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An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission (the “SEC” or the “Commission”). Information contained in this Preliminary offering circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary offering circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final offering circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Final offering circular or the offering statement in which such Final offering circular was filed may be obtained.

KeyStone Solutions, Inc.

3,000,000 Units

Consisting of:

3,000,000 Shares of Series A Cumulative Convertible Redeemable Preferred Stock, par value $0.0001 per share

and

Warrants to Purchase 750,000 Shares of Common Stock, par value $0.0001 per share

(2,892,857 Shares of Common Stock, par value $0.0001 per share, issuable upon Conversion of Series A Cumulative Convertible Redeemable Preferred Stock and Exercise of Warrants)

Minimum purchase: 500 Units ($5,000)

KeyStone Solutions, Inc., a Delaware corporation, qualifies as an “emerging growth company” as defined in the Jumpstart Our Business (JOBS) Startups Act. We are offering units (“Units”), consisting of (a) a minimum of 300,000 shares of Series A Cumulative Convertible Redeemable Preferred Stock, par value $0.0001 (the “Series A Preferred Stock”), and a maximum of 3,000,000 shares of Series A Preferred Stock and (b) warrants to purchase up to 750,000 shares of our common stock, on a “best efforts” basis. Each Unit consists of one share of Series A Preferred Stock and a warrant to purchase 0.25 shares of our common stock at any time on or before seven years from the date of qualification of the Units as exempt from registration by the SEC (the “Qualification Date”) at an exercise price of $2.00 per share of common stock. While the Series A Preferred Stock and the warrants will be sold together as a Unit, the Series A Preferred Stock and warrants will be issued separately. The Units will be sold by the Company in minimum amounts of $5,000 (500 Units).

If $3,000,000 in subscriptions for the Units (the “Minimum Offering”) is not deposited with Folio Investments, Inc., as set forth in more detail in the “Plan of Distribution,” on or before six (6) months after the Qualification Date (the “Minimum Offering Period”), all subscriptions will be refunded to subscribers without deduction or interest. The offering will commence within two calendar days from the Qualification Date. The offering will expire twelve (12) months after the Qualification Date (the “Offering Expiration Date”). See “Plan of Distribution” and “Securities Being Offered” for a description of the Units being sold and our capital stock.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to “Accredited Investors” as defined in Rule 501(a) of Regulation D (17 CFR §230.501(a) and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

There is currently no trading market for our Units, common stock or preferred stock. We do not intend to apply to have our Units or shares of preferred stock or common stock approved for trading on any trading market upon the completion of this offering.

These are speculative securities. Investing in the Units involves significant risks. You should purchase these securities only if you can afford a complete loss of your investment. See “Risk Factors” beginning on page 3.

The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

We are providing the disclosure in the format prescribed by Part II of Form 1-A.

14420 Albemarle Point Place, Suite 200, Chantilly, VA, 20151

(703) 953-3838; www.keystonewins.com

The date of this preliminary offering circular is September 2, 2016

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RISK FACTORS

An investment in Units involves a high degree of risk and many uncertainties. You should carefully consider the specific factors listed below, together with the cautionary statement that follows this section and the other information included in this offering circular, before purchasing Units in this offering. If one or more of the possibilities described as risks below actually occur, our operating results and financial condition would likely suffer and the trading price, if any, of our preferred stock and/or common stock could fall, causing you to lose some or all of your investment. The following is a description of what we consider the key challenges and material risks to our business and an investment in our securities.

Risks Related to our Business and Industry

We are a holding company; have no direct operations and depend in large part on funding from our subsidiaries.

KeyStone Solutions, Inc. was formed in March 2016 as a holding company. It has no current business operations of its own. Until we have either formed or acquired other companies, our only significant assets are our cash and equity interest in our principal operating subsidiary, AOC Key Solutions. As a result, we rely on funding from AOC Key Solutions to meet our obligations. If AOC Key Solutions needs to retain its funds to meet its financial obligations or experiences other restrictions on its ability to fund us, that may limit our access to funds and restrict our ability to meet our dividend, redemption and liquidation obligations in respect of our Series A Preferred Stock and to pursue our acquisition strategy or other strategic objectives.

We face aggressive competition that can impact our ability to obtain contracts and therefore affect our future revenues and growth prospects.

Our business is highly competitive, and we compete with larger companies that have greater name recognition and financial resources, as well as many independent sole-proprietors who sell themselves as business development experts.

The markets in which we operate are characterized by rapidly changing technology, and the needs of our clients change and evolve regularly. Accordingly, our success depends on our ability to develop services and solutions that address these changing needs of our government contractor clients, and to provide people and technology needed to deliver these services and solutions. To remain competitive, we must consistently provide superior service, technology and performance on a cost-effective basis to our clients. Our competitors may be able to provide our clients with different or greater capabilities or technologies or better contract terms than we can provide, including technical qualifications, past contract experience, geographic presence, price and the availability of qualified professional personnel. Additionally, we anticipate that larger or new competitors or alliances among competitors may emerge which may adversely affect our ability to compete for new contracts.

The U.S. government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.

Our industry has experienced, and we expect it will continue to experience, significant changes to business practices as a result of an increased focus on affordability, efficiencies and recovery of costs, among other items. U.S. government agencies may face restrictions or pressure regarding the type and amount of services that they may obtain from private contractors. Legislation, regulations and initiatives dealing with procurement reform, mitigation of potential conflicts of interest, deterrence of fraud, and environmental responsibility or sustainability, as well as any resulting shifts in the buying practices of U.S. government agencies, such as increased usage of fixed-price contracts, multiple award contracts and small business set-aside contracts, could have adverse effects on government contractors and the business development services we provide. Any of these changes could impair our ability to obtain new support contracts or renew our existing contracts when those contracts are recompeted. Any new contracting requirements or procurement methods could be costly or administratively difficult for us to implement and could adversely affect our future revenues, profitability and prospects, or alternatively may reduce the need for government contractors to acquire our services.

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Technology improvements and disruptions could diminish the need for our traditional services.

Based on recent technological developments, the market for consultants has diminished and may continue to diminish. Some companies are beginning to use the World Wide Web to advertise for different services, including experts for sale, anonymous authors to complete certain proposal sections for an “introductory fee,” and even buying entire proposals on-line, sometimes from overseas vendors. The market trend seems to be that these competitors are offering similar types of services at extremely low prices. This trend towards utilization of unknown and unproven companies advertising traditional consulting services may diminish the demand for our services, which may adversely affect our revenues, results of operations and financial condition.

The spending cuts imposed by the Budget Control Act of 2011 (“BCA”) could impact our operating results and profit.

The U.S. government continues to focus on developing and implementing spending, tax, and other initiatives to stimulate the economy, create jobs, and reduce the deficit. One of these initiatives, the BCA, imposed constraints around U.S. government spending. In an attempt to balance decisions regarding defense, homeland security, and other federal spending priorities, the BCA imposed spending caps that contain approximately $487 billion in reductions to the Department of Defense base budgets over a seven year period (to 2021). Additionally, the BCA triggered an automatic sequestration process, effective March 1, 2013, that would have reduced planned defense spending by an additional $500 billion over a nine-year period that began in the U.S. government’s 2013 fiscal year.

On November 2, 2015, the President signed into law the Bipartisan Budget Act of 2015 (“BBA 2015”). BBA 2015 raises the limit on the U.S. government’s debt until March 2017 and raises the sequester caps imposed by the BCA by $80 billion, split equally between defense and non-defense spending over the next two years ($50 billion in the U.S. government’s 2016 fiscal year and $30 billion in the U.S. government’s 2017 fiscal year). On December 18, 2015, the President signed into law the Consolidated Appropriations Act of 2016, funding the government through September 30, 2016 and on February 9, 2016, the President submitted a budget proposal for the U.S. government’s 2017 fiscal year, consistent with BBA 2015 funding levels. BBA 2015 includes discretionary funding for Department of Defense of approximately $580 billion in the U.S. government’s 2016 fiscal year and $583 billion in the U.S. government’s 2017 fiscal year. This funding includes a base budget for the Department of Defense of approximately $521 billion in the U.S. government’s 2016 fiscal year and $524 billion in the U.S. government’s 2017 fiscal year. BBA 2015 also provides approximately $59 billion for Department of Defense Overseas Contingency Operations (OCO) spending in each of the U.S. government’s 2016 and 2017 fiscal years.

The Bipartisan Budget Act of 2013 (“BBA 2013”) passed by Congress in December 2013 alleviated some budget cuts that would have otherwise been instituted through sequestration in the U.S. government’s 2014 and 2015 fiscal years. While BBA 2013 and BBA 2015 (collectively, the “Bipartisan Budget Acts”), taken together, increased discretionary spending limits through the U.S. government’s 2017 fiscal year, the Bipartisan Budget Acts retained sequestration cuts for the U.S. government’s 2018 through 2021 fiscal years, including the across-the-board spending reduction methodology provided for in the BCA. As a result, there remains uncertainty regarding how, or if, sequestration cuts will be applied in the U.S. government’s 2018 fiscal year and beyond. Department of Defense and other agencies may have significantly less flexibility in how to apply budget cuts in future years. While the defense budget sustained the largest single reductions under the BCA, other civil agencies and programs have also been impacted by significant spending reductions. In light of the BCA and deficit reduction pressures, and the upcoming change in administrations, it is likely that discretionary spending by the U.S. government will remain constrained for a number of years. Additionally, if an annual appropriations bill is not enacted for the U.S. government’s 2017 fiscal year or beyond, the U.S. government may operate under a continuing resolution, abating RFP processes, restricting new contract or program starts and government slowdowns, or even shutdowns, could arise. We anticipate there will continue to be significant debate within the U.S. government over defense spending throughout the budget appropriations process for the U.S. government’s 2017 fiscal year and beyond. The outcome of these debates could have long-term consequences for our industry and Company.

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Since we generate most of our revenues from clients that bid on contracts with U.S. government agencies, our operating results could be adversely affected by spending caps or changes in the budgetary priorities of the U.S. government, as well as by delays in RFP processes, program starts or the award of contracts or task orders under contracts.

Continued or increased market consolidations by large and small contractors.

Last year witnessed a variety of transactions impacting our client base: CACI acquired L-3’s National Security Solutions business unit for $550 million; Harris Corporation acquired Exelis, Inc. for $4.7 billion; Science Applications International Corporation (“SAIC”) acquired Scitor Corporation from Leonard Green Partners for $790 million; The Carlyle Group acquired Novetta Solutions from Arlington Capital; and Computer Sciences Corporation (“CSC”) split its public sector business from its commercial and international business (the public sector business then merged with SRA International to form CSRA, Inc. the largest professional services firm to the U.S. government). This consolidation of our client base could lead to less demand for our services.

Due to the competitive process to obtain contracts and an increase in bid protests, we may be unable to achieve or sustain revenue growth and profitability.

We expect that a majority of the business that we seek in the foreseeable future will be under service agreements awarded to our clients through a competitive bidding process, including Indefinite Delivery/Indefinite Quantity (“ID/IQ”) contracts. The U.S. government has increasingly relied on contracts that are subject to a competitive bidding process, which has resulted in greater competition and increased pricing pressure. As a result, there is a tendency for it to place undue emphasis on low price over technical merit when selecting contractors. This in turn can result in the U.S. government contracts market attracting extremely low-priced competitors who see certain consulting products and services as mere “commodities” and price accordingly. Government contractors may decide that they can prepare their bid responses with internal resources and not engage outside organizations to assist this process.

The competitive bidding process involves substantial costs and a number of risks, including significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to our clients, and therefore puts our reputation at risk and may affect our future contracts with these clients, or that may be awarded but for which our customers do not receive meaningful task orders which might make them less likely to bid for additional task orders. For support contracts awarded to us, we also face the risk of inaccurately estimating the resources and costs that will be required to fulfill these engagements, which also could impact our reputation and the likelihood of getting additional engagements for capture and proposal support.

Our business is directly tied to the success of our government contracting clients, which are increasingly reliant on ID/IQ contracts. ID/IQ contracts are not firm orders for services, and we may generate limited or no revenue from these contracts which could adversely affect our operating performance.

ID/IQ contracts are typically awarded to multiple contractors, and the award of an ID/IQ contract does not represent a firm order for services. Generally, under an ID/IQ contract, the government is not obligated to order a minimum of services or supplies from its contractor, irrespective of the total estimated contract value. In effect, an ID/IQ award acts as a “hunting license,” permitting a contractor to bid on task orders issued under the ID/IQ contract, but not guaranteeing the award of individual task orders. Following an award under a multi-award ID/IQ program, the customer develops requirements for task orders that are competitively bid against all of the contract awardees. However, many contracts also permit the U.S. government to direct work to a specific contractor. Our clients may not win new task orders under these contracts for various reasons, including price, past performance and responsiveness, among others. We support our government contractor clients both when they compete to get the umbrella ID/IQ contract and subsequently when we help the winners of those contracts compete for individual tasks. The proposals for both of these stages can be relatively brief and require quick turn-arounds, thus potentially reducing some opportunities to be awarded significant turn-key engagements. While it is possible that the increased importance of winning the umbrella ID/IQ contract will prompt clients to hire outside firms to prepare their proposals, it is also likely that government contractors will decide to prepare ID/IQ proposals without the assistance from outside experts.

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Increased reliance on task order responses as the preferred method of proposal submission may significantly and adversely affect our future revenues, cash flow and financial results.

The U.S. government sometimes makes use of abbreviated (miniature) submissions to a solicitation by requiring a task order response rather than a full proposal, especially for ID/IQ contracts. Task Order Responses (TORs) as a rule tend to be relatively brief and have a short response period (often 10 days). These reduced page counts and shorter response times reduce the need for our traditional services, and if TORs become more of a standard for the U.S. government, this could adversely impact our operations, cash flow and financial results.

Our business could be negatively impacted by cyber and other security threats or disruptions.

We face various cyber and other security threats, including attempts to gain unauthorized access to sensitive information and networks; insider threats; threats to the safety of our directors, officers and employees; threats to the security of our facilities and infrastructure; and threats from terrorist acts or other acts of aggression. Our clients and partners (including subcontractors and joint ventures) face similar threats. Although we utilize various procedures and controls to monitor and mitigate the risk of these threats, there can be no assurance that these procedures and controls will be sufficient. These threats could lead to losses of sensitive information or capabilities, harm to personnel, infrastructure or products, and/or damage to our reputation as well as our partners’ ability to perform.

Cyber threats are evolving and include, but are not limited to, malicious software, destructive malware, attempts to gain unauthorized access to data, disruption or denial of service attacks, and other electronic security breaches that could lead to disruptions in mission critical systems, unauthorized release of confidential, personal or otherwise protected information (ours or that of our employees, customers or partners), and corruption of data, networks or systems. In addition, we could be impacted by cyber threats or other disruptions or vulnerabilities found in products we use or in our partners’ or customers’ systems that are used in connection with our business. These threats, if not prevented or effectively mitigated, could damage our reputation, require remedial actions and lead to loss of business, regulatory actions, potential liability and financial losses.

We provide services to various customers (commercial and occasionally government) who also face cyber threats. Our services may themselves be subject to cyber threats and/or they may not be able to detect or deter threats, or effectively to mitigate resulting losses. These losses could adversely affect our customers and our Company.

The impact of these factors is difficult to predict, but one or more of them could result in the loss of information or capabilities, harm to individuals or property, damage to our reputation, loss of business, regulatory actions and potential liability, any one of which could have a material adverse effect on our financial position, results of operations and/or cash flows.

Although we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses for merger or acquisition, we may enter into a potential business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into a potential business combination may not have attributes entirely consistent with our general criteria and guidelines.

Although we have identified general criteria and guidelines for evaluating prospective target businesses for merger or acquisition, it is possible that a target business with which we enter into a potential business combination will not have all of these positive attributes. If we complete a potential business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines.

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Resources could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a potential business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete a potential business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.

We may seek investment opportunities in industries outside of our management’s area of expertise.

We intend to focus on target businesses in industries that complement our management team’s backgrounds including consulting for the procurement of government contracts. However, we may also pursue acquisition opportunities in other markets. Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our Units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a business combination candidate.

Our strategy of growth through acquisitions could harm our business.

It is our intent to continue to grow through strategic acquisitions. Successful integration of newly acquired target companies may place a significant burden on our management and internal resources. The diversion of management’s attention and any difficulties encountered in the transition and integration processes could harm our business, financial condition and operating results. In addition, we may be unable to execute our acquisition strategy, resulting in under-utilized resources and a failure to achieve anticipated growth. Our operating results and financial condition will be adversely affected if we are unable to achieve, or achieve on a timely basis, cost savings or revenue opportunities from any future acquisitions, or incur unforeseen costs and expenses or experience unexpected operating difficulties from the integration of acquired businesses.

Our ability to successfully effect a potential business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following a potential business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.

Our ability to successfully effect business combinations is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following our business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements and take time away from oversight of our operations.

We may have a limited ability to assess the management of a prospective target business and, as a result, may effect a potential business combination with a target business whose management may not have the skills, qualifications or abilities to manage a growing company.

When evaluating the desirability of effecting a potential business combination with a prospective target business, our ability to assess the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a growing company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. The officers and directors of an acquisition candidate may resign upon completion of a potential business combination. The departure of a potential business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of a potential business combination cannot be ascertained at this time.

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We may issue additional common or preferred shares to complete business combinations or under an employee award plan after completion of business combinations, any one of which would dilute the interest of our stockholders and likely present other risks.

Our Certificate of Incorporation authorizes the issuance of up to 32,500,000 shares – 25,000,000 shares of common stock, par value $0.0001 per share, and 7,500,000 shares of preferred stock, par value $0.0001 per share. Immediately after this offering (assuming the Maximum Offering Amount is raised), there will be 16,091,270 authorized but unissued shares of common stock available for issuance, which amount takes into account shares reserved for issuance (a) upon conversion of outstanding Series A Preferred Stock, (b) upon the exercise of outstanding Unit Warrants and the warrant held by Avon Road, and (c) under the Company’s equity award plan. Immediately after this offering, there will be (x) if the Company receives subscriptions for the minimum number of shares available in the offering, 300,000 and (y) if the Company receives subscriptions for the maximum number of shares available in the offering 3,000,000 shares of preferred stock issued and outstanding. We may issue a substantial number of additional shares of common or preferred stock to complete a proposed business combination. The issuance of additional shares of common or preferred stock:

We may issue additional notes or other debt securities, or otherwise incur substantial additional debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.

The anticipated cash needs of our business could change significantly as we pursue and complete business acquisitions, if our business plans change, if economic conditions change from those currently prevailing or from those now anticipated, or if other unexpected circumstances arise that may have a material effect on the cash flow or profitability of our business. If we require additional capital resources to grow our business, either internally or through acquisition, we may seek to secure debt financing. We may not be able to obtain financing arrangements in amounts or on terms acceptable to us in the future.

Although we have no commitments as of the date of this offering circular to issue any additional notes or other debt securities, or to otherwise incur additional outstanding debt, we may choose to incur substantial debt to complete a business combination. The incurrence of debt could have a variety of negative effects, including:

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We may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete a business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.

If we attempt to simultaneously acquire several businesses that are owned by different sellers, we may need for each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations. With multiple business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could negatively impact the Company’s profitability and results of operations.

Risks Related to the Investment in our Securities

The ownership of our common stock is concentrated among existing executive officers and directors.

Upon the sale of all of the shares offered in this offering, our executive officers and directors will continue to own beneficially, in the aggregate, a vast majority of the outstanding shares of our common stock. As a result, they will be able to exercise a significant level of control over all matters requiring shareholder approval, including the election of directors, amendments to our Certificate of Incorporation, and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of the Company or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

Holders of our Series A Preferred Stock will have limited voting rights.

Except with respect to certain material changes in the terms of the Series A Preferred Stock and certain other matters and except as may be required by Delaware law, holders of Series A Preferred Stock will have no voting rights unless and until such Series A Preferred Stock is converted into our common stock. You will have no right to vote for any members of our Board of Directors unless and until such Series A Preferred Stock you hold is converted into our common stock.

Although we have five directors on our Board of Directors, only one is independent and four are our executive officers, and we may not be able to appoint additional qualified independent directors.

Currently, although we have five directors, we have only one independent director, Glen Goord, who joined our Board of Directors in March 2016 in connection with the formation of the Company. Although we do not currently intend to apply to have our Units or shares of preferred stock or common stock approved for trading on any trading market or securities exchange upon the completion of this offering, to have our stock listed on a securities exchange we will be required to have a majority of independent directors, but we may not be able to identify independent directors qualified to be on our board who are willing to serve. In the absence of a majority of independent directors, we would be prevented from listing our stock on any such exchange. In addition, the Board of Directors, which includes four of our executive officers, could establish policies and enter into transactions over the objections of the sole independent director. This could present the potential for a conflict of interest between us and our stockholders generally and the executive officers, stockholders or directors. The absence of more independent directors who could provide a more neutral point of view could jeopardize your interests. For example, in the absence of a compensation committee, or a nominating and governance committee, comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our officers, or recommendations for director nominees, respectively, may be made by existing members of the Board of Directors, who may have a direct or indirect interest in the outcome of those decisions.

Additionally, we do not currently have, nor are we currently required to have under the rules and regulations applicable to us, an audit committee or an audit committee financial expert, and therefore have not established independent oversight over our management and internal controls. Audit committees must be comprised of entirely independent members of the Board of Directors with a minimum of three members under the independence standards of the major securities exchanges. Therefore, we are exposed to the risk that material misstatements or omissions caused by errors or fraud with respect to our financial statements or other disclosures may occur and not be detected in a timely manner or at all. In the event there are deficiencies or weaknesses in our internal controls, we may misreport our financial results or lose significant amounts due to misstatements caused by errors or fraud. These misstatements or acts of fraud could also cause our company to lose value and investors to lose confidence in us.

Terms of subsequent financings may adversely impact your investment.

We may have to engage in common equity, preferred stock or debt financing in the future, as a result of which our stockholders could suffer significant dilution. Your rights and the value of your investment in Units could be reduced. Interest on debt securities could increase costs and negatively impact operating results. Preferred stock could be issued in series from time to time with such designation, rights, preferences, and limitations as are needed to raise capital. The terms of preferred stock could be more advantageous to those investors than to the holders of common stock. In addition, if we need to raise more equity capital from the sale of common stock, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment. Shares of common stock which we sell could be sold into any market which develops, which could adversely affect the market price.

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If our Series A Preferred Stock is converted into common stock, these converting stockholders will have significant voting power, and they will have the ability to exert substantial influence over matters requiring stockholder approval.

The Series A Preferred stockholders may convert their shares of Series A Preferred Stock at any time after the third anniversary of the Qualification Date into shares of our common stock. If all of our Series A Preferred Stock is converted into common stock (assuming the Maximum Offering Amount is raised), the shares issued upon this conversion will total approximately 24.1% of our outstanding common stock. Therefore, although these stockholders may not acquire majority control upon conversion of their Series A Preferred Stock, if these distinct stockholders were to act together, they will have the ability to exert substantial influence over all matters requiring approval of our stockholders, including the election and removal of directors, the approval of mergers or other business combinations, and other significant corporate actions. This ability to influence the Company’s affairs might be disadvantageous to our other stockholders.

Provisions in our Certificate of Incorporation and Bylaws and Delaware law could delay or discourage a takeover and could adversely affect the price of our common stock.

Our Board of Directors has the authority to issue 7,500,000 shares of preferred stock, and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by holders of our common stock. If additional preferred stock is issued, the voting and other rights of the holders of our common stock may be subject to, and may be adversely affected by, the rights of the holders of our preferred stock. The issuance of preferred stock may have the effect of delaying or preventing a change of control of the Company that could have been at a premium price to our stockholders.

Certain provisions of our Certificate of Incorporation and Bylaws could discourage potential takeover attempts and make stockholders’ attempts to change management difficult. Our Board of Directors has the authority to impose various procedural and other requirements that could make it more difficult for our stockholders to effect certain corporate actions.

In addition, certain provisions of Delaware law could have the effect of delaying or preventing a change of control of the Company. Section 203 of the Delaware General Corporation Law, for example, prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years from the date the person became an interested stockholder unless certain conditions are met.

The cumulative feature of the Series A Preferred Stock will create obligations for the Company.

If any dividends payable with respect to the Series A Preferred Stock are not paid when due, the dividends will accrue, even in cases when the Company is financially unable to pay such dividends. As dividends in arrears accrue they can become a significant obligation to the Company which will accumulate and compound at the rate of seven percent (7%) per annum. Any accumulation of dividends can become a financial burden that the Company is obligated to pay in full. Such accumulations if not paid down on a regular basis can become an obligation that may delay or prevent the Company from using its cash to meet its obligations for operations, acquisitions by the Company and dividends on the Company’s common stock.

We do not expect to pay cash dividends on common stock in the foreseeable future.

We have not declared or paid cash or other dividends on our common stock and do not expect to pay cash dividends for the foreseeable future. Our ability to pay dividends on our common stock is also restricted by the terms of our Series A Preferred Stock which require us to pay full cumulative dividends on the Series A Preferred Stock before making any dividend payment on our common stock. Generally, the Series A Preferred Stock is entitled to quarterly dividends of $0.175 (7% per annum) per share. We currently intend to retain all future earnings for use in the operation of our business and to fund future growth. Any future cash dividends will depend upon our results of operations, financial conditions, cash requirements, the availability of a surplus and other factors.

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There currently is no public trading market for our securities and an active market may not develop or, if developed, be sustained. If a public trading market does not develop, you may not be able to sell any of your securities.

There is currently no public trading market for our common stock, our preferred stock or our warrants, and an active market may not develop or be sustained. If an active public trading market for our securities does not develop or is not sustained, it may be difficult or impossible for you to resell your securities at any price. Even if a public market does develop, the market price could decline below the amount you paid for your securities.

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USE OF PROCEEDS

We estimate the net proceeds from the sale of Units by us in this offering, excluding the proceeds, if any, from the exercise of the warrants, after deducting the placement agent fees and estimated offering expenses payable by us, will be approximately $2,315,000 for the minimum offering or $27,076,600 for the maximum offering. We cannot predict when or if the warrants will be exercised, and it is possible that the warrants may expire and never be exercised. We intend to use the net proceeds from the sale of the Units offered by us in this offering to fund the Company’s organic growth and strategic acquisition of, and investments in, government contract service providers and government contractors, and for general corporate purposes. We intend for any such acquisitions to become 100% wholly owned subsidiaries of KeyStone Solutions. We do not anticipate our ownership in any particular acquisition to be less than 80%. The Company does not believe that its acquisition strategy will cause it to become an “investment company” under the Investment Company Act of 1940, as amended (the “1940 Act”) nor does it intend to become one.

Accordingly, although our expected use of proceeds is based on reasonable estimates, it is subject to change as the Company’s opportunities for acquisitions and operational expenses change from time-to-time. Set forth below is a table showing the estimated sources and uses of the proceeds from this offering.

Since this is a best efforts offering, if we are only able to sell $3,000,000, the minimum offering amount required to be raised in order to continue with the offering, we expect to use the net proceeds from the sale to fund the Company’s strategic acquisition of, and investments in, government contract service providers and government contractors, and for general corporate purposes. To the extent that we sell more than 300,000 Units, the additional net proceeds will be used primarily to fund the Company’s strategic acquisition of, and investments in, government contract service providers and government contractors, with the remainder being used for general corporate purposes. These general corporate purposes may include capital expenditures and additions to working capital.

The foregoing information is an estimate based on our current business plan. We may find it necessary or advisable to re-allocate portions of the net proceeds reserved for one category to another, and we will have broad discretion in doing so. Pending these uses, we intend to invest the net proceeds of this offering in short-term, interest-bearing securities.

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BUSINESS

General

The Company was formed in March 2016 as a holding company for the purpose of creating or acquiring professional services companies that provide support to the government contracting (GovCon) industry. We formed the Company through a corporate reorganization of AOC Key Solutions, which, as a result, became a wholly owned subsidiary of the Company. We believe this structure will allow the Company to make acquisitions and raise capital in a more efficient manner.

The operations of the Company are currently conducted by and through its wholly owned subsidiary, AOC Key Solutions. AOC Key Solutions is an established business development and consulting firm that assists government contractors in winning government contracts. It also helps commercially focused firms gain entry into the government contracting market for the first time. Since commencing operations in 1983, AOC Key Solutions has assisted clients in winning over approximately $150 billion of government contract awards.

AOC Key Solutions was a division of American Operations Corporation before being spun off in 2008 and has been profitable since becoming an independent company in 2008.

The Company identifies winnable government contracts for clients and provides teaming support to help its clients identify qualified teaming opportunities from the Company’s large database of government contractors. Next, AOC Key Solutions helps its clients develop the strategy and plan to win contracts, implement and execute their strategy and plan, and prepare a compliant, compelling and winning proposal document. For more than 30 years AOC Key Solutions has provided market intelligence, proposal, capture, advisory and teaming support and other important services to Fortune 50 companies and small businesses alike. Since the 2008 spin-off, AOC Key Solutions’ cumulative client awards have exceeded $72 billion. For the year ended December 31, 2015, AOC Key Solutions generated over $9.6 million of revenue and net income of approximately $422,000. For the six-month period ended June 30, 2016, AOC Key Solutions’ revenues were $7,177,345 as compared to $4,311,170 for the same period in 2015.

We seek to improve how the federal government and government contractors operate. For the former, KeyStone works to increase the efficiency and effectiveness of government on behalf of the taxpayer. For the latter, KeyStone assists companies who are in, or seek to enter, the lucrative government contracting market. KeyStone helps contractors seeking to achieve two types of results: positive societal contributions; and success measured by our clients’ profits and return on investment.

Members of KeyStone’s management team have extensive experience in the government contracting sector and collective breadth of experience managing organic growth as well as growth through acquisitions and integration. In connection with the formation of the Company as a platform for expansion in the GovCon sector, Robert A. Berman joined the Company as Chief Executive Officer and became an investor in the Company. See “Interest of Management and Others in Certain Transactions.” Prior to investing in the Company, Mr. Berman executed a successful growth acquisition strategy by building a $6 million in annual revenue, 50-employee hospitality company into the hospitality sector’s premiere service provider. In just three years, the hospitality company grew by more than 3,000 employees and $280 million in revenues with offices around the globe by acquiring well-run synergistic companies. In addition to successfully operating and growing businesses through acquisitions, Mr. Berman has extensive capital market experience in both the public and private sectors. Mr. James McCarthy is the Company’s Chairman and his career spans over 30 years of marketing strategy creation, proposal development, and oral presentation coaching to contractors seeking to expand their market shares or to enter the government contracts market sector. Dr. Richard Nathan, our Chief Operating Officer, President and Member of the Board, brings over 45 years of corporate management, program management, and business and proposal development experience. He has led large management and operation contracts valued at more than a billion dollars and managed service and technical contracts for DOE, DoD, DHS, NASA, EPA, and state government. We believe that the combined expertise of Mr. Berman, Mr. McCarthy and Dr. Nathan will help to identify and evaluate key strategic acquisitions as we pursue our growth strategy.

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KeyStone’s strategy includes diversifying its services offering within the market it knows well gaining a critical mass of sustainable revenues. We intend to use the net proceeds of this offering to fund organic growth and to add both vertical and horizontal capabilities by acquiring GovCon service providers through a disciplined acquisition strategy. We intend to foster communication and knowledge transfer by constructing a “bridge” across which efficiencies and best practices will be shared between the private sector and government, benefiting government, industry and the taxpayer.

Our Mission Statement

Through acquisitions and integration, KeyStone intends to provide a “one-stop,” full suite of services and products to the Government Contracting Market, making us a cohesive force in an extremely fragmented industry. KeyStone will diversify its services within the market it knows well in an effort to gain a critical mass of sustainable revenues.

Background

On March 15, 2016, the Company entered into a merger agreement (the “Merger Agreement”) with KCS Merger Sub, Inc. (“Merger Sub”), a wholly owned subsidiary of the Company, and AOC Key Solutions. Pursuant to the Merger Agreement, on March 15, 2016, Merger Sub was merged with and into AOC Key Solutions, with AOC Key Solutions becoming a wholly owned subsidiary of the Company.

Our Process

AOC Key Solutions works with clients across nearly all federal agencies and market sectors, and specializes in information technology, defense and homeland security, healthcare, energy and environment, infrastructure support services, design/build, and new and emerging markets. Our full service business development process is shown below.

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Distinctive Characteristics

The United States Government purchases between $450 billion and $500 billion in products and services each year from the private sector, making it the single largest customer on the planet. As policy evolves, KeyStone evolves with government keeping itself and its clients ahead of the curve.

The following characteristics have contributed to our success and, we believe will have a material and positive impact on the growth anticipated from KeyStone’s strategy:

Win Record. Each year we list, in our Billion Dollar Club, the major contract awards that we have helped our clients to win. Our 2015 members are shown below. From 2011 through 2015 we provided support to our clients for over 175 winning bids. During this period, we averaged $9 billion annually in government contract award wins for our clients. Our clients compensated us on a time and materials basis for our services. We do not provide additional services after a contract has been awarded.

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Ability to Provide Value to the Influx of Small Businesses. Recent data suggest that the Small Business Administration helps to start approximately 14,200 small businesses per year. We believe that a number of these new entities intend to enter the GovCon sector and may be potential KeyStone clients. We have a toolbox of services and products tailored to help new businesses gain entry into this lucrative market.

Access to Government and Industry Decision-Makers. We support our clients in seeking work from a majority of federal agencies. We know well the executive and working-level staff at all of our government contractor clients, and they are aware of the value of our services. As a result, we have key market intelligence that allows us to recommend teaming arrangements that have strategic value and are designed to increase the likelihood of our client winning a contract.

Government Contracting Weekly. This is a TV show we produced and are transitioning to the Internet to broaden its exposure. This show was previously broadcast for several years on CBS in Washington, DC and continues to open doors to us. Government Contracting Weekly also provides an open and transparent forum to discuss the many issues relevant to both the government and contractors.

Expertise and Depth of Resources. We employ over 25 in-house proposal development specialists backed by approximately 300 contract technical and management subject matter experts. Many of our employees maintain federal security clearances up to and including Top Secret.

Client Base of World Class Companies. Our client base has grown to over 450 companies, ranging from Fortune 50 firms to small and minority-owned businesses and start-ups. Over the Company’s 33-year history, we have supported a majority of the top-100 federal contractors, based on revenue.

Client Base Continues to Expand. Even with the size of our client base, the total number of contractors registered in the government’s System for Acquisition Management (SAM) exceeds 413,000, the majority of whom we do not currently serve.

Successful Long-Term Performance is Due to Our Sound and Proven Business Model. We have been in business for over 33 years with continuity of management from the beginning. Our proprietary processes and tools have afforded us the opportunity to train the next generation of talent.

Dedication to Principle-Centered Winning (PCW). We create value for our clients by focusing on winning— but winning the right way, not just any way. PCW is a code of conduct, a set of ethical principles and rules; based on service, sacrifice where necessary, and always seeking to act in the interests of our clients. We also seek to act in the best interests of the Federal Government. In part, this is because we are selective about who we take on as clients – only those companies which we believe will be able to successfully perform to government requirements. Thus, we play the important role of providing the right capabilities and the right price to the government entity with which our client is contracting.

State-of-the-Art Proposal Facility. For those clients who prefer an off-site proposal venue, we have a modern, secure and well-equipped proposal facility capable of simultaneously hosting multiple client engagements.

Our Network of Strategic Relationships. To increase our access to senior executives in government and industry, we have created a wide network of strategic relationships with organizations that include the George Washington University, Virginia Science and Technology Campus, Technology Accelerator, George Mason University Procurement and Technical Assistance Center, Arbinger Institute, Coalition for Government Procurement and the Veterans Institute for Procurement. It is through these relationships that we are able to:

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Our Services

We believe clients value our services for four primary reasons. First, we offer a full suite of services for GovCon industry best practices allowing our clients to outsource their non-core competencies and focus on performing their contracts more efficiently. Second, many companies cannot maintain a large support infrastructure in-house and find it more cost effective to outsource. Third, our proprietary tools help clients maintain a healthy pipeline. And fourth, our win record supports their top-line revenue growth.

Clients engage us for a variety of important reasons when they:

The services we provide include:

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Our Clients

KeyStone works with many highly-regarded government contractors, including start-ups, small and medium sized businesses, and large defense contractors and integrators. We have supported brand name firms such as Lockheed Martin, Northrop Grumman, Boeing, Raytheon, General Dynamics, Honeywell, BAE, Siemens, CSC, SAIC/Leidos, HP, CACI, AT&T, Booz Allen Hamilton, IBM, Oshkosh, Sodexo and others. Over the Company’s 33-year history, we have supported a majority of the top-100 federal contractors (by revenue). We provide our clients with quality value-added service through efficiencies of scale, productivity enhancements and expertise.

Our potential GovCon clients are the various levels of government and those companies that support them. They consist of two groups:

The Private Sector Group consists of those contractors and service companies that serve and support the various levels of Government. Contractors include firms that offer an array of important products and services. These are provided in the areas of national security, defense, homeland security, intelligence, information technology, energy, environment, healthcare, transportation, education, operations and maintenance, infrastructure, logistics, and others. Examples of service companies include law firms, accounting firms, banks and financial institutions, insurance companies, staffing and recruiting firms, media companies, market research, public relations houses, and all manner of consulting firms dedicated to supporting the taxpayer at every level of government.

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The Public Sector Group is comprised of the government entities or agencies of the United States including those at the federal, state and municipal levels.

Business Development

In the GovCon market, business development is tailored and scaled to meet the opportunity and the players associated with that opportunity. Business development is primarily carried out by our team of full-time business developers. To promote our business, our officers and employees take leadership positions in key GovCon industry organizations including industry trade groups and associations, chambers of commerce, veterans organizations, and civic and community organizations. Our leadership routinely engages in writing blogs, newsletters, white papers and thought pieces and developing podcasts and webinars for the GovCon industry on various GovCon subjects. We further this educational and brand recognition process by offering seminars and training, participating on roundtables and presenting at industry conferences. We also use several technology platforms to monitor industry developments and identify targets of contract opportunity for our clients. Because of our breadth of industry contacts and relationships we frequently facilitate and help create teams of multiple companies to pursue targets of opportunity. On each occasion, we become accessible to potential new clients by brokering the relationships.

The GovCon Market Defined

The GovCon market is defined as:

“The economic system through which different companies compete with each other to sell their services

or products to the Government.”

A government contractor is an organization — either for profit or non-profit — that produces goods or services under a contract for the government. The GovCon market functions at the intersection of government and private industry.

Size of GovCon Market—Leading Market Metrics

The GovCon market is massive. The US Federal Government is estimated to procure between $450 billion and $500 billion annually for products and services from the private sector — making it the world’s largest customer. KeyStone is positioned to become a leading provider of outsourced services to government contractors.

Government Contracting Sector Outlook

We believe the outlook for the GovCon sector for GFY 2016 (the federal government fiscal year starts on October 1 and ends on September 30) is promising. Congress has repealed sequestration and late last year a potential government shutdown was averted with pledges to avoid future disruptions. $88 billion of defense cuts from sequestration were restored. An omnibus-spending bill, ending the need for stopgap funding, was passed by Congress and signed into law. The government relaxed certain restrictions affecting spending ceilings and budget deficits, and a new House Speaker was elected, giving rise to hopes of stemming the partisan tide on the Hill. The shortage in the government’s acquisition workforce received attention accompanied by the recognition that training for government contracting personnel is a national priority.

Industry has also bounced back. The number of undercapitalized, unprofitable, and unstable companies was reduced—leaving a smaller, yet more robust contractor base. The volume and frequency of RFPs is increasing, outdated and ill-conceived programs have been eliminated in favor of higher priority programs and Low Price Technically Acceptable (LPTA) is more and more falling into disfavor.

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We believe the following indicators suggest a restoration of normalcy in the market:

We believe that GovCon’s future appears bright. The following chart provides a recap of federal government spending, demonstrating the size and scope of the GovCon market.

Source: USAspending.gov

Our Growth Strategy

KeyStone intends to bring together in one platform many of the products, services, and expertise used by both the public and private sector groups in the GovCon market. Our intent is to set up a structure of “cross pollination” and “cross selling” among all companies throughout the platform. This gives us a strong marketing tool which we believe will help us achieve our vision. The net proceeds from this offering will enable KeyStone to pursue this strategy.

KeyStone intends to acquire companies that provide a wide range of complementary services as described below. KeyStone’s acquisition strategy is to buy well-run profitable businesses, like AOC Key Solutions, focusing on top-line revenues to achieve critical mass while concurrently leveraging our platform to create economies of scale and best practices. Our strategy targets companies that provide both vertical and horizontal integrated services. We intend for any such acquisitions to become 100% wholly owned subsidiaries of KeyStone Solutions. We do not anticipate our ownership in any particular acquisition to be less than 80%. The Company does not believe that its acquisition strategy will cause it to become an “investment company” under the 1940 Act, nor does it intend to become one.

A vertical is a company that provides products and services within the GovCon market that are compatible and synergistic, and supplement those currently provided by KeyStone. Through strategic acquisitions of verticals, our plan is to be the preeminent source for many of the services and products required to provide end-to-end support to government contractors.

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GovCon verticals under consideration include companies engaged in staffing and recruiting, back office support services, information technology support, operations and contract performance, opportunity identification tracking and pipeline management services, teaming solutions, training and business development, price-to-win strategies, hardware and product offerings, traditional and social media services, M&A-related products and services, market research, specialized insurance, government executive recruiting, event planning and concierge services and logistics. We may consider investing in more than one company in any vertical category if it is a strategic fit.

A horizontal is a company that provides products and services that competes in whole or in part with AOC Key Solutions which operates in a highly-fragmented market. No single firm is dominant in the market and none has a large market share. As part of our growth strategy, we will seek to acquire firms that are qualified, meet our standards, and offer a supportable business case.

In the past the Company has been presented with numerous opportunities where a potential client has asked the Company to go at risk in some fashion in pursuit of a particular contract opportunity. In addition to our acquisition strategy, we may use a portion of the net proceeds from this offering to make strategic investments in targeted GovCon entities.

The likely recipients of any direct investments are high potential/high performing companies, primarily, but not exclusively, small businesses. Candidates could also include firms whose owners are executing a growth or exit strategy and are positioning themselves for an eventual liquidity event.

These types of investments may be deployed in certain sectors of the GovCon market including but not limited to: information technology; health care; national defense; homeland security; energy and the environment; maintenance and operation of government facilities and infrastructure; architecture, engineering, and construction; transportation; law enforcement; and new and emerging market sectors.

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We believe our existing facilities are adequate to meet our current needs and we can renew our existing leases or obtain alternate space on terms that would not have a material impact on our financial results.

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

Summary Historical Financial Data

The following summary historical and pro forma financial data should be read in conjunction with: (a) “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; (b) the AOC Key Solutions audited financial statements and accompanying notes for the years ended December 31, 2015 and 2014; (c) the AOC Key Solutions unaudited financial statements for the three-months and six-months ended June 30, 2016 and 2015; and (d) the KeyStone Solutions unaudited consolidated financial statements and accompanying notes for the period from March 15, 2016 (date of inception) to June 30, 2016. The summary financial data in this section are not intended to replace the respective financial statements and related notes included in the “Financial Statements” section of this offering circular.

As the Company was formed in March 2016, has no assets other than holding its shares in AOC Key Solutions and has had no operations since its formation other than those incidental to its formation and this proposed offering, no substantive information would be communicated to investors by including audited financials for KeyStone Solutions that is not otherwise provided by the AOC Key Solutions audited and interim financials and the pro forma financial information included herein.

The selected statements of income data for AOC Key Solutions for the years ended December 31, 2015 and 2014, and the selected balance sheets data as of December 31, 2015 and 2014, are derived from the AOC Key Solutions audited financial statements for the years ended December 31, 2015 and 2014, appearing in the “Financial Statements” section of this offering circular. The selected statements of income data for the three-months and six-months ended June 30, 2016 and 2015, and the selected balance sheets data as of June 30, 2016 and 2015, are derived from the AOC Key Solutions unaudited financial statements for the periods ended June 30, 2016 and 2015, appearing in the “Financial Statements” section of this offering circular.

The selected statements of income consolidated data for KeyStone Solutions for the period from March 15, 2016 (date of inception) to June 30, 2016, and the selected balance sheets data as of June 30, 2016 are derived from the KeyStone Solutions unaudited consolidated financial statements for the period from March 15, 2016 (date of inception) to June 30, 2016 appearing in the “Financial Statements” section of this offering circular.

The unaudited financial statements have been prepared on a basis consistent with our audited financial statements included in this offering circular. Our historical results are not necessarily indicative of the results that may be expected in the future and the results for any interim period are not necessarily indicative of the results that may be expected for the full fiscal year.

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Pro Forma Financial Data

The following unaudited pro forma combined financial statements are based on the KeyStone Solutions unaudited consolidated financial statements and accompanying notes for the period from March 15, 2016 (date of inception) to June 30, 2016, and the AOC Key Solutions unaudited financial statements for the six-month periods ended June 30, 2016 and 2015, as adjusted to give effect to the Reorganization. The unaudited pro forma combined statements of income for the six months ended June 30, 2016 give effect to the acquisition of AOC Key Solutions as if it had occurred on January 1, 2016. The unaudited pro forma combined balance sheets as of June 30, 2016 gives effect to the Reorganization as if it had occurred on June 30, 2016.

The assumptions and estimates underlying the unaudited adjustments to the pro forma condensed combined financial statements are described in the accompanying notes in this section, which should be read together with the KeyStone Solutions unaudited consolidated financial statements and accompanying notes for the period from March 15, 2016 (date of inception) to June 30, 2016.

The pro forma combined financial statements do not necessarily reflect what the combined Company’s financial condition or results of operations would have been had the Reorganization occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

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See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

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See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

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See accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Information

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Notes to the Unaudited Pro Forma Condensed Combined Financial Information

Note 1 – Basis of presentation

KeyStone Solutions interim unaudited consolidated financial statements have been adjusted in the pro forma condensed combined financial statements to give effect to pro forma events that are (1) directly attributable to the Reorganization, (2) factually supportable and (3) with respect to the pro forma condensed combined statement of operations, expected to have a continuing impact on the combined results following the business combination.

The pro forma combined financial statements do not necessarily reflect what the combined Company’s financial condition or results of operations would have been had the Reorganization occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The combined pro forma financial information does not reflect the realization of any expected cost savings or other synergies from the Reorganization and other possible cost savings initiatives following the completion of the Reorganization.

Note 2 – Pro forma adjustments

The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:

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MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATION

General

KeyStone Solutions was formed on March 15, 2016 as a holding company for the purpose of creating or acquiring professional services companies that provide support to the government contracting (GovCon) industry. While KeyStone Solutions has no direct current business operations, our significant assets are our cash and equity interest in our principal operating subsidiary, AOC Key Solutions.

AOC Key Solutions is an established provider of outsourced services to the GovCon market. AOC Key Solutions helps government contractors target and win government contracts. For more than 30 years AOC Key Solutions has provided market intelligence, proposal, capture, advisory and teaming support and other important services to Fortune 50 companies and small businesses alike. We intend to use the net proceeds of this offering to fund organic growth and add both vertical and horizontal capabilities by acquiring GovCon service providers through a market-focused and disciplined strategy. Our efforts to identify prospective target businesses will not be limited to any geographic region or any particular sector of the GovCon support industry.

We are based in Chantilly, Virginia and have a satellite office in New Orleans, Louisiana. As of June 30, 2016 we had 32 employees and access to approximately 350 consultants.

We generate revenues from fees and reimbursable expenses for professional services usually billed on an hourly rate, time-and-materials (T&M) basis. Clients are typically invoiced on a monthly basis, with revenue recognized as the services are provided. In a few cases, we may enter into a fixed-fee engagement for our services. Fixed-fee engagements can be invoiced once for the entire job, or there could be several “progress” invoices for accomplishing various phases or reaching contractual milestones. T&M contracts represent over 95% of our client engagements. Revenues related to materials (mainly out-of-pocket expenses such as airfare, lodging and meals) required during an engagement generally are billed on a pass-through basis and do not include overhead, general and administrative and profit mark-ups and can be charged and reimbursed separately or as part of the overall fee arrangement. Time-and-materials engagements do not provide us with a high degree of predictability of future period performance.

Our financial results are impacted principally by the:

The number of quarterly business days is affected by the number of vacation days taken by our staff and consultants, as well as the number of holidays in each quarter. We typically have fewer business work days available in the fourth quarter of the year, which can impact revenues during that period. Our staff utilization rate can also be affected by seasonal variations in the demand for our services from our clients. Our revenues have historically been weighted slightly toward the second and third calendar quarters, with the fourth quarter generally experiencing the least amount of revenue. Our earnings may trend with revenue seasonality and results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year.

Unexpected changes in the demand for our services can result in significant variations in utilization and revenues, and present a challenge to optimal hiring, staffing and use of consultants. The volume of work performed can vary from period to period.

We anticipate an increasing demand for our services in 2016 as the volume of government spending increases and as our clients elect to outsource their bid and proposal activities. We believe the outlook for the GovCon sector for GFY 2016 (the federal government fiscal year starts on October 1 and ends on September 30) is promising. The volume and frequency of RFPs is increasing, outdated and ill-conceived programs have been eliminated in favor of higher priority programs and Low Price Technically Acceptable (LPTA) contracts are increasingly falling into disfavor. We have seen a growth in AOC Key Solutions’ comparable unaudited year-over-year revenue for the six months ended June 30, 2016.

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Operating Results

Since KeyStone Solutions was not formed until March 2016, we are presenting the following reviews of operating results:

Comparison of the Three Months Ended June 30, 2016 and 2015 (Unaudited) – AOC Key Solutions Only

Since the Company was formed on March 15, 2016, a comparison of the unaudited financial results for the three months ended June 30, 2016 and 2015 is provided below for AOC Key Solutions in order to provide a comparative review of the Company’s only wholly owned operating subsidiary.

The interim period comparison for the second quarters of 2016 and 2015 was not adjusted for a difference in period-start and period-end dates. Prior to 2016, AOC Key Solutions used second quarter start and end dates that coincided with its billing and payroll quarter start date of March 27, 2015 and end date of June 26, 2015. In 2016, AOC Key Solutions changed its quarterly end dates to coincide with the calendar end of each quarter. The number of business days of comparison between the second quarters of 2016 and 2015 is identical. We have determined that the difference in the 2016 and 2015 period-start and period-end dates does not have a material effect on the financial statement presentation because the majority of AOC Key Solutions’ expenses are directly associated with AOC Key Solutions’ revenue.

The unaudited results for the periods shown below should be reviewed in conjunction with the financial statements included elsewhere in this offering circular.

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Revenue

AOC Key Solutions’ revenue for the second quarter of 2016 increased by $1,559,583, or 71.4%, to $3,744,579 compared to $2,184,996 in the comparable period in 2015. This increase was primarily due to an increase in demand by clients for our services as a result of the federal government procurement process putting more contracts out for bid.

Operating Costs and Expenses

AOC Key Solutions’ most significant operating costs and expenses are described below:

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Total operating costs and expenses for the second quarter of 2016 increased by $1,199,070, or 56.9%, to $3,307,963 compared to $2,108,893 in the comparable period in 2015. This increase was mostly attributable to a $919,803, or 79.5%, increase in our cost of revenue compared to the prior year period primarily due to an increased use of consultants to support the additional demand for our services. Billable expenses increased by $73,897, or 186.1%, for the second quarter of 2016 as compared to the comparable period in 2015 due to additional client engagements requiring increased travel and other direct costs. Selling, general and administrate expenses increased by $206,602, or 23.4%, compared to the prior year period primarily due to increases in payroll related expenses and employee bonuses, offset by decreases in net rent and administrative expenses. Depreciation and amortization expense for the second quarter of 2016 decreased by $1,232, or 4.4%, for the comparable period in 2015.

Income Taxes

As presented below in the Critical Accounting Policies and Estimates discussion regarding income taxes, AOC Key Solutions elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, AOC Key Solutions did not pay federal corporate income tax, and in most instances state income tax, on its taxable income. AOC Key Solutions revoked its S Corporation election upon the March 16, 2016 merger with the Company and is now subject to corporate income taxes.

The provision for income taxes for the three-month period ended June 30, 2016 is $79,840.

The deferred tax assets on AOC Key Solutions’ balance sheets are due to temporary differences related primarily to depreciation of property and equipment and accrued deferred employee compensation. There was no valuation allowance for deferred tax assets at June 30, 2016, as management believes that the deferred tax assets will be realized through future operations.

The difference between the effective tax rate and federal statutory tax rate is due primarily to certain expenses which are not deductible for income tax purposes.

Net Income

Net income in the second quarter of 2016 increased by $280,673, or 368.8%, to $356,776 compared to $76,103 for the comparable period in 2015. As a result, AOC Key Solutions’ net income margin increased from 1.8% in 2015 to 5.0% for the comparable period in 2016.

Stockholders’ Distributions

There were no stockholders’ distributions for the second quarter of 2016 and 2015.

Cash Flow

We expect to finance our operations over the next twelve months primarily through existing cash flow and from the net proceeds of this offering, supplemented as necessary by funds available through our $1,000,000 revolving line of credit.

The unaudited net cash flows from operating, investing and financing activities for the periods below were as follows:

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Cash Used for Operating Activities

For the three-month period ended June 30, 2016, net cash used for operating activities of $117,420 consisted of AOC Key Solutions’ net income of $356,776 adjusted by $27,055 of non-cash depreciation and amortization, and offset by $501,251 in cash used by changes in working capital including intercompany receivables from KeyStone Solutions, prepaid expenses, accrued wages and leave, accrued income taxes payable, deferred taxes and other activities.

For the three-month period ended June 30, 2015, net cash from operating activities of $53,686 consisted of AOC Key Solutions’ net income of $76,103 adjusted by $28,287 of non-cash depreciation and amortization, and offset by $50,704 in cash used by changes in working capital, prepaid expenses, accrued wages and leave, and other activities.

Cash Used for Investing Activities

For the three-month period ended June 30, 2016, net cash used for investing activities of $21,486 was entirely for the purchase of computer hardware and equipment.

For the three-month period ended June 30, 2015, net cash used for investing activities of $2,086 was entirely for the purchase of computer hardware and equipment.

Cash Used for Financing Activities

For the three-month period ended June 30, 2016, net cash from financing activities of $39,352 was from advances on the line of credit.

For the three-month period ended June 30, 2015, no cash was used for financing activities.

Comparison of the Six Months Ended June 30, 2016 and 2015 (Unaudited) – AOC Key Solutions Only

Since the Company was formed on March 16, 2016, a comparison of the unaudited financial results for the six months ended June 30, 2016 and 2015 is provided below for AOC Key Solutions in order to provide a comparative review of the Company’s only wholly owned operating subsidiary.

The interim period comparison for the first two quarters of 2016 and 2015 was not adjusted for a difference in period-end closing dates. Prior to 2016, AOC Key Solutions used a second quarter end date that coincided with its billing and payroll quarter end date of June 26, 2015. In 2016, AOC Key Solutions changed its quarterly ended dates to coincide with the calendar end of each quarter. The number of days of comparison between the first two quarters of 2016 and 2015 differs by three business days. We have determined that the absence of accruing for the three business days does not have a material effect on the financial statement presentation because the majority of AOC Key Solutions’ expenses are directly associated with AOC Key Solutions’ revenue.

The unaudited results for the periods shown below should be reviewed in conjunction with the financial statements included elsewhere in this offering circular.

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Revenue

AOC Key Solutions’ revenue for the six-month period ended June 30, 2016 increased by $2,866,175, or 66.5%, to $7,177,345 compared to $4,311,170 in the comparable period in 2015. This increase was primarily due to an increase in demand by clients for our services as a result of the federal government procurement process putting more contracts out for bid.

Operating Costs and Expenses

AOC Key Solutions’ most significant operating costs and expenses are described below:

Total operating costs and expenses for the six-month period ended June 30, 2016 increased by $1,975,493, or 45.6%, to $6,310,302 compared to $4,334,809 in the comparable period in 2015. This increase was mostly attributable to an increase in our cost of revenue which increased by $1,593,247, or 67.5%, compared to the prior year period primarily due to an increased use of consultants to support the additional demand for our services. Billable expenses increased by $129,026, or 165.4%, for the second quarter of 2016 as compared to the comparable period in 2015 due to additional client engagements requiring increased travel and other direct costs. Selling, general and administrate expenses increased by $256,372, or 13.9%, compared to the prior year period primarily due to increases in payroll related expenses and employee bonuses, offset by decreases in net rent and administrative expenses. Depreciation and amortization expense for the second quarter of 2016 decreased by $3,152, or 5.6%, for the comparable period in 2015.

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Income Taxes

As presented below in the Critical Accounting Policies and Estimates discussion regarding income taxes, AOC Key Solutions elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, AOC Key Solutions did not pay federal corporate income tax, and in most instances state income tax, on its taxable income. AOC Key Solutions revoked its S Corporation election upon the March 16, 2016 merger with the Company and is now subject to corporate income taxes.

The provision for income taxes for the six-month period ended June 30, 2016 is $53,915.

The deferred tax assets on AOC Key Solutions’ balance sheets are due to temporary differences related primarily to depreciation of property and equipment and accrued deferred employee compensation. There was no valuation allowance for deferred tax assets at June 30, 2016, as management believes that the deferred tax assets will be realized through future operations.

The difference between the effective tax rate and federal statutory tax rate is due primarily to certain expenses which are not deductible for income tax purposes.

Net Income

Net income in the six-month period ended June 30, 2016 increased by $836,767, or 3,540%, to $813,128 compared to a net loss of $23,639 for the comparable period in 2015. As a result, AOC Key Solutions’ net income margin increased from a loss of 0.5% in 2015 to a gain of 11.3% for the comparable period in 2016.

Stockholders’ Distributions

The Stockholders’ distributions for the six-month period ended June 30, 2016 were $125,615 compared to $0 for the comparable period in 2015.

Cash Flow

We expect to finance our operations over the next twelve months primarily through existing cash flow and from the net proceeds of this offering, supplemented as necessary by funds available through our $1,000,000 revolving line of credit.

The unaudited net cash flows from operating, investing and financing activities for the periods below were as follows:

Cash Used for Operating Activities

For the six-month period ended June 30, 2016, net cash used for operating activities of $431,986 consisted of AOC Key Solutions’ net income of $813,128 adjusted by $53,318 of non-cash depreciation and amortization, and offset by $1,298,432 in cash used by changes in working capital including intercompany receivables from KeyStone Solution, prepaid expenses, accrued wages and leave, employee advances, accrued income taxes payable, deferred taxes and other activities.

For the six-month period ended June 30, 2015, net cash used for operating activities of $163,473 consisted of AOC Key Solutions’ net loss of $23,639 adjusted by $56,470 of non-cash depreciation and amortization, and offset by $196,304 in cash used by changes in working capital, prepaid expenses, employee advances, accrued wages and leave, and other activities.

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Cash Used for Investing Activities

For the six-month period ended June 30, 2016, net cash used for investing activities of $32,481 was entirely for the purchase of computer hardware and equipment.

For the six-month period ended June 30, 2015, net cash used for investing activities of $43,835 was entirely for the purchase of computer hardware and equipment.

Cash Used for Financing Activities

For the six-month period ended June 30, 2016, net cash used for financing activities of $86,263 was used for stockholders’ distributions and advances on the line of credit.

For the six-month period ended June 30, 2015, no cash was used for financing activities.

Comparison of Years Ended December 31, 2015 and 2014 – AOC Key Solutions Only

AOC Key Solutions is KeyStone’s historical operating entity that has been in business for over 30 years. A comparison for the years ended December 31, 2015 and 2014 is provided below. The audited results for the periods shown below should be reviewed in conjunction with the financial statements and notes included elsewhere in this Offering Circular.

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Revenue

Total revenue for 2015 decreased by $1,857,662, or 16.1%, compared to 2014 primarily due to a decrease in federal government spending and the resultant reduction in the number of contracts on which our clients bid.

Operating Costs and Expenses

Total operating costs and expenses for 2015 decreased by $2,164,642, or 19.0%, compared to 2014. As our expectations for revenue decreased during 2015, we reduced our use of consultants to maximize profitability. As a result, our cost of revenue during 2015 decreased by $1,115,133, or 17.4%, compared to 2014. Billable expenses decreased by $7,376, or 3.3%, in 2015 as compared to 2014 due to the net change of travel and other direct costs requirements of individual client engagements. Selling, general and administrate expenses decreased by $1,032,755, or 21.9%, in 2015 as compared to 2014 primarily due to a reduction in overhead expenses and also due to a reduction in fringe benefit expenses.

Depreciation and amortization expense in 2015 and 2014 were $70,268 and $79,646, respectively, representing a $9,378 or 11.8%, decrease. Depreciation expense is computed using the straight-line method over the estimated useful lives of assets.

We sublease part of our Chantilly, Virginia office space to a subtenant. To further reduce our overhead, we amended the sublease on April 7, 2015 to provide more space for the subtenant. As a result of these changes, rental income from this sublease arrangement increased from $101,522 in 2014 to $156,375 in 2015, thus helping to reduce our net rent.

Other Expenses

Total other expenses for 2015 decreased by $16, or 100%, compared to 2014 because we did not draw any funds from our credit facility.

Net Income

While we experienced a significant decrease in 2015 revenue, 2015 net income increased by $306,996, or 267.5%, due to operational changes and cost reductions. As a result, our net income margin increased from 1.0% in 2014 to 4.4% in 2015.

Stockholders’ Distributions

We reduced stockholders’ distributions from $319,909 in 2014 to $267,758 in 2015. This reduction coupled with the 2015 increase in net income resulted in the total shareholders’ equity balance increasing to $1,582,417 as of December 31, 2015, a $154,016 or a 10.8% increase over the balance as of December 31, 2014. Throughout its history and until March 15, 2016, AOC Key Solutions was an S corporation and the 2014 and 2015 financial statements reflect this status.

Cash Flow

We expect to finance our operations over the next twelve months primarily through existing cash flow and from the net proceeds of this offering, supplemented as temporarily necessary by funds available through our $1,000,000 revolving line of credit (See “Debt Issuances” below.) If we are unable to raise funds when required or on acceptable terms, we may have to significantly scale back, or discontinue, our intended acquisitions.

Net cash flow from operating, investing and financing activities for the periods below were as follows:

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Cash Provided By Operating Activities

For year ended December 31, 2015, net cash provided by operating activities of $260,659 consisted of our net income of $421,774 adjusted by $70,268 of non-cash depreciation and amortization, and offset by $231,383 in cash used by changes in working capital, accrued wages and leave, and other activities.

For year ended December 31, 2014, net cash provided by operating activities of $53,831 consisted of our net income of $114,778 adjusted by $79,646 of non-cash depreciation and amortization, and offset by $140,593 in cash used by changes in working capital, accrued wages and leave, and other activities.

Cash Used For Investing Activities

For year ended December 31, 2015, net cash used for investing activities of $57,343 was entirely for the purchase of computer hardware and equipment.

For year ended December 31, 2014, net cash used for investing activities of $32,070 was entirely for the purchase of computer hardware and equipment.

Cash Used For Financing Activities

For year ended December 31, 2015, net cash used for financing activities of $267,758 was used for stockholders’ distributions.

For year ended December 31, 2014, net cash used for financing activities of $319,909 was used for stockholders’ distributions.

Period from March 15, 2016 (Date of Inception) to June 30, 2016

On March 15, 2016, AOC Key Solutions, Inc. entered into a merger agreement (the “Merger Agreement”) with KeyStone Solutions and KCS Merger Sub, Inc. (“Merger Sub”), a wholly-owned subsidiary of KeyStone Solutions. Pursuant to the Merger Agreement, on March 15, 2016, Merger Sub was merged with and into AOC Key Solutions, and thus AOC Key Solutions became a wholly-owned subsidiary of KeyStone Solutions (the “Reorganization”). The operations of AOC Key Solutions have not changed, nor have any assets or operations transferred to either KeyStone Solutions or Merger Sub. The stockholders’ proportionate ownership of KeyStone Solutions remains the same as it was for AOC Key Solutions.

The unaudited consolidated results for the period shown below should be reviewed in conjunction with the KeyStone Solutions unaudited financial statements and notes for the period from March 15, 2016 (date of inception) to June 30, 2016 included elsewhere in this offering circular and represent the consolidated operations from the Company’s inception on March 15, 2016 through June 30, 2016.

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Revenue

Consolidated revenue for the period from March 15, 2016 (date of inception) to June 30, 2016 was $4,377,095 and is entirely attributable to the Company’s wholly-owned subsidiary, AOC Key Solutions. As discussed in the comparative review of AOC Key Solutions for the three-month and six-month periods ended June 30, 2016, AOC Key Solutions’ revenue increase period over period due to an increase in demand by clients for our services as a result of the federal government procurement process putting more contracts out for bid.

Operating Costs and Expenses

Total consolidated operating costs and expenses for the period from March 15, 2016 (date of inception) to June 30, 2016 were $4,262,596. Operating cost attributable only to KeyStone at the holding company level during this period totaled $324,342 and were primarily for selling, general and administrative expenses primarily associated with professional and legal services in forming KeyStone, the merger which made AOC Key Solutions a subsidiary of KeyStone.

We anticipate selling, general and administrative expenses increasing in future periods. These increases will include costs related to hiring of personnel and fees to outside consultants, lawyers and accountants as well as expenses related to maintaining compliance with applicable listing rules and SEC requirements, insurance, and investor relations activities. These expenses may further increase if we are required to comply with certain SEC reporting requirements from which we are currently exempt.

Other Expenses

Net other expenses for the period from March 15, 2016 (date of inception) to June 30, 2016 were $13,037 and were comprised of $13,065 of interest expense associated with the $500,000 Avon Road Partners, L.P. subordinated note offset by $28 of interest income.

Income Taxes

As presented below in the Critical Accounting Policies and Estimates discussion regarding Income Taxes, AOC Key Solutions elected to be taxed under the provision of Subchapter S of the Internal Revenue Code. Under those provisions, AOC Key Solutions did not pay federal corporate income tax, and in most instances state income tax, on its taxable income. AOC Key Solutions revoked its S Corporation election upon the March 15, 2016 merger with the Company and is now subject to corporate income taxes.

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The provision for income taxes for the period from March 15, 2016 (date of inception) to June 30, 2016 is $53,915 and is comprised of a $161,159 current tax provision offset by an $81,319 deferred tax benefit.

The deferred tax assets are due to temporary differences related primarily to depreciation of property and equipment and accrued deferred employee compensation. There was no valuation allowance for deferred tax assets at June 30, 2016, as management believes that the deferred tax assets will be realized through future operations.

The difference between the effective tax rate and federal statutory tax rate is due primarily to certain expenses which are not deductible for income tax purposes.

Net Income

Net income for the period from March 15, 2016 (date of inception) to June 30, 2016 was $47,547 or 1.1%. Net income for the three-months ended June 30, 2016 was $246,419 or 6.6%.

Cash Flow

We expect to finance our operations over the next twelve months primarily through existing cash flow, the Avon Road Partners, L.P. subordinated note and from the net proceeds of this offering, supplemented as temporarily necessary by funds available through our $1,000,000 revolving line of credit.

The unaudited net cash flow from consolidated operating, investing and financing activities for the period below was as follows:

Cash Used For Operating Activities

For the period from March 15, 2016 (date of inception) to June 30, 2016, net cash used for operating activities of $473,129 consisted of KeyStone’s net income of $47,547 adjusted by $31,432 of non-cash depreciation and amortization, and offset by $552,108 in cash used by changes in working capital, employee advances, prepaid expenses, accrued wages and leave, interest payable, deferred taxes and other activities.

Cash Used For Investing Activities

For the period from March 15, 2016 (date of inception) to June 30, 2016, net cash used for investing activities of $32,481 was entirely for the purchase of computer hardware and equipment.

As of June 30, 2016, we did not have any material commitments for capital expenditures.

Cash Provided By Financing Activities

For the period from March 15, 2016 (date of inception) to June 30, 2016, net cash used for financing activities of $36,075 was the result of borrowing $500,000 through the Avon Partners, L.P. subordinated note and the temporary receipt of funds from a line of credit offset by the costs of the preferred stock offering and the issuance of a note receivable.

Non-Cash Financing Activities

As more fully disclosed in Note 7 of the KeyStone Solutions, Inc. Notes to the Consolidated Financial Statements of March 31, 2016, the stockholders exchanged 100% of their outstanding shares of common stock in AOC Key Solutions for proportionate shares of KeyStone’s outstanding common stock.

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Lease Obligations

The Company leases office space in Chantilly, Virginia under the terms of a ten-year lease expiring October 31, 2019. The lease contains one five-year renewal option. The lease terms include an annual increase in base rent and expenses of 2.75%. The Company also leases office space in New Orleans, Louisiana under a three-year lease expiring May 31, 2018.

Rent expense was $142,041 for the period from March 15 (date of inception) to June 30, 2016.

Future obligations over the primary terms of the Company’s long-term lease expiring in 2019 are as follows:

The Company is the lessor in an agreement to sublease office space in Chantilly, Virginia with an initial term of two years with eight one-year options to renew the lease through October 31, 2019. The lease provides for an annual increase in base rent and expenses of 2.90%. The initial term ended October 31, 2011 and the Company exercised the renewal options through 2014. On April 7, 2015, the lease was amended to sublease more space to the subtenant and change the rental calculation. Rent income was $53,239 for the period from March 15, 2016 (date of inception) to June 30, 2016.

Liquidity and Capital Resources

We have funded our operations primarily through cash from operating activities of AOC Key Solutions. As of June 30, 2016 we had unrestricted cash and cash equivalents of $26,181 and working capital of $1,665,368.

For a minimum offering of 300,000 Units, we anticipate paying the quarterly cash dividends through existing assets and cash flow. For a maximum offering of 3,000,000 Units, we anticipate paying the quarterly cash dividends through cash flow and potential business growth from acquired entities. We do not believe the dividend payments will have a material effect on our liquidity and capital resources when compared to anticipated future cash flow.

As of December 31, 2015 we had unrestricted cash and cash equivalents of $567,865 and a working capital of $3,342,253, as compared to unrestricted cash and cash equivalents of $632,308 and working capital of $3,470,564 as of December 31, 2014.

Operating assets and liabilities consist primarily of receivables from billed and unbilled services, accounts payable, accrued expenses, and accrued payroll and related benefits. The volume of billings and timing of collections and payments affect these account balances.

Debt Issuances

AOC Key Solutions was a party to a business loan agreement (the “2015 Loan Agreement”) with Sandy Spring Bank (the “Lender”) dated as of September 25, 2015. The primary credit facility was an asset based revolving line of credit up to $1,000,000 which was due to mature on September 30, 2016. To secure our obligations under the 2015 Loan Agreement, AOC Key Solutions had granted to the Lender a security interest in its accounts receivable. The Lender was required to advance funds to AOC Key Solutions up to the lesser of (1) $1,000,000 or (2) eighty percent (80%) of the aggregate amount of all of AOC Key Solutions’ accounts receivable aged 90-days or less which contained selling terms and conditions acceptable to the Lender. AOC Key Solutions’ obligations under the 2015 Loan Agreement were guaranteed by James McCarthy, our Chairman of the Board, and his wife. AOC Key Solutions did not draw any funds from this credit facility in 2015. Pursuant to First Amendment to Business Loan Agreement (Asset Based), dated May 9, 2016, the Lender had waived the restrictions in the 2015 Loan Agreement on AOC Key Solutions’ ability to make dividends to the Company.

On August 11, 2016, KeyStone Solutions entered into a Loan and Security Agreement (the “2016 Line of Credit”) with Sandy Spring Bank (the “Lender”) that replaces the 2015 Loan Agreement. The 2016 Line of Credit is comprised of: 1) an asset-based revolving line of credit up to $1,000,000 for short-term working capital needs and general corporate purposes which is due to mature on July 31, 2017, bears interest at the Wall Street Journal Prime Rate, floating, plus 0.50% and is secured by a first lien on all of KeyStone’s business assets; and 2) an optional term loan of $100,000 which must be drawn by July 31, 2017, is for permanent working capital, bears interest at the Wall Street Journal Prime Rate, floating, plus 0.75%, requires monthly payments of principal plus interest to fully amortize the loan over four (4) years, is secured by a first lien on all of KeyStone’s business assets, cross-collateralized and cross-defaulted with the revolving line of credit, and matures on February 15, 2019. The 2016 Line of Credit does not require any personal guarantees.

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The borrowing base for the 2016 Line of Credit is up to the lesser of (1) $1,000,000 or (2) eighty percent (80%) of the aggregate amount of all of Keystone’s eligible accounts receivable as defined by the Lender. The borrowing base for the $100,000 term loan is fully reserved under the borrowing base for the revolving line of credit. The 2016 Line of Credit has periodic reporting requirements and balance sheet covenants, as well as affirmative and negative operational and ownership covenants.

As of June 30, 2016, the Company had a $39,352 balance due on the 2015 Line of Credit. When the Company replaced the 2015 Line of Credit with the 2016 Line of Credit on August 11, 2016, neither line of credit had a balance due.

On March 16, 2016, the Company entered into a Subordinated Note and Warrant Purchase Agreement (the “Note Purchase Agreement”) pursuant to which the Company agreed to issue up to $1,000,000 in subordinated debt and warrants to purchase up to 125,000 shares of the Company’s common stock (“Subordinated Note Warrants”). The exercise price for the Subordinated Note Warrants is equal to $2.00 per share of common stock. As of the date of this offering circular, subordinated notes with a face amount of $500,000 and Subordinated Note Warrants to purchase 62,500 shares of the Company’s common stock have been issued pursuant to the Note Purchase Agreement to Avon Road Partners, L.P. (“Avon Road”), an affiliate of Robert Berman, the Company’s acting CEO and a member of the Company’s Board of Directors.

The note is subordinated to the 2016 Line of Credit and any successor financing facility. Simple interest accrues on the unpaid principal of the note at a rate equal to the lower of (a) 9% per annum, or (b) the highest rate permitted by applicable law. Interest is payable monthly and the note matures on March 16, 2019.

As of June 30, 2016, we did not have any material commitments for capital expenditures.

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Off-Balance Sheet Arrangements

As of the date of this offering circular, we did not have any off-balance sheet arrangements that have had or are reasonably likely to have a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital resources or capital expenditures.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations is based upon our financial statements which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts in our financial statements.

We believe the application of accounting policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are periodically reevaluated, and adjustments are made when facts and circumstances dictate a change. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates.

Our accounting policies are further described in our financial statements and the accompanying notes included in this offering circular. We have identified the following critical accounting policies:

Revenue Recognition

We recognize our revenues for the sale of services when persuasive evidence of an arrangement exists, services have been rendered or delivery has occurred, the fee is fixed or determinable, and the collectability of the related revenue is reasonably assured. We principally derive revenues from fees for services generated on a project by project basis. Prior to the commencement of a project, we reach agreement with the client on rates for services based upon the scope of the project, the proposed schedule, staffing requirements and the level of client involvement. Numerous assumptions are also set forth to guide on-going work. It is our policy to obtain written agreements from new clients prior to performing services. In these agreements, the clients acknowledge that they will pay based upon the amount of time spent on the project, and the completion of certain deliverables or milestones based on an agreed upon fee structure.

Revenues for time-and-materials contracts are recognized based on the number of hours worked by our employees or consultants at an agreed upon rate per hour set forth in our standard rate sheet or as written from time to time in our contracts or purchase orders. These costs are recognized in the period in which services are performed. Revenues for time-and-materials contracts are billed monthly or in accordance with the specific contractual terms of each project. All invoices rendered are fully supported by time sheets documenting labor costs. Where required by our client’s need to follow the Federal Travel Regulations, all other direct costs are supported by receipts or other documentation.

Revenues related to firm fixed price contracts are recognized as revenue as value is delivered to the customer. The pattern of revenue recognition for these contracts varies depending on the terms of the individual contracts, and may be recognized proportionally over the term of the contract or deferred until the end of the contract term and recognized when our obligations have been fulfilled with the customer. In instances where substantive acceptance provisions are specified in customer contracts, revenues are deferred until all acceptance criteria have been met. The pattern of revenue recognition for contracts where revenues are recognized proportionally over the term of the contact is based on the proportional performance method of accounting using the ratio of labor hours incurred to estimated total labor hours, which we consider to be the best available indicator of the pattern and timing in which contract obligations are fulfilled. This percentage is multiplied by the contracted dollar amount of the project to determine the amount of revenue to recognize in an accounting period. The contracted amount used in this calculation typically excludes the amount the client pays for reimbursable expenses. There are situations where the number of hours to complete projects may exceed our original estimate as a result of an increase in project scope or unforeseen events. On a regular basis, we review the hours incurred and estimated total labor hours to complete. The results of any revisions in these estimates are reflected in the period in which they become known. We believe we have demonstrated a history of successfully estimating the total labor hours to complete a project.

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Fees for services that have been performed, but for which we have not invoiced the customers are recorded as unbilled receivables in the accompanying balance sheets.

The agreements entered into in connection with a project, whether on a time-and-materials basis or firm fixed price basis, typically allow our clients to terminate early due to breach or for convenience with 30-days’ notice. In the event of termination, the client is contractually required to pay for all time, materials and expenses incurred by us through the effective date of the termination.

Accounts Receivables

Management reviews the collectability of accounts receivable on a monthly basis, assessing the credit-worthiness of customers whose accounts are past due. Management has elected to record bad debts using the direct write-off method. Generally accepted accounting principles require that the allowance method be used to reflect bad debts. However, the effect of the use of the direct write-off method is not materially different from the results that would have been obtained had the allowance method been followed.

Income Taxes

Through March 15, 2016, AOC Key Solutions had elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, AOC Key Solutions does not pay federal corporate income taxes, and in most instances state income tax, on its taxable income. Instead, the stockholders of AOC Key Solutions are liable for individual income taxes on their respective shares of AOC Key Solutions’ net income. AOC Key Solutions effectively revoked its S Corporation election upon the March 15, 2016 merger with the Company. Both the Company and AOC Key Solutions are subject to corporate income taxes.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company’s evaluation as of June 30, 2016 revealed no tax positions that would have a material impact on the financial statements. The 2012 through 2015 tax years remain subject to examination by the IRS. Management does not believe that any reasonably possible changes will occur within the next twelve months that will have a material impact on the financial statements.

Change to AOC Key Solutions Quarter End Date

Prior to 2016, AOC Key Solutions used quarter end dates that coincided with its billing and payroll quarter end dates. AOC Key Solutions has used December 31 as its fiscal year end date. In 2016 AOC Key Solutions changed its quarterly ended dates to coincide with the calendar end date of each quarter.

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