agreement, which, among other things, provides for (i) the Reorganization of Bendon and Holdco pursuant to which all of the shareholders of Bendon will exchange all the outstanding Bendon Ordinary Shares for Holdco Ordinary Shares, and (ii) immediately thereafter, the Merger of Merger Sub and Naked, with Naked being the surviving entity, and to approve the transactions contemplated by the Merger Agreement.
               In addition to voting on the principal terms of the Merger Agreement including the Transactions, the stockholders of Naked will also vote on a proposal to approve, if necessary, an adjournment of the special meeting to permit further solicitation and vote of proxies if, based on the tabulated vote, Naked is unable to consummate the business combination contemplated by the Merger Agreement (see the section entitled “The Adjournment Proposal ”).
               This proxy statement/prospectus contains important information about the proposed transactions and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.
               The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
Q.   Why is Naked proposing the business combination?   A.   Bendon is an intimate apparel and swimwear company that has sought to deliver innovative, premium quality products throughout its 70-year history. Bendon has a portfolio of eight brands which it owns: Bendon, Bendon Man, Davenport, Evollove, Fayreform, Hickory, Lovable (in Australia and New Zealand) and Pleasure State. Bendon has a portfolio of three licensed brands: Heidi Klum Intimates, Swimwear and Stella McCartney Lingerie and Swimwear and Frederick’s of Hollywood Intimates and Swimwear. Bendon’s license to use the Stella McCartney brand terminates effective June 30, 2018.
               Based on its due diligence investigations of Bendon, including the financial and other information provided by Bendon in the course of their negotiations, Naked believes that a business combination with Bendon will provide several significant benefits to both Naked and Bendon. However, there is no assurance of this. See the section entitled “ The Merger Proposal — Naked’s Board of Directors’ Reasons for Approval of the Transactions .”

4


 
 

TABLE OF CONTENTS

     
Q.   Do I have dissenter’s rights if I object to the proposed transactions?   A.   No. Naked stockholders do not have dissenter’s rights under Nevada law in connection with the Transactions.
Q.   When do you expect the Transactions to be completed?   A.   It is currently anticipated that the Transactions will be consummated promptly following the completion of the Naked special meeting, which is scheduled for [•], 2018, and any postponements or adjournments thereof. For a description of the conditions for the completion of the Transactions, see the section entitled “ The Merger Agreement — Conditions to the Closing of the Transactions .”
Q.   What do I need to do now?   A.   Naked urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the annexes, and to consider how the transactions will affect you as a stockholder of Naked. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy cards.
Q.   How do I vote?   A.   If you are a holder of record of Naked common stock on the record date, you may vote in person at the special meeting or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope, or by following the instructions on your proxy card to submit a proxy electronically by telephone or internet. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person, obtain a proxy from your broker, bank or nominee.
Q.   If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?   A.   No. Under applicable self-regulatory organization rules, your broker may not exercise discretionary authority to vote your shares of Naked common stock on “non-routine” proposals, such as the merger proposal. Accordingly, your broker, bank or nominee cannot vote your shares unless you provide it with instructions on how to vote. If you do not provide instructions on how to vote on a “non-routine” matter, the bank, broker or other nominee will inform us that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

5


 
 

TABLE OF CONTENTS

     
Q.   May I change my vote after I have mailed my signed proxy card or given instructions to my broker, bank or other nominee?   A.   Yes. Stockholders of record may send a later-dated, signed proxy card to Naked’s secretary at the address set forth below, or submit a later proxy electronically by telephone or internet, so that it is received prior to the vote at the special meeting or attend the special meeting in person and vote. Stockholders of record also may revoke their proxy by sending a notice of revocation to Naked’s secretary, which must be received by Naked’s secretary prior to the vote at the special meeting. Stockholders who hold their shares in “street name” must follow the instructions provided by their broker, bank or other nominee in order to change or revoke their voting instructions.
Q.   What happens if I fail to take any action with respect to the meeting?   A.   If you are a stockholder and you fail to take any action with respect to the stockholder meeting and the Transactions are approved by stockholders and consummated, you will become a shareholder of Holdco. If you fail to take any action with respect to the stockholder meeting and the Transactions are not approved, you will continue to be a stockholder of Naked.
Q.   What should I do with my share certificates?   A.   Naked stockholders should not submit their certificates now. After the consummation of the Transactions, Holdco will send instructions to Naked stockholders regarding the exchange of their Naked stock for Holdco Ordinary Shares.
Q.   What should I do if I receive more than one set of voting materials?   A.   You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus. For example, if you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. If you hold your shares in more than one brokerage account, you will receive voting materials for each brokerage account in which you hold shares. Please complete, sign, date and return each proxy card you receive (or submit a proxy electronically by telephone or internet for each such physical proxy card you receive) and provide instructions on how to vote your shares with respect to each brokerage account for which you receive proxy materials, in order to be sure you cast a vote with respect to all of your shares of Naked common stock.
Q.   Who can help answer my questions?   A.   If you have questions about the Transactions or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

6


 
 

TABLE OF CONTENTS

     
                 Naked Brand Group Inc.
  180 Madison Avenue, Suite 1505
  New York, New York 10016
  Attn: Secretary
  Tel: (646) 653-7710
  Email: [•]
 
  or:
 
  Morrow Sodali
  470 West Avenue
  Stamford CT 06902
  Tel:  (800) 662-5200 or banks and brokers can call collect
              at (203) 658-9400
                 Email: [•]
               You may also obtain additional information about Naked from documents filed with the Securities and Exchange Commission (“SEC”) by following the instructions in the section entitled “ Where You Can Find More Information .”

7


 
 

TABLE OF CONTENTS

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the Transactions, you should read this entire document carefully, including the Merger Agreement and the amendments thereto attached as Annexes A-1, A-2, A-3, A-4 and A-5 to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Transactions that will be undertaken. It is also described in detail in this proxy statement/prospectus in the section entitled “The Merger Agreement.”

The Parties

Naked

Naked is an apparel and lifestyle brand company that is currently focused on innerwear products for women and men. Under its flagship brand name and registered trademark “Naked®”, Naked designs, manufactures and sells men’s and women’s underwear, intimate apparel, loungewear and sleepwear through retail partners and direct to consumer through its online retail store www.wearnaked.com. Naked has a growing retail footprint for its innerwear products in premium department and specialty stores and internet retailers in North America, including accounts such as Nordstrom Dropship, Dillard’s, Bloomingdale’s, Amazon.com, Chico's, SaksFifthAvenue.com, and others. Naked’s common stock is listed on Nasdaq under the symbols “NAKD.”

Naked, a Nevada corporation, was incorporated on May 17, 2005 under the name Search By Headlines.com Corp. Immediately prior to the transaction with Naked Inc. described below, Naked was a public reporting “shell company,” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). On July 30, 2012, Naked completed a reverse acquisition of Naked Inc., whereby Naked acquired all of the issued and outstanding common shares of Naked Inc. in exchange for the issuance of 337,500 shares of common stock of Naked to the Naked Inc. stockholders on a pro-rata basis, representing 50% of the capital stock of Naked at the time. As a result of this reverse acquisition transaction, Naked Inc. became a wholly-owned subsidiary of Naked and Naked’s business became the manufacture and sale of direct and wholesale men’s innerwear and intimate apparel products in Canada and the United States to consumers and retailers. Effective August 29, 2012, Naked changed its name from “Search By Headlines.com Corp.” to “Naked Brand Group Inc.” Naked Inc., Naked’s wholly owned subsidiary, was originally incorporated under the federal laws of Canada on May 21, 2009 as “In Search of Solutions Inc.” Naked changed the subsidiary’s corporate name to “Naked Boxer Brief Clothing Inc.” on May 17, 2010 and to “Naked Inc.” on February 20, 2013. Naked Inc. converted from the federal jurisdiction of Canada to the jurisdiction of the State of Nevada on July 27, 2012.

The mailing address of Naked’s principal executive office is 180 Madison Avenue, Suite 1505, New York, New York 10016 and its telephone number is (646) 653-7710. After the consummation of the Transactions, Naked will become a wholly owned subsidiary of Holdco.

Bendon

Bendon is an intimate apparel and swimwear company that has sought to deliver innovative, premium quality products throughout its 70-year history. Bendon has a portfolio of eight brands which it owns: Bendon, Bendon Man, Davenport, Evollove, Fayreform, Hickory, Lovable (in Australia and New Zealand) and Pleasure State, and three licensed brands: Heidi Klum Intimates and Swimwear, Stella McCartney Lingerie and Swimwear and Frederick’s of Hollywood Intimates and Swimwear. Bendon’s license to use the Stella McCartney brand terminates effective June 30, 2018. In addition, Bendon continually explores new ways to expand its business, including through the use of new technologies, such as blockchain technology. Bendon is presently evaluating how these new technologies may be leveraged in the retail fashion industry. For instance, blockchain technology might be used in the future to create highly efficient end-to-end operations from suppliers to consumers and also to provide low cost trade finance for market participants. However, Bendon has not yet taken any steps to evaluate the feasibility of using blockchain technology in its business.

Bendon, a New Zealand limited company, was formed on March 31, 1981.

8


 
 

TABLE OF CONTENTS

The mailing address of Bendon’s principal executive office is Building 7C, Huntley Street, Alexandria, NSW 2015, Australia, and its telephone number is +61 2 9384 2400. After the consummation of the Transactions, Bendon will become a wholly owned subsidiary of Holdco.

Holdco

Holdco was formed to serve as a holding company for Bendon and Naked after consummation of the Transactions. Holdco currently is wholly owned by Justin Davis-Rice, the Executive Chairman of Bendon and a director of Naked.

Holdco, an Australian public limited company, was formed on May 11, 2017, under the name Bendon Group Holdings Limited. The mailing address of Holdco’s principal executive office is Building 7C, Huntley Street, Alexandria, NSW 2015, Australia, and its telephone number is +61 2 9384 2400. After the consummation of the Transactions, Holdco will become the continuing public company.

Merger Sub

Merger Sub was formed solely as a vehicle for consummating the Transactions, and currently is a wholly owned subsidiary of Holdco.

Merger Sub, a Nevada corporation, was formed on May 22, 2017, under the name Naked Merger Sub Inc. The mailing address of Merger Sub’s principal executive office is Building 7C, Huntley Street, Alexandria, NSW 2015, Australia, and its telephone number is +61 2 9384 2400.

Principal Shareholder

Bendon Investments Ltd. is an investment vehicle, which at the time of the execution of the Merger Agreement owned a majority of the outstanding shares of Bendon.

The Principal Shareholder is an indirect wholly-owned subsidiary of Bendon Group Holdings Limited (which is a New Zealand company and a separate entity from Holdco) (“BGHL”). Justin Davis-Rice, the Executive Chairman of Bendon, is also a director of BGHL. BGHL is itself an indirect wholly-owned subsidiary of Valley Trust. Victoria Equities Ltd. is the sole trustee of the Valley Trust.

The Principal Shareholder, a New Zealand company, was formed on July 2, 1999, under the name Bendon Investments Ltd. The mailing address of the Principal Shareholder’s principal executive office is 8 Airpark Drive, Airport Oaks, Auckland 2022, New Zealand, and its telephone number is +64 9 257 0711.

Emerging Growth Company

Holdco is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (or JOBS Act). As an emerging growth company, Holdco is eligible, and has elected, to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation (to the extent applicable to a foreign private issuer).

Holdco could remain an emerging growth company until the last day of Holdco’s fiscal year following the fifth anniversary of the consummation of the transactions. However, if Holdco’s annual gross revenue is $1.07 billion or more, if its non-convertible debt issued within a three year period exceeds $1 billion or the market value of its ordinary shares that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, Holdco would cease to be an emerging growth company as of the last day of that fiscal year.

Foreign Private Issuer

Holdco will be a “foreign private issuer” as defined under the Exchange Act. As a foreign private issuer under the Exchange Act, Holdco will be exempt from certain rules under the Exchange Act, including the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations. Moreover, Holdco will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic U.S. companies with securities registered under the Exchange Act, and Holdco will not

9


 
 

TABLE OF CONTENTS

be required to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information. In addition, Holdco’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of Holdco Ordinary Shares.

As a foreign private issuer, Holdco will also be permitted to follow certain home country corporate governance practices instead of those otherwise required under the applicable rules of Nasdaq for domestic U.S. issuers. For instance, Holdco could follow home country practice in Australia with regard to, among other things, composition of its board of directors and approval of compensation of officers. In addition, Holdco could follow its home country law instead of the applicable rules of Nasdaq that require that it obtain shareholder approval for certain dilutive events, such as the establishment or amendment of certain equity based compensation plans, an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or greater interest in Holdco, and certain acquisitions of the stock or assets of another company. Although Holdco presently does not intend to rely on its home country practice in lieu of the Nasdaq corporate governance requirements, there can be no assurance it won’t elect to do so in the future.

The Merger Proposal

The Merger Agreement provides for (i) the Reorganization of Bendon and Holdco pursuant to which all of the shareholders of Bendon will exchange all the outstanding Bendon Ordinary Shares for Holdco Ordinary Shares, and (ii) immediately thereafter, the Merger of Merger Sub and Naked, with Naked surviving as a wholly owned subsidiary of Holdco and the Naked stockholders receiving Holdco Ordinary Shares.

As a result of the Transactions, Bendon and Naked will become wholly owned subsidiaries of Holdco and the shareholders of Bendon and the stockholders of Naked will become the shareholders of Holdco along with the Principal Shareholder. We estimate that, immediately following the consummation of the Transactions, the shares issued to the shareholders of Bendon as a result of the Reorganization will constitute approximately 91.65% of the issued and outstanding Holdco Ordinary Shares and the shares issued to the Naked stockholders as a result of the Merger will constitute approximately 8.35% of the issued and outstanding Holdco Ordinary Shares.

Carole Hochman, the Chief Executive Officer of Naked, will agree that the Holdco Ordinary Shares received by her in the Merger will be subject to certain transfer restrictions for a period of six months from the closing of the Transactions in accordance with the terms of a lock-up agreement (the “Lock-Up Agreement”), except that the restrictions will terminate earlier if she ceases to be employed by Holdco, Bendon, Naked or any of their affiliates.

Naked and Bendon plan to complete the Transactions promptly after the Naked special meeting, provided that:

Naked’s stockholders have approved the merger proposal; and
the other conditions specified in the Merger Agreement have been satisfied or waived.

After consideration of the factors identified and discussed in the section entitled “ The Merger Proposal — Naked’s Board of Directors’ Reasons for Approval of the Transactions ,” Naked’s Board of Directors concluded that the Transactions are in the best interests of the Naked stockholders.

The Adjournment Proposal

If, based on the tabulated vote, Naked is unable to consummate the Transactions contemplated by the Merger Agreement (because, for example, the merger proposal is not approved), Naked’s board of directors may submit a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies. See the section entitled “ The Adjournment Proposal .”

Date, Time and Place of Special Meeting of Naked’s Stockholders

The special meeting of the stockholders of Naked will be held at [•] a.m., local time, on [•], 2018, at the offices of Duane Morris LLP, Naked’s counsel, 1540 Broadway, New York, NY 10036-4086, or such other

10


 
 

TABLE OF CONTENTS

date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the merger proposal or, if necessary, the adjournment proposal.

Voting Power; Record Date

Naked has fixed the close of business on April 17, 2018, as the “record date” for determining Naked stockholders entitled to notice of and to attend and vote at the special meeting. As of the close of business on the record date, there were 10,342,191 shares of Naked common stock outstanding and entitled to vote. Each share of Naked common stock is entitled to one vote per share at the special meeting. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

Quorum and Vote for the Special Meeting of Stockholders

A quorum of Naked stockholders is necessary to hold a valid meeting of stockholders. The presence in person or by proxy of the holders of one-third of the outstanding shares of Naked common stock constitutes a quorum. The proposals presented at the special meeting will require the following votes:

The approval of the merger proposal will require the affirmative vote of holders of a majority of the outstanding shares of Naked common stock.
The approval of the adjournment proposal will require the shares of Naked common stock voting in favor of the proposal to exceed the shares of Naked common stock voting in opposition to the proposal.

Abstentions occur when a Naked stockholder marks “abstain” with respect to a particular proposal. Broker non-votes occur when a stockholder that holds its shares in “street name” does not give its broker, bank or other nominee instructions on how to vote its shares on a “non-routine” matter, such as the merger proposal. Abstentions and broker non-votes will count as present for the purposes of establishing a quorum. Abstentions and broker non-votes will have the same effect as a vote “against” the merger proposal, but will have no effect on the other proposals.

Consummation of the Transactions is conditional on approval of the merger proposal.

Dissenter’s Rights

Naked stockholders do not have dissenter’s rights under Nevada law in connection with the Transactions.

Proxy Solicitation

Naked is soliciting proxies on behalf of its board of directors. Naked will bear all of the costs of the solicitation. Proxies may be solicited by mail, telephone or in person. Naked has engaged Morrow Sodali to assist in the solicitation of proxies and will pay Morrow Sodali the fees described elsewhere in this proxy statement/prospectus.

If you grant a proxy, you may still vote your shares of Naked common stock in person at the special meeting. You may also change you vote by submitting a later-dated proxy or by revoking your proxy as described in the section entitled “ Special Meeting of Naked Stockholders — Revoking Your Proxy .”

Opinion of Financial Advisor to Naked

Naked retained Noble Capital Markets Inc. (“Noble”) to act as an independent financial advisor to Naked’s board of directors in connection with the proposed Transactions. Naked selected Noble based on Noble’s expertise in analyzing businesses and their securities. Noble is a full-service, investment and merchant banking boutique focused on the healthcare, media and entertainment, technology and natural resources sectors. In the ordinary course of its investment banking business, Noble is regularly engaged in the valuation of public companies and their securities in connection with mergers and acquisitions and other corporate transactions.

At the May 22, 2017 meeting at which Naked’s board of directors considered and discussed the terms of the Merger Agreement and the Merger, Noble delivered to Naked’s board of directors its oral opinion, which was subsequently confirmed in its written opinion, to the effect that the merger consideration is fair to holders

11


 
 

TABLE OF CONTENTS

of Naked common stock as of the date of its written opinion from a financial point of view. The opinion speaks only as of May 22, 2017 and not as of the time the Merger may be completed or any other time. Importantly, the opinion does not reflect changes that may occur or may have occurred after the date of the opinion, which could significantly alter the value of, among other things, Naked or Bendon, which are factors upon which Noble based its opinion.

The full text of the opinion, which sets forth, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations of the review undertaken by Noble in rendering its opinion, is incorporated by reference into this proxy statement and attached as Annex B and Noble has consented to the inclusion of its written opinion as an annex to this proxy statement/prospectus. The summary of the Noble’s opinion set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion. Naked stockholders should read the opinion carefully and in its entirety. The Noble opinion was directed to Naked’s board of directors in connection with its consideration of the Merger Agreement and the Merger and does not constitute a recommendation to any stockholder of Naked as to how any such stockholder should vote at any meeting of stockholders called to consider and vote upon the approval of the Merger Agreement and the Merger. Further, Noble’s opinion was directed only to the fairness, from a financial point of view, of the exchange ratio to the holders of Naked common stock and does not address the underlying business decision of Naked to engage in the Merger, the form or structure of the Merger or any other transactions contemplated in the Merger Agreement, the relative merits of the Merger as compared to any other alternative transactions or business strategies that might exist for Naked or the effect of any other transaction in which Naked might engage. Noble did not express any opinion as to the fairness of the amount or nature of the compensation to be received in the Merger by any officer, director or employee of Naked or Bendon, or any class of such persons, if any, relative to the compensation to be received in the Merger by any other stockholder, including the merger consideration to be received by the holders of Naked common stock.

Interests of Naked’s Directors and Officers in the Transactions

When you consider the recommendation of Naked’s board of directors in favor of approval of the merger proposal, you should keep in mind that certain of Naked’s directors and executive officers have interests in such proposal that are different from, or in addition to, your interests as a Naked stockholder. These interests include, among other things:

Justin Davis-Rice, the Executive Chairman of Bendon and a director of Naked, beneficially owns 9.8% of the outstanding Bendon Ordinary Shares. As such, Mr. Davis-Rice will own approximately 19.3% of the Holdco Ordinary Shares immediately following the consummation of the Transactions. Furthermore, Mr. Davis-Rice will be the Chief Executive Officer of Holdco and may receive additional compensation in the future for his service to Holdco.
The Transactions contemplated by the Merger Agreement also provide that Paul Hayes, a director of Naked, will be a director of Holdco. As such, in the future he may receive cash fees, stock options or stock awards that the Holdco board of directors determines to pay to its nonemployee directors as compensation for his service on the Holdco board.
Carole Hochman, the Chief Executive Officer of Naked and a member of Naked’s board of directors, will be Executive Chairman of the Board of Holdco and will be entering into a new employment agreement with Holdco upon consummation of the Transactions. As such, she will receive the compensation provided for her thereunder, which is described in the section entitled “ Management of Holdco Following the Transactions .”

Notwithstanding the foregoing, Messrs. Davis-Rice and Edward Hanson, who was designated by Bendon for appointment as a member of the Naked board of directors, recused themselves from the vote by the Naked board when it approved the Transactions. Accordingly, the above-interests may not have necessarily impacted the vote on the proposed Transactions.

12


 
 

TABLE OF CONTENTS

Recommendation to Stockholders

Naked’s board of directors has unanimously (with Justin Davis-Rice and Edward Hanson recusing themselves) determined that each of the proposals outlined above is fair to and in the best interests of Naked and its stockholders and recommended that you vote or give instruction to vote “FOR” each proposal.

Conditions to Closing the Transactions

General Conditions

Consummation of the Merger is conditioned on the following: (i) no governmental entity will have enacted or issued any legal requirement which has the effect of making the Transactions illegal or otherwise prohibiting the consummation of the Transactions substantially on the terms set forth in the Merger Agreement, (ii) the registration statement of which this proxy statement/prospectus forms a part will have been declared effective, (iii) the Naked stockholders will have approved the Transactions, (iv) the Reorganization will have been completed, and (v) the Holdco Ordinary Shares will have been approved for listing on Nasdaq or the NYSE.

In addition, each party’s obligations to consummate the Merger is conditioned upon, among other things, (i) the representations and warranties of the other party being true and correct on and as of the closing date in all material respects (except to the extent already qualified as to materiality), (ii) all agreements and covenants required by the Merger Agreement to be performed or complied with by the other party on or prior to the closing date will have been performed or complied with, except to the extent that any failure to perform or comply (other than a willful failure to perform or comply or failure to perform or comply with an agreement or covenant reasonably within the control of such party, in any case in any material respect) does not, or will not, constitute a material adverse effect (as described in on such party and its subsidiaries taken as a whole, and (iii) all necessary consents, waivers and approvals required to be obtained in connection with the transactions contemplated by the Merger Agreement having been received, other than consents, waivers and approvals the absence of which could not reasonably be expected to have a material adverse effect on the other party and its subsidiaries taken as a whole.

Holdco, Bendon and Merger Sub’s Conditions to Closing

The obligations of Holdco, Bendon and Merger Sub to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

the Lock-Up Agreements will have been executed and delivered by Ms. Hochman and Mr. Primus;
no action, suit or proceeding is pending or threatened which would reasonably be expected to prevent consummation of the Transactions, cause the Transactions to be rescinded following consummation, or affect materially and adversely or otherwise materially encumber the title of the Holdco Ordinary Shares to be issued to the Bendon shareholders in the Reorganization, or affect materially and adversely the right of Naked to own, operate or control the assets and operations of Naked following the transaction, and no order to any such effect shall be in effect; and
Naked is in compliance with its reporting requirements under the Exchange Act.

Naked’s Conditions to Closing

The obligations of Naked to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon each of the following, among other things:

no action, suit or proceeding is pending or threatened which would reasonably be expected to prevent consummation of the Transactions, cause such Transactions to be rescinded following consummation, or affect materially and adversely or otherwise materially encumber the title of the Holdco Ordinary Shares to be issued to the Naked stockholders in the Merger, or affect materially and adversely the right of Naked to own, operate or control the assets and operations of Naked following the Transactions, and no order to any such effect shall be in effect;
(i) all outstanding indebtedness owed by insiders to Bendon has been repaid in full; (ii) all outstanding guaranties and similar arrangements pursuant to which Bendon has guaranteed the

13


 
 

TABLE OF CONTENTS

payment or performance of any obligations of any insider to a third party have been terminated; and (iii) no insider owns any direct or indirect equity interests in any subsidiary of Holdco or Bendon or in any other person that utilizes in its name “Bendon,” except, in the case of clauses (i) and (ii), for ordinary course advances to employees, officers and directors and advances to shareholders who will not be executive officers or directors of Holdco as of the closing;
Bendon has not substantially changed its business as conducted as of the date of the Merger Agreement;
Holdco and Bendon is have completed the refinancing of certain indebtedness of Bendon as described in the Merger Agreement; and
Holdco is in compliance with its reporting requirements under the Exchange Act.

Waiver

If permitted under applicable law, each of the parties may, in writing, waive any inaccuracies in the representations and warranties made for its benefit contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement, and waive compliance with any agreements or conditions for its benefit contained in the Merger Agreement or in any document delivered pursuant to the Merger Agreement. Inaccuracies in representations and warranties and noncompliance with agreements or conditions made for the benefit of more than one party may only be waived by mutual agreement of all such parties. We cannot assure you that all of the conditions will be satisfied or waived. Furthermore, the condition that the Holdco Ordinary Shares have been approved for listing on Nasdaq cannot be waived. Accordingly, if Nasdaq does not approve Holdco’s application for listing of the Holdco Ordinary Shares, the Transactions will not be completed. There can be no assurance that Nasdaq will approve Holdco’s application.

If permitted under applicable law, at any time prior to the closing, Holdco, Bendon and/or Naked may, in writing, to the extent legally allowed, extend the time for the performance of any of the obligations or other acts of the other parties to the Merger Agreement that are to be performed for the benefit of such party or parties.

The existence of the financial and personal interests of the directors may result in a conflict of interest on the part of one or more of them between what he/she may believe is best for Naked and what he/she may believe is best for himself or herself in determining whether or not to grant or agree to a waiver in a specific situation. See the section entitled “ Risk Factors ” for a fuller discussion of this and other risks.

Termination

The Merger Agreement may be terminated at any time, but not later than the closing, as follows:

by mutual written consent of Naked and Bendon;
by either Naked or Bendon, if the Transactions contemplated by the Merger Agreement are not consummated on or before June 1, 2018 (the “Outside Date”). However, the right to terminate due to the Outside Date passing will not be available to any party whose material breach of their obligations under the Merger Agreement resulted in the failure of the Merger to occur on or before the Outside Date. Notwithstanding the foregoing, on or before May 22, 2018, Bendon will provide written notice to Naked of any known material breach by Naked of its obligations under the Merger Agreement which could reasonably be expected to result in the failure of the Merger to occur on or before the Outside Date. Naked will have no more than ten days to cure any such breach from the date of such notice and the Outside Date will be extended by the number of days (although not more than ten days in each instance) used by Naked to cure such breach, which date shall be the new Outside Date. In any event, under no circumstances will the Outside Date be extended beyond June 11, 2018;
by either Naked or Bendon, if a governmental entity shall have issued an order, decree or ruling or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions, which order, decree, judgment, ruling or other action is final and non-appealable;
by either Bendon or Naked, if the Naked stockholders have not approved the merger proposal by the Outside Date;

14


 
 

TABLE OF CONTENTS

by either Naked or Bendon, if the other party has materially breached any of its covenants or representations and warranties, or if any representation or warranty of the other party shall have become untrue, in either case such that the closing conditions would not be met, provided that, if such breach is curable, this right to terminate may not be exercised prior to thirty days after notice of such breach or the Outside Date, if earlier, it being understood that a party may not exercise its right to terminate if it has materially breached the Merger Agreement;
by Naked, if Bendon shall substantially change its business as conducted as of the date hereof;
by Naked, if (i) a Superior Proposal (as defined herein) has been made not in violation of the prohibition in the Merger Agreement on soliciting any merger, sale of ownership interests and/or assets, recapitalization or similar transaction, (ii) Naked has complied with all provisions of the Merger Agreement relating to a Superior Proposal, (iii) Naked has otherwise complied with the provisions relating to the Naked Board of Directors making a recommendation change, (iv) Naked concurrently pays the Break-Up Fee (as defined herein) and (v) Naked concurrently enters into a definitive agreement for such Superior Proposal.
By Naked, if Bendon shall fail to pay Naked’s expenses as described in “The Merger Agreement —  Fees and Expenses.”

If Naked terminates the Merger Agreement in order to enter into a definitive agreement for a Superior Proposal as described in the seventh bullet point above, or Bendon terminates this Agreement because the Merger has not been consummated by the Outside Date and the failure of the Merger to occur on or before the Outside Date has resulted from a material breach by Naked of its obligations under the Merger Agreement, then Naked is required to issue to Bendon 2,500,000 shares of Naked common stock (the “Break-Up Fee”). In the event that Naked has complied with its obligations and Naked does not obtain the approval of its stockholders for the Merger, then Naked must issue Bendon 1,250,000 shares of Naked common stock.

See the section entitled “ The Merger Agreement  —  Non-Solicitation; Change of Recommendation; Break-Up Fee ” for a description of the definitions of “Superior Proposal.”

Regulatory Matters

The Transactions contemplated by the Merger Agreement are not subject to any additional federal or state regulatory requirement or approval necessary to effectuate the Transactions, except for the filing of articles of merger with the Secretary of State of Nevada.

Risk Factors

In evaluating the proposals to be presented at the special meeting, a stockholder should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “ Risk Factors .”

15


 
 

TABLE OF CONTENTS

SELECTED HISTORICAL FINANCIAL INFORMATION

Bendon and Naked are providing the following selected historical financial information to assist you in your analysis of the financial aspects of the Transactions.

Bendon’s balance sheet data as of July 31, 2017 and statement of operations data for the six months ended July 31, 2017 and the six months ended July 31, 2016 are derived from Bendon’s unaudited financial statements, which are included elsewhere in this proxy statement/prospectus. Bendon’s balance sheet data as of January 31, 2017, June 30, 2016 and June 30, 2015 and statement of operations data for the seven months ended January 31, 2017 and for the fiscal years ended June 30, 2016 and 2015 are derived from Bendon’s audited financial statements, which are included elsewhere in this proxy statement/prospectus. The financial statements of Bendon have been prepared and presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB. In connection with the Transaction, Bendon will be changing its fiscal year end to January 31.

Naked’s balance sheet data as of October 31, 2017 and statement of operations data for the nine months ended October 31, 2017 are derived from Naked’s unaudited financial statements, which are included elsewhere in this proxy statement/prospectus. Naked’s balance sheet data as of January 31, 2017 and January 31, 2016 and statement of operations data for the two years ended January 31, 2017 and January 31, 2016 are derived from Naked’s audited financial statements, which are included elsewhere in this proxy statement/prospectus. The financial statements of Naked have been prepared and presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”).

The information is only a summary and should be read in conjunction with each of Bendon’s and Naked’s consolidated financial statements and related notes and “ Bendon’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and “ Naked’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” contained elsewhere herein. The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of Bendon or Naked.

Bendon Financial Information as prepared under IFRS and in New Zealand Dollars (NZ$)

Consolidated Statement of Operations Data:

         
In Thousands of NZ Dollars, except per share data   6 months ended
Jul. 31
2017
  6 months ended
Jul. 31,
2016
  7 months ended
Jan. 31,
2017
  Year ended
Jun. 30,
2016
  Year ended
Jun. 30,
2015
     (unaudited)   (unaudited)
Revenue     59,787       67,795       96,284       151,000       138,838  
Cost of goods sold     (40,207 )       (34,659 )       (57,144 )       (83,525 )       (79,031 )  
Gross profit     19,580       33,136       39,140       67,475       59,807  
Brand management     (25,873 )       (25,222 )       (32,040 )       (48,362 )       (42,203 )  
Administrative expenses     (1,891 )       (2,295 )       (2,383 )       (4,090 )       (4,691 )  
Corporate expenses     (7,028 )       (6,041 )       (8,082 )       (13,002 )       (13,940 )  
Finance expense     (5,027 )       (5,957 )       (6,238 )       (10,409 )       (5,870 )  
Brand transition, restructure and transaction expenses     (1,112 )       (1,113 )       (1,321 )       (2,232 )       (12,182 )  
Impairment expense           (2,168 )       (292 )       (2,157 )        
Other foreign currency gains/(losses)     (934 )       1,908       (3,306 )       (2,423 )       4,700  
Fair value gain/(loss) on convertible notes derivative     3,246             (592 )              
Loss before income tax     (19,039 )       (7,752 )       (15,114 )       (15,200 )       (14,379 )  
Income tax benefit/(expense)     (174 )       (6,038 )       (865 )       (5,546 )       1,274  
Loss for the period     (19,213 )       (13,790 )       (15,979 )       (20,746 )       (13,105 )  
Other comprehensive income
                                            
Exchange differences on translation of foreign operations     757       95       (29 )       31       (93 )  
Total comprehensive loss for the period     (18,456 )       (13,695 )       (16,008 )       (20,715 )       (13,198 )  
Basic earnings/(loss) per share     (66.21 )       (54.78 )       (60.54 )       (82.86 )       (52.79 )  
Diluted earnings/(loss) per share     (66.21 )       (54.78 )       (60.54 )       (82.86 )       (52.79 )  

16


 
 

TABLE OF CONTENTS

Consolidated Balance Sheet Data:

       
  Jul. 31,
2017
NZ$000
  Jan. 31,
2017
NZ$000
  Jun. 30,
2016
NZ$000
  Jun. 30,
2015
NZ$000
Cash and cash equivalents     3,464       2,644       4,193       1,246  
Working capital     (31,545 )       (26,439 )       (19,987 )       (24,067 )  
Total assets     92,385       101,232       95,591       99,849  
Borrowings     69,311       68,998       77,593       56,273  
Total shareholders’ equity     (14,781 )       (9,044 )       (17,876 )       2,839  
Contributed equity     40,667       27,948       3,108       3,108  

Naked Financial Information as prepared under US GAAP and in US Dollars (US$)

     
In Thousands of US Dollars, except per share data   Nine months ended
October 31,
2017
  Year ended
Jan. 31,
2017
  Year ended
Jan. 31,
2016
     (unaudited)          
Revenue     1,747       1,842       1,389  
Cost of goods sold         (1,171 )       (1,465 )       (1,291 )  
Gross profit     576       377       98  
Corporate and Administrative expenses     (6,251 )       (11,076 )       (11,727 )  
Finance expense     (45 )       (82 )       (879 )  
Accretion of debt discounts and finance charges     (0 )       (16 )       (7,255 )  
Other foreign currency gains/(losses)     3       (2 )       (9 )  
Fair value mark-to-market adjustments                 709  
Loss before income tax     (5,717 )       (10,799 )       (19,063 )  
Income tax benefit                  
Loss for the period     (5,717 )       (10,799 )       (19,063 )  
Other comprehensive income
                          
Exchange differences on translation of foreign operations                  
Total comprehensive loss for the period     (5,717 )       (10,799 )       (19,063 )  
Basic loss per share     (0.57 )       (1.77 )       (10.13 )  
Diluted loss per share     (0.57 )       (1.77 )       (10.13 )  

Consolidated Balance Sheet Data:

     
  October 31,
2017
US$000
  Jan. 31,
2017
US$000
  Jan. 31,
2016
US$000
     (unaudited)          
Cash and cash equivalents     2,171       879       4,781  
Working capital     3,861       1,277       4,671  
Total assets     4,879       3,685       6,873  
Borrowings     3       559       1,116  
Total shareholders’ equity     3,942       1,321       4,587  
Contributed equity     66,845       58,506       50,974  

17


 
 

TABLE OF CONTENTS

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Bendon and Naked are providing the following selected unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the transactions. The unaudited pro forma financial statements are not necessarily indicative of the financial position or results of operations that may have actually occurred had the Transactions taken place on the dates noted, or the future financial position or operating results of the combined company.

In connection with the Merger, Bendon and Holdco will undertake a reorganization. Under the Reorganization Holdco acquired Bendon and its controlled entities. Holdco determined that the acquisition of Bendon did not represent a business combination as defined by IFRS 3 ‘Business Combinations’. This is because the Reorganization is considered to be a combination of entities under common control immediately prior to the Merger, and such common control transactions are outside the scope of IFRS 3 ‘Business Combinations’.

Accordingly the related restructuring represents a reorganization of the economic entity historically known as Bendon and results in the Holdco becoming the new parent entity of that group. As such, the consolidated financial statements of the Holdco reflect a continuation of the existing Bendon consolidated financial statements.

The following selected unaudited pro forma condensed combined balance sheet information combines the unaudited historical balance sheet of Bendon as of July 31, 2017 with the unaudited historical consolidated balance sheet of Naked as of July 31, 2017, giving effect to (1) the Transactions as if they had been consummated as of that date, (2) conversion of Naked’s financial statements from U.S. GAAP to IFRS and translation from USD to NZD, (3) purchase accounting adjustments, and (4) any other relevant adjustments which may include reclassifications to align Naked’s financial statements to Bendon.

The following selected unaudited pro forma condensed combined statement of operations for the six months ended July 31, 2017 combines the unaudited historical statement of operations of Bendon for the six months ended July 31, 2017 with the unaudited historical statement of operations of Naked for the six months ended July 31, 2017, giving effect to (1) the mergers as if they had been consummated on July 1 2015, (2) conversion of Naked’s financial statements from U.S. GAAP to IFRS and translation from USD to NZD, (3) purchase accounting adjustments, and (4) any other relevant adjustments which may include reclasses to align Naked’s financial statements to Bendon.

The following selected unaudited pro forma condensed combined statement of operations information for the seven months ended January 31, 2017 combines the audited historical statement of operations of Bendon for the seven months ended January 31, 2017 with the historical consolidated statement of operations of Naked, adjusted by combining the unaudited six months ended January 31, 2017 and the unaudited one month ended July 31, 2016, giving effect to (1) the Transactions as if they had been consummated on July 1, 2015, (2) conversion of Naked’s financial statements from U.S. GAAP to IFRS and translation from USD to NZD, (3) purchase accounting adjustments, and (4) any other relevant adjustments which may include reclassifications to align Naked’s financial statements to Bendon.

The following selected unaudited pro forma condensed combined statement of operations for the year ended June 30, 2016 combines the audited historical statement of operations of Bendon for the year ended June 30 2016 with the historical consolidated statement of operations of Naked, adjusted by combining the unaudited six months ended July 31, 2016 with the unaudited six months ended January 31, 2016, giving effect to the (1) the Transactions as if they had been consummated on July 1, 2015, (2) conversion of Naked’s financial statements from U.S. GAAP to IFRS and translation from USD to NZD, (3) purchase accounting adjustments, and (4) any other relevant adjustments which may include reclassifications to align Naked’s financial statements to Bendon.

The historical financial information has been adjusted to give effect to pro forma events that are related and/or directly attributable to the Transactions, are factually supportable and are expected to have a continuing impact on the combined results. The adjustments presented on the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Transactions. Matters such as cost savings as a result of the Transactions and contingent consideration and the working capital adjustment

18


 
 

TABLE OF CONTENTS

associated with the Transactions have not been reflected in the pro forma condensed combined financial statements as the impact of these matters cannot be determined at this time.

This selected unaudited pro forma information is only a summary and should be read together with Bendon’s and Naked’s financial statements and related notes, “ Unaudited Pro Forma Condensed Combined Financial Statements ,” “ Bendon’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” “ Naked’s Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and other financial information included elsewhere in this proxy statement/prospectus.

19


 
 

TABLE OF CONTENTS

Holdco
Selected Unaudited Pro Forma condensed combined Statement of Financial Position Information
As at July 31, 2017
(in thousands of NZ Dollars)

                 
Notes   Historical   Naked – 
IFRS
Adjustments
  Naked
(in IFRS)
  Bendon
Holdco (2)
  Purchase
Accounting
Adjustments
  Financing
transaction
  Other
Adjustments
  Pro forma
Combined
  Bendon   Naked
(in U.S.
GAAP) (1)
ASSETS
                                                                                         
TOTAL CURRENT ASSETS     73,409       7,163             7,163             (2,730 )       28,650             106,492  
TOTAL NON-CURRENT ASSETS     18,976       108             108       0       20,563                   39,467  
TOTAL ASSETS     92,385       7,271             7,271       0       17,833       28,650             146,139  
LIABILITIES
                                                                                
TOTAL CURRENT LIABILITIES     104,954       1,007             1,007                   (13,080 )       (9,468 )       83,413  
TOTAL NON-CURRENT LIABILITIES     2,212                               694                   2,906  
TOTAL LIABILITIES     107,166       1,007             1,007             694       (13,080 )       (9,468 )       86,319  
NET ASSETS/
(LIABILITIES)
    (14,781 )       6,264             6,264       0       17,139       41,730       9,468       59,820  
EQUITY
                                                                                
Share capital     40,667       14             14       0       29,544       41,730       9,468       121,423  
Common stock to be issued           19             19             (19 )                    
Accumulated paid-in capital           88,765       842       89,607             (89,607 )                    
Accumulated deficit           (82,526 )       (850 )       (83,376 )             83,376                    
Other reserves     (1,397 )                                                 (1,397 )  
Accumulated losses     (54,051 )       (8 )       8                   (6,155 )                   (60,206 )  
TOTAL EQUITY     (14,781 )       6,264             6,264       0       17,139       41,730       9,468       59,820  

(1) The information for Naked was originally denominated in U.S. dollars and has been converted to New Zealand dollars based on the closing rate as at July 31, 2017 of NZ$1 = US$0.7512 for the statement of financial position.
(2) Bendon Holdco has a $2 investment in Bendon which is eliminated through the purchase accounting adjustments.

20


 
 

TABLE OF CONTENTS

Holdco
Unaudited Pro Forma combined Interim Statement of Operations
For the six month period ended July 31, 2017
(in thousands of NZ dollars)

                 
Notes   Historical   Naked
Brand
Group
Inc. – IFRS
Adjustments
  Naked
Brand
Group Inc.
(in IFRS)
  Bendon
Holdco
  Purchase
Accounting
Adjustments
  Financing
transaction
  Other
Adjustments
  Pro forma
Combined
  Bendon
Limited
  Naked
Brand
Group Inc.
(in US
GAAP) (1)
Revenue     59,787       1,581             1,581                               61,368  
Cost of goods sold     (40,207 )       (1,095 )             (1,095 )                               (41,302 )  
Gross profit     19,580       486             486                               20,066  
Brand management     (25,873 )                                                 (25,873 )  
Administrative expenses     (1,891 )       (7,198 )       2,218       (4,980 )             (248 )                   (7,119 )  
Corporate expenses     (7,028 )                                                 (7,028 )  
Finance expense     (5,027 )       (58 )             (58 )                   2,632       1,292       (1,161 )  
Accretion of debt discounts and finance charges                                                      
Brand transition, restructure and transaction expenses     (1,112 )                                                 (1,112 )  
Impairment expense                                                      
Other foreign currency gains/(losses)     (934 )       9             9                               (925 )  
Fair value gain/(loss) on convertible note derivative     3,246                                                    3,246  
Loss before income tax     (19,039 )       (6,761 )       2,218       (4,543 )             (248 )       2,632       1,292       (19,906 )  
Income tax benefit     (174 )       0                                              (174 )  
Loss for the year     (19,213 )       (6,761 )       2,218       (4,543 )             (248 )       2,632       1,292       (20,080 )  
Other comprehensive income                                                      
Exchange difference on translation of foreign operations     757                                                 757  
Total comprehensie income/(loss) for the period     (18,456 )       (6,761 )       2,218       (4,543 )             (248 )       2,632       1,292       (19,323 )  
Basic earnings/(loss) per
share
    (66.21 )       (0.69 )                                           (0.84 )  
Diluted earnings/(loss) per share     (66.21 )       (0.69 )                                           (0.84 )  
Number of Shares used to calculate Basic earnings/(loss) per share     278,740       9,800                                           22,983,474  
Number of Shares used to calculate Diluted earnings/(loss) per share     278,740       9,800                                           22,983,474  

(1) The information for Naked was originally denominated in U.S. dollars and has been converted to New Zealand dollars based on the average exchange rate for the period from February 1, 2017 to July 31, 2017 of NZ$1 = US$0.7119

21


 
 

TABLE OF CONTENTS

Holdco
Selected Unaudited Pro Forma combined Statement of Operations Information
For the seven month period ended January 31, 2017
(in thousands of NZ dollars)

                         
  Historical   Naked – 
IFRS
Adjustments
  (Note)   Naked
(in IFRS)
  Bendon Holdco   Purchase Accounting Adjustments   (Note)   Financing
Adjustments
  (Note)   Other Adjustments   (Note)   Pro forma Combined
Notes   Bendon   Naked
(in U.S.
GAAP) (1)
Revenue     96,284       1,579                   1,579                                                 97,863  
Cost of goods sold     (57,144 )       (1,196 )                   (1,196 )                                                 (58,340 )  
Gross profit     39,140       383                   383                                                 39,523  
Brand management     (32,040 )                                                                         (32,040 )  
Administrative expenses     (2,383 )       (9,244 )       3,284       4 A       (5,960 )             (305 )       4B (iii)                               (8,648 )  
Corporate expenses     (8,082 )                                                                         (8,082 )  
Finance expense     (6,238 )                                                 1,201       4B (v)       3,759       4B (iv)       (1,278 )  
Accretion of debt discounts and finance charges           (68 )                   (68 )                                                 (68 )  
Brand transition, restructure and transaction expenses     (1,321 )       (1 )                   (1 )                                                 (1,322 )  
Impairment expense     (292 )                                                                         (292 )  
Other foreign currency gains/(losses)     (3,306 )       (5 )                   (5 )                                                 (3,311 )  
Fair value gain/(loss) on Convertible Notes derivative     (592 )                                                                         (592 )  
Loss before income tax     (15,114 )       (8,935 )       3,284             (5,651 )             (305 )             1,201             3,759             (16,110 )  
Income tax (expense)/benefit     (865 )                                                                         (865 )  
Loss for the period     (15,979 )       (8,935 )       3,284             (5,651 )             (305 )             1,201             3,759             (16,975 )  
Other comprehensive income
                                                                                                                    
Exchange difference on translation of foreign operations     (29 )                                                                         (29 )  
Total comprehenceive income/(loss) for the period     (16,008 )       (8,935 )       3,284             (5,651 )             (305 )             1,201             3,759             (17,004 )  
Basic earnings/(loss) per share     (60.54 )       (2.06 )                                                                   (0.74 )  
Diluted earnings/(loss)
per share
    (60.54 )       (2.06 )                                                                   (0.74 )  

(1) The information for Naked was originally denominated in U.S. dollars and has been converted to New Zealand dollars based on the average exchange rate for the period from August 1, 2016 to January 31, 2017 of NZ$1 = US$0.7171.

22


 
 

TABLE OF CONTENTS

Holdco
Selected Unaudited Pro Forma combined Statement of Operations Information
For the year ended June 30, 2016
(in thousands of NZ dollars)

               
               
Notes   Historical   Naked – IFRS
Adjustments
  Naked
(in IFRS)
  Bendon
Holdco
  Purchase
Accounting
Adjustments
  Other Adjustments   Pro
forma
Combined
  Bendon   Naked
(in U.S.
GAAP) (1)
Revenue     151,000       2,248             2,248                         153,248  
Cost of goods sold     (83,525 )       (2,493 )             (2,493 )                         (86,018 )  
Gross profit     67,475       (245 )             (245 )                         67,230  
Brand management     (48,362 )                                           (48,362 )  
Administrative expenses     (4,090 )       (18,107 )       2,248       (15,859 )             (522 )             (20,471 )  
Corporate expenses     (13,002 )                                           (13,002 )  
Finance expense     (10,409 )       (825 )             (825 )                   6,479       (4,755 )  
Accretion of debt discounts and finance charges           (10,520 )             (10,520 )                         (10,520 )  
Brand transition, restructure and transaction expenses     (2,232 )                                           (2,232 )  
Impairment expense     (2,157 )                                           (2,157 )  
Other foreign currency
gains/(losses)
    (2,423 )       (16 )             (16 )                         (2,439 )  
Fair value gain/(loss) on convertible notes derivative                                                
Loss before income tax     (15,200 )       (29,713 )       2,248       (27,465 )             (522 )       6,479       (36,708 )  
Income tax (expense)/benefit     (5,546 )                                           (5,546 )  
Loss for the year     (20,746 )       (29,713 )       2,248       (27,465 )             (522 )       6,479       (42,254 )  
Other comprehensive income
                                                                       
Exchange differences on translation of foreign operations     31                                           31  
Total comprehensive
income/(loss) for the year
    (20,715 )       (29,713 )       2,248       (27,465 )             (522 )       6,479       (42,223 )  
Basic earnings/(loss)
per share
    (82.86 )       (4.87 )                                     (1.84 )  
Diluted earnings/(loss)
per share
    (82.86 )       (4.87 )                                     (1.84 )  

(1) The information for Naked was originally denominated in U.S. dollars and has been converted to New Zealand dollars based on the average exchange rate for the period from August 1, 2015 to July 31, 2016 of NZ$1 – US$0.6716.

23


 
 

TABLE OF CONTENTS

COMPARATIVE PER SHARE DATA

The following table sets forth the per share data of Bendon and Naked on a stand-alone basis and unaudited pro forma combined per share ownership information of Bendon and Naked after giving effect to the Transactions.

This information is only a summary and should be read together with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the historical financial statements of Bendon and Naked and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Bendon and Naked would have been had the companies been combined during the period presented.

See the unaudited pro forma condensed combined financial statements and related notes in the section entitled “ Unaudited Pro Forma Condensed Combined Financial Statements ” included elsewhere in this proxy statement/prospectus.

Six months ended July 31, 2017

     
  Bendon   Naked (1)   Pro Forma
consolidated
     (In thousands of New Zealand dollars expect per
share amounts)
Income/(loss) from continuing operations     (18,456 )       (6,761 )       (19,323 )  
Per Common Share
                          
Basic     (66.21 )       (0.69 )       (0.84 )  
Diluted     (66.21 )       (0.69 )       (0.84 )  
Dividends     0.00       0.00       0.00  
Book value of equity     (53.78 )       0.61       1.70  

Seven months ended January 31, 2017

     
  Bendon
  Naked (1)   Pro Forma
consolidated
     (In thousands of New Zealand dollars expect per share amounts)
Income/(loss) from continuing operations     (16,008 )       (8,935 )       (17,004 )  
Per Common Share
                          
Basic     (60.54 )       (2.06 )       (0.74 )  
Diluted     (60.54 )       (2.06 )       (0.74 )  
Dividends                  
Book value of equity     (32.91 )       0.28       0.27  

24


 
 

TABLE OF CONTENTS

Year ended June 30, 2016

     
  Bendon
  Naked (1)   Pro forma
consolidated
     (In thousands of New Zealand dollars expect per share amounts)
Income/(loss) from continuing operations     (20,715 )       (29,713 )       (42,223 )  
Per Common Share
                          
Basic     (82.86 )       (4.87 )       (1.84 )  
Diluted     (82.86 )       (4.87 )       (1.84 )  
Dividends                  
Book value of equity     (71.5 )       1.78       1.01  

(1) The information for Naked was originally denominated in U.S. dollars and has been converted to New Zealand dollars based on the average exchange rate for the period from February 1, 2017 to July 31, 2017 of NZ$ 1 = US$0.7119, the period from August 1, 2016 to January 31, 2017 of NZ$1 = US$ 0.7171, and the period from August 1, 2015 to July 31, 2016 of NZ$1 – US$0.6716 and the closing rate as at July 31, 2017 of NZ$ 1 = US$ 0.7512 for the balance sheet.

25


 
 

TABLE OF CONTENTS

RISK FACTORS

You should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus.

The value of your investment in Holdco following consummation of the Transactions will be subject to the significant risks affecting Holdco and inherent in the intimate apparel industry. You should carefully consider the risks and uncertainties described below and other information included in this proxy statement/prospectus. If any of the events described below occur, the business and financial results of the combined company could be adversely affected in a material way. This could cause the trading price of the Holdco Ordinary Shares to decline, perhaps significantly, and you therefore may lose all or part of your investment.

Risks Related to Bendon’s Business and Operations

As used in the risks described in this subsection, references to “we,” “us” and “our” are intended to refer to Bendon and its subsidiaries unless the context clearly indicates otherwise.

All figures presented below are in New Zealand Dollars, unless otherwise stated.

We have a history of operating losses that may continue into the foreseeable future.

We have a history of operating losses and negative cash flow that may continue into the foreseeable future. If we fail to execute our strategy to achieve and maintain profitability in the future, investors could lose confidence in the value of our Ordinary Shares, which could cause our share price to decline and adversely affect our ability to raise additional capital. Investors should evaluate an investment in our company in light of this.

If we are unable to obtain additional financing on acceptable terms, we may have to curtail our growth or cease our development plans and operations.

The operation of our business and our growth efforts will require significant cash outlays. We are largely dependent on outside capital to implement our business plan and support our operations. We anticipate for the foreseeable future that cash on hand and cash generated from operations will not be sufficient to meet our cash requirements, and that we will need to raise additional capital through investments to fund our operations and growth. We cannot assure you that we will be able to raise additional capital as needed on terms acceptable to us, if at all. If we are unable to raise capital as needed, we may be required to reduce the scope of our growth efforts, which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case, you may lose all your investment. Financings, including future equity investments, if obtained, may be on terms that are dilutive to our stockholders, and the prices at which new investors would be willing to purchase our securities may be lower than the price at which you purchase your shares. Furthermore, the terms of securities issued in a financing, if obtained, may be more favorable for new investors.

Investors should be aware that the value of an investment in our company may go down as well as up. In addition, there can be no certainty that the market value of an investment in our company will fully reflect its underlying value.

Bendon’s auditors’ report on the consolidated financial statements included an explanatory paragraph regarding there being substantial doubt about the ability to continue as a going concern.

For the financial periods ended July 31, 2017, January 31, 2017, June 30, 2016 and June 30, 2015, Bendon incurred a net loss from continuing operations of ($18,456,000), ($16,008,000), ($20,715,000) and ($13,198,000) and operating cash outflows of $7,993,000, $13,518,000, $5,040,000 and $17,199,000, respectively. We anticipate generating losses to at least June 2018. In addition, we are in the process of raising capital through share issuance and arranging the conversion of convertible noteholder debt to equity. Therefore, there is substantial doubt about Bendon’s ability to continue operations in the future as a going concern, as noted by our auditors with respect to the consolidated financial statements for the periods ended

26


 
 

TABLE OF CONTENTS

January 31, 2017, June 30, 2016 and June 30, 2015. Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business. If Bendon cannot continue as a viable entity, our shareholders may lose some or all of their investment in our company.

We have a concentration of sales to key customers and any substantial reduction in sales to these customers would have a material adverse effect on our business.

During the six month period ended July 31, 2017, sales were concentrated with Myer, Woolsworths, Farmers and Macy’s accounting for 9%, 6%, 8% and 2% respectively. During the seven month period ended January 31, 2017, sales were concentrated with Myer, Farmers, Macy’s and Woolworths, accounting for 11%, 6%, 5%, and 4%, respectively, of our sales. Our results of operations would be materially adversely affected if these relationships ceased. Although we have diversified our customers and continue to receive increasing sales orders from existing customers, these customers do not have any ongoing purchase commitment agreement with us; therefore, we cannot guarantee that the volume of sales will remain consistent going forward. Any substantial change in purchasing decisions by these customers, whether due to actions by our competitors, industry factors or otherwise, could have a material adverse effect on our business and our financial condition.

Our customers generally purchase our products on credit, and as a result, our results of operations and financial condition may be adversely affected if our customers experience financial difficulties.

During the past several years, various retailers, including some of our largest customers, have experienced significant difficulties, including restructurings, bankruptcies and liquidations. This could adversely affect us because our customers generally pay us after goods are delivered. Adverse changes in our customers’ financial position could cause us to limit or discontinue business with that customer, require us to assume more credit risk relating to that customer’s future purchases or limit our ability to collect accounts receivable relating to previous purchases by that customer, all of which could have a material adverse effect on our business, results of operations and financial condition.

We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability.

The market for intimate apparel products is highly competitive. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business and results of operations. We compete directly against wholesalers and direct retailers of intimate apparel products, including large, diversified companies with substantial market share and strong worldwide brand recognition, such as L Brands Inc., Hanesbrands Inc. and PVH Corp., whose brands include Victoria’s Secrets, Calvin Klein, Maidenform, Bonds and others. Many of our competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, marketing, distribution and other resources than we do. Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can. Many of our competitors promote their brands through traditional forms of advertising, such as print media and television commercials, and through celebrity endorsements, and have greater and substantial resources to devote to such efforts. Our competitors may also create and maintain brand awareness using traditional forms of advertising more quickly than we can. Our competitors may also be able to increase sales in their new and existing markets faster than we can by emphasizing different distribution channels than we do, such as catalog sales or an extensive franchise network, as opposed to distribution through retail stores, wholesale or internet, and many of our competitors have substantial resources to devote toward increasing sales in such ways.

If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our products are subject to changing

27


 
 

TABLE OF CONTENTS

consumer preferences that cannot be predicted with certainty. We may be unable to introduce new products in a timely manner. Our customers may not accept our new products including our recently launched women’s products, or our competitors may introduce similar products in a more timely fashion. Failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels. Even if we are successful in anticipating consumer preferences, our ability to adequately react to and address those preferences will in part depend upon our continued ability to develop and introduce innovative, high-quality products. Our failure to effectively introduce new products that are accepted by consumers could have a material adverse effect on our financial condition.

Our net sales, profit results and cash flows are sensitive to, and may be affected by, general economic conditions, consumer confidence, spending patterns, weather or other market disruptions.

Our net sales, profit, cash flows and future growth may be affected by negative local, regional, national or international political or economic trends or developments that reduce the consumers’ ability or willingness to spend, including the effects of national and international security concerns such as war, terrorism or the threat thereof. In addition, market disruptions due to severe weather conditions, natural disasters, health hazards or other major events or the prospect of these events could also impact consumer spending and confidence levels. Purchases of women’s intimate and other apparel, beauty and personal care products and accessories often decline during periods when economic or market conditions are unsettled or weak. In such circumstances, we may increase the number of promotional sales, which could have a material adverse effect on our results of operations, financial condition and cash flows.

The decision by the United Kingdom to leave the European Union (“Brexit”) has increased the uncertainty in the economic and political environment in Europe. In particular, our business in the United Kingdom may be adversely impacted by fluctuations in currency exchange rates, changes in trade policies, or changes in labor, immigration, tax or other laws.

Extreme weather conditions in the areas in which our stores are located, particularly in markets where we have multiple stores, could adversely affect our business. For example, heavy snowfall, rainfall or other extreme weather conditions over a prolonged period might make it difficult for our customers to travel to our stores and thereby reduce our sales and profitability.

Our net sales, operating income, cash and inventory levels fluctuate on a seasonal basis.

We experience major seasonal fluctuations in our net sales and operating income, with a significant portion of our operating income typically realized during the fourth quarter holiday season. Any decrease in sales or margins during this period could have a material adverse effect on our results of operations, financial condition and cash flows.

Seasonal fluctuations also affect our cash and inventory levels, since we usually order merchandise in advance of peak selling periods and sometimes before new fashion trends are confirmed by customer purchases. We must carry a significant amount of inventory, especially before the holiday season selling period. If we are not successful in selling inventory, we may have to sell the inventory at significantly reduced prices or may not be able to sell the inventory at all, which could have a material adverse effect on our results of operations, financial condition and cash flows.

We are subject to risks associated with leasing retail space, are generally subject to long-term non-cancelable leases and are required to make substantial lease payments under our operating leases. Any failure to make these lease payments when due may lead to the landlord terminating the lease, which would harm our business, profitability and results of operations.

We do not own any of our stores, but instead lease all of our retail stores under operating leases. Our leases generally have initial terms of 5 years. All of our leases require a fixed annual rent, and some of them require the payment of additional rent if store sales exceed a negotiated amount. Most of our leases are “net” leases, which require us to pay all of the cost of insurance, taxes, maintenance and utilities, and we generally cannot cancel these leases at our option.

28


 
 

TABLE OF CONTENTS

Our net sales depend on a volume of traffic to our stores and the availability of suitable lease space.

Most of our stores are located in retail shopping areas including malls and other types of retail centers. Sales at these stores are derived, in part, from the volume of traffic in those retail areas. Our stores benefit from the ability of the retail center and other attractions in an area, including “destination” retail stores, to generate consumer traffic in the vicinity of our stores. Sales volume and retail traffic may be adversely affected by factors that we cannot control, such as economic downturns or changes in consumer demographics in a particular area, competition from internet and other retailers and other retail areas where we do not have stores, the closing or decline in popularity of other stores in the shopping areas where our stores are located and the deterioration in the financial condition of the operators of the shopping areas or developers in which our stores are located.

Our ability to grow depends in part on new store openings and existing store remodels and expansions.

Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores on a timely and profitable basis. Accomplishing our new and existing store expansion goals will depend upon a number of factors, including the ability to partner with developers and landlords to obtain suitable sites for new and expanded stores at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations. There can be no assurance we will be able to achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. These risks could have a material adverse effect on our ability to grow and results of operations, financial condition and cash flows.

Our planned international expansion may adversely impact our results and reputation.

We intend to further expand into international markets through partner arrangements and/or company-owned stores. The risks associated with our expansion into international markets include difficulties in attracting customers due to a lack of customer familiarity with our brands, our lack of familiarity with local customer preferences and seasonal differences in the market. Such expansions will also have upfront investment costs. If the expansion is not accompanied by sufficient revenues to achieve typical or expected operational and financial performance, it may have a material adverse effect on our results of operations and our business reputation.

We may not select suitable business partners for our international expansion, which could have a materially adverse effect on our results of operations.

In expanding into international markets through partner arrangements, we may be exposed to risks if we fail to identify suitable business partners. For example, these third parties may be unable to meet their projections regarding store openings and sales or they may fail to maintain compliance with federal and local law. Because these parties likely will be independent contractors, certain aspects of these arrangements will be outside of our direct control. These risks could have a material adverse effect on our results of operations, financial condition and cash flows.

Our operations in international markets are subject to additional political, economic, and other risks and uncertainties that could adversely affect our business, and our exposure to such risks will increase as we expand into additional international markets.

Our operations in international markets are subject to a number of risks inherent in any business operating in multiple countries. As we continue our international expansion, our operations will continue to encounter the following risks, among others:

Competition with new competitors or with existing competitors with an established market presence.
General economic conditions in specific countries or markets.
Volatility in the geopolitical landscape.
Restrictions on the repatriation of funds held internationally.

29


 
 

TABLE OF CONTENTS

Disruptions or delays in shipments.
Changes in diplomatic and trade relationships.
Political instability.
Foreign governmental regulation.

If any of these or other similar events should occur, it could have a material adverse effect on our results of operations, financial condition and cash flows.

Our performance may be affected by general economic conditions and financial difficulties.

Our performance is subject to worldwide economic conditions and their impact on levels of consumer spending. Some of the factors that have, or have had, an impact on discretionary consumer spending include general economic conditions, employment, consumer debt, changes in personal net worth based on changes in securities market price levels, residential real estate and mortgage markets, taxation, healthcare costs, fuel and energy prices, interest rates, credit availability, consumer confidence and other macroeconomic factors.

The worldwide apparel industry is heavily influenced by general economic cycles. Apparel retailing is a cyclical industry that is heavily dependent upon the overall level of consumer spending. Purchases of specialty apparel and related goods tend to be highly correlated with the cycles of the levels of disposable income of consumers. As a result, any substantial deterioration in general economic conditions could materially and adversely affect our net sales and results of operations. Downturns, or the expectation of a downturn, in general economic conditions could materially and adversely affect consumer spending patterns, our sales and our results of operations.

Consumer purchases of discretionary items generally decline during recessionary periods and other periods where disposable income is adversely affected. Any downturn in the economy may affect consumer purchases of our merchandise and have an adverse impact on our sales, results of operations and cash flow. Because apparel generally is a discretionary purchase, declines in consumer spending may have a more negative effect on apparel retailers than on other retailers. A decline in consumer spending may negatively affect our profitability.

Future increases in interest rates or other tightening of the credit markets, or future turmoil in the financial markets, could make it more difficult for us to access funds, to refinance our indebtedness (if necessary), to enter into agreements for new indebtedness, or to obtain funding through the issuance of our securities. Any such adverse changes in the credit or financial markets could also impact the ability of our suppliers to access liquidity, or could result in the insolvency of suppliers, which in turn could lead to their failure to deliver our merchandise. Worsening economic conditions could also result in difficulties for financial institutions (including bank failures) and other parties that we may do business with, which could potentially impair our ability to access financing under existing arrangements or to otherwise recover amounts as they become due under our other contractual arrangements. Additionally, either as a result of, or independent of, any financial difficulties and economic weakness in the United States, material fluctuations in currency exchange rates could have a negative impact on our business.

We may be impacted by our ability to service or refinance our debt.

We currently have substantial indebtedness. Some of our debt agreements contain covenants which require maintenance of certain financial ratios and also, under certain conditions, restrict our ability to pay dividends, repurchase common shares and make other restricted payments as defined in those agreements. Our cash flow from operations provides the primary source of funds for our debt service payments. If our cash flow from operations declines, we may be unable to service or refinance our current debt.

If we do not comply with the terms of our existing debt agreements, and such debt agreements cannot be amended or replaced with new indebtedness, we may be in default of our obligations under such debt agreements.

Our existing debt agreements (including our credit facility and our term loan agreement) contain a number of affirmative and negative covenants and representations and warranties. We have, in the past, been required to seek waivers of compliance with, or amendments of, certain of the financial covenants in the debt

30


 
 

TABLE OF CONTENTS

agreements, and we may be required to seek such waivers or amendments in the future. Our ability to meet these financial covenants may be affected by events beyond our control, and there can be no assurance that the lenders will grant any required waivers under, or amendments to, the debt agreements if for any reason we are unable to meet the requirements of such covenants.

If we fail to comply with covenants, representations or warranties under our debt agreements and do not either receive a waiver or amendment from our lenders or refinance the indebtedness subject to such agreements, such failure could trigger a default under our debt agreements. If we default, the lenders under those debt agreements could declare all borrowings owed to them, including accrued interest and other fees, to be due and payable, which declaration could have an adverse impact on our business and results of operations and may adversely impact our ability to consummate the Transactions.

Our business is exposed to foreign currency exchange rate fluctuations and control regulations.

Our business has substantial international components that expose us to significant foreign exchange risk. Changes in exchange rates can impact our financial results in two ways: a translation impact and a transaction impact. The translation impact refers to the impact that changes in exchange rates can have on our financial results, as our operating results in local foreign currencies are translated into New Zealand dollars using an average exchange rate over the representative period. Accordingly, during times of a strengthening New Zealand dollar, particularly against the Australian dollar, the Euro, the British pound sterling and the US dollar, our results of operations will be negatively impacted, and during times of a weakening New Zealand dollar, our results of operations will be favorably impacted.

The transaction impact on financial results is common for apparel companies operating outside the United States that purchase goods in U.S. dollars, as is the case with most of our foreign operations. During times of a strengthening U.S. dollar, our results of operations will be negatively impacted from these transactions as the increased local currency value of inventory results in higher cost of goods sold in local currency when the goods are sold, and during times of a weakening U.S. dollar, our results of operations will be favorably impacted. We also have exposure to changes in foreign currency exchange rates related to certain intercompany transactions and, to a lesser extent, SG&A expenses that are denominated in currencies other than the functional currency of a particular entity. We currently use and plan to continue to use foreign currency forward exchange contracts or other derivative instruments to mitigate the cash flow or market value risks associated with these inventory and intercompany transactions, but we are unable to entirely eliminate these risks.

We are also exposed to market risk for changes in exchange rates for the U.S. dollar in connection with our business as a licensee. Most of our license agreements require us to pay in Unites States dollars based on the exchange rate as of the last day of the contractual selling period but the sales are reported in the relevant territories’ local currencies. Thus we are exposed to exchange rate changes during and up to the last day of the selling period. In addition, we are exposed to exchange rate changes up to the date we make payment in U.S. dollars. As a result, during times of a strengthening U.S. dollar, our royalty fees will be positively impacted, and during times of a weakening U.S. dollar, our royalty fees will be negatively impacted.

We conduct business, directly or through licensees and other partners, in countries that are or have been subject to exchange rate control regulations and have, as a result, experienced difficulties in receiving payments owed to us when due, with amounts left unpaid for extended periods of time. Although the amounts to date have been immaterial to our results, as our international businesses grow and if controls are enacted or enforced in additional countries, there can be no assurance that such controls would not have a material and adverse effect on our business, financial condition or results of operations.

Our reported financial results may be adversely affected by changes in accounting principles

Generally accepted accounting principles are subject to interpretation by the SEC and the Public Company Accounting Oversight Board and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

31


 
 

TABLE OF CONTENTS

While we believe we have taken the steps necessary to improve the effectiveness of our internal control over financial reporting, we can give no assurance that any material weaknesses will arise in the future

Any material weakness or other deficiencies in our disclosure controls and procedures and internal control over financial reporting may affect our ability to report our financial results on a timely and accurate basis and to comply with disclosure obligations or cause our consolidated financial statements to contain material mistatements, which could negatively affect the market price and trading liquidity of our common stock or cause investors to lose confidence in our reported financial information. Investors relying upon our consolidated financial statements may make a misinformed investment decision.

Acquisitions may not be successful in achieving intended benefits, cost savings and synergies.

One component of our growth strategy has been to make acquisitions. Prior to completing any acquisition, our management team identifies expected synergies, cost savings and growth opportunities but, due to legal and business limitations, we may not have access to all necessary information. The integration process may be complex, costly and time-consuming. The potential difficulties of integrating the operations of an acquired business and realizing our expectations for an acquisition, including the benefits that may be realized, include, among other things:

failure to implement our business plan for the combined business;
delays or difficulties in completing the integration of acquired companies or assets;
higher than expected costs, lower than expected cost savings or a need to allocate resources to manage unexpected operating difficulties;
unanticipated issues in integrating manufacturing, logistics, information, communications and other systems;
unanticipated changes in applicable laws and regulations affecting the acquired business;
unanticipated changes in the combined business due to potential divestitures or other requirements imposed by antitrust regulators;
retaining key customers, suppliers and employees;
retaining and obtaining required regulatory approvals, licenses and permits;
operating risks inherent in the acquired business;
diversion of the attention and resources of management;
consumers’ failure to accept product offerings by us or our licensees;
assumption of liabilities not identified in due diligence;
the impact on our or an acquired business’ internal controls and compliance with the requirements under the Sarbanes-Oxley Act of 2002; and
other unanticipated issues, expenses and liabilities.

We have completed acquisitions that have not performed as well as initially expected and cannot assure you that any acquisition will not have a material adverse impact on our financial condition and results of operations.

The loss of the services of Justin Davis-Rice, members of our executive management team, or other key personnel could have a material adverse effect on our business.

Justin Davis-Rice’s leadership in the design and marketing areas of our business has been a critical element of our success since our inception. The death or disability of Mr. Davis-Rice or other extended or permanent loss of his services, or any negative market or industry perception with respect to him or arising from his loss, could have a material adverse effect on our business, results of operations, and financial condition.

32


 
 

TABLE OF CONTENTS

We also depend on the service and management experience of other key executive officers and other members of senior management who have substantial experience and expertise in our industry and our business and have made significant contributions to our growth and success. The loss of the services of any of our key executive officers or other members of senior management, or one or more of our other key personnel, or the concurrent loss of several of these individuals or any negative public perception with respect to these individuals, could also have a material adverse effect on our business, results of operations, and financial condition.

We are not protected by a material amount of key-man or similar life insurance covering our executive officers, including Mr. Davis-Rice, or other members of senior management. We have entered into employment agreements with certain of our executive officers, but competition for experienced executives in our industry is intense and the non-compete period with respect to certain of our executive officers could, in some circumstances in the event of their termination of employment with our company, end prior to the employment term set forth in their employment agreements.

We rely on third-party suppliers and manufacturers to provide fabrics for and to produce our products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.

We do not manufacture our products or the raw materials for them and rely instead on third-party suppliers and manufacturers. Many of the specialty fabrics used in our products are technically advanced textile products developed and manufactured by third parties and may be available, in the short-term, from only one or a very limited number of sources. We may experience a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a disruption, we may be unable to locate alternative materials suppliers of comparable quality at an acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to replace an existing supplier manufacturer, we may be unable to locate additional suppliers of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from other participants in our supply chain. Any delays, interruption or increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenue and income from operations both in the short and long term. We have occasionally received, and may in the future continue to receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. If defects in the manufacture of our products are not discovered until after our customers purchase such products, our customers could lose confidence in the technical attributes of our products and our results of operations could suffer and our business could be harmed.

The fluctuating cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.

The fabrics used by our suppliers and manufacturers include synthetic fabrics whose raw materials include petroleum-based products. Our products also include natural fibers, including cotton. Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. Increases in the cost of raw materials could have a material adverse effect on our cost of goods sold, results of operations, financial condition and cash flows.

33


 
 

TABLE OF CONTENTS

If we are unable to safeguard against security breaches with respect to our information systems our business may be adversely affected.

In the course of our business, we gather, transmit and retain confidential information, including personal information about our customers, and process payment transactions through our information systems. Although we endeavor to protect confidential information and payment information through the implementation of security technologies, processes and procedures, it is possible that an individual or group could defeat security measures and access sensitive information about our customers, employees and other third parties. Any misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information gathered, stored or used by us could have a material impact on the operation of our business, including damaging our reputation with our customers, employees, third parties and investors. We could also incur significant costs implementing additional security measures to comply with applicable federal, state or international laws and regulations governing the unauthorized disclosure of confidential or personally identifiable information as well as increased costs such as organizational changes, implementing additional protection technologies, training employees or engaging consultants. In addition, we could incur lost revenues and face increased litigation as a result of any potential cyber-security breach. We are not aware of that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cyber-security breach or other act, however, a cyber-security breach or other act and/or disruption to our information technology systems could have a material adverse effect on our business, prospects, financial condition or results of operations.

Our fabrics and manufacturing technology are not patented and can be imitated by our competitors.

The intellectual property rights in the technology, fabrics and processes used to manufacture our products are owned or controlled by our suppliers and are generally not unique to us. Our ability to obtain intellectual property protection for our products is therefore limited and we currently own no patents or exclusive intellectual property rights in the technology, fabrics or processes underlying our products. As a result, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrics and styling similar to our products. Because many of our competitors have significantly greater financial, distribution, marketing and other resources than we do, they may be able to manufacture and sell products based on our fabrics and manufacturing technology at lower prices than we can. If our competitors do sell similar products to ours at lower prices, our net revenue and profitability could suffer.

Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position.

We currently rely on trademarks, as well as confidentiality procedures, to establish and protect our intellectual property rights. We cannot assure you that the steps taken by us to protect our intellectual property rights will be adequate to prevent infringement of such rights by others, including imitation of our products and misappropriation of our brand. In addition, intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States, Canada or the European Union, and it may be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of our brand could be diminished and our competitive position may suffer.

We may be impacted by changes in taxation, trade and other regulatory requirements.

We are subject to income tax in local, national and international jurisdictions. In addition, our products are subject to import and excise duties and/or sales or value-added taxes in many jurisdictions. We are also subject to the examination of our tax returns and other tax matters by the Internal Revenue Service and other tax authorities and governmental bodies. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance as to the outcome of these examinations. Fluctuations in tax rates and duties, changes in tax legislation or regulation or adverse outcomes of these examinations could have a material adverse effect on our results of operations, financial condition and cash flows.

34


 
 

TABLE OF CONTENTS

We have significant tax losses arising on historical trading losses. The availability to utilize these tax losses to offset future taxable profit is dependent on future performance and trade of the business. There can be no assurance as to the availability of these losses for utilization.

There is increased uncertainty with respect to tax policy and trade relations between the U.S. and other countries. Major developments in tax policy or trade relations, such as the disallowance of tax deductions for imported merchandise or the imposition of unilateral tariffs on imported products, could have a material adverse effect on our results of operations, financial condition and cash flows.

Our current operations in international markets and our efforts to expand into additional international markets, and any earnings in those markets, may be affected by legal and regulatory risks.

We are subject to the U.S. Foreign Corrupt Practices Act, in addition to the anti-corruption laws of the foreign countries in which we operate and manufacture our products. Although we implement policies and procedures designed to promote compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation could result in sanctions or other penalties and have an adverse effect on our business, reputation and operating results.

We may be subject to loss and theft.

Our merchandise is subject to loss, including those caused by illegal or unethical conduct by associates, customers, vendors or unaffiliated third parties. We have experienced events such as inventory shrinkage in the past, and we cannot assure that incidences of loss and theft will decrease in the future or that the measures we are taking will effectively reduce these losses. Higher rates of loss or increased security costs to combat theft could have a material adverse effect on our results of operations, financial condition and cash flows.

We could have failures in our system of internal controls causing us to inaccurately report our financial results or to fail to prevent fraud.

We cannot assure you that there will not be any control deficiencies in the future. Should we become aware of any significant deficiencies or material weaknesses, we would report them to the Audit Committee and recommend prompt remediation. We cannot be certain that these measures will ensure that our controls are adequate in the future or that adequate controls will be effective in preventing fraud. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. Any failures in the effectiveness of our internal controls could have a material adverse effect on our financial condition or operating results or cause us to fail to meet reporting obligations.

A portion of our revenue is dependent on royalties and licensing.

License arrangements exist for Heidi Klum, Stella McCartney and Fredericks of Hollywood that contributed revenue of 30%, 9% and 14% of group sales, respectively, in the seven month period to January 31, 2017. The gross margin contribution during this period was 29%, 9%, and 19%, respectively, of total group gross margin. License arrangements exist for Heidi Klum, Stella McCartney and Fredericks of Hollywood that contributed revenue of 30%, 12% and 16% of group sales, respectively, in the six month period to July 31, 2017. The gross margin contribution during this period was 25%, 6%, and 21%, respectively, of total group gross margin.

The operating profit associated with our royalty, advertising and other revenue is significant because the operating expenses directly associated with administering and monitoring an individual licensing or similar agreement are minimal. Therefore, the loss of a significant licensing partner, whether due to the termination or expiration of the relationship, the cessation of the licensing partner’s operations or otherwise (including as a result of financial difficulties of the partner), without an equivalent replacement, could materially impact our profitability. For example, Bendon’s license to use the Stella McCartney brand terminates effective June 30, 2018.

While we generally have significant control over our licensing partners’ products and advertising, we rely on our licensing partners for, among other things, operational and financial controls over their businesses. Our licensing partners’ failure to successfully market licensed products or our inability to replace our existing licensing partners could materially and adversely affect our revenue both directly from reduced royalty and

35


 
 

TABLE OF CONTENTS

advertising and other revenue received and indirectly from reduced sales of our other products. Risks are also associated with our licensing partners’ ability to obtain capital, execute their business plans, timely deliver quality products, manage their labor relations, maintain relationships with their suppliers, manage their credit risk effectively and maintain relationships with their customers.

A significant shift in the relative sources of our earnings, adverse decisions of tax authorities or changes in tax treaties, laws, rules or interpretations could have a material adverse effect on our results of operations and cash flow.

We have direct operations in many countries and the applicable tax rates vary by jurisdiction. As a result, our overall effective tax rate could be materially affected by the relative level of earnings in the various taxing jurisdictions to which our earnings are subject. In addition, the tax laws and regulations in the countries where we operate may be subject to change and there may be changes in interpretation and enforcement of tax law. As a result, we may pay additional taxes if tax rates increase or if tax laws, regulations or treaties in the jurisdictions where we operate are modified by the competent authorities in an adverse manner.

In addition, various national and local taxing authorities periodically examine us and our subsidiaries. The resolution of an examination or audit may result in us paying more than the amount that we may have reserved for a particular tax matter, which could have a material adverse effect on our cash flows, business, financial condition and results of operations for any affected reporting period.

We and our subsidiaries are engaged in a number of intercompany transactions. Although we believe that these transactions reflect arm’s length terms and that proper transfer pricing documentation is in place, which should be respected for tax purposes, the transfer prices and conditions may be scrutinized by local tax authorities, which could result in additional tax liabilities.

Bendon has identified material weaknesses in its internal controls over financial reporting.

We have identified material weaknesses that existed as of July 31, 2017, January 31, 2017, June 30, 2016 and June 30, 2015. A material weakness is a deficiency, or a combination of deficiencies in internal controls over financial reporting, such that if there is a material misstatement in our financial statements, they will not necessarily be prevented or detected on a timely basis.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were:

(1) Lack of a functioning audit committee;
(2) Lack of independent directors on our board of directors that are financial experts, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures;
(3) Lack of skilled resources and lack of expertise with complex GAAP and SEC reporting matters;
(4) Lack of adequate processes, procedures and internal controls over the collation and review of contracts executed by our company; and
(5) No formally implemented system of internal control over financial reporting and no associated written documentation of our internal control policies and procedures

We believe that these material weaknesses primarily related to our lack of board oversight and appropriately skilled resources. While these material weaknesses resulted in errors that were material to our financial statements, it impacted our company’s ability to close financial reporting on a timely basis and resulted in numerous late amendments to draft financial statements.

The introduction of a properly constituted Board with diverse skills and talent will manage the risks across the business. We delayed implementing the appointment of an appropriately qualified personnel on the basis we are preparing to merge with Naked which has on its Board a newly appointed Independent Non Executive Director and we will also provide appropriate support for our CFO and/or appoint an appropriately skilled and experienced CFO.

36


 
 

TABLE OF CONTENTS

We plan to take a number of actions to correct these material weaknesses upon going public including, but not limited to, appointing independent directors, establishing an independent Audit Committee, adding experienced accounting and financial personnel and retaining third party consultants to review our internal controls and recommend improvements.

Our efforts to remediate these material weaknesses may not be effective. If our efforts to remediate these material weaknesses are not successful, the remediated material weaknesses may reoccur, or other material weaknesses could occur in the future.

As a result of these material weaknesses, we may be unable to report our financial results accurately on a timely basis, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence and could cause the stock price to decline.

As a result of such failures, we could also become subject to investigation by the stock exchange on which our shares are listed, the SEC, or other regulatory authorities, and become subject to litigation from investors, which would harm our reputation, business, financial condition and results or operations, and divert financial and management recoveries from our core business.

The material weaknesses will require management to devote significant time and incur significant expenses to remediate the material weaknesses and they might not be able to remediate the weaknesses in a timely manner.

If we fail to implement and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm, if and when required, may reveal additional deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or identify other areas for further attention or improvement. If in the future we identify other 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 then listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

Additionally, we currently do not have an internal audit group nor an Audit Committee of our board of directors, and we will eventually need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to have effective internal controls for financial reporting.

Risks Related to Naked’s Business and Operations

As used in the risks described in this subsection, references to “we,” “us” and “our” are intended to refer to Naked and its subsidiaries unless the context clearly indicates otherwise.

All figures presented below are in U.S. dollars, unless otherwise stated.

We have a limited operating history, which makes it difficult to evaluate our company or future operations.

We are still evolving our business plan as a growing company. As a result, we have no way to evaluate the likelihood that we will be able to operate the business successfully. For the years ended January 31, 2017

37


 
 

TABLE OF CONTENTS

and 2016, our net revenues were $1,842,065 and $1,389,414, respectively. For the three and nine months ended October 31, 2017, our net revenues were $620,928 and $1,746,644, respectively, compared to net revenue for the three and nine months ended October 31, 2016 of $551,494 and $1,292,132, respectively. Naked commenced operations in 2010 and, since beginning operations, we have generated limited total revenues. As a relatively new company, we are subject to many risks associated with the initial organization, financing, expenditures and impediments inherent in a new business and there is limited history upon which to base any assumption as to the likelihood that we will prove successful.

We have a history of operating losses and negative cash flow that may continue into the foreseeable future. If we fail to execute our strategy to achieve and maintain profitability in the future, investors could lose confidence in the value of our common stock which could cause our stock price to decline and adversely affect our ability to raise additional capital. Investors should evaluate an investment in our company in light of the obstacles that may be encountered by a start-up company in a competitive market.

If we are unable to obtain additional financing on acceptable terms, we may have to curtail our growth or cease our development plans and operations.

The operation of our business and our growth efforts will require significant cash outlays. We are largely dependent on outside capital to implement our business plan and support our operations. We anticipate for the foreseeable future that cash on hand and cash generated from operations will not be sufficient to meet our cash requirements, and that we will need to raise additional capital through investments to fund our operations and growth. We cannot assure you that we will be able to raise additional working capital as needed on terms acceptable to us, if at all. If we are unable to raise capital as needed, we may be required to reduce the scope of our growth efforts, which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case, you may lose all your investment. Financings, including future equity investments, if obtained, may be on terms that are dilutive to our stockholders, and the prices at which new investors would be willing to purchase our securities may be lower than the price at which you purchase your shares. Furthermore, the terms of securities issued in a financing, if obtained, may be more favorable for new investors.

Investors should be aware that the value of an investment in our company may go down as well as up. In addition, there can be no certainty that the market value of an investment in our company will fully reflect its underlying value.

Naked’s auditors’ report on the January 31, 2017 consolidated financial statements included an explanatory paragraph regarding there being substantial doubt about the ability to continue as a going concern.

For the year ended January 31, 2017, Naked incurred a net loss of ($10,798,503). We anticipate generating losses for at least the next 12 months. Therefore, there is substantial doubt about Naked’s ability to continue operations in the future as a going concern, as noted by our auditors with respect to the consolidated financial statements for the year ended January 31, 2017. Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business. If Naked cannot continue as a viable entity, our stockholders may lose some or all of their investment in our company.

We have a concentration of sales to key customers and any substantial reduction in sales to these customers would have a material adverse effect on our business.

During the year ended January 31, 2017, sales were concentrated with Bloomingdales and Nordstrom, which accounted for 14% and 12%, respectively, of our net sales. In fiscal 2016, Nordstrom accounted for 41% of our net sales. The decline in percentage of sales to Nordstrom during fiscal 2017 is partly due to a reduction by Nordstrom in replenishment due to the elimination of in-store inventory, but more significantly is due to the addition of other key departments store and specialty store accounts, and the corresponding increase in overall net sales. Nordstrom and Bloomingdales are currently of key importance to our business and our results of operations would be materially adversely affected if these relationships ceased. Although we have diversified our customers and continue to receive increasing sales orders from existing customers, these customers do not have any ongoing purchase commitment agreement with us; therefore, we cannot guarantee

38


 
 

TABLE OF CONTENTS

that the volume of sales will remain consistent going forward. Any substantial change in purchasing decisions by these customers, whether due to actions by our competitors, industry factors or otherwise, could have a material adverse effect on our business and our financial condition.

We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can, resulting in a loss of our market share and a decrease in our net revenue and profitability.

The market for innerwear products is highly competitive. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business and results of operations. We compete directly against wholesalers and direct retailers of innerwear products, including large, diversified companies with substantial market share and strong worldwide brand recognition, such as Calvin Klein, Polo Ralph Lauren, 2(x)ist, Hugo Boss, Tommy John, Saxx Giorgio Armani, Tommy Hilfiger, Michael Kors, DKNY, Natori, Free People, Hanky Panky, Commando, Cosabella, MeUndies, Bread&Boxers, Frigo and others. Many of our competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, marketing, distribution and other resources than we do. Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can. Many of our competitors promote their brands through traditional forms of advertising, such as print media and television commercials, and through celebrity endorsements, and have greater and substantial resources to devote to such efforts. Our competitors may also create and maintain brand awareness using traditional forms of advertising more quickly than we can. Our competitors may also be able to increase sales in their new and existing markets faster than we can by emphasizing different distribution channels than we do, such as catalog sales or an extensive franchise network, as opposed to distribution through retail stores, wholesale or internet, and many of our competitors have substantial resources to devote toward increasing sales in such ways.

If we are unable to anticipate consumer preferences and successfully develop and introduce new, innovative and updated products, we may not be able to maintain or increase our sales and profitability.

Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing consumer demands in a timely manner. All of our products are subject to changing consumer preferences that cannot be predicted with certainty. We may be unable to introduce new products in a timely manner. Our customers may not accept our new products including our recently launched women’s products, or our competitors may introduce similar products in a more timely fashion. Failure to anticipate and respond in a timely manner to changing consumer preferences could lead to, among other things, lower sales and excess inventory levels. Even if we are successful in anticipating consumer preferences, our ability to adequately react to and address those preferences will in part depend upon our continued ability to develop and introduce innovative, high-quality products. Our failure to effectively introduce new products that are accepted by consumers could have a material adverse effect on our financial condition.

If we are unable to obtain or maintain our endorsements by professional athletes and celebrities, our ability to market and sell our products may be harmed.

An important element of our marketing strategy is to obtain endorsements from prominent athletes and celebrities, which may contribute to the image of our brands. To date, we have entered into one celebrity endorsement agreement with Dwyane Wade, an NBA basketball player which has been subsequently terminated. We believe that this strategy is an effective means of gaining brand exposure worldwide and creating broad appeal for our products. We cannot assure you that we will be able to attract new athletes and celebrities to endorse our products. We also are subject to risks related to the selection of athletes and celebrities whom we choose to endorse our products. We may select athletes who are unable to perform at expected levels or who are not sufficiently marketable. In addition, negative publicity concerning any of our athletes and celebrities could harm our brand and adversely impact our business. If we are unable in the future to secure prominent athletes and celebrities and arrange endorsements of our products on terms we deem to be reasonable, we may be required to modify our marketing platform and to rely more heavily on other forms of marketing and promotion, which may not prove to be effective. In any event, our inability to obtain

39


 
 

TABLE OF CONTENTS

endorsements from professional athletes and celebrities could adversely affect our ability to market and sell our products, resulting in loss of revenues.

An economic downturn or economic uncertainty in our key markets may adversely affect consumer discretionary spending and demand for our products.

Many of our products may be considered discretionary items for consumers. Factors affecting the level of consumer spending for such discretionary items include general economic conditions, particularly those in the United States, and other factors such as consumer confidence in future economic conditions, fears of recession, the availability of consumer credit, levels of unemployment, tax rates and the cost of consumer credit. As global economic conditions continue to be volatile or economic uncertainty remains, trends in consumer discretionary spending also remain unpredictable and subject to reductions due to credit constraints and uncertainties about the future. The current volatility in the United States economy in particular has resulted in an overall slowing in growth in the retail sector because of decreased consumer spending, which may remain depressed for the foreseeable future. These unfavorable economic conditions may lead consumers to delay or reduce purchase of our products. Consumer demand for our products may not reach our sales targets, or may decline, when there is an economic downturn or economic uncertainty in our key markets, particularly in North America. Our sensitivity to economic cycles and any related fluctuation in consumer demand may have a material adverse effect on our financial condition.

Our sales and profitability may decline as a result of increasing product costs and decreasing selling prices.

Our business is subject to significant pressure on pricing and costs caused by many factors, including intense competition, constrained sourcing capacity and related inflationary pressure, pressure from consumers to reduce the prices we charge for our products and changes in consumer demand. These factors may cause us to experience increased costs, reduce our sales prices to consumers or experience reduced sales in response to increased prices, any of which could have a material adverse effect on our financial conditions, operating results and cash flows.

Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products.

To ensure adequate inventory supply, we must forecast inventory needs and place orders with our manufacturers based on our estimates of future demand for particular products. Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in customer demand for our products or for products of our competitors, our failure to accurately forecast customer acceptance of new products, product introductions by competitors, unanticipated changes in general market conditions, and weakening of economic conditions or consumer confidence in future economic conditions. If we fail to accurately forecast customer demand we may experience excess inventory levels or a shortage of products available for sale in our stores or for delivery to customers. Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would adversely affect our results of operations and could impair the strength and exclusivity of our brand. Conversely, if we underestimate customer demand for our products, our manufacturers may not be able to deliver products to meet our requirements, and this could result in damage to our reputation and customer relationships.

We rely on third-party suppliers and manufacturers to provide fabrics for and to produce our products, and we have limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.

We do not manufacture our products or the raw materials for them and rely instead on third-party suppliers and manufacturers. Many of the specialty fabrics used in our products are technically advanced textile products developed and manufactured by third parties and may be available, in the short-term, from only one or a very limited number of sources. We may experience a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a disruption, we may be unable to locate alternative materials suppliers of comparable quality at an acceptable price, or at all. In addition, if we experience significant increased demand, or if we need to replace an existing supplier manufacturer, we may

40


 
 

TABLE OF CONTENTS

be unable to locate additional suppliers of fabrics or raw materials or additional manufacturing capacity on terms that are acceptable to us, or at all, or we may be unable to locate any supplier or manufacturer with sufficient capacity to meet our requirements or to fill our orders in a timely manner. Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other ethical practices. Even if we are able to expand existing or find new manufacturing or fabric sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from other participants in our supply chain. Any delays, interruption or increased costs in the supply of fabric or manufacture of our products could have an adverse effect on our ability to meet customer demand for our products and result in lower net revenue and income from operations both in the short and long term. We have occasionally received, and may in the future continue to receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. In that event, unless we are able to obtain replacement products in a timely manner, we risk the loss of net revenue resulting from the inability to sell those products and related increased administrative and shipping costs. If defects in the manufacture of our products are not discovered until after our customers purchase such products, our customers could lose confidence in the technical attributes of our products and our results of operations could suffer and our business could be harmed.

The fluctuating cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.

The fabrics used by our suppliers and manufacturers include synthetic fabrics whose raw materials include petroleum-based products. Our products also include natural fibers, including cotton. Our costs for raw materials are affected by, among other things, weather, consumer demand, speculation on the commodities market, the relative valuations and fluctuations of the currencies of producer versus consumer countries and other factors that are generally unpredictable and beyond our control. Increases in the cost of raw materials could have a material adverse effect on our cost of goods sold, results of operations, financial condition and cash flows.

Our ability to source our merchandise profitably or at all could be hurt if new trade restrictions are imposed or existing trade restrictions become more burdensome.

The United States and the countries in which our products are produced or sold internationally have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations, or may adversely adjust prevailing quota, duty or tariff levels. Countries impose, modify and remove tariffs and other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs and other trade restrictions. Trade restrictions, including tariffs, quotas, embargoes, safeguards and customs restrictions, could increase the cost or reduce the supply of products available to us or may require us to modify our supply chain organization or other current business.

Our operating results are subject to seasonal and quarterly variations in our net revenue from operations, which could cause the price of our common stock to decline.

We have experienced, and expect to continue to experience, significant seasonal variations in our net revenue from operations. Seasonal variations in our net revenue are primarily related to increased sales of our products during our fiscal fourth quarter, reflecting our historical strength in sales during the holiday season.

Our quarterly results of operations may also fluctuate significantly as a result of a variety of other factors, including, among other things, net revenue and profits contributed by new retailers; increases or decreases in comparable sales; changes in our product mix; and the timing of new advertising and new product introductions.

As a result of these seasonal and quarterly fluctuations, we believe that comparisons of our operating results between different quarters within a single fiscal year are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of our future performance.

41


 
 

TABLE OF CONTENTS

We began selling our products in Canada in January 2010. Our limited operating history and nature as a developing company make it difficult to assess the impact of seasonal factors on our business or whether or not our business is susceptible to cyclical fluctuations in the economy in the markets in which we operate. Likewise, our growth may have obscured the effect of any seasonal or cyclical factors on our business to date. Seasonal or cyclical variations in our business may become more pronounced over time and may harm our results of operations in the future.

Any future seasonal or quarterly fluctuations in our results of operations may not match the expectations of market analysts and investors. Disappointing quarterly results could cause the price of our common stock to decline. Seasonal or quarterly factors in our business and results of operations may also make it more difficult for market analysts and investors to assess the longer-term strength of our business at any particular point, which could lead to increased volatility in our stock price. Increased volatility could cause our stock price to suffer in comparison to less volatile investments.

If we are unable to adequately demonstrate that our independent manufacturers use ethical business practices and comply with applicable laws and regulations, our brand image could be harmed due to negative publicity.

Our core values, which include developing the highest quality products while operating with integrity, are an important component of our brand image, which makes our reputation particularly sensitive to allegations of unethical business practices. While our internal and vendor operating guidelines promote ethical business practices such as environmental responsibility, fair wage practices, and compliance with child labor laws, among others, and we, along with a third party that we retain for this purpose, monitor compliance with those guidelines, we do not control our independent manufacturers or their business practices. Accordingly, we cannot guarantee their compliance with our guidelines. A lack of demonstrated compliance could lead us to seek alternative suppliers, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations. Violation of labor or other laws by our independent manufacturers or the divergence of an independent manufacturer’s labor or other practices from those generally accepted as ethical in the United States, Canada or other markets in which we do business could also attract negative publicity for us and our brand. This could diminish the value of our brand image and reduce demand for our merchandise if, as a result of such violation, we were to attract negative publicity. Other apparel manufacturers have encountered significant problems in this regard, and these problems have resulted in organized boycotts of their products and significant adverse publicity. If we, or other manufacturers in our industry, encounter similar problems in the future, it could harm our brand image, stock price and results of operations.

Our limited operating experience and limited brand recognition in new international markets may limit our expansion strategy and cause our business and growth to suffer.

Our future growth depends, to an extent, on our international expansion efforts. We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in any new market. We may also encounter difficulty expanding into new international markets because of limited brand recognition leading to delayed acceptance of our products by customers in these new international markets. Our failure to develop new international markets or disappointing growth outside of existing markets will harm our business and results of operations.

Our current operations in international markets and our efforts to expand into additional international markets, and any earnings in those markets, may be affected by legal and regulatory risks.

We are subject to the U.S. Foreign Corrupt Practices Act, in addition to the anti-corruption laws of the foreign countries in which we operate and manufacture our products. Although we implement policies and procedures designed to promote compliance with these laws, our employees, contractors and agents, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies. Any such violation could result in sanctions or other penalties and have an adverse effect on our business, reputation and operating results.

42


 
 

TABLE OF CONTENTS

Our success depends on our ability to maintain the value and reputation of our brand.

Our success depends on the value and reputation of the Naked brand. The Naked name is integral to our business as well as to the implementation of our strategies for expanding our business. Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide a consistent, high quality customer experience. We rely on social media as one of our marketing strategies to have a positive impact on both our brand value and reputation. Our brand could be adversely affected if we fail to achieve these objectives or if our public image or reputation were to be tarnished by negative publicity. Negative publicity regarding the production methods of any of our suppliers or manufacturers could adversely affect our reputation and sales and force us to locate alternative suppliers or manufacturing sources. Additionally, while we devote considerable efforts and resources to protecting our intellectual property, if these efforts are not successful the value of our brand may be harmed, which could have a material adverse effect on our financial condition.

Any material disruption of our information systems could disrupt our business and reduce our sales.

We rely on information systems to operate our e-commerce website, process transactions, respond to customer inquiries, manage inventory, purchase, sell and ship goods on a timely basis and maintain cost-efficient operations. Any material disruption or slowdown of our systems, including a disruption or slowdown caused by our failure to successfully upgrade our systems, system failures, viruses, cyber-attack or other causes, could cause information, including data related to customer orders, to be lost or delayed which could result in delays in the delivery of merchandise to our customers or lost sales, which could reduce demand for our merchandise and cause our sales to decline. If changes in technology cause our information systems to become obsolete, or if our information systems are inadequate to handle our growth, we could lose customers. If our systems are damaged, fail to function properly or become obsolete, we may have to make monetary investments to repair or replace the systems, and we could endure delays in our operations.

If we are unable to safeguard against security breaches with respect to our information systems our business may be adversely affected.

In the course of our business, we gather, transmit and retain confidential information, including personal information about our customers, and process payment transactions through our information systems. Although we endeavor to protect confidential information and payment information through the implementation of security technologies, processes and procedures, it is possible that an individual or group could defeat security measures and access sensitive information about our customers, employees and other third parties. Any misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information gathered, stored or used by us could have a material impact on the operation of our business, including damaging our reputation with our customers, employees, third parties and investors. We could also incur significant costs implementing additional security measures to comply with applicable federal, state or international laws and regulations governing the unauthorized disclosure of confidential or personally identifiable information as well as increased costs such as organizational changes, implementing additional protection technologies, training employees or engaging consultants. In addition, we could incur lost revenues and face increased litigation as a result of any potential cyber-security breach. We are not aware of that we have experienced any material misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information as a result of a cyber-security breach or other act, however, a cyber-security breach or other act and/or disruption to our information technology systems could have a material adverse effect on our business, prospects, financial condition or results of operations.

Our fabrics and manufacturing technology are not patented and can be imitated by our competitors.

The intellectual property rights in the technology, fabrics and processes used to manufacture our products are owned or controlled by our suppliers and are generally not unique to us. Our ability to obtain intellectual property protection for our products is therefore limited and we currently own no patents or exclusive intellectual property rights in the technology, fabrics or processes underlying our products. As a result, our current and future competitors are able to manufacture and sell products with performance characteristics, fabrics and styling similar to our products. Because many of our competitors have significantly greater financial, distribution, marketing and other resources than we do, they may be able to manufacture and sell

43


 
 

TABLE OF CONTENTS

products based on our fabrics and manufacturing technology at lower prices than we can. If our competitors do sell similar products to ours at lower prices, our net revenue and profitability could suffer.

Our failure or inability to protect our intellectual property rights could diminish the value of our brand and weaken our competitive position.

We currently rely on trademarks, as well as confidentiality procedures, to establish and protect our intellectual property rights. We cannot assure you that the steps taken by us to protect our intellectual property rights will be adequate to prevent infringement of such rights by others, including imitation of our products and misappropriation of our brand. In addition, intellectual property protection may be unavailable or limited in some foreign countries where laws or law enforcement practices may not protect our intellectual property rights as fully as in the United States, Canada or the European Union, and it may be more difficult for us to successfully challenge the use of our intellectual property rights by other parties in these countries. If we fail to protect and maintain our intellectual property rights, the value of our brand could be diminished and our competitive position may suffer.

Our future success is substantially dependent on the continued service of our senior management.

Our future success is substantially dependent on the continued service of our senior management and other key employees, particularly our Chief Executive Officer and Chief Creative Officer, Carole Hochman. The loss of the services of our senior management or other key employees could make it more difficult to successfully operate our business and achieve our business goals. We also may be unable to retain existing personnel that are critical to our success, which could result in harm to our customer and employee relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs.

Because a portion of our sales may be generated in foreign countries, fluctuations in foreign currency exchange rates may negatively affect our results of operations.

The reporting currency for our consolidated financial statements is the US dollar. In the future, we expect to continue to derive a significant portion of our net revenue in foreign countries, and changes in exchange rates between the currencies for those countries and the US dollar may have a significant, and potentially adverse, effect on our results of operations. Our primary risk of loss regarding foreign currency exchange rate risk is caused by fluctuations in the exchange rates between the US dollar and the currencies for those countries. We have not historically engaged in hedging transactions and do not currently contemplate engaging in hedging transactions to mitigate foreign exchange risks. As we continue to recognize gains and losses in foreign currency transactions, depending upon changes in future currency rates, such gains or losses could have a significant, and potentially adverse, effect on our results of operations.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC and the Public Company Accounting Oversight Board and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.

While we believe we have taken the steps necessary to improve the effectiveness of our internal control over financial reporting, we can give no assurance that any material weaknesses will not arise in the future.

Any material weakness or other deficiencies in our disclosure controls and procedures and internal control over financial reporting may affect our ability to report our financial results on a timely and accurate basis and to comply with disclosure obligations or cause our consolidated financial statements to contain material misstatements, which could negatively affect the market price and trading liquidity of our common stock or cause investors to lose confidence in our reported financial information. Investors relying upon our consolidated financial statements may make a misinformed investment decision.

44


 
 

TABLE OF CONTENTS

Risk Related to Our Common Stock and Public Reporting Requirements

On February 1, 2018 we received writing notice from Nasdaq that we were not in compliance with NASDAQ’s continued listing requirements due to our failure to hold an annual meeting of stockholders for the fiscal year ended January 31, 2017. Our common stock may be delisted from the Nasdaq Capital Market if we cannot satisfy Nasdaq’s continued listing requirements.

On February 1, 2018, the Company received written notice from the Listing Qualifications Staff of The Nasdaq Stock Market (“Nasdaq”) notifying the Company that it no longer complies with Nasdaq Listing Rule 5620(a) due to the Company’s failure to hold an annual meeting of stockholders within twelve months of the end of the Company’s fiscal year ended January 31, 2017 (the “Annual Meeting Requirement”). The Company delayed holding its 2017 annual meeting of stockholders because of the contemplated business combination with Bendon and Holdco that would be submitted to the Company’s stockholders for a vote at a meeting.

Nasdaq’s notice has no immediate effect on the listing of the Company’s common stock on The Nasdaq Capital Market. Under Nasdaq Listing Rule 5810(c)(2)(G), the Company has 45 calendar days from February 1, 2018 to submit to Nasdaq a plan to regain compliance with the Annual Meeting Requirement. If Nasdaq accepts the Company’s plan, Nasdaq may grant an extension of up to 180 calendar days from the end of the fiscal year ended January 31, 2017, or until July 30, 2018, to regain compliance. If Nasdaq does not accept the Company’s plan, the Company will have the right to appeal such decision to a Nasdaq hearings panel.

On March 19, 2018, the Company provided Nasdaq with a plan to regain compliance with the Annual Meeting Requirement, which, among other things, explained the reasons for the Company’s delay in holding its 2017 annual meeting of stockholders and stated the Company’s intention to hold an annual meeting of stockholders on or before July 30, 2018.

On March 27, 2018, the Company received written notice from Nasdaq granting the Company an extension until July 30, 2018 to regain compliance with the Annual Meeting Requirement by holding an annual meeting of stockholders at which, among other things, the stockholders shall elect directors to the Board of Directors of the Company. The notice further provides that in the event the Company does not satisfy such terms, Nasdaq will provide written notification that the Company’s securities will be delisted.

There can be no assurance that the Company will be able to regain compliance with the Annual Meeting Requirement or maintain compliance with any other Nasdaq requirement in the future.

Because we can issue additional shares of common stock, holders of our common stock may experience dilution in the future.

We are authorized to issue up to 18,000,000 shares of common stock, of which 10,342,191 shares are issued and outstanding as of the record date. Our board of directors has the authority to cause us to issue additional shares of common stock without consent of any of our stockholders. Consequently, our stockholders may experience more dilution in their ownership of our stock in the future.

The stock price of our common stock may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is currently listed on the Nasdaq Capital Market. Historically trading in our stock has been thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. Although we believe that the listing of our common stock on the Nasdaq Capital Market has improved the liquidity of our common stock, our stock has been historically characterized by large volatility. Accordingly, stockholders may have difficulty reselling shares of our common stock.

A decline in the price of our common stock could affect our ability to raise further working capital, may adversely impact our ability to continue operations and we may go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant

45


 
 

TABLE OF CONTENTS

portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

Because we do not intend to pay any cash dividends on our shares of common stock in the near future, our stockholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common stock in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and such other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

Future sales of shares by existing stockholders could cause our stock price to decline and investors in this offering may experience dilution by exercises of outstanding options and warrants.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.

As of October 31, 2017, we had outstanding options to purchase an aggregate of 3,472,399 shares of our common stock at a weighted average exercise price of $3.85 per share and warrants to purchase an aggregate of 1,614,559 shares of our common stock at a weighted average exercise price of $5.11 per share. The exercise of such outstanding options and warrants will result in further dilution of your investment. If our existing stockholders sell substantial amounts of our common stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market price of our common stock, even if there is no relationship between such sales and the performance of our business.

The Financial Industry Regulatory Authority (“FINRA”) sales practice requirements may also limit a stockholder’s ability to buy and sell our common stock.

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

We are a former “shell company” and as such are subject to certain limitations not applicable to other public companies generally.

Prior to our acquisition of Naked Inc. in June 2012, we were a public reporting “shell company,” as defined in Rule 12b-2 under the Exchange Act. Although we are no longer a “shell company,” we are subject to certain restrictions under the Securities Act of 1933, as amended (the “Securities Act”), for the resale of securities issued by issuers that have been at any time previously a shell company. Specifically, the Rule 144 safe harbor available for the resale of our restricted securities is only available to our stockholders if we have filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as

46


 
 

TABLE OF CONTENTS

applicable, during the preceding twelve months, other than current reports on Form 8-K, at the time of the proposed sale, regardless of whether the restricted securities were initially issued at the time we were a shell company or subsequent to termination of such status. Accordingly, holders of our “restricted securities” within the meaning of Rule 144 will be subject to the conditions set forth in Rule 144 with respect to our company. Other reporting companies that are not former shell companies and have been reporting for more than twelve months are not subject to this same reporting threshold for non-affiliate reliance on Rule 144.

Accordingly, any restricted securities we have sold or sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose, may not be resold unless such securities are registered with the SEC or the requirements of Rule 144 have been satisfied. As a result, it may be harder for us to fund our operations and pay our employees and consultants with our securities instead of cash. Furthermore, it may be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the SEC, which could cause us to expend additional resources in the future. Our prior status as a “shell company” could prevent us in the future from raising additional funds, engaging employees and consultants, and using our securities to pay for any acquisitions, which could cause the value of our securities, if any, to decline in value or become worthless.

Further, as current and former shell companies and reverse acquisition transactions have been, and remain to some degree, subject to additional scrutiny by the SEC, FINRA and the national securities exchanges, our prior shell company status and the reverse acquisition transaction that terminated it may result in delays in the completion of any offering and our attempt to qualify for and list on a national securities exchange. Specifically, as a former shell company and subject of a reverse acquisition transaction, we may need to demonstrate the ability to maintain a threshold per share market price for an extended trading period in order to qualify for listing on a national securities exchange.

If we are unable to obtain additional financing on acceptable terms, we may have to curtail our growth or cease our development plans and operations.

The operation of our business and our growth efforts will require significant cash outlays. We are largely dependent on outside capital to implement our business plan and support our operations. We anticipate for the foreseeable future that cash on hand and cash generated from operations will not be sufficient to meet our cash requirements, and that we will need to raise additional capital through investments to fund our operations and growth. We cannot assure you that we will be able to raise additional working capital as needed on terms acceptable to us, if at all. If we are unable to raise capital as needed, we may be required to reduce the scope of our growth efforts, which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case, you may lose all your investment. Financings, including future equity investments, if obtained, may be on terms that are dilutive to our stockholders, and the prices at which new investors would be willing to purchase our securities may be lower than the price at which you purchase your shares.

As of October 31, 2017, we had cash totaling $2,170,000. The latest amendment to the Merger Agreement requires Bendon to fund all operating losses until closing. Due to this requirement, we believe we have sufficient working capital to implement our proposed business plan over the next 12 months.

Risks Related to the Merger

Holdco’s shares may not be listed on a securities exchange. Even if listed, Holdco may be unable to maintain the listing of its securities in the future.

Holdco has applied for listing, to be effective at the time of the consummation of the Transactions, of the Holdco Ordinary Shares on Nasdaq. However, Holdco will be required to meet the initial listing requirements of such exchange in order to be listed. Holdco may not be able to meet those initial listing requirements. The initial listing requirements for new issuers are stringent and, although Holdco may explore various actions to meet the requirements, there is no guarantee that any such actions will be successful in bringing it into compliance with the requirements. For this reason, there can be no assurance that Nasdaq will approve Holdco’s application. It is a condition of the consummation of the Transactions that Holdco receive confirmation from Nasdaq or the NYSE that the Holdco Ordinary Shares have been approved for listing. This

47


 
 

TABLE OF CONTENTS

condition cannot be waived. Accordingly, if Nasdaq does not approve Holdco’s application for listing of the Holdco Ordinary Shares, the Transactions will not be completed.

Even if the Holdco Ordinary Shares are so listed and the Transactions are completed, Holdco may be unable to meet the continued listing requirements in the future and accordingly may be unable to maintain the listing of its securities. If Holdco meets the initial listing requirements, but is unable to meet the continued listing requirements and the Holdco Ordinary Shares are subsequently delisted, Holdco could face significant material adverse consequences, including:

a limited availability of market quotations for its securities;
a limited amount of news and analyst coverage for the company; and
a decreased ability to issue additional securities or obtain additional financing in the future.

Holdco, the surviving corporation in the Merger, has never previously been a U.S. reporting company.

Holdco, which will be the surviving corporation in the Merger, has never previously been a reporting company in the United States subject to U.S. federal and state securities laws, including the reporting obligations of the Exchange Act and other requirements of the Sarbanes-Oxley Act. The combined company will be required to increase its compliance efforts and incur significant costs in connection with complying with public company requirements under U.S. federal and state securities laws. The attention of management may be diverted on a frequent basis in order to carry out public company reporting and related obligations, rather than directing their full time and attention to the operation and growth of the business. Employees and some members of the management team have had limited experience working for a U.S. reporting company, increasing the risk of non-compliance. The combined company’s disclosure controls and procedures may not prevent or detect all errors or acts of fraud or misconduct by persons inside or outside the combined company. Similarly, if the combined company fails to maintain an effective system of internal control over financial reporting, the combined company may not be able to accurately report its financial condition, results of operations or cash flows. Noncompliance with U.S. federal and state securities laws and other regulatory requirements could result in administrative or other penalties or civil or criminal judgments against the combined company or harm to the combined company’s reputation. These consequences could affect investor confidence in the combined company and cause the price of the stock to decline, result in the delisting of the combined company’s shares from the Nasdaq require the payment of fines or other amounts, distract management’s time and attention to the business or result in the loss of customer or supplier relationships.

The unaudited pro forma financial information included elsewhere in this joint proxy statement/prospectus may not be indicative of what the combined company’s actual financial position or results of operations would have been.

The unaudited pro forma financial information in this joint proxy statement/prospectus is presented for illustrative purposes only, has been prepared based on a number of assumptions and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the business combination been completed on the dates indicated. The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined companies may achieve as a result of the business combination or the costs to combine the operations of Naked and Bendon or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements. See the section entitled “ Unaudited Pro Forma Consolidated Combined Financial Statements .” It is noted that each of Bendon and Naked has an explanatory paragraph regarding there being substantial doubt about each company’s continuing as a going concern.

Holdco has no operating history. The unaudited pro forma financial information and the historical combined financial information included elsewhere in this proxy statement/prospectus may not be representative of actual results as a combined company, and accordingly, you have limited financial information on which to evaluate the combined company and your investment decision.

Bendon and Naked have no prior history as a combined entity and their operations have not previously been managed on a combined basis. As a result, the pro forma financial information for the combined company and the combined audited financial statements of Bendon and Naked giving effect to the Merger

48


 
 

TABLE OF CONTENTS

included elsewhere in this proxy statement/prospectus as presented are not necessarily indicative of the financial position or results of operations of the combined company that would have actually occurred had the Merger been completed at or as of the dates indicated, nor are they indicative of the future operating or financial position of the combined company. The pro forma financial information for the combined company does not consider potential impacts of current market conditions on revenues or expense efficiencies. The pro forma financial information presented in this proxy statement/prospectus is based in part on certain assumptions regarding the Merger that Bendon and Naked believe are reasonable under the circumstances. However, assumptions used in preparing such financial information may not prove to be accurate over time. Investors should not place any undue reliance on the pro forma financial information of the combined company.

If the adjournment proposal is not approved, and an insufficient number of votes have been obtained to approve the consummation of the Transactions, Naked’s board of directors will not have the ability to adjourn the special meeting to a later date in order to solicit further votes, and, therefore, the Transactions will not be approved.

Naked’s board of directors is seeking approval to adjourn the special meeting to a later date or dates, if, based on the tabulated vote, Naked is unable to consummate the Transactions contemplated by the Merger Agreement. If the adjournment proposal is not approved, Naked’s board will be unable to adjourn the special meeting to a later date and, therefore, will not have more time to solicit votes to approve the consummation of the Transactions. In such event, the Transactions would not be completed.

Because the number of Holdco Ordinary Shares that are issuable to the shareholders of Bendon in the Reorganization is adjustable depending on the net debt of Bendon and the net assets of Naked, as finally determined in accordance with the Merger Agreement, Naked shareholders cannot be certain of the precise percentage ownership of Holdco that they will hold immediately following the closing of the Merger.

The number of Holdco Ordinary Shares that are issuable to the shareholders of Bendon in the Reorganization is adjustable depending on the net debt of Bendon and net assets of Naked, as finally determined in accordance with the Merger Agreement. If it is finally determined that Naked's Net Assets (as defined in the Merger Agreement) at the closing of the Transactions are less than the Net Asset Amount (as defined in the Merger Agreement) by at least $150,000, then the number of Holdco Ordinary Shares issuable to Bendon will be increased by the number equal to the product obtained by multiplying the difference in the asset amount by 2.327. If, however, Naked's Net Assets at the closing of the Transactions are greater than the Net Asset Amount by at least $150,000, then then the number of Holdco Ordinary Shares issuable to Bendon will be reduced by the same ratio. Notwithstanding the foregoing, so long as Naked does not incur any expenditures that in the aggregate exceed any line item in the Budget (as defined below) by more than 10%, unless otherwise agreed to by the Budget Committee, no adjustment will be made based on Naked's Net Assets. Additionally, if Bendon's Net Debt (as defined in the Merger Agreement) at the closing of the Transactions exceeds the Net Debt Amount (as defined in the Merger Agreement) by at least $1,000,000, then then the number of Holdco Ordinary Shares issuable to Bendon will be reduced by the number equal to the product obtained by multiplying the difference in the debt amount by 0.167. If, however, Bendon's Net Debt at the closing of the Transactions is less than the Net Debt Amount by at least $1,000,000, then then the number of Holdco Ordinary Shares issuable to Bendon will be increased by the same ratio. Since the Naked Closing Net Assets and Bendon Closing Net Debt will not be determined until the closing of the Merger, Naked stockholders cannot be certain of the exact percentage ownership of Holdco that they will hold immediately following the closing of the Merger.

Failure to complete the Merger could harm Naked’s future business and operations.

If the Merger is not completed, Naked is subject to the following risks, among others: