1521 Concord Pike, Suite 301
Wilmington, Delaware 19803
(302) 824-7062

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

Kevin J. Bratton
Chief Financial Officer
Special Diversified Opportunities Inc.
1521 Concord Pike, Suite 301
Wilmington, Delaware 19803
(302) 824-7062

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

Copies to:

Justin W. Chairman
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
(215) 963-5061

Approximate date of commencement of proposed sale of the securities to the public: As promptly as practicable after this Registration Statement becomes effective and upon consummation of the acquisition described herein.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    ☐

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

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

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

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

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

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

The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer, solicitation or sale is not permitted.

Subject to Completion, Dated January 27, 2017

PRELIMINARY

PROSPECTUS
and
PROXY STATEMENT
of
SPECIAL DIVERSIFIED OPPORTUNITIES INC.

Special Meeting of Stockholders
to be held on            , 2017

Special Diversified Opportunities Inc., or SDOI or the Company, is using this Proxy Statement and Prospectus, or the proxy statement/prospectus, to solicit proxies on behalf of SDOI from SDOI stockholders in connection with the special meeting of stockholders of SDOI to be held on            , 2017, or the Special Meeting. At the Special Meeting, stockholders will be asked to: (1) approve the adoption of the Fifth Amended and Restated Certificate of Incorporation of SDOI (comprising three separate proposals, each a Charter Amendment Proposal and together the Charter Amendment Proposals), (2) approve the proposal to adjourn or postpone the Special Meeting, if necessary and (3) approve any other matters that may properly be brought before the Special Meeting and at any adjournments or postponements thereof. Each of the Charter Amendment Proposals is dependent on the others, and none of them will be implemented unless they are all approved at the Special Meeting.

The three separate Charter Amendment Proposals are as follows:

1A.   A proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to:

•

change the name of the Company to “Standard Diversified Opportunities Inc.”;

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•

increase the number of authorized shares of SDOI’s Common Stock, $0.01 par value per share, from 50,000,000 to 330,000,000, of which 300,000,000 shall be a class of Common Stock designated as “Class A Common Stock” and 30,000,000 shall be a class of Common Stock designated as “Class B Common Stock,” which classes shall be identical except that (i) each share of Class B Common Stock shall entitle its holder of record to 10 votes per share and (ii) the shares of Class B Common Stock shall be convertible into shares of Class A Common Stock automatically upon the transfer of such shares of Class B Common Stock, with certain exceptions, or upon the affirmative vote of holders of two-thirds of the then-outstanding shares of Class B Common Stock or voluntarily by the holder of such shares of Class B Common Stock;

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•

increase the number of authorized shares of SDOI’s preferred stock, $0.01 par value per share, from 19,664,362 to 500,000,000, all of which shall be designated as blank check preferred stock; and

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•

cause the re-classification of SDOI’s current Common Stock issued and outstanding or held as treasury stock, such that every 25 shares of such current Common Stock shall be reclassified as, and shall become, one fully paid and nonassessable share of Class A Common Stock;

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1B.   A proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to:

•

require that, for a period of 18 months from the effective time of the filing of the Fifth Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, any merger, consolidation, share exchange or similar transaction as a result of which Standard General L.P. and its affiliates, individually or in the aggregate, would own ninety-five percent (95%) or more of the issued and outstanding shares of the Class B Common Stock and Class A Common Stock of SDOI, shall require the approval of the holders of a majority of the shares of Class A Common Stock held by stockholders of the Company other than Standard General L.P. and its affiliates, and that for such 18-month period, any amendment to such requirement would require the approval of the holders of a majority of the shares of Class A Common Stock held by the stockholders of the Company other than Standard General L.P. and its affiliates;

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•

permit the stockholders to act by written consent of a majority of the total votes eligible to be cast at a duly constituted meeting; and

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allow for a special meeting of the stockholders to be called by (i) the majority of the board of directors, (ii) the chairman of the board of directors, (iii) the president of the Company, or (iv) stockholders holding a majority of the total votes eligible to be cast by the stockholders;

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1C.   A proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to restrict certain persons and entities from owning more than 14.9% of any class of capital stock of SDOI;

2.   A proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve any of the Charter Amendment Proposals or the Proposal to Adjourn or Postpone the Special Meeting; and

3.   Any other matters which may properly be brought before the Special Meeting and at any adjournments or postponements thereof.

The Charter Amendment Proposals are being made pursuant to SDOI’s obligations under that certain Contribution and Exchange Agreement, dated as of November 25, 2016, as amended by the amendment dated January 25, 2017, or the Exchange Agreement, by and among SDOI, Standard General Master Fund L.P., a Cayman Islands limited partnership, or SG Master Fund, P Standard General Ltd., a British Virgin Islands company, or PSG, and Standard General Focus Fund L.P., a Delaware limited partnership, or SG Focus Fund and together with SG Master Fund and PSG, the SG Parties, pursuant to which the SG Parties shall contribute, or cause to be contributed, to SDOI approximately 9,592,373 shares of the voting Common Stock of Turning Point Brands, Inc., or Turning Point, or the Turning Point Contributed Shares, in exchange for a number of newly issued shares of Class A Common Stock of SDOI based on an exchange ratio, which we refer to as the Exchange Ratio, calculated as of the closing of the transactions contemplated by the Exchange Agreement, equal to the lesser of  (i) the 30-calendar day trailing volume-weighted average price, or VWAP, of the Turning Point Common Stock divided by the 30-calendar day trailing VWAP of the SDOI Common Stock (as adjusted to reflect the reclassification of the SDOI Common Stock pursuant to the Fifth Amended and Restated Certificate of Incorporation of SDOI) and (ii) the 30-calendar day trailing VWAP of the Turning Point Common Stock divided by the pro forma book value per share of SDOI.

We refer to this exchange of shares pursuant to the Exchange Agreement as the Contribution and Exchange.

The Exchange Agreement provides that our board of directors will declare a dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock, with the record date for such dividend to be set as of a date that immediately follows the completion of the Contribution and Exchange. Following the distribution of such dividend, the SG Parties will deliver a written consent to adopt and approve a further amendment and restatement of the Fifth Amended and Restated Certificate of Incorporation in the form of the Sixth Amended and Restated Certificate of Incorporation of the Company attached as Exhibit C to the First Amendment to Contribution and Exchange Agreement (attached to this proxy statement/prospectus as Exhibit 2.2), which we refer to as the Sixth Amended and Restated Certificate of Incorporation.

Approval of the Charter Amendment Proposals is a condition to completing the Contribution and Exchange, and thus SDOI and the SG Parties cannot complete the Contribution and Exchange unless the stockholders of SDOI approve the Charter Amendment Proposals. If approved by the SDOI stockholders, the Fifth Amended and Restated Certificate of Incorporation will be filed and become effective prior to the closing of the Contribution and Exchange. Unless all of the Charter Amendment Proposals are approved, none will be implemented.

This proxy statement/prospectus also constitutes the prospectus of SDOI under the Securities Act of 1933, as amended, for the offering of shares of SDOI Class A Common Stock and shares of Class B Common Stock being issued to current SDOI stockholders as part of the Contribution and Exchange. This proxy statement/prospectus does not cover shares of Class A Common Stock to be issued in exchange for the Turning Point Contributed Shares pursuant to the Exchange Agreement, nor does it cover the shares of Class B Common Stock to be issued with respect to such shares. In addition, this prospectus does not cover resales of shares of Class A Common Stock or Class B Common Stock issued in connection with the Contribution and Exchange, and no person is authorized to use this prospectus in connection with any resale.

The above matters are discussed in detail in this proxy statement/prospectus. The proposed transaction is a complex transaction. The stockholders of SDOI are strongly urged to read and consider carefully this proxy statement/prospectus in its entirety.

See the section entitled “ Risk Factors ” beginning on page 17 for a discussion of risks associated with the proposed transaction.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the shares of SDOI Common Stock to be issued in connection with the transaction or passed upon the accuracy or adequacy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The date of this proxy statement/prospectus is            , 2017.

This proxy statement/prospectus and the accompanying form of proxy for SDOI stockholders are first
being mailed or delivered to SDOI stockholders on or about            , 2017.

SDOI will provide you with copies of its filings with the Securities and Exchange Commission without charge, upon written or oral request to:

Special Diversified Opportunities Inc.
1521 Concord Pike, Suite 301
Wilmington, Delaware 19803
Attn: Chief Financial Officer
(302) 824-7062

In order for you to receive timely delivery of the documents in advance of the Special Meeting, SDOI should receive your request no later than            , 2017.

SPECIAL DIVERSIFIED OPPORTUNITIES INC.

1521 Concord Pike, Suite 301
Wilmington, Delaware 19803

           , 2017

Dear Stockholder:

You are cordially invited to attend the special meeting of stockholders of Special Diversified Opportunities Inc., or SDOI or the Company, which will be held at           beginning at             on            , 2017, or the Special Meeting.

This proxy statement/prospectus contains your official notice of the Special Meeting and includes information about the matters to be acted upon at the meeting. Officers and directors of SDOI will be on hand to review our operations and to answer questions and discuss matters that may properly arise.

On November 25, 2016, SDOI entered into a contribution and exchange agreement, as amended by the amendment dated January 25, 2017, or the Exchange Agreement, with Standard General Master Fund L.P., P Standard General Ltd. and Standard General Focus Fund L.P. (Standard General Master Fund L.P., P Standard General Ltd. and Standard General Focus Fund L.P., known collectively as the SG Parties), pursuant to which the SG Parties agreed to, among other things, contribute, or cause to be contributed, to SDOI approximately 9,592,373 shares of the voting Common Stock, par value $0.01 per share, of Turning Point Brands, Inc., or Turning Point, or the Turning Point Contributed Shares, in exchange for a number of newly issued shares of Class A Common Stock of SDOI based on an exchange ratio, which we refer to as the Exchange Ratio, calculated as of the closing of the transactions contemplated by the Exchange Agreement, equal to the lesser of  (i) the 30-calendar day trailing volume-weighted average price, or VWAP, of the Turning Point Common Stock divided by the 30-calendar day trailing VWAP of the SDOI Common Stock (as adjusted to reflect the reclassification of the SDOI Common Stock pursuant to the Fifth Amended and Restated Certificate of Incorporation of SDOI) and (ii) the 30-calendar day trailing VWAP of the Turning Point Common Stock divided by the pro forma book value per share of SDOI.

In connection with this exchange of shares, which we refer to as the Contribution and Exchange, the SDOI board of directors has approved an amendment and restatement of the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, or the Existing Charter, to, among other things, change the name of the company to “Standard Diversified Opportunities Inc.,” increase the number of authorized shares of the SDOI capital stock and reclassify the existing Common Stock, par value $0.01 per share, of SDOI into a new class of Common Stock, par value $0.01 per share, designated as “Class A Common Stock,” and authorize the issuance of an additional class of Common Stock, par value $0.01 per share, designated as “Class B Common Stock.” The proposed amendment and restatement of the Existing Charter also contains certain protective provisions. The proposals contained in this proxy statement/​prospectus are being proposed to obtain shareholder approval of the Fifth Amended and Restated Certificate of Incorporation, or the Charter Amendment Proposals.

It is also a condition precedent to the closing of the Contribution and Exchange that our board of directors declares a dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock, with the record date for such dividend to be set as of a date that immediately follows the completion of the Contribution and Exchange. Following the distribution of the Dividend, the SG Parties will deliver a written consent to adopt and approve the Sixth Amended and Restated Certificate of Incorporation.

After careful consideration of a number of factors, which are described in the attached document, the SDOI board of directors has determined that the Exchange Agreement and the transactions contemplated thereby are advisable, fair to and in the best interests of SDOI and its stockholders. At the Special Meeting you will be presented with the Charter Amendment Proposals and will be asked to vote “FOR” each of the Charter Amendment Proposals. If there are insufficient votes to approve any of the Charter Amendment Proposals, you will be asked to vote to adjourn or postpone the Special Meeting to solicit additional proxies.

The Contribution and Exchange is conditioned upon each of the Charter Amendment Proposals receiving approval from the holders of a majority of the shares of Common Stock of SDOI outstanding and entitled to vote thereon, and will not occur without such approval. None of the Charter Amendment Proposals will be adopted unless each of them is approved.

The accompanying proxy statement/prospectus contains important information concerning the Charter Amendment Proposals and the Contribution and Exchange, along with specific information about the Special Meeting and how to cast your vote. We encourage you to read the accompanying proxy statement/prospectus and all attached Appendices in their entirety.

Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote by proxy over the Internet, by telephone or by mailing the enclosed proxy card. If you attend the meeting, you may, if you wish, withdraw any proxy previously given and vote your shares in person.

Sincerely,

/s/ Kevin J. Bratton

Kevin J. Bratton
Chief Financial Officer and Corporate Secretary

SPECIAL DIVERSIFIED OPPORTUNITIES INC.

1521 Concord Pike, Suite 301
Wilmington, Delaware 19803

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Stockholders of Special Diversified Opportunities Inc.:

NOTICE IS HEREBY GIVEN that the special meeting of stockholders of Special Diversified Opportunities Inc., or SDOI or the Company, will be held at          beginning at             on            , 2017, or the Special Meeting. At the Special Meeting, stockholders will be asked to consider and vote upon:

1.   The three separate Charter Amendment Proposals, which are as follows:

1A.   A proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to:

•

change the name of the Company to “Standard Diversified Opportunities Inc.”;

​

•

increase the number of authorized shares of SDOI’s Common Stock, $0.01 par value per share, from 50,000,000 to 330,000,000, of which 300,000,000 shall be a class of Common Stock designated as “Class A Common Stock” and 30,000,000 shall be a class of Common Stock designated as “Class B Common Stock,” which classes shall be identical except that (i) each share of Class B Common Stock shall entitle its holder of record to 10 votes per share and (ii) the shares of Class B Common Stock shall be convertible into shares of Class A Common Stock automatically upon the transfer of such shares of Class B Common Stock, with certain exceptions, or upon the affirmative vote of holders of two-thirds of the then-outstanding shares of Class B Common Stock or voluntarily by the holder of such shares of Class B Common Stock;

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•

increase the number of authorized shares of SDOI’s preferred stock, $0.01 par value per share, from 19,664,362 to 500,000,000, all of which shall be designated as blank check preferred stock; and

​

•

cause the re-classification of SDOI’s current Common Stock issued and outstanding or held as treasury stock, such that every 25 shares of such current Common Stock shall be reclassified as, and shall become, one fully paid and nonassessable share of Class A Common Stock;

​

1B.   A proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to:

•

require that, for a period of 18 months from the effective time of the filing of the Fifth Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, any merger, consolidation, share exchange or similar transaction as a result of which Standard General L.P. and its affiliates, individually or in the aggregate, would own ninety-five percent (95%) or more of the issued and outstanding shares of the Class B Common Stock and Class A Common Stock of SDOI, shall require the approval of the holders of a majority of the shares of Class A Common Stock held by stockholders of the Company other than Standard General L.P. and its affiliates, and that for such 18-month period, any amendment to such requirement would require the approval of the holders of a majority of the shares of Class A Common Stock held by the stockholders of the Company other than Standard General L.P. and its affiliates;

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•

permit the stockholders to act by written consent of a majority of the total votes eligible to be cast at a duly constituted meeting; and

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•

allow for a special meeting of the stockholders to be called by (i) the majority of the board of directors, (ii) the chairman of the board of directors, (iii) the president of the Company, or (iv) stockholders holding a majority of the total votes eligible to be cast by the stockholders;

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1C.   A proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to restrict certain persons and entities from owning more than 14.9% of any class of capital stock of SDOI;

2.   A proposal to adjourn or postpone the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve any of the Charter Amendment Proposals or the Proposal to Adjourn or Postpone the Special Meeting; and

3.   Any other matters which may properly be brought before the Special Meeting and at any adjournments or postponements thereof.

A copy of the Exchange Agreement is attached as Appendix A and a copy of the form of the Fifth Amended and Restated Certificate of Incorporation is attached as Appendix B. The Fifth Amended and Restated Certificate of Incorporation will not be filed or become effective unless all of the Charter Amendment Proposals are approved at the Special Meeting.

Our board of directors has fixed            , 2017 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Special Meeting and any adjournment or postponement thereof. Only holders of record of shares of our Common Stock at the close of business on the record date are entitled to notice of, and to vote at, the Special Meeting. At the close of business on the record date, there were           shares of SDOI Common Stock outstanding and entitled to vote.

The proxy statement/prospectus accompanying this notice is deemed to be incorporated into and forms part of this notice. The accompanying proxy statement/prospectus, dated            , 2017 and proxy card for the Special Meeting are first being mailed to our stockholders on or about            , 2017.

Upon recommendation of the special committee of the board of directors, our board of directors has unanimously approved the adoption of the Fifth Amended and Restated Certificate of Incorporation. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF EACH OF THE PROPOSALS LISTED ABOVE.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE POSTAGE-PREPAID ENVELOPE PROVIDED.

STOCKHOLDERS MAY ALSO VOTE VIA THE INTERNET OR BY USING A TOLL-FREE TELEPHONE NUMBER. INSTRUCTIONS ON HOW TO VOTE EITHER VIA THE INTERNET OR BY TELEPHONE ARE INCLUDED ON THE PROXY CARD. IF YOU RETURN YOUR PROXY CARD AND LATER ATTEND THE MEETING IN PERSON, YOU MAY REVOKE THE PROXY BEFORE IT IS EXERCISED AND VOTE IN PERSON IF YOU WISH.

Only stockholders and persons holding proxies from stockholders may attend the Special Meeting. If your shares are registered in your name, you should bring a form of photo identification to the Special Meeting. If your shares are held in the name of a broker, bank or other nominee, you should being a proxy or letter from that broker, bank or other nominee that confirms you are the beneficial owner of those shares, together with a form of photo identification. Cameras, recording devises and other electronic devices will not be permitted at the Special Meeting. All stockholders are cordially invited to attend the Special Meeting.

If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor: The Proxy Advisor Group, LLC, toll-free at (   )    -    .

By Order of the Board of Directors,

/s/ Kevin J. Bratton

Kevin J. Bratton
Chief Financial Officer and Corporate Secretary

18 E. 41st Street
New York, New York 10017
TOLL-FREE (   )    -    

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

Following are questions and related answers that address some of the questions you may have regarding the proposed amendment and restatement of the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, or the Charter Amendment Proposals, the Contribution and Exchange (as defined below) and related matters. These questions and answers may not contain all of the information relevant to you, do not purport to summarize all material information relating to the Fifth Amended and Restated Certificate of Incorporation (the subject of the Charter Amendment Proposals), the Contribution and Exchange and related matters or any of the other matters discussed in this proxy statement/prospectus, and are subject to, and are qualified in their entirety by, the more detailed information contained in or attached to this proxy statement/​prospectus. Therefore, you should read carefully this entire proxy statement/prospectus, including the attached appendices and materials to which we refer you in order to fully understand the Fifth Amended and Restated Certificate of Incorporation, the Exchange Agreement (as defined below) and the transactions contemplated thereby.

Unless otherwise indicated in this proxy statement/prospectus or the context otherwise requires, throughout this proxy statement/prospectus we refer to Special Diversified Opportunities Inc. as “we,” “us,” “our,” “the Company” or “SDOI,” to Standard General Master Fund L.P. as “SG Master Fund,” P Standard General Ltd. as “PSG,” and Standard General Focus Fund L.P. as “SG Focus Fund” and together with SG Master Fund and PSG, collectively, as “SG Parties,” to Turning Point Brands, Inc. as “Turning Point,” to Interboro Holdings, Inc. as “Interboro,” to the Contribution and Exchange Agreement, dated as of November 25, 2016, by and among us and the SG Parties, as amended by the amendment dated January 25, 2017, as the “Exchange Agreement” and to the contribution of the 9,592,373 shares of the voting Common Stock of Turning Point to SDOI via the Exchange Agreement as the “Contribution and Exchange.”

Q:

Why am I receiving this proxy statement/prospectus?

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A:

Our board of directors is furnishing this proxy statement/prospectus in connection with the solicitation of proxies to be voted at the special meeting of stockholders, or the Special Meeting, or any adjournments or postponements of the Special Meeting.

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Q:

When and where will the Special Meeting be held?

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A:

The Special Meeting will be held on            , 2017 at              local time, at             .

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Q:

What matters will the stockholders vote on at the Special Meeting?

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A:

The stockholders will vote on the following proposals:

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to approve each of the three Charter Amendment Proposals;

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to approve the proposal to adjourn or postpone the Special Meeting, if necessary or appropriate; and

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to approve any other matters which may properly be brought before the Special Meeting or any postponement or adjournment thereof, if any.

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Q:

What is the Contribution and Exchange?

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A:

The Contribution and Exchange is a transaction in which the SG Parties will contribute, or cause to be contributed, approximately 9,592,373 shares (including 500,000 shares held by Thomas F. Helms, Jr., Chairman of the board of directors of Turning Point, over which Mr. Helms has provided the SG Parties investment discretion and certain disposition and other rights) of the voting Common Stock of Turning Point, or the Turning Point Contributed Shares, in exchange for a number of newly issued shares of Class A Common Stock of SDOI, or the Exchange Shares, based on an exchange ratio, or the Exchange Ratio, calculated as of the closing of the transactions contemplated by the Exchange Agreement, equal to the lesser of  (i) the 30-calendar day trailing volume-weighted average price, or VWAP, of the Turning Point Common Stock divided by the 30-calendar day trailing VWAP of the

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1

SDOI Common Stock (as adjusted to reflect the reclassification of the SDOI Common Stock pursuant to the Fifth Amended and Restated Certificate of Incorporation of SDOI) and (ii) the 30-calendar day trailing VWAP of the Turning Point Common Stock divided by the pro forma book value per share of SDOI.

Q:

Am I voting to approve the Contribution and Exchange?

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A:

The Contribution and Exchange itself is not subject to a vote of our stockholders, and approval of the transaction is not among the proposals being put forth in this proxy statement/prospectus.

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However, approval of the Charter Amendment Proposals is a condition to the consummation of the transactions contemplated by the Exchange Agreement, and the Contribution and Exchange cannot be consummated unless each Charter Amendment Proposal is approved.

Q:

What are the material terms of the Exchange Agreement?

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A:

In addition to the issuance of the Exchange Shares to the SG Parties, and customary representations and warranties, the Exchange Agreement contains other important terms and provisions, including:

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The representations and warranties made by the parties do not survive the closing;

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Adoption of the Fifth Amended and Restated Certificate of Incorporation (the subject of the Charter Amendment Proposals) is subject to approval by our stockholders;

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We have agreed to continue to conduct business in the ordinary course and to be subject to certain other restrictions during the period prior to the completion of the Contribution and Exchange, including restrictions on solicitation of alternative transactions;

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The Contribution and Exchange is subject to the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, our compliance with the filing of various documents with the SEC, and using our reasonable best efforts to cause the Exchange Shares to be approved for trading on the OTCQB prior to the completion of the acquisition;

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Declaration of a dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock, with the record date for such dividend to be set as of a date that immediately follows the completion of the Contribution and Exchange;

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Following the distribution of the Dividend, delivery by the SG Parties of a written consent to adopt and approve the Sixth Amended and Restated Certificate of Incorporation; and

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The Exchange Agreement may be terminated by the parties in a number of circumstances, in which case, if so terminated, the Contribution and Exchange will not be completed.

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Please see the section entitled “ The Exchange Agreement ,” as well as “ Appendix A — The Exchange Agreement .”

Q:

What will result from approval of the Charter Amendment Proposals and the adoption of the Fifth Amended and Restated Certificate of Incorporation?

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A:

Upon adoption of the Fifth Amended and Restated Certificate of Incorporation:

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•

the name of the Company will change to “Standard Diversified Opportunities Inc.”;

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•

the number of authorized shares of SDOI’s Common Stock will increase from 50,000,000 to 330,000,000, of which 300,000,000 shall be a class of Common Stock designated as “Class A Common Stock” and 30,000,000 shall be a class of Common Stock designated as “Class B Common Stock,” which classes shall be identical except that (i) each share of Class B Common Stock shall entitle its holder of record to 10 votes per share and (ii) the shares of Class B Common Stock shall be convertible into shares of Class A Common Stock automatically upon the transfer of such shares of Class B Common Stock, with certain exceptions, or upon the affirmative vote of holders of two-thirds of the then-outstanding shares of Class B Common Stock or voluntarily by the holder of such shares of Class B Common Stock;

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2

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the number of authorized shares of SDOI’s Preferred Stock will increase from 19,664,362 to 500,000,000, all of which shall be designated as blank check preferred stock;

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SDOI’s current Common Stock issued and outstanding or held as treasury stock will be reclassified such that every 25 shares of such current Common Stock will be reclassified as, and will become, one fully paid and nonassessable share of Class A Common Stock;

​

•

for a period of 18 months from the effective time of the filing of the Fifth Amended and Restated Certificate of Incorporation, any merger, consolidation, share exchange or similar transaction as a result of which Standard General L.P. and its affiliates, individually or in the aggregate, would own ninety-five percent (95%) or more of the issued and outstanding shares of the Class B Common Stock and Class A Common Stock of SDOI, shall require the approval of the holders of a majority of the shares of Class A Common Stock held by stockholders of the Company other than Standard General L.P. and its affiliates, and that for such 18-month period, any amendment to such requirement would require the approval of the holders of a majority of the shares of Class A Common Stock held by the stockholders of the Company other than Standard General L.P. and its affiliates;

​

•

stockholders will be permitted to act by written consent of a majority of the total votes eligible to be cast at a duly constituted meeting;

​

•

special meetings of the stockholders will be able to be called by (i) the majority of the board of directors, (ii) the chairman of the board of directors, (iii) the president of the Company, or (iv) stockholders holding a majority of the total votes eligible to be cast by the stockholders; and

​

•

certain persons and entities shall be restricted from owning more than 14.9% of any class of capital stock of SDOI.

​

Q:

How will fractional shares be treated in the reclassification of the existing SDOI Common Stock?

​

A:

SDOI’s current Common Stock issued and outstanding or held as treasury stock will be reclassified such that every 25 shares of such current Common Stock will be reclassified as, and will become, one fully paid and nonassessable share of Class A Common Stock. If the reclassification would otherwise result in the issuance of any fractional share, the Company will issue one whole share of Class A Common Stock in lieu of such fractional share.

​

Q:

What if I hold SDOI stock options?

​

A:

Options to purchase shares of the existing SDOI Common Stock will automatically be amended in accordance with the terms of the Company’s 2000 Stock Incentive Plan and the grant agreement under which such options were granted to reflect the reclassification of SDOI Common Stock, and will otherwise remain exercisable in accordance with their current terms.

​

Q:

What will the nature of our business be following the Contribution and Exchange?

​

A:

Following the consummation of the Contribution and Exchange, we will own approximately 52.3% of the outstanding Turning Point Common Stock. We will continue our primary business strategy of identifying new business and investment opportunities and we believe we will become a diversified holding company with interests in a variety of industries and market sectors. We expect to complete two acquisitions that are currently probable following the consummation of the Contribution and Exchange, one in the insurance industry and the other in the outdoor advertising industry. Please see the section entitled “ The Contribution and Exchange — Plans for SDOI and Turning Point after the Contribution and Exchange .”

​

Q:

Are there any risks of the Contribution and Exchange?

​

A:

Yes, please read carefully the section entitled “ Risk Factors .”

​

3

Q:

What are the prior relationships among the SG Parties, Turning Point, and SDOI?

​

A:

The SG Parties may have interests that differ from, and/or are in addition to, those of our other stockholders. As of the date hereof, the SG Parties own approximately 34.5% of our outstanding Common Stock. As of the date hereof, Standard General L.P., the investment manager of the SG Parties, beneficially owns 10,825,463 shares of Turning Point Common Stock, which in the aggregate constitutes approximately 59.0% of the outstanding shares of Turning Point Common Stock. Included in this total are 150,000 shares the SG Parties will acquire prior to the consummation of the Contribution and Exchange from Thomas F. Helms, Jr., Chairman of the board of directors of Turning Point. In addition, the total includes 500,000 shares owned by Mr. Helms over which the SG Parties have investment discretion and certain disposition and other rights. In connection with the Contribution and Exchange, the SG Parties will contribute or cause to be contributed 9,592,373 shares of Turning Point Common Stock, which constitutes approximately 52.3% of the outstanding shares of Turning Point Common Stock. For additional information, please see the section entitled “ The Contribution and Exchange — Interests of Certain Stockholders, Directors, Officers and other Related Parties in the Contribution and Exchange — The SG Parties .”

​

Q:

Did a special committee of the SDOI board of directors approve the Exchange Agreement and related matters?

​

A:

Yes. When the SG Parties advised us that they were interested in pursuing a transaction with us with respect to the Turning Point Common Stock and our Common Stock, our board of directors delegated the consideration of such transaction to a special committee comprised of those directors our board has determined to be independent under the General Corporation Law of the State of Delaware, or the DGCL, or the Special Committee. As a result of the Special Committee’s consideration of a number of factors and a review of a substantial amount of information, the Special Committee unanimously determined that the Exchange Agreement and the Contribution and Exchange are advisable to, and in the best interests of, SDOI and our stockholders (other than the SG Parties), approved the Exchange Agreement and the transactions contemplated thereby, and recommended that our board of directors approve the Exchange Agreement and our stockholders approve the Charter Amendment Proposals. Please see the section entitled “ The Contribution and Exchange — Approval of the Special Committee and SDOI’s Board of Directors; Reasons for the Contribution and Exchange .”

​

Q:

What does our board of directors recommend regarding the Charter Amendment Proposals and why?

​

A:

Our board of directors, based in part upon the approval and recommendation by the Special Committee, determined that the Exchange Agreement and the Contribution and Exchange are advisable to, and in the best interests of, SDOI and our stockholders (other than the SG Parties), approved the Exchange Agreement and the transactions contemplated thereby, and recommended that our stockholders approve the Charter Amendment Proposals. Please see the section entitled “ The Contribution and Exchange — Approval of the Special Committee and SDOI’s Board of Directors; Reasons for the Contribution and Exchange .”

​

Q:

If approved, when is the closing of the Contribution and Exchange expected to occur?

​

A:

We expect to complete the Contribution and Exchange no later than the second business day after satisfaction or waiver of all of the closing conditions in the Exchange Agreement, including approval of the Charter Amendment Proposals by our stockholders. Subject to the satisfaction or waiver of these conditions, we expect the Contribution and Exchange to close in the second quarter of 2017. However, there can be no assurance that the Contribution and Exchange will be completed at all, or, if completed, when it will be completed. Subject to certain exceptions, if the Contribution and Exchange is not completed by June 30, 2017 either party may terminate the Exchange Agreement.

​

Q:

Am I entitled to appraisal or dissenters’ rights in connection with the Charter Amendment Proposals?

​

A:

No appraisal or dissenters’ rights are available to our stockholders under Delaware law, our Fourth Amended and Restated Certificate of Incorporation, as amended, or our Second Amended and Restated Bylaws in connection with the types of actions contemplated under the Charter Amendment Proposals.

​

4

Q:

Who is entitled to vote at the Special Meeting?

​

A:

Holders of our Common Stock at the close of business on            , 2017, the record date for the Special Meeting established by our board of directors, or the Record Date, are entitled to receive notice of, and to vote their shares at, the Special Meeting and any related adjournments or postponements thereof. As of the close of business on the record date, there were              shares of our Common Stock outstanding and entitled to vote. Holders of our Common Stock are entitled to one vote per share.

​

Q:

What are the quorum requirements for the Special Meeting?

​

A:

The presence in person or by proxy of the holders of a majority of our outstanding shares of Common Stock that are entitled to vote at the Special Meeting constitutes a quorum. You are counted as present at the Special Meeting for quorum purposes if you are present and vote in person at the Special Meeting or if you properly submit a proxy by returning the proxy card accompanying this proxy statement/prospectus in the postage-paid envelope provided or by the Internet procedures described under “Q: How do I vote?”. A validly submitted proxy will result in your shares counting towards a quorum even if no voting instructions are provided.

​

Q:

What vote is required to approve each of the proposals?

​

A:

Approval of the Charter Amendment Proposals requires the affirmative vote of holders of at least a majority of our issued and outstanding shares of Common Stock that are entitled to vote at the Special Meeting. If you fail to vote, either in person or by proxy, or you attend the meeting or deliver a proxy but abstain from voting, or you do not instruct your broker or other nominee how to vote your shares, the resulting non-attendance, abstention or broker non-vote will have the same effect as a vote “AGAINST” the approval of these proposals.

​

If a quorum is present at the Special Meeting, the proposal to adjourn or postpone the Special Meeting will be approved if the number of shares voted in favor of that proposal is greater than the number of shares voted against that proposal. Non-attendance, abstentions and broker non-votes will have no effect on the outcome of the vote on the proposal to adjourn or postpone the Special Meeting if it is submitted for stockholder approval when a quorum is present at the meeting. If a quorum is not present at the Special Meeting, the proposal to adjourn or postpone the Special Meeting will be approved by the affirmative vote of the holders of a majority of the voting power of our Common Stock present in person or by proxy at the Special Meeting and no other business will be transacted thereat. Abstentions would have the same effect as a vote “AGAINST” this proposal and non-attendance and broker non-votes would have no effect on the outcome of the vote on this proposal if it is submitted for approval when no quorum is present at the Special Meeting.

Q:

How do I vote?

​

A:

You may vote by proxy or in person at the Special Meeting.

​

•

Voting in Person .   If you hold shares as a stockholder of record and plan to attend the Special Meeting and wish to vote in person, you will be given a ballot at the Special Meeting. Alternatively, you may provide us with a signed proxy card before voting is closed. If you would like to vote in person, please bring proof of identification with you to the Special Meeting. Even if you plan to attend the Special Meeting, we strongly encourage you to submit a proxy for your shares in advance as described below, so your vote will be counted if you are not able to attend. If your shares are held in street name, you must bring to the Special Meeting a proxy from the record holder of the shares (your broker, bank or nominee) authorizing you to vote at the Special Meeting. To do this, you should contact your broker, bank or nominee as soon as possible.

​

5

•

Voting By Proxy .   If you hold your shares as stockholder of record, you may submit a proxy for your shares by mail, by telephone or on the Internet. If you submit a proxy by mail, by telephone or on the Internet, you should not return the proxy card accompanying this proxy statement.

​

•

Vote by Mail .   You may submit a proxy for your shares by mail by marking the proxy card accompanying this proxy statement, dating and signing it, and returning it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Please allow sufficient time for mailing if you decide to submit a proxy for your shares by mail.

​

•

Vote on the Internet .   You may also submit a proxy for your shares on the Internet by visiting www.proxyvote.com. You may use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

​

•

Vote by Telephone .   You may also submit a proxy for your shares by telephone by calling toll-free 1-800-690-6903 from any touch-tone telephone and following the instructions. You may transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card available when you call.

​

If you hold your shares in street name, then you received this proxy statement from your broker, bank or nominee, along with a voting instruction card from your broker, bank or nominee. You will need to instruct your broker, bank or other nominee on how to vote your shares of Common Stock using the voting instructions provided. All shares represented by properly executed proxies received in time for the Special Meeting will be voted in the manner specified by the stockholders giving those proxies.

Q:

If I hold my shares in street name through my broker, will my broker vote these shares for me?

​

A:

If you hold your shares in street name, you must provide your broker, bank or other nominee with instructions in order to vote those shares. To do so, you should follow the voting instructions provided to you by your bank, broker or other nominee. If your bank, broker or nominee holds your shares in its name and you do not instruct it how to vote, it will not have discretion to vote on any of the proposals at the Special Meeting.

​

Q:

What happens if I hold my shares in street name through my broker and I do not instruct my broker how to vote my shares?

​

A:

Brokers, banks or other nominees who hold shares in street name for their customers have the authority to vote on “routine” proposals when they have not received instructions from the beneficial owners of such shares. However, brokers, banks or other nominees do not have the authority to vote shares they hold for their customers on non-routine proposals when they have not received instructions from the beneficial owners of such shares. All of the proposals before the Special Meeting are non-routine proposals. As a result, absent instructions from the beneficial owner of such shares, brokers, banks and other nominees will not vote those shares. This is referred to as a “broker non-vote.” Broker non-votes are counted for purposes of determining whether there is a quorum. Broker non-votes will have the same effect as a vote “AGAINST” the approval of the Charter Amendment Proposals, but will not have any effect on the outcome of the votes on the proposal to adjourn or postpone the Special Meeting.

​

Q:

Can I change my vote?

​

A:

Yes. If you are a stockholder of record, you may change your vote or revoke your proxy at any time before the vote at the Special Meeting by:

​

•

delivering to our Corporate Secretary a written notice, bearing a date later than your proxy, stating that you revoke the proxy;

​

•

submitting a later-dated proxy (either by mail, by telephone or on the Internet) relating to the same shares prior to the vote at the Special Meeting; or

​

6

•

attending the Special Meeting and voting in person (although attendance at the Special Meeting will not, by itself, revoke a proxy).

​

You should send any written notice or a new proxy card to our Corporate Secretary, Kevin Bratton, at 1521 Concord Pike, Suite 301, Wilmington, DE 19803, Fax: 302-504-4780. You may request a new proxy card by calling our Corporate Secretary, Kevin Bratton, at 302-824-7062.

If your shares are held in street name, you must contact your broker, bank or nominee to revoke your proxy.

Q:

What if I do not specify a choice for a matter when returning a proxy?

​

A:

If you hold your shares of record, proxies that are signed and returned without voting instructions will be voted in accordance with the recommendations of our board of directors. If your shares are held in street name, failure to give voting instructions to your broker, bank or other nominee will result in a broker non-vote.

​

Q:

What is the difference between a stockholder of record and a stockholder who holds stock in street name?

​

A:

If your shares are registered in your name, you are a stockholder of record. If your shares are held in an account with a broker, bank or another holder of record, these shares are held in street name.

​

Q:

Can I see a list of stockholders of record?

​

A:

You may examine a list of the stockholders of record as of the close of business on            , 2017 for any purpose germane to the Special Meeting during normal business hours during the 10-day period preceding the date of the meeting at our corporate headquarters at 1521 Concord Pike, Suite 301, Wilmington, DE 19803. This list will also be made available at the Special Meeting.

​

Q:

What does it mean if I get more than one proxy card?

​

A:

If your shares are registered differently and are in more than one account, you may receive more than one proxy card.

​

Please complete, sign, date, and return all of the proxy cards you receive regarding the Special Meeting to ensure that all of your shares are voted.

Q:

How are proxies solicited and what is the cost?

​

A:

We will bear all expenses incurred in connection with the solicitation of proxies and printing, filing and mailing this proxy statement. We have engaged The Proxy Advisory Group, LLC, or PAG, to assist in the solicitation of proxies and provide related advice and information support, for a services fee, plus customary disbursements, which are not expected to exceed $18,000 in total.

​

Certain of the Company’s directors, officers and regular employees may also, without additional compensation, solicit proxies personally or by telephone or e-mail. In addition to solicitation by mail, our directors, officers and employees may solicit proxies from stockholders by telephone, letter, facsimile or in person. These directors, officers and employees will not be paid additional remuneration for their efforts but may be reimbursed for out-of-pocket expenses incurred in connection therewith. Following the original mailing, we will request brokers, custodians, nominees and other record holders to forward their own notice and, upon request, to forward copies of the proxy statement and related soliciting materials to persons for whom they hold shares of our Common Stock and to request authority for the exercise of proxies. In such cases, upon the request of the record holders, we will reimburse such holders for their reasonable out-of-pocket expenses.

Q:

What should I do if I have questions regarding the Special Meeting?

​

A:

If you have any questions about how to cast your vote for the Special Meeting or would like copies of any of the documents referred to in this proxy statement/prospectus, you should call our Corporate Secretary, Kevin Bratton, at 302-824-7062.

​

7

Q:

What are the material United States federal income tax consequences to me of the actions contemplated under Proposal #1A and the subsequent dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock?

​

A:

We believe that the actions contemplated under Proposal #1A and the subsequent dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock will either qualify collectively as one or more tax-free reorganization exchanges within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and the Treasury regulations promulgated thereunder, or the Code, or qualify as one or more tax-free reorganization exchanges within the meaning of Section 368(a) of the Code followed by a non-taxable stock distribution to the holders of Common Stock within the purview of Section 305(a) of the Code.

​

Tax matters can be complicated, and the tax consequences of the actions contemplated under Proposal #1A and the subsequent dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock to a particular stockholder will depend in part on such stockholder’s circumstances. Accordingly, we urge you to consult your own tax advisor for a full understanding of the tax consequences of the transaction to you, including the applicability and effect of federal, state, local and foreign income and other tax laws.

For more information, please see the section entitled “ The Contribution and Exchange — Material United States Federal Income Tax Consequences of the Actions Contemplated under Proposal #1A and the Subsequent Dividend of One Share of Class B Common Stock for Each Outstanding Share of Class A Common Stock .”

8

Comparative Data

Certain historical and pro forma per share data of SDOI and Turning Point is set forth below:

Historical Data

​

​

​

Net Tangible Book Value Per Share

​

​

Cash Dividends Declared Per Share

​

​

Income (Loss) Per Share from Operations

​

​

Basic

​

​

Diluted

​

SDOI

​

​

​

​

​

9/30/16

​

​

​

$

1.08

​

​

​

​

​

—

​

​

​

​

$

(0.03 )

​

​

​

​

$

(0.03 )

​

​

12/31/15

​

​

​

$

1.10

​

​

​

​

​

—

​

​

​

​

$

(0.06 )

​

​

​

​

$

(0.06 )

​

​

Turning Point

​

​

​

​

​

9/30/16

​

​

​

$

(6.78 )

​

​

​

​

​

—

​

​

​

​

$

0.64

​

​

​

​

$

0.58

​

​

12/31/15

​

​

​

$

(31.30 )

​

​

​

​

​

—

​

​

​

​

$

1.27

​

​

​

​

$

1.10

​

​

Pro Forma Data

​

​

​

Net Tangible Book Value Per Share

​

​

Cash Dividends Declared Per Share

​

​

Income Per Share from Operations

​

Basic

​

​

Diluted

SDOI

​

​

​

​

​

9/30/16

​

​

​

$

(10.06 )

​

​

​

​

​

—

​

​

​

​

$

0.06

​

​

​

​

$

0.06

12/31/15

​

​

​

​

—

​

​

​

​

​

—

​

​

​

​

$

0.03

​

​

​

​

$

0.03

10

11

12

​

​

​

Class A Common Stock

​

​

Class B Common Stock

​

​

​

​

Outstanding (1)

​

​

Fully Diluted (1)

​

​

Outstanding

​

​

Fully Diluted

​

Existing SDOI stockholders (excluding the SG Parties)

​

​

​

​

551,304

​

​

​

​

​

580,519

​

​

​

​

​

551,304

​

​

​

​

​

580,304

​

​

The SG Parties (2)

​

​

​

​

5,519,067

​

​

​

​

​

5,519,067

​

​

​

​

​

5,519,067

​

​

​

​

​

5,519,067

​

​

13

14

15

16

The assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect our financial condition or results of operations following the Contribution and Exchange. Any potential decline in our financial condition or results of operations could adversely affect our liquidity.

There can be no assurance that we have identified every matter that could have a material adverse effect on Turning Point.

Although we have conducted business, financial and legal due diligence in connection with the Contribution and Exchange, there can be no assurance that due diligence has identified every matter that could have a material adverse effect on Turning Point. Accordingly, there may be matters involving Turning Point and its operations that were not identified during our due diligence. Any of these issues could materially and adversely affect our financial condition after giving effect to the Contribution and Exchange.

The completion of the Contribution and Exchange is subject to the satisfaction or waiver of conditions.

The Contribution and Exchange is subject to the satisfaction or waiver of a number of closing conditions set forth in the Exchange Agreement. If these conditions are not satisfied or waived, the Contribution and Exchange will not be completed. Also, even if all of these conditions are satisfied, the Contribution and Exchange may not be completed, as we and the SG Parties each have the right to terminate the Exchange Agreement under certain circumstances specified in the Exchange Agreement and described in greater detail in the section entitled “ The Exchange Agreement — Termination of the Exchange Agreement ”.

The date on which the transaction will close is uncertain.

The date on which the Contribution and Exchange will close depends on the satisfaction of the closing conditions set forth in the Exchange Agreement, or the waiver of those conditions by the parties thereto. Although SDOI and the SG Parties expect to close the transaction within two days after which all closing conditions are satisfied or waived, such closing may not take place as anticipated. Subject to specific exceptions, either SDOI or the SG Parties may terminate the Exchange Agreement if the Contribution and Exchange has not taken place on or before June 30, 2017.

If the conditions to the Contribution and Exchange are not met or waived, the Contribution and Exchange will not occur.

Even if the Charter Amendment Proposals are approved by the SDOI stockholders, specified conditions must be satisfied or waived to complete the transaction. These conditions are described in the section entitled “ The Exchange Agreement — Conditions Precedent to the Contribution and Exchange ” below and in the Exchange Agreement attached to this proxy statement/prospectus as Appendix A. SDOI cannot assure you that all of the conditions will be satisfied. If the conditions are not satisfied or waived, the Contribution and Exchange will not occur or will be delayed, which would result in the loss of some or all of the expected benefits of the transaction.

After the transaction, SDOI will continue to incur costs as a result of operating as a public company, and its management may be required to devote substantial time to compliance initiatives.

As a public company, SDOI currently incurs legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC, have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. SDOI’s management devotes both time and financial resources to these compliance initiatives.

After the Contribution and Exchange, SDOI will remain subject to all of its current public obligations, including the Sarbanes-Oxley Act. If, after the Contribution and Exchange, SDOI fails to staff its accounting and finance function adequately, or maintain internal controls adequate to meet the demands that are placed upon it as a public company, including the requirements of the Sarbanes-Oxley Act, it may be unable to report its financial results accurately or in a timely manner and its business and stock price may suffer. The costs of being a public company, as well as diversion of management’s time and attention, may have a material adverse effect on SDOI’s future business, financial condition and results of operations.

18

Risks Relating to SDOI’s Business

We may not be successful in identifying any additional suitable acquisition or investment opportunities.

The successful implementation of our business strategy depends on our ability to identify and consummate suitable acquisitions or other investment opportunities. However, to date we have only been able to identify a limited number of such opportunities. There is no assurance that we will be successful in identifying or consummating any additional suitable acquisitions and certain acquisition opportunities may be limited or prohibited by applicable regulatory regimes. Even if we do complete another acquisition or business combination, there is no assurance that it will be successful in enhancing our business or our financial condition. In addition, the Contribution and Exchange and other acquisitions could divert a substantial amount of our management time and may be difficult for us to integrate, which could adversely affect management’s ability to identify and consummate other investment opportunities. The failure to identify or successfully integrate future acquisitions and investment opportunities could have a material adverse effect on our results of operations and financial condition.

Because we face significant competition for acquisition and investment opportunities, including from numerous companies with a business plan similar to ours, it may be difficult for us to fully execute our business strategy. We expect to encounter intense competition for acquisition and investment opportunities from both strategic investors and other entities having a business objective similar to ours, such as private investors (which may be individuals or investment partnerships), blank check companies, and other entities, domestic and international, competing for the type of businesses that we may intend to acquire. Many of these competitors possess greater technical, human and other resources, or more local industry knowledge, or greater access to capital, than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. These factors may place us at a competitive disadvantage in successfully completing future acquisitions and investments.

In addition, while we believe that there are numerous target businesses that we could potentially acquire or invest in, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing acquisition and investment opportunities.

We are precluded from competing in certain areas of the life sciences business for five years following the consummation of an asset sale with Origene Technologies, Inc.

Under an asset purchase agreement that we entered into with Origene Technologies, Inc., or Origene, in April 2013, we have agreed to be bound by a non-competition covenant that precludes our ability to re-enter the antibody and assay design business (as defined in such agreement) during the five years following the consummation of the asset sale, which occurred in July 2013.

Future acquisitions or investments could involve unknown risks that could harm our business and adversely affect our financial condition.

We expect to become a diversified holding company with interests in a variety of industries and market sectors. Future acquisitions that we consummate, including the Contribution and Exchange, will involve unknown risks, some of which will be particular to the industry in which the acquisition target operates. We may be unable to adequately address the financial, legal and operational risks raised by such acquisitions, especially if we are unfamiliar with the industry in which we invest. The realization of any unknown risks could prevent or limit us from realizing the projected benefits of the acquisitions, which could adversely affect our financial condition and liquidity. In addition, our financial condition and results of operations, will be subject to the specific risks applicable to any company in which we invest.

There can be no assurance that our due diligence investigations will identify every matter that could have a material adverse effect on SDOI.

We intend to conduct extensive business, financial and legal due diligence in connection with the evaluation of future acquisition and investment opportunities. However, there can be no assurance that our due diligence investigations will identify every matter that could have a material adverse effect on the acquisition or investment target. Accordingly, there may be matters involving the business and operations of investment targets that we do not identify during our due diligence. To the extent we consummate any acquisition or investment and any of these issues arise, the business and operations of the investment target could be adversely affected, which in turn could adversely affect our results of operations, financial condition and liquidity.

19

Resources could be consumed in researching acquisition or investment targets that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or invest in another business.

It is anticipated that the investigation of each specific acquisition or investment target 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 other advisors. If a decision is made not to consummate a specific business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific acquisition or investment target, we may fail to consummate the investment or acquisition 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 adversely affect our financial position and our ability to consummate other acquisitions and investments.

We may issue notes or other debt securities or otherwise incur substantial debt, which may adversely affect our leverage and financial condition.

We may choose to incur substantial debt to complete a business combination or acquisition or otherwise. The incurrence of debt could result in:

•

default and foreclosure on our assets if our operating revenues after a business combination or acquisition are insufficient to repay our debt obligations;

​

•

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

​

•

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

​

•

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

​

•

our inability to pay dividends on our Common Stock;

​

•

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Common Stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;

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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and

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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

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We may require additional capital in the future, and you may incur dilution to your stock holdings in connection with such financings.

If we require additional capital, we may attempt to raise it through a variety of strategies, including the issuance and sale of additional shares of our Common Stock or preferred stock. Issuances of additional shares of our Common stock or preferred stock in the future, whether in connection with a rights offering, follow-on offering, private placement or otherwise, would dilute existing stockholders and may adversely affect the market price of our Common Stock.

In the event we issue subscription rights to purchase shares of our Common Stock, stockholders who do not fully exercise their rights should expect that they will, at the completion of the offer, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of the offer. Such dilution could be substantial.

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We may issue additional common shares or preferred shares to complete our business combinations or as consideration of an acquisition of an operating business or other acquisition or under an employee incentive plan after consummation of a business combination or acquisition, which would dilute the interests of our stockholders and could present other risks.

The Fifth Amended and Restated Certificate of Incorporation of SDOI authorizes the issuance of up to 330,000,000 shares of Common Stock, 300,000,000 of which are designated as Class A Common Stock and 30,000,000 of which are designated as Class B Common Stock, and 500,000,000 shares of blank check preferred stock. After we consummate the Contribution and Exchange, we will have more than 317,800,000 authorized but unissued shares of our Common Stock available for issuance (assuming the SG Parties do not contribute to us in the Contribution and Exchange more than the Turning Point Contributed Shares). We may issue a substantial number of additional shares of common or preferred stock to complete a business combination or acquisition or under an employee incentive plan after consummation of a business combination or acquisition. The issuance of additional shares of common or preferred stock:

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may significantly dilute the equity interest of our stockholders;

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may subordinate the rights of holders of our Common Stock if preferred stock is issued with rights senior to those afforded our Common Stock;

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could cause a change in control of SDOI if a substantial number of shares of our Common Stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any; and

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may adversely affect prevailing market prices for our Common Stock.

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We may be unable to obtain additional financing to consummate future investments or acquisitions or to fund the operations and growth of an investment or acquisition, which could compel us to restructure the transaction or abandon a particular investment or acquisition.

We may need to obtain additional financing in order to consummate future acquisitions and investment opportunities. We cannot assure you that any additional financing will be available to us on acceptable terms, if at all. This risk is exacerbated by the volatility the global credit markets experiences from time to time. To the extent that additional financing proves to be unavailable when needed to consummate a particular investment or acquisition, we may be compelled to either restructure the transaction or abandon the investment or acquisition. In addition, if we consummate an acquisition or investment, the company we acquire or invest in may require additional financing to fund continuing operations and/or growth. The failure by such company to secure additional financing if required could have a material adverse effect on the results of operations of such business, which in turn could have a material adverse effect on our results of operations or financial condition.

Our investments in any future joint investment could be adversely affected by our lack of sole decision-making authority, our reliance on a partner’s financial condition and disputes between us and our partners.

We may in the future co-invest with third parties through partnerships or joint investment in an investment or acquisition target or other entities. In such circumstances, we may not be in a position to exercise significant decision-making authority regarding a target business, partnership or other entity if we do not own a substantial majority of the equity interests of the target. These investments may involve risks not present were a third party not involved, including the possibility that partners might become insolvent or fail to fund their share of required capital contributions. In addition, partners may have economic or other business interests or goals that are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such partners may also seek similar acquisition targets as us and we may be in competition with them for such business combination targets. Disputes between us and partners may result in litigation or arbitration that would increase our costs and expenses and divert a substantial amount of our management’s time and effort away from our business. Consequently, actions by, or disputes with, partners might result in subjecting assets owned by the partnership to additional risk. We may also, in certain circumstances, be liable for the actions of our third-party partners. For example, in the future we may agree to guarantee indebtedness incurred by a partnership or other entity. Such a guarantee may be on a joint and several basis with our partner in which case we may be liable in the event such party defaults on its guaranty obligation.

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There may be tax consequences associated with our acquisition, investment, holding and disposition of target companies and assets.

We may incur significant taxes in connection with effecting acquisitions or investments, holding, receiving payments from, and operating target companies and assets and disposing of target companies or their assets.

It is very likely that our ability to use SDOI’s net operating loss carryforwards will be substantially reduced as a result of the Contribution and Exchange.

If a corporation undergoes an “ownership change” within the meaning of Section 382 of the Code, the corporation’s net operating loss carryforwards and certain other tax attributes arising from before the ownership change are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds fifty percentage points by value over a rolling three-year period. Similar rules may apply under state tax laws. It is very likely that the Contribution and Exchange will result in an ownership change for SDOI and, accordingly, SDOI’s net operating loss carryforwards and certain other tax attributes will very likely be subject to limitation and possibly elimination after the Contribution and Exchange. Because SDOI has taken a full valuation reserve for its deferred tax assets on SDOI’s financial statements, an ownership change would not have an immediate impact on our reported earnings for financial accounting purposes but may cause significant reduction or elimination of the tax attribute carryforwards in the future.

In addition to the Contribution and Exchange, we may make other significant investments in publicly traded companies. Changes in the market prices of the securities we own, particularly during times of volatility in security prices, can have a material impact on the value of SDOI’s portfolio and equity.

In addition to the Contribution and Exchange, we may make other significant investments in publicly traded companies. We will either consolidate our investments and subsidiaries or report such investments under the equity method of accounting. Changes in the market prices of the publicly traded securities of these entities could have a material impact on an investor’s perception of the aggregate value of our company portfolio and on the value of the assets that we can pledge to creditors for debt financing, which in turn could adversely affect our ability to incur additional debt or finance future acquisitions.

Our ability to dispose of equity interests we acquire may be limited by restrictive stockholder agreements and by the federal securities laws.

When we acquire less than 100% of the equity interests of a company, our investment may be illiquid and we may be subject to restrictive terms of agreements with other equityholders. For instance, the Turning Point Contributed Shares will not be registered under the Securities Act and are, and any other securities we acquire may be, restricted securities under the Securities Act and our ability to sell such securities could be limited to sales pursuant to: (i) an effective registration statement under the Securities Act covering the resale of those securities, (ii) Rule 144 under the Securities Act, which, among other things, requires a specified holding period and limits the manner and volume of sales, or (iii) another applicable exemption under the Securities Act. The inability to efficiently sell restricted securities when desired or necessary may have a material adverse effect on our financial condition and liquidity, which could adversely affect our ability to service our debt.

Any potential acquisition or investment in a foreign company or a company with significant foreign operations, may subject us to additional risks.

If we acquire or invest in a foreign business or a company with significant foreign operations, we will be subject to risks inherent in business operations outside of the United States. These risks include, for example, currency fluctuations, complex foreign regulatory regimes, punitive tariffs, unstable local tax policies, trade embargoes, risks related to shipment of raw materials and finished goods across national borders, restrictions on the movement of funds across national borders and cultural and language differences. If realized, some of these risks may have a material adverse effect on our business, results of operations and liquidity, and can have an adverse effect on our ability to service the notes we expect to issue and any additional debt we incur.

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After consummation of the Contribution and Exchange, the SG Parties will hold a majority of our outstanding Common Stock and have interests which may conflict with interests of our other stockholders.

After consummation of the Contribution and Exchange, the SG Parties will hold in excess of 86% of our total voting power (based on a closing date of January 23, 2017 and assuming an Exchange Ratio of 0.5451 shares of SDOI Class A Common Stock for each share of Turning Point Common Stock as of such date). After the Contribution and Exchange closes, the SG Parties will exercise a controlling influence over our business and affairs and will have the power to determine all matters submitted to a vote of our stockholders, including the election of directors, the removal of directors, and approval of significant corporate transactions such as amendments to our amended and restated certificate of incorporation, mergers and the sale of all or substantially all of our assets. Prior to the closing of the Contribution and Exchange, in accordance with the Company’s Fourth Amended and Restated Certificate of Incorporation, as amended, the board of directors shall adopt resolutions increasing the size of the board of directors and appoint David Glazek, as designee of the SG Parties, to fill the resulting vacancy, which will be effective upon the closing of the Contribution and Exchange. The SG Parties could cause corporate actions to be taken even if the interests of these entities conflict with or are not aligned with the interests of our other stockholders. Section 122(17) of the DGCL provides that a corporation may renounce, in its certificate of incorporation or by action of its board of directors, any interest or expectancy of the corporation in, or in being offered an opportunity to participate in, specified business opportunities or specified classes or categories of business opportunities that are being presented to the corporation or one or more of its officers, directors, or stockholders. In accordance with and to the fullest extent permitted by Section 122(17) of the DGCL, pursuant to a resolution adopted by our board of directors (upon recommendation of the Special Committee), the Company has (i) renounced any interest or expectancy in, or in being offered the opportunity to participate in, any potential transaction or matter which may be a corporate opportunity, including any right, interest, or expectancy regarding any such particular investments or activities which may be a corporate opportunity undertaken by the SG Parties, as the controlling stockholders of the Company from and after the closing of the transactions contemplated by the Exchange Agreement, each of their affiliates and each of the respective officers, directors, agents, members, partners and employees of the foregoing; any person or entity (other than the Company and any person or entity that is controlled by the Company) for which any of the foregoing serves as a director, officer, partner, member, manager, representative, agent, adviser, fiduciary or employee and members of the board of directors of the Company who are designated by or affiliated with any of the foregoing (each of the foregoing an Identified Person), (ii) determined that no Identified Person shall be obligated to communicate, offer, or present any potential transaction, matter, or opportunity to the Company even if such potential transaction, matter, or opportunity is of a character that, if presented to the Company, could be taken by the Company and (iii) waived any claim that an Identified Person is liable to the Company or its stockholders for any breach of fiduciary duty by solely by reason of the fact that such Identified Person pursues or acquires any such corporate opportunity for itself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company.

Future acquisitions and dispositions may not require a stockholder vote and may be material to us.

Any future acquisitions could be material in size and scope, and our stockholders and potential investors may have virtually no substantive information about any new business upon which to base a decision whether to invest in our Common Stock. In any event, depending upon the size and structure of any acquisitions, stockholders may not have the opportunity to vote on the transaction, and may not have access to any information about any new business until the transaction is completed and we file a report with the SEC disclosing the nature of such transaction and/or business. Even if a stockholder vote is required for any of our future acquisitions, under our amended and restated certificate of incorporation and our bylaws, the SG Parties, as long as they continue to own a majority of our outstanding Common Stock, may approve such transaction by written consent without our other stockholders having an opportunity to vote on such transaction.

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Our stockholders are subject to the broad discretion of our board of directors.

We have essentially no operating assets, and our business strategy is primarily identifying new business and investment opportunities. Our stockholders may not have an opportunity to evaluate the specific merits or risks of any such proposed transactions or investments. As a result, our stockholders may be dependent on the broad discretion and judgment of our board of directors in connection with the application of our capital and the selection of acquisition or investment targets, or any proposal that our board of directors may make to our stockholders that they approve, a distribution of the assets of the Company to the stockholders. There can be no assurance that determinations ultimately made by us will permit us to achieve profitable operations.

Our officers, directors, stockholders and their respective affiliates may have a pecuniary interest in certain transactions in which we are involved, and may also compete with us.

We have not adopted a policy that expressly prohibits our directors, officers, stockholders or affiliates from having a direct or indirect pecuniary interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such parties may have an interest in certain transactions such as strategic partnerships or joint ventures in which we are involved, and may also compete with us.

In the course of their other business activities, our officers and directors may become aware of investment and acquisition opportunities that may be appropriate for presentation to SDOI as well as the other entities with which they are affiliated. Our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

Our officers and directors may become aware of business opportunities which may be appropriate for presentation to us as well as the other entities with which they are or may be affiliated. Due to our officers’ and directors’ existing affiliations with other entities, they may have fiduciary obligations to present potential business opportunities to those entities in addition to presenting them to us which could cause additional conflicts of interest. To the extent that our officers and directors identify business combination opportunities that may be suitable for entities to which they have pre-existing fiduciary obligations, or are presented with such opportunities in their capacities as fiduciaries to such entities, they may be required to honor their pre-existing fiduciary obligations to such entities. Accordingly, they may not present business combination opportunities to us that otherwise may be attractive to such entities unless the other entities have declined to accept such opportunities. Section 122(17) of the DGCL provides that a corporation may renounce, in its certificate of incorporation or by action of its board of directors, any interest or expectancy of the corporation in, or in being offered an opportunity to participate in, specified business opportunities or specified classes or categories of business opportunities that are being presented to the corporation or one or more of its officers, directors, or stockholders. In accordance with and to the fullest extent permitted by Section 122(17) of the DGCL, pursuant to a resolution adopted by our board of directors (upon recommendation of the Special Committee), the Company has (i) renounced any interest or expectancy in, or in being offered the opportunity to participate in, any potential transaction or matter which may be a corporate opportunity, including any right, interest, or expectancy regarding any such particular investments or activities which may be a corporate opportunity undertaken by the SG Parties, as the controlling stockholders of the Company from and after the closing of the transactions contemplated by the Exchange Agreement, each of their affiliates and each of the respective officers, directors, agents, members, partners and employees of the foregoing; any person or entity (other than the Company and any person or entity that is controlled by the Company) for which any of the foregoing serves as a director, officer, partner, member, manager, representative, agent, adviser, fiduciary or employee and members of the board of directors of the Company who are designated by or affiliated with any of the foregoing (each of the foregoing an Identified Person), (ii) determined that no Identified Person shall be obligated to communicate, offer, or present any potential transaction, matter, or opportunity to the Company even if such potential transaction, matter, or opportunity is of a character that, if presented to the Company, could be taken by the Company and (iii) waived any claim that an Identified Person is liable to the Company or its stockholders for any breach of fiduciary duty by solely by reason of the fact that such Identified Person pursues or acquires any such corporate opportunity for itself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Company.

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

We have no operating assets at this time and have only one part-time employee as of January 25, 2017. If we complete the Contribution and Exchange and/or proceed with other acquisitions or investments, we expect to require additional personnel and enhanced information technology systems. Future growth will impose significant added responsibilities on members of our management, including the need to identify, recruit, maintain and integrate additional employees and implement enhanced informational technology systems. Our future financial performance and our ability to compete effectively will depend, in part, on our ability to manage any future growth effectively. Future growth will also increase our costs and expenses and limit our liquidity.

Agreements and transactions involving former businesses may give rise to future claims that could materially adversely impact our capital resources.

Under an asset purchase agreement that we entered into with Origene in April 2013, Origene did not assume all of the liabilities associated with our life sciences business. Certain liabilities remained with us post-closing. For example, Origene did not assume any liabilities arising out of, relating to or resulting or accruing from or with respect to the life sciences business prior to the closing date. Such liabilities, together with other excluded liabilities under the asset purchase agreement, could be significant. While we believe that we are adequately insured against certain of the risks associated with such excluded liabilities, there can be no assurances.

From time to time we may be subject to litigation for which we may be unable to accurately assess our level of exposure and which, if adversely determined, may have a material adverse effect on our consolidated financial condition or results of operations.

We may become party to legal proceedings that are considered to be either ordinary or routine litigation incidental to our or their current or prior businesses or not material to our consolidated financial position or liquidity. There can be no assurance that we will prevail in any litigation in which we may become involved, or that our insurance coverage will be adequate to cover any potential losses. To the extent that we sustain losses from any pending litigation which are not reserved or otherwise provided for or insured against, our business, results of operations, cash flows and/or financial condition could be adversely affected.

Upon consummation of the Contribution and Exchange, we will become a holding company. As a holding company our only material assets will be our equity interests in our operating subsidiaries, and our principal source of revenue and cash flow will be distributions from our subsidiaries.

As a holding company our only material assets will be our equity interests in our operating subsidiaries, and our principal source of revenue and cash flow will be distributions from our subsidiaries. Thus our ability to service our debt, finance acquisitions and pay dividends to our stockholders in the future will be dependent on the ability of our subsidiaries to generate sufficient net income and cash flows to make upstream cash distributions to us. Our subsidiaries will be separate legal entities, and although they may be wholly-owned or controlled by us, they will have no obligation to make any funds available to us, whether in the form of loans, dividends or otherwise. The ability of our subsidiaries to distribute cash to us will also be subject to, among other things, restrictions that are contained in our subsidiaries’ financing agreements, availability of sufficient funds in such subsidiaries and applicable state laws. Claims of creditors of our subsidiaries generally will have priority as to the assets of such subsidiaries over our claims and claims of our creditors and stockholders. To the extent the ability of our subsidiaries to distribute dividends or other payments to us could be limited in any way, this could materially limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, or otherwise fund and conduct our business.

Turning Point is an independent public company with its own board of directors owing fiduciary duties to all stockholders, not just SDOI as a large stockholder.

Although SDOI will be a large stockholder of Turning Point upon the consummation of the Contribution and Exchange, the Turning Point board of directors will continue to have fiduciary duties to all of its stockholders. The Turning Point board may make decisions and approve actions that are in the best interests of all shareholders, even if such actions or decisions are not desirable to SDOI.

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If we discover significant deficiencies in our internal controls over financial reporting, or those of any entity that we acquire, it may adversely affect our ability to provide timely and reliable financial information and satisfy our reporting obligations under federal securities laws, which also could affect the trading price of our Common Stock.

Effective internal and disclosure controls are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. A “significant deficiency” is a deficiency, or combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention of those responsible for oversight of our financial reporting.

To the extent that any material weakness or significant deficiency exists in our, or our consolidated subsidiaries’, internal control over financial reporting, such material weakness or significant deficiency may adversely affect our ability to provide timely and reliable financial information necessary for the conduct of our business and satisfaction of our reporting obligations under federal securities laws. Ineffective internal and disclosure controls could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Common Stock.

After the consummation of the Contribution and Exchange, we may be required to include in our periodic reports filed with the Commission, or to incorporate by reference therein, the financial statements of entities that we acquire. If any such entity does not timely provide such financial statements, it may adversely affect our ability to provide timely and reliable financial information and satisfy our reporting obligations under federal securities laws, which also could affect the trading price of our Common Stock.

We are required to file periodic reports with the Commission that contain our financial information, and after the consummation of the Contribution and Exchange, financial information of entities that we acquire or in which we hold a substantial interest. Should any such entity fail to provide us with such financial information in a timely manner, or at all, it could cause us to be delinquent in meeting our own filing requirements, and cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Common Stock.

We may be required to incur significant costs, and our activities may be restricted, to avoid investment company status. We may suffer adverse consequences if we are deemed an investment company under the Investment Company Act.

Since the sale of our life sciences business in July 2013, we have held substantially all of our assets in cash and cash equivalents, and have held no “investment securities,” as that term is defined in Section 3(a)(2) of the Investment Company Act. We have been conducting a good faith search for a merger or acquisition candidate, and have repeatedly and publicly disclosed our intention to acquire a business. In addition, we have not held, and do not hold, ourselves out as an investment company. The Investment Company Act contains substantive legal requirements that regulate the manner in which investment companies are permitted to conduct their business activities. We believe that we are not an investment company under the Investment Company Act. We could incur significant legal expenses if the SEC or a court questioned whether we are an investment company. If the SEC or a court were to disagree with us, we could be required to register as an investment company, which would negatively affect our ability to acquire an operating company; subject us to disclosure and accounting guidance geared toward investment, rather than operating, companies; significantly limit our ability to borrow money, issue options, issue multiple classes of stock and debt, and engage in transactions with affiliates; and require us to undertake significant costs and expenses to meet other disclosure, reporting and regulatory requirements.

In addition, if at any time it were established that we are or had been operating as an investment company in violation of the Investment Company Act, there would be a risk, among other material adverse consequences, that we would be subject to monetary penalties or injunctive relief, or both, that we could be unable to enforce contracts with third parties or that third parties could seek to obtain rescission of transactions undertaken during the period in which it was established that we were an unregistered investment company. If, subsequently, we were not permitted or were unable to register as an investment company as described above, it is likely that we would be forced to cease or significantly restructure operations.

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In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exemption, we must ensure that we are engaged primarily in a business other than investing, reinvesting, owning, holding or trading in securities (as defined in the Investment Company Act) and that we do not own or acquire “investment securities” having a value exceeding 40% of the value of our total assets (exclusive of United States government securities and cash items) on an unconsolidated basis. Rule 3a-1 of the Investment Company Act provides an exemption from registration as an investment company if a company meets both an asset and an income test and is not otherwise primarily engaged in an investment company business by, among other things, holding itself out to the public as such or by taking controlling interests in companies with a view to realizing profits through subsequent sales of these interests. A company satisfies the asset test of Rule 3a-1 if it has no more than 45% of the value of its total assets (adjusted to exclude United States Government securities and cash) in the form of securities other than interests in United States Government securities, majority-owned subsidiaries and companies which it primarily and actively controls. A company satisfies the income test of Rule 3a-1 if it has derived no more than 45% of its net income for its last four fiscal quarters combined from securities other than interests in United States Government securities, majority owned subsidiaries and primarily controlled companies.

We may be subject to an additional tax as a personal holding company on future undistributed personal holding company income if we generate passive income in excess of operating expenses.

Section 541 of the Code subjects a corporation which is a “personal holding company”, or a PHC, as defined in the Code, to a 20% tax on “undistributed personal holding company income” in addition to the corporation’s normal income tax. Generally, undistributed personal holding company income is based on taxable income, subject to certain adjustments, most notably a deduction for federal income taxes and a modification of the usual net operating loss deduction. Personal holding company income, or PHC Income, is comprised primarily of passive investment income plus, under certain circumstances, personal service income. A corporation generally is considered to be a PHC if  (i) at least 60% of its adjusted ordinary gross income for the taxable year is PHC Income and (ii) more than 50% in value of its outstanding stock is owned, directly or indirectly, by five or fewer individuals (including, for this purpose, certain organizations and trusts) at any time during the last half of the corporation’s taxable year.

So long as the SG Parties hold more than 50% in value of our outstanding Common Stock at any time during the second half of 2017 or during any future tax year, it is possible that at least 60% of our adjusted ordinary gross income could consist of PHC Income as discussed above. Thus, there can be no assurance that we will not be subject to this tax in the future, which, in turn, may materially adversely impact our financial position, results of operations, cash flows and liquidity. In addition, if we are subject to this tax during future periods, statutory tax rate increases could significantly increase tax expense and adversely affect operating results and cash flows.

The Fifth Amended and Restated Certificate of Incorporation contains provisions which may discourage the takeover of SDOI, may make removal of our management more difficult and may depress our stock price.

The Fifth Amended and Restated Certificate of Incorporation of SDOI contains provisions that may have an anti-takeover effect and inhibit a change in our management. Such provisions could also have the effect of discouraging others from making tender offers for our Common Stock. As a result, these provisions could prevent our stockholders from receiving a premium for their shares of Common Stock above the prevailing market prices. These provisions include:

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the authority of our board of directors to issue, without stockholder approval, up to 500,000,000 shares of our preferred stock with such terms as our board of directors may determine;

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special meetings of our stockholders may be called only by the board of directors pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office, the chairman of the board of directors, the president of SDOI, or the holders of shares of capital stock of SDOI representing a majority of the total votes eligible to be cast by holders of shares of capital stock of SDOI;

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a staggered board of directors as a result of which only one of the two classes of directors is elected each year (under the Sixth Amended and Restated Certificate of Incorporation, the board of directors is declassified and all directors are elected each year);

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advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings;

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the absence of cumulative voting rights; and

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subject to any special rights of the holders of any class or series of our stock to elect directors, removal of incumbent directors only for cause and upon the affirmative vote of at least two-thirds of the total votes that would be eligible to be cast by the stockholders in the election of such director (under the Sixth Amended and Restated Certificate of Incorporation, directors may be removed with or without cause by the affirmative vote of a majority of the total votes that would be eligible to be cast by the stockholders in the election of such director).

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Limitations on liability and indemnification matters.

As permitted by the DGCL, we have included in our Fifth Amended and Restated Certificate of Incorporation a provision to eliminate the personal liability of our directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, subject to certain exceptions. Our bylaws also provide that we are required to indemnify our directors under certain circumstances, including those circumstances in which indemnification would otherwise be discretionary, and we will be required to advance expenses to our directors as incurred in connection with proceedings against them for which they may be indemnified. In addition, we, by action of our board of directors, may provide indemnification and advance expenses to our officers, employees and agents (other than directors), to directors, officers, employees or agents of a subsidiary of SDOI, and to each person serving as a director, officer, partner, member, employee or agent of another corporation, partnership, limited liability company, joint venture, trust or other enterprise, at our request, with the same scope and effect as the indemnification of our directors provided in our bylaws.

Our Common Stock was delisted from the NASDAQ Capital Market following the 2013 sale of our life sciences business, and there may be reduced ability to trade our Common Stock.

Because we no longer had an operating business immediately following the asset sale transaction with Origene, we were notified that, in NASDAQ’s view, we no longer satisfied the continued listing standards of the NASDAQ Capital Market, and our Common Stock was delisted from the NASDAQ Capital Market pursuant to NASDAQ’s authority under NASDAQ Listing Rule 5101. While trading of our Common Stock is currently conducted in the over-the-counter market on the OTCQB, such trading could substantially reduce the market liquidity of our Common Stock. As a result, an investor may find it more difficult to dispose of, or obtain accurate quotations for the price of, our Common Stock. Additionally, the trading market for shares of our Common Stock will consist of a decreased percentage of our total capitalization following the Contribution and Exchange, and the future trading and pricing of our Common Stock may be further limited.

As a shell company, there are restrictions on the ability of our shareholders to resell our restricted securities.

Rule 144 under the Securities Act provides a safe harbor under which holders of restricted securities and affiliates of an issuer may resell their securities into the public market. However, Rule 144 is unavailable for securities of a shell company and former shell companies until, among other things, twelve months have elapsed since the former “shell company” has filed certain information with the Commission. We expect to cease being a “shell company” upon completion of the Contribution and Exchange, and to file the requisite information with the Commission promptly thereafter. However, no assurance can be provided as to the date, if any, that our securities will again become eligible for resale under Rule 144. The unavailability of the Rule 144 resale exemption for our securities may adversely affect our ability to raise additional financing on a private placement basis, and may adversely affect the ability of parties purchasing in our private placements and our affiliates to resell their securities into the public market, all of which could have a material adverse effect on us and our shareholders.

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We will have to satisfy certain requirements before our Common Stock can be listed on a national securities exchange such as NASDAQ or the NYSE.

National securities exchanges, including NASDAQ and the NYSE, prohibit a company that has completed a reverse merger with a public shell from applying to list on such an exchange (often referred to as “uplisting”) until the combined entity had traded in the U.S. over-the-counter market, on another national securities exchange, or on a regulated foreign exchange, for at least one year following the filing of all required information about the reverse merger transaction, including audited financial statements. In addition, the rules require that the former shell company has filed all of its required reports for the one-year period, including at least one annual report. Furthermore, in order to uplist, the former shell company must maintain a threshold closing stock price for a substantial period of time. The exchanges may also impose more stringent requirements upon a former shell company seeking to uplist if they so choose. As such, we cannot guarantee that we will in the future be able to cause the listing of our securities on any national securities exchange.

Our stock has generally had a low trading volume and price fluctuations in our Common Stock could result from general market and economic conditions and a variety of other factors, including factors that affect the volatility of the Common Stock of any of our publicly held subsidiaries.

During the period from January 1, 2017 through January 25, 2017, the price of our Common Stock fluctuated between $0.90 and $0.98 per share, with an average daily trading volume for the period of approximately 30,938 shares. The trading price of our Common Stock may be highly volatile and could be subject to fluctuations in response to a number of factors beyond our control, including:

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actual or anticipated fluctuations in our results of operations and, after we complete the Contribution and Exchange or other acquisitions or investments, the performance of our subsidiaries and their competitors;

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reaction of the market to our announcement of any future acquisitions or investments;

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the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

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changes in general economic conditions; and

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actions of our historical equity investors, including sales of Common Stock by our principal stockholders, our directors and our executive officers.

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In addition, the trading price of our Common Stock could be subject to fluctuations in response to a number of factors that affect the volatility of the Common Stock of any of our subsidiaries, such as Turning Point, that are publicly traded. For more information, please see the section entitled “ Risk Factors — Risks Related to Turning Point’s Business ” below.

Future sales of substantial amounts of our Common Stock may adversely affect our market price.

Shares of our Common Stock held by the SG Parties, including those to be acquired by them under the Exchange Agreement, will be “restricted securities” under the Securities Act and held by them as our affiliates, as that term is defined in the Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an exemption from registration is available. However, in connection with the Contribution and Exchange, we will grant registration rights to the SG Parties under the SG Parties Registration Rights Agreement to facilitate the resale of their shares of our Common Stock. Under the SG Parties Registration Rights Agreement, the SG Parties will have the right, subject to certain conditions, to require us to register the sale of these shares under the federal securities laws. By exercising their registration rights, and selling all or a large number of their shares, the SG Parties could cause the prevailing market price of our Common Stock to decline. In addition, the shares of our Common Stock owned by the SG Parties, including those to be acquired by them under the Exchange Agreement, may in the future be saleable in the public market under Rule 144 of the Securities Act after the applicable holding period and manner and volume of sales requirements have been met, subject to the restrictions and limitations of that Rule. However, because we are a shell company, Rule 144 is not available for sales of shares of our securities until one year after we have satisfied all of the following requirements:

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(i) cease to be a shell company, (ii) become subject to the applicable reporting requirements of the Exchange Act, (iii) have filed all reports and other materials required to be filed by the applicable provisions of the Exchange Act for at least 12 months, and (iv) have filed certain information with the Commission reflecting that we are no longer a shell company (which we expect to do shortly after completing the Contribution and Exchange). For a detailed discussion of the SG Parties Registration Rights Agreement, see the section entitled “ Ancillary Agreements to Be Entered into in Connection with the Contribution and Exchange — SG Parties Registration Rights Agreement .”

Future sales of substantial amounts of our Common Stock into the public market, or perceptions in the market that such sales could occur, may adversely affect the prevailing market price of our Common Stock and impair our ability to raise capital through the sale of additional equity securities.

Because we do not intend to pay any cash dividends on our Common Stock in the near term, capital appreciation, if any, of our Common Stock will be your sole source of potential gain for the foreseeable future. We currently intend to retain all available funds and any future earnings for use as consideration for an acquisition of an operating business or other acquisition or in the operation and expansion of our future businesses. In addition, the terms of any future financing agreements may preclude us from paying any dividends. As a result, capital appreciation, if any, of our Common Stock will be your sole source of potential gain for the foreseeable future.

Risks Related to Turning Point’s Business

Sales of tobacco products are generally expected to continue to decline.

As a result of restrictions on advertising and promotions, increases in regulation and excise taxes, health concerns, a decline in the social acceptability of tobacco and tobacco-related products, increased pressure from anti-tobacco groups and other factors, the overall United States market for tobacco products has generally been declining in terms of volume of sales, and is expected to continue to decline. The general climate of declining sales of tobacco products is principally driven by the long-standing declines in cigarettes. OTP, on the other hand, as measured by Management Science Associates, Inc., or MSAi, have been generating modest volume gains. For instance, while loose leaf chewing tobacco products have declined for over a decade, moist snuff tobacco, or MST, a much larger smokeless segment, has been growing in the low single digits over the same period. Additionally, cigarillo cigars and MYO cigar wraps have each demonstrated MSAi volume gains in recent years. Turning Points’ tobacco products comprised approximately 66% of its total 2015 revenues and, while some of its sales volume declines have been offset by higher prices or by increased sales in other product categories, there can be no assurance that these price increases or increased sales can be sustained, especially in an environment of increased regulation and taxation and changes in consumer spending habits.

Sales of NewGen products have weakened over the last several years as consumed for Liquid Vapor products have migrated to purchasing from non-traditional retail outlets. Turning Point has not historically covered these non-traditional outlets and has therefor suffered slowing sales of NewGen products. The market for its NewGen products is new and developing and is only a fraction of the size of the conventional tobacco market. In addition, although Turning Point does not market NewGen products as cessation products, in the event they are used as such, the size of the opportunity in this new market may be limited as the population of smokers that is seeking such cessation products continues to shrink.

It cannot be assured that sales of NewGen products will offset any decrease in sales of tobacco products. To the extent that any decrease in sales of tobacco products is not offset by increases in price or increases in sales of NewGen products, it may have a material adverse effect on Turning Point’s business, results of operations and financial condition.

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Turning Point depends on a small number of key third-party suppliers and producers for its products.

Turning Point’s operations are largely dependent on a small number of key suppliers and producers to supply or manufacture its products pursuant to long-term contracts. In 2015, its five most important suppliers and producers were: (i) Bolloré, which provides Turning Point with exclusive access to the Zig-Zag cigarette paper and related accessories in the United States and Canada, (ii) Swedish Match, which produces all of Turning Point’s loose leaf chewing tobacco in the United States, (iii) Durfort, from which Turning Point sources its make-your-own, or MYO, cigar wraps, (iv) JJA, from which Turning Point sources its Zig-Zag ® tobacco branded cigars and cigarillos and (v) VMR, which provides Turning Point with the exclusive supply and distribution of V2 ® branded electronic cigarettes and vaporizers in the United States.

All of Turning Point’s Zig-Zag ® premium cigarette papers, cigarette tubes and injectors are sourced from Bolloré, pursuant to a renewable 20-year exclusive agreement. This agreement was most recently renewed in 2012. In addition, under the terms of the agreement with Bolloré, Turning Point renegotiates pricing terms every five years. At the present time, it is operating under a temporary price structure and formula. The parties are considering a modified pricing formula and a potential new index and duration. There is no guarantee that Turning Point will be able to reach a new five-year pricing agreement with Bolloré at all or on terms satisfactory to it.

All of Turning Point’s loose leaf tobacco products are manufactured by Swedish Match pursuant to a ten-year renewable agreement, which Turning Point entered into in 2008. The agreement will automatically be renewed for five successive ten-year terms unless either party provides at least 180 days’ notice prior to a renewal term of its intent to terminate the agreement or unless otherwise terminated in accordance with the provisions of the agreement. If a notice of non-renewal is delivered, the contract will expire two years after the date on which the agreement would have otherwise been renewed. Under this agreement, Turning Point retains the rights to all marketing, distribution and trademarks over the loose leaf brands that it owns or licenses. Turning Point shares responsibilities with Swedish Match related to process control, manufacturing activities, quality control and inventory management with respect to its loose leaf products. Turning Point relies on the performance by Swedish Match of its obligations under the agreement for the production of its loose leaf tobacco products. Any significant disruption in Swedish Match’s manufacturing capabilities or Turning Point’s relationship with Swedish Match, a deterioration in Swedish Match’s financial condition or an industry-wide change in business practices with respect to loose leaf tobacco products could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point sources its MYO cigar wraps through Durfort pursuant to an agreement entered into in October 2008. Turning Point relies on Durfort to produce and package its MYO cigar wraps to Turning Point’s specifications. Any significant disruption in Turning Point’s relationship with Durfort, a deterioration in Durfort’s financial condition, an industry-wide change in business practices relating to MYO cigar wraps or Turning Point’s ability to source the MYO cigar wraps from them could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point sources its Zig-Zag ® tobacco branded cigars and cigarillos through JJA and its Dominican Republic partner pursuant to an agreement it entered into in April 2013. Turning Point relies on JJA to purchase and maintain an inventory all of the necessary raw materials, including packaging bearing Turning Point’s intellectual property, and to manufacture to Turning Point’s specifications and deliver the products to Turning Point’s designated United States distribution center. Turning Point cannot guarantee that JJA will continue to source sufficient quantities of Turning Point’s Zig-Zag ® tobacco branded cigars or cigarillos in order for Turning Point to meet its customer demands. Any significant disruption in Turning Point’s relationship with JJA, a failure to supply Turning Point with inventory in sufficient amounts, a deterioration in JJA’s financial condition or an industry-wide change in business practices with respect to cigars could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point currently relies on VMR to supply V2 ® branded electronic cigarettes, vaporizers and e-liquids that it distributes. VMR’s unwillingness or inability to maintain the quality of its products or to comply with Turning Point’s specifications and requirements for products that it distributes could, among other things, result in a product recall and could adversely affect its reputation. Any significant disruption in Turning Point’s relationship with VMR, a deterioration in VMR’s financial condition or an industry-wide change in business practices with respect to NewGen products could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

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Pursuant to agreements with certain suppliers, Turning Point has agreed to store tobacco inventory purchased on its behalf and generally maintains a 12- to 24-month supply of its various tobacco products at its facilities. Turning Point cannot guarantee that its supply of these products will be adequate to meet the demands of its customers. Further, a major fire, violent weather conditions or other disasters that affect Turning Point or any of its key suppliers or producers, including Bolloré, Swedish Match, Durfort, JJA or VMR, as well as those of its other suppliers and vendors, could have a material adverse effect on its operations. Although Turning Point has insurance coverage for some of these events, a prolonged interruption in its operations, as well as those of its producers, suppliers and vendors, could have a material adverse effect on its business, results of operations and financial condition. In addition, Turning Point does not know whether it will be able to renew any or all of its agreements on a timely basis or on terms satisfactory to it or at all.

Any disruptions in Turning Point’s relationships with Bolloré, Swedish Match, Durfort, JJA or VMR, a failure to renew any of its agreements, an inability or unwillingness by any supplier to produce sufficient quantities of its products in a timely manner or finding a new supplier would have a significant impact on its ability to continue distributing the same volume and quality of products and maintain its market share, even during a temporary disruption, which could have a material adverse effect on its business, results of operations and financial condition.

Turning Point may be unable to identify or contract with new suppliers or producers in the event of a disruption to its supply.

In order to continue selling its products in the event of a disruption to its supply, Turning Point would have to identify new suppliers or producers that would be required to satisfy significant regulatory requirements. Only a limited number of suppliers or producers may have the ability to produce Turning Point’s products at the volumes it needs, and it could be costly or time-consuming to locate and approve such alternative sources. Moreover, it may be difficult or costly to find suppliers to produce small volumes of its new products in the event it is looking only to supplement current supply as suppliers may impose minimum order requirements. In addition, Turning Point may be unable to negotiate pricing or other terms with its existing or new suppliers as favorable as those it currently enjoys. Even if Turning Point were able to successfully identify new suppliers and contract with them on favorable terms, these new suppliers would also be subject to stringent regulatory approval procedures that could result in prolonged disruptions to Turning Point’s sourcing and distribution processes. Furthermore, there is no guarantee that a new third-party supplier could accurately replicate the production process and taste profile of Turning Point’s existing products. Turning Point cannot guarantee that a failure to adequately replace its existing suppliers would not have a material adverse effect on its business, results of operations and financial condition.

Turning Point’s licenses to use certain brands and trademarks may be terminated or not renewed.

Turning Point is reliant upon brand recognition in the OTP markets in which it competes, as the OTP industry is characterized by a high degree of brand loyalty and a reluctance to switch to new or unrecognizable brands on the part of consumers. Some of the brands and trademarks under which Turning Point’s products are sold are licensed to it for a fixed period of time in respect of specified markets, such as Turning Point’s distribution and license agreement with Bolloré for use of the Zig-Zag ® name and associated trademarks in connection with certain of Turning Point’s cigarette papers and related products.

Turning Point has two licensing agreements with Bolloré, the first of which governs licensing and the use of the Zig-Zag ® name with respect to cigarette papers, cigarette tubes and cigarette injector machines, and the second of which governs licensing and the use of the Zig-Zag ® name with respect to e-cigarettes, vaporizers and liquids. In 2015, Turning Point generated $117.5 million in gross sales of Zig-Zag ® products, of which $51 million was generated from products sold through Turning Point’s license agreement with Bolloré. In the event the licensing agreements with Bolloré are not renewed, the terms of the agreements bind Turning Point under a five-year non-compete clause, under which Turning Point cannot engage in direct or indirect manufacturing, selling, distributing, marketing or otherwise promoting of cigarette papers of a competitor without Bolloré’s consent, except in limited instances. Turning Point does not know whether it will renew these agreements on a timely basis or on terms satisfactory to it or at all. As a result of these restrictions, if Turning Point’s agreements with Bolloré are terminated, Turning Point may not be able to access the markets with recognizable brands that would be positioned to compete in these segments.

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In Turning Point’s NewGen products segment, in addition to its license to sell NewGen products under the Zig-Zag ® name, it also has a license to sell under VMR’s V2Cigs ® brand name in the United States Turning Point relies on this branding to attract customers based on its existing value as a recognizable and trusted name in the OTP industry. Turning Point’s agreement with VMR grants it rights to use the V2Cigs ® and V2 ® marks in its distribution of its NewGen products to brick-and-mortar retailers. If Turning Point is unable to continue to market Zig-Zag ® - or V2 ® -branded NewGen products, it may see a significant decline in its market share and may not be able to find an equally attractive brand or trademark for its NewGen products. Even if Turning Point successfully markets NewGen products under different brand names, it may take some time and significant investment for Turning Point to obtain rights to a new brand and gain market share with these products. Any potential delays or periods of time in which it cannot continue to use the Zig-Zag ® or V2 ® names in the NewGen products market may make it difficult for Turning Point to compete against other producers who have title to or use of established brands and access to resources through which to capture market share.

In the event that the licenses to use the brands and trademarks in Turning Point’s portfolio are terminated or are not renewed after the end of the term, there is no guarantee it will be able to find a suitable replacement, or that if a replacement is found, that it will be on favorable terms. Any loss in Turning Point’s brand-name appeal to its existing customers as a result of the lapse or termination of its licenses could have a material adverse effect on its business, results of operations and financial condition.

Turning Point may not be successful in maintaining the consumer brand recognition and loyalty of its products.

Turning Point competes in a market that relies on innovation and the ability to react to evolving consumer preferences. The tobacco industry in general, and the OTP industry in particular, is subject to changing consumer trends, demands and preferences. Therefore, products once favored may over time become disfavored by consumers or no longer perceived as the best option. Consumers in the OTP market have demonstrated a high degree of brand loyalty, but producers must continue to adapt their products in order to maintain their status among these customers as the market evolves. The Zig-Zag ® brand has strong brand recognition among smokers, and Turning Point’s continued success depends in part on its ability to continue to differentiate the brand names that it owns or licenses and maintain similarly high levels of recognition with target consumers. Trends within the OTP industry change often and Turning Point’s failure to anticipate, identify or react to changes in these trends could, among other things, lead to reduced demand for its products. Factors that may affect consumer perception of Turning Point’s products include health trends and attention to health concerns associated with tobacco, price-sensitivity in the presence of competitors’ products or substitute products and trends in favor of new NewGen products that are currently being researched and produced by participants in the industry. For example, in recent years, Turning Point has witnessed a shift in consumer purchases from chewing tobacco to moist snuff, due to its increased affordability. Along with its biggest competitors in the chewing tobacco market, which also produce moist snuff, Turning Point has been able to shift priorities and adapt to this change. A failure to react to similar trends in the future could enable its competitors to grow or establish their brands’ market share in these categories before Turning Point has a chance to respond.

Consumer perceptions of the overall health of tobacco-based products is likely to continue to shift, and Turning Point’s success depends, in part, on its ability to anticipate these shifting tastes and the rapidity with which the markets in which it competes will evolve in response to these changes on a timely and affordable basis. If Turning Point is unable to respond effectively and efficiently to changing consumer preferences, the demand for its products may decline which could have a material adverse effect on its business, results of operations and financial condition.

Regulations may be enacted in the future, particularly in light of increasing restrictions on the form and content of marketing of tobacco products, that would make it more difficult to appeal to Turning Point’s consumers or to leverage existing recognition of the brands that it owns or licenses. Furthermore, even if Turning Point is able to continue to distinguish its products, there can be no assurance that the sales, marketing and distribution efforts of its competitors will not be successful in persuading consumers of its products to switch to their products. Many of Turning Point’s competitors have greater access to resources than it does, which better positions them to conduct market research in relation to branding strategies or costly marketing campaigns. Any loss of consumer brand loyalty to Turning Point’s products or in its ability to effectively brand its products in a recognizable way will have a material effect on its ability to continue to sell its products and maintain its market share, which could have a material adverse effect on its business, results of operations and financial condition.

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Turning Point is subject to substantial and increasing regulation.

The tobacco industry has been under public scrutiny for over fifty years. Industry critics include special interest groups, the United States Surgeon General and many legislators and regulators at the state and federal levels. A wide variety of federal, state and local laws limit the advertising, sale and use of tobacco and these laws have proliferated in recent years. Together with changing public attitudes towards tobacco consumption, the constant expansion of regulations has been a major cause of the overall decline in the consumption of tobacco products since the early 1970s. These regulations relate to, among other things, the importation of tobacco products and shipping throughout the United States market, increases in the minimum age to purchase tobacco products, imposition of taxes, sampling and advertising bans or restrictions, flavor bans or restrictions, ingredient and constituent disclosure requirements and media campaigns and restrictions on where smokers can smoke. Additional restrictions may be legislatively imposed or agreed to in the future. These limitations may make it difficult for Turning Point to maintain the value of any brand.

Moreover, the current trend is toward increasing regulation of the tobacco industry, which is likely to differ between the various United States and Canadian provinces in which Turning Point currently conducts business. Extensive and inconsistent regulation by multiple states and at different governmental levels could prove to be particularly disruptive to Turning Point’s business as well, as it may be unable to accommodate such regulations in a cost-effective manner that allows it to continue to compete in an economically viable way. Regulations are often introduced without the tobacco industry’s input and have been a significant reason behind reduced industry sales volumes and increased illicit trade.

In 1986, federal legislation was enacted regulating smokeless tobacco products (including dry and moist snuff and chewing tobacco) by, among other things, requiring health warnings on smokeless tobacco packages and prohibiting the advertising of smokeless tobacco products on media subject to the jurisdiction of the Federal Communications Commission, or the FCC. Since 1986, other proposals have been made at the federal, state and local levels for additional regulation of tobacco products and it is likely that additional proposals will be made in the coming years. For example, the Prevent All Cigarette Trafficking Act prohibits the use of the United States Postal Service to mail most tobacco products and amends the Jenkins Act, which established cigarette sales reporting requirements for state excise tax collection, to require individuals and businesses that make interstate sales of cigarettes or smokeless tobacco comply with state tax laws. Additional federal or state regulation relating to the manufacture, sale, distribution, advertising, labeling, mandatory ingredients disclosure and nicotine yield information disclosure of tobacco products could reduce sales, increase costs and have a material adverse effect on its business, results of operations and financial condition.

On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act, or the Tobacco Control Act, authorized the FDA to regulate the tobacco industry and amended the Federal Cigarette Labeling and Advertising Act, which governs how cigarettes can be advertised and marketed. In addition to the FDA, Turning Point is subject to regulation by numerous other federal agencies, including the Federal Trade Commission, or the FTC, the Alcohol and Tobacco Tax and Trade Bureau, or the TTB, the FCC, the United States Environmental Protection Agency, the United States Department of Agriculture, or the USDA, United States Customs and Border Protection and the United States Center for Disease Control and Prevention’s Office on Smoking and Health. There have also been adverse legislative and political decisions and other unfavorable developments concerning cigarette smoking and the tobacco industry, which have received widespread public attention. There can be no assurance as to the ultimate content, timing or effect of any regulation of tobacco products by governmental bodies, nor can there be any assurance that potential corresponding declines in demand resulting from negative media attention would not have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point’s products are regulated by the FDA, which has broad regulatory powers.

Substantially all of Turning Point’s 2015 United States gross margin was derived from sales of products that are currently regulated by the FDA. The Tobacco Control Act grants the FDA broad regulatory authority over the design, manufacture, sale, marketing and packaging of tobacco products. Among the regulatory powers conferred to the FDA under the Tobacco Control Act is the authority to impose tobacco product standards that are appropriate for the protection of the public health, require manufacturers to

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obtain FDA review and authorization for the marketing of certain new or modified tobacco products and impose various additional restrictions. Such restrictions may include requiring reduction or elimination of the use of particular constituents or components, requiring product testing, or addressing other aspects of tobacco product construction, constituents, properties or labeling.

Specifically, the Tobacco Control Act (i) increases the number of health warnings required on cigarette and smokeless tobacco products, increases the size of warnings on packaging and in advertising, requires the FDA to develop graphic warnings for cigarette packages, and grants the FDA authority to require new warnings, (ii) imposes restrictions on the sale and distribution of tobacco products, including significant restrictions on tobacco product advertising and promotion as well as the use of brand and trade names, (iii) bans the use of  “light,” “mild,” “low” or similar descriptors on tobacco products, (iv) bans the use of “characterizing flavors” in cigarettes other than tobacco or menthol, (v) requires manufacturers to report ingredients and harmful constituents and requires the FDA to disclose certain constituent information to the public, (vi) authorizes the FDA to require the reduction of nicotine (although it may not require the reduction of nicotine yields of a tobacco product to zero) and the potential reduction or elimination of other constituents, including menthol, (vii) establishes pre-market review pathways for tobacco products that are considered new and (viii) requires tobacco product manufacturers (and certain other entities) to register with the FDA.

The FDA charges user fees based on the USDA unit calculations pro-rated to the annualized FDA congressionally allocated budget. These fees only apply to Turning Point’s smokeless and smoking products (not electronic cigarettes or other e-products), but Turning Point may in the future be required to pay such fees on more of its products, and it cannot accurately predict which additional products may be subject to such fees or the magnitude of such fees, which could become significant.

Although the FDA is prohibited from issuing regulations banning all cigarettes or all smokeless tobacco products, or requiring the reduction of nicotine yields of a tobacco product to zero, it is likely that its regulations in accordance with the Tobacco Control Act could result in a decrease in cigarette and smokeless tobacco sales in the United States. Turning Point believes that such regulation could adversely affect its ability to compete against its larger competitors, who may be able to more quickly and cost-effectively comply with these new rules and regulations. Turning Point’s ability to gain efficient market clearance for new tobacco products, or even to keep existing products on the market, could also be affected by FDA rules and regulations. All of Turning Point’s currently marketed products that are subject to FDA regulation will require approval from the FDA for Turning Point to continue marketing them, which it cannot guarantee it will be able to obtain. In addition, failure to comply with new or existing tobacco laws under which the FDA imposes regulatory requirements could result in significant financial penalties and government investigations of Turning Point. To the extent it is unable to respond to, or comply with, new FDA regulations it could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Many of Turning Point’s products contain nicotine, which is considered to be a highly addictive substance.

Many of Turning Point’s products contain nicotine, a chemical that is considered to be highly addictive. The Tobacco Control Act empowers the FDA to regulate the amount of nicotine found in tobacco products, but not to require the reduction of nicotine yields of a tobacco product to zero. Any FDA regulation, whether of nicotine levels or other product attributes, may require Turning Point to reformulate, recall and/or discontinue certain of the products it may sell from time to time, which may have a material adverse effect on its ability to market its products and have a material adverse effect on its business, results of operations and financial condition.

There is uncertainty related to the federal regulation of NewGen products, cigars and pipe tobacco products.

Since their introduction, there has been significant uncertainty regarding whether, how and when tobacco regulations would apply to NewGen products, such as electronic cigarettes or other vaporizer products. Based on a decision in December 2010 by the United States Court of Appeals for the D.C. Circuit, or the Sottera decision, the FDA is permitted to regulate electronic cigarettes containing tobacco-derived nicotine as “tobacco products” under the Tobacco Control Act.

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On May 5, 2016, the FDA issued final regulations that extend its regulatory authority under the Tobacco Control Act to electronic cigarettes, vaporizers and certain other products, including cigars and pipe tobacco products, by newly deeming these products as “tobacco products.” The scope of the rules includes the following products that Turning Point markets under the FDA’s authority: electronic cigarettes (e-cigarettes), vaporizers, e-liquids, cigars and pipe tobacco not already under the FDA’s authority. The scope of the FDA’s authority also includes tobacco product components or parts that are used in the consumption of a tobacco product, like e-cigarette cartridges. The rules became effective 90 days from their date of publication, which occurred on May 10, 2016. The rules require that electronic cigarette manufacturers and manufacturers of other newly-deemed “tobacco products,” including cigars and pipe tobacco products, (i) register with the FDA and report product and ingredient listings; (ii) market new products only after FDA review and approval; (iii) only make direct and implied claims of reduced risk if the FDA approves after finding that scientific evidence supports the claim and that marketing the product will benefit public health as a whole; (iv) refrain from distributing free samples; (v) implement minimum age and identification restrictions to prevent sales to individuals under age 18; (vi) include a health warning; and (vii) refrain from selling the products in vending machines, unless the machine is located in a facility that never admits youth. Under the rules, newly-deemed tobacco products will be subject to the other requirements of the Tobacco Control Act, such as that they not be adulterated or misbranded. The FDA could in the future promulgate good manufacturing practice regulations for these and Turning Point’s other products, which could have a material adverse impact on its ability and the cost to manufacture its products.

Any significant impediments to the sale of NewGen products, cigars and pipe tobacco products caused by the rules could have a material adverse impact on Turning Point’s business and compliance and related costs could be substantial and could significantly increase the costs of operating in the NewGen products, cigar and pipe tobacco markets. In addition, failure to comply with the Tobacco Control Act and with FDA regulatory requirements could result in litigation, criminal convictions or significant financial penalties and could impair Turning Point’s ability to market and sell its electronic and vaporizer products. At present, Turning Point is not able to predict whether the Tobacco Control Act will impact its products to a greater degree than competitors in the industry, thus affecting its competitive position.

Under the final rules, regulatory approvals will be necessary in order for Turning Point to continue its distribution of NewGen products and cigar and pipe tobacco products. Turning Point intends to file for the appropriate approvals to allow it to sell its products in the United States. Turning Point has no assurances that the outcome of such approval process will result in its products being approved by the FDA. The anticipated costs of complying with future FDA regulations will be dependent on the rules issued by the FDA. Failure to comply with existing or new FDA regulatory requirements could result in significant financial penalties and could have a material adverse effect on Turning Point’s business, results of operations, financial condition and ability to market and sell its products.

Furthermore, neither the Prevent All Cigarette Trafficking Act nor the Federal Cigarette Labeling and Advertising Act currently apply to NewGen products. There may, in the future, also be increased regulation of additives in smokeless products and internet sales of NewGen products. The application of either or both of these federal laws, and of any new laws or regulations which may be adopted in the future, to NewGen products or such additives could result in additional expenses and require Turning Point to change its advertising and labeling, and methods of marketing and distribution of its products, any of which could have a material adverse effect on its business, results of operations and financial condition.

Significant increases in state and local regulation of Turning Point’s NewGen products have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions.

There has been increasing activity on the state and local levels with respect to scrutiny of NewGen products. State and local governmental bodies across the United States have indicated NewGen products may become subject to new laws and regulations at the state and local levels. For example, in January 2015, the California Department of Health declared electronic cigarettes a health threat that should be strictly regulated like tobacco products. Further, some states and cities, including the State of Iowa, have enacted regulations that require obtaining a tobacco retail license in order to sell electronic cigarettes and vaporizer products. Many states and some cities have passed laws restricting the sale of electronic cigarettes and vaporizer products to minors. If one or more states from which Turning Point generates or anticipates

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generating significant sales of NewGen products bring actions to prevent it from selling its NewGen products unless it obtains certain licenses, approvals or permits, and if it is not able to obtain the necessary licenses, approvals or permits for financial reasons or otherwise and/or any such license, approval or permit is determined to be overly burdensome to Turning Point, then it may be required to cease sales and distribution of its products to those states, which could have a material adverse effect on its business, results of operations and financial condition.

Certain states and cities have already restricted the use of electronic cigarettes and vaporizer products in smoke-free venues. Additional city, state or federal regulators, municipalities, local governments and private industry may enact rules and regulations restricting the use of electronic cigarettes and vaporizer products in those same places where cigarettes cannot be smoked. Because of these restrictions, Turning Point’s customers may reduce or otherwise cease using its NewGen products, which could have a material adverse effect on its business, results of operations and financial condition.

Increases in tobacco-related taxes have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions.

Tobacco products, premium cigarette papers and tubes have long been subject to substantial federal, state and local excise taxes. Such taxes have frequently been increased or proposed to be increased, in some cases significantly, to fund various legislative initiatives or further disincentivize smoking. Since 1986, smokeless products have been subject to federal excise tax. Smokeless products are taxed by weight (in pounds or fractional parts thereof) manufactured or imported.

Since the State Children’s Health Insurance Program, or S-CHIP, reauthorization in early 2009, which utilizes, among other things, taxes on tobacco products to fund health insurance coverage for children, the federal excise tax increases adopted have been substantial and have materially reduced sales in the “roll your own,” or RYO, /MYO cigarette smoking products market, and also caused volume declines in other markets. Although the RYO/MYO cigarette smoking tobacco and related products market had been one of the fastest growing markets in the tobacco industry in the five years prior to 2009, the reauthorization of S-CHIP increased the federal excise tax on RYO tobacco from $1.10 to $24.78 per pound, and materially reduced the MYO cigarette smoking tobacco market in the United States. There have not been any increases announced since 2009, but Turning Point cannot guarantee that it will not be subject to further increases, nor whether any such increases will affect prices in a way that further deters consumers from purchasing its products and/or affects its net revenues in a way that renders it unable to compete effectively.

In addition to federal excise taxes, every state and certain city and county governments have imposed substantial excise taxes on sales of tobacco products, and many have raised or proposed to raise excise taxes in recent years, including Arkansas, Kansas, Louisiana, Minnesota, Nevada, Ohio, Vermont, Oregon, Indiana, Kentucky and Rhode Island. A number of states have weight-based taxes/unit-based taxes on moist snuff tobacco, including Alabama, Arizona, Connecticut, Delaware, Illinois, Indiana, Iowa, Kentucky, Maine, Montana, Nebraska, New Jersey, New York, North Dakota, Oregon, Rhode Island, Texas, Utah, Vermont, Virginia, Washington and Wyoming. Additional states may consider adopting such revised tax structures as well. Tax increases, depending on their parameters, may result in consumers switching between tobacco products or depress overall tobacco consumption, which is likely to result in declines in overall sales volumes.

Any future enactment of increases in federal or state excise taxes on Turning Point’s tobacco products or rulings that certain of its products should be categorized differently for excise tax purposes could adversely affect demand for its products and may result in consumers switching between tobacco products or a depression in overall tobacco consumption, which would have a material adverse effect on its business, results of operations and financial condition.

If Turning Point’s NewGen products become subject to increased taxes it could adversely affect its business.

Presently the sale of NewGen products is generally not subject to federal, state and local excise taxes like the sale of conventional cigarettes or other tobacco products, all of which generally have high tax rates and have faced significant increases in the amount of taxes collected on their sales. In recent years, however, state and local governments have taken actions to move towards imposing excise taxes on NewGen

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products. As of January 1, 2016, the District of Columbia, Louisiana, Minnesota, North Carolina and certain localities impose excise taxes on electronic cigarettes and/or liquid vapor. In addition, the state of Kansas has passed legislation approving excise taxes that will take effect in July 2016. Other jurisdictions are contemplating similar legislation and other restrictions on electronic cigarettes. Should federal, state and local governments and/or other taxing authorities begin or continue to impose excise taxes similar to those levied against conventional cigarettes and tobacco products on NewGen products, it may have a material adverse effect on the demand for these products, as consumers may be unwilling to pay the increased costs, which in turn could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point may be subject to increasing international control and regulation.

The World Health Organization’s Framework Convention on Tobacco Control, or the FCTC, is the first international public health treaty that establishes a global agenda to reduce initiation of tobacco use and regulate tobacco in an effort to encourage tobacco cessation. Over 170 governments worldwide have ratified the FCTC. The FCTC has led to increased efforts to reduce the supply and demand of tobacco products and to encourage governments to further regulate the tobacco industry. The tobacco industry expects significant regulatory developments to take place over the next few years, driven principally by the FCTC. Regulatory initiatives that have been proposed, introduced or enacted include:

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the levying of substantial and increasing tax and duty charges;

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restrictions or bans on advertising, marketing and sponsorship;

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the display of larger health warnings, graphic health warnings and other labeling requirements;

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restrictions on packaging design, including the use of colors and generic packaging;

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restrictions or bans on the display of tobacco product packaging at the point of sale, and restrictions or bans on cigarette vending machines;

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requirements regarding testing, disclosure and performance standards for tar, nicotine, carbon monoxide and other smoke constituents levels;

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requirements regarding testing, disclosure and use of tobacco product ingredients;

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increased restrictions on smoking in public and work places and, in some instances, in private places and outdoors;

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elimination of duty free allowances for travelers; and

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encouraging litigation against tobacco companies.

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If the United States becomes a signatory to the FCTC and/or national laws are enacted in the United States that reflect the major elements of the FCTC, Turning Point’s business, results of operations and financial condition could be materially and adversely affected. If NewGen products become subject to one or more of the significant regulatory initiatives proposed under the FCTC, Turning Point’s NewGen products segment may also be materially adversely affected.

As part of its strategy, Turning Point has begun strategic international expansions, such as introducing its moist snuff tobacco products in South America. This and other future expansions may subject it to additional or increasing international regulation, either by the countries that are the object of the strategic expansion or through international regulatory regimes, such as the FCTC, to which those countries may be signatories.

Liquid vapor products containing nicotine have not been approved for sale in Canada. Some Canadian provinces have restricted sales and marketing of electronic cigarettes, and other provinces are in the process of passing similar legislation. Furthermore, some Canadian provinces have limited the use of electronic cigarettes and vaporizer products in public places. As a result, Turning Point is unable to market these products in the relevant parts of Canada. These measures, and any future measures taken to limit the marketing, sale and use of NewGen products may have a material adverse effect on Turning Point’s business, results of operations and financial condition.

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To the extent its existing or future products become subject to international regulatory regimes that it is unable to comply with or fail to comply with, they may have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point’s distribution efforts rely in part on its ability to leverage relationships with large retailers and national chains.

Turning Point’s distribution efforts rely in part on its ability to leverage relationships with large retailers and national chains to sell and promote its products, which is dependent upon the strength of the brand names that Turning Point owns or licenses. In order to maintain these relationships, Turning Point must continue to supply products that will bring steady business to these retailers and national chains. Turning Point may not be able to sustain these relationships or establish other relationships with such entities, which could have a material adverse effect on its ability to execute its branding strategies, its ability to access the end-user markets with its products or its ability to maintain its relationships with the producers of its products. For example, if Turning Point is unable to meet benchmarking provisions in contracts or if it is unable to maintain and leverage its retail relationships on a scale sufficient to make it an attractive distributor, it would have a material adverse effect on Turning Point’s ability to source products, and on its business, results of operations and financial condition.

In addition, there are factors beyond Turning Point’s control that may prevent it from leveraging existing relationships, such as industry consolidation. If Turning Point is unable to develop and sustain relationships with large retailers and national chains, or is unable to leverage those relationships due to factors such as a decline in the role of brick-and-mortar retailers in the North American economy, its capacity to maintain and grow brand and product recognition and increase sales volume will be significantly undermined. In such an event, Turning Point may ultimately be forced to pursue and rely on local and more fragmented sales channels, which will have a material adverse effect on its business, results of operations and financial condition.

Turning Point has a substantial amount of indebtedness, which could significantly limit its business activities.

Turning Point’s substantial amount of indebtedness could limit its ability to:

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obtain necessary additional financing for working capital, capital expenditures or other purposes in the future;

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plan for, or react to, changes in its business and the industries in which it operates;

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make future acquisitions or pursue other business opportunities;

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react in an extended economic downturn; and

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pay dividends to the extent it determines to do so in the future.

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The terms of the agreements governing its current indebtedness, and any future indebtedness of Turning Point would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions on Turning Point, including restrictions on its ability to, among other things:

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incur additional debt;

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pay dividends and make other restricted payments;

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create liens;

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make investments and acquisitions;

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engage in sales of assets and subsidiary stock;

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enter into sale-leaseback transactions;

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enter into transactions with affiliates;

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transfer all or substantially all of its assets or enter into merger or consolidation transactions; and

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enter into certain hedging agreements.

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In addition to the restrictive covenants, the current agreements governing indebtedness contain standard financial covenants with which Turning Point must comply. In the event of a default under its facilities, the lenders under its debt instruments could elect to declare all amounts outstanding under such instruments to be due and payable and require it to apply all of its available cash to repay these amounts. If the indebtedness under one of its credit facilities were to be accelerated, which would cause an event of default and a cross-acceleration of its obligations under its other debt instruments, there can be no assurance that its assets would be sufficient to repay this indebtedness in full, which could have a material adverse effect on the business, results of operations and financial condition.

Turning Point faces intense competition and may fail to compete effectively.

The OTP industry is characterized by brand recognition and loyalty, with product quality, price, marketing and packaging constituting the primary methods of competition. Substantial marketing support, merchandising display, competitive pricing and other financial incentives generally are required to introduce a new brand or to improve or maintain a brand’s market position. Turning Point’s principal competitors are “big tobacco,” Altria Group, Inc. (formerly Phillip Morris) and Reynolds American Inc., as well as Swedish Match, Swisher International and manufacturers of electronic cigarettes, including U.K.-based Imperial Tobacco Group PLC. These competitors are significantly larger than Turning Point and aggressively seek to limit the distribution or sale of other companies’ products, both at the wholesale and retail levels. For example, certain competitors have entered into agreements limiting retail merchandising displays of other companies’ products or imposing minimum prices for OTP products, thereby limiting their competitors’ ability to offer discounted products. In addition, the tobacco industry is experiencing a trend toward industry consolidation, most recently evidenced by the June 2015 acquisition of Lorillard Inc. by Reynolds American Inc. Industry consolidation could result in a more competitive environment if Turning Point’s competitors are able to increase their combined resources, enhance their access to national distribution networks, or become acquired by established companies with greater resources than Turning Point’s. Any inability to compete due to its smaller scale as the industry continues to consolidate and be dominated by “big tobacco” could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

The competitive environment and Turning Point’s competitive position is also significantly influenced by economic conditions, erosion of consumer confidence, competitors’ introduction of low-priced products or innovative products, higher taxes, higher absolute prices and larger gaps between price categories and product regulation that diminishes the consumer’s ability to differentiate tobacco products. Due to the impact of these factors, as well as higher state and local excise taxes and the market share of deep discount brands, the tobacco industry has become increasingly price competitive. As Turning Point seeks to adapt to the price competitive environment, its competitors that are better capitalized may be able to sustain price discounts for long periods of time by spreading the loss across their expansive portfolios, with which Turning Point is not positioned to compete.

Competition in the electronic cigarette and vaporizer products industry is particularly intense. The nature of Turning Point’s NewGen product competitors is varied as the market is highly fragmented. In addition, some marketers still have the ability to access sales channels through the mail, which is no longer available in the markets for traditional tobacco products, and which facilitates market access for a range of competitors who would otherwise find themselves at a competitive disadvantage in a brick-and-mortar context.

“Big tobacco” has also established its presence in the NewGen products market. There can be no assurance that Turning Point’s products will be able to compete successfully against these companies or any of its other competitors, some of which have far greater resources, capital, experience, market penetration, sales and distribution channels than Turning Point. In addition, there are currently no United States restrictions on advertising electronic cigarettes and vaporizer products and competitors, including “big tobacco,” may have more resources than Turning Point for advertising expenses, which could have a material adverse effect on its ability to build and maintain market share, and thus have a material adverse effect on its business, results of operations and financial condition.

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The market for NewGen products is a niche market, subject to a great deal of uncertainty and is still evolving.

Vaporizer products and electronic cigarettes, having recently been introduced to market, are at an early stage of development, and represent core components of a niche market that is evolving rapidly and is characterized by a number of market participants. Rapid growth in the use of, and interest in, vaporizer products and electronic cigarettes is recent, and may not continue on a lasting basis. The demand and market acceptance for these products is subject to a high level of uncertainty. Therefore, Turning Point is subject to all of the business risks associated with a new enterprise in a niche market. Continued evolution, uncertainty and the resulting increased risk of failure of its new and existing product offerings in this market could have a material adverse effect on its ability to build and maintain market share and on its business, results of operations and financial condition. Further, there can be no assurance that Turning Point will be able to continue to effectively compete in the NewGen products marketplace.

Turning Point may become subject to significant product liability litigation.

The tobacco industry has experienced and continues to experience significant product liability litigation. Most tobacco liability lawsuits have been brought against manufacturers and sellers of cigarettes by individual plaintiffs, often participating on a class-action basis, for injuries allegedly caused by cigarette smoking or by exposure to cigarette smoke. However, several lawsuits have also been brought against Turning Point and other manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. There are several such suits pending against Turning Point, but all have been dormant for a number of years. No assurance can be given however, that such suits will remain dormant. In addition to the risks to its business, results of operations and financial condition resulting from adverse results in any such action, ongoing litigation may divert management’s attention and resources, which could have an impact on Turning Point’s business and operations. For a description of current material litigation to which Turning Point or its subsidiaries are a party see, “ Certain Information Concerning the Business of Turning Point — Legal Proceedings .” Turning Point cannot predict with certainty the outcome of these claims and there can be no assurance that it will not sustain losses in connection with such lawsuits and that such losses will not have a material adverse effect on its business, results of operations and financial condition.

In addition to current and potential future claims related to Turning Point’s smoking and smokeless products, Turning Point may be subject to claims in the future relating to its NewGen products. As a result of their relative novelty, electronic cigarette and vaporizer product manufacturers and sellers have only recently become subject to litigation. Turning Point may see increasing litigation over its NewGen products or the regulation of its products, as the regulatory regimes surrounding these products develop. In February 2015, for example, the Center for Environmental Health, a public interest group in California, filed an action against vaporizer marketers, including one of Turning Point’s subsidiaries, alleging a violation of California’s Proposition 65, or Prop 65. Prop 65 requires the State of California to identify chemicals that could cause cancer, birth defects, or reproductive harm, and businesses selling products in California are then required to warn consumers of any possible exposure to the chemicals on the list. The basis for the action brought by the Center for Environmental Health is the reproductive harm associated with nicotine. Although Turning Point is not aware of an instance in which it has sold nicotine-containing e-cigarette products that did not carry the appropriate Prop 65 warning, the Center for Environmental Health has asserted in its complaint that even e-cigarette products that do not contain nicotine, but could potentially be used with nicotine-containing products (such as open-system vaporizers or blank cartridges), should also carry a Prop 65 warning. In February 2016, Turning Point received the Notice of Order and Entry of Consent Judgment granting approval of the Consent Judgment, which results in a settlement in the amount of  $80,000. As a result of this or other similar suits which may be filed in the future, Turning Point may face substantial costs due to increased product liability litigation relating to new regulations or other potential defects associated with its NewGen products, which could have a material adverse effect on its business, results of operations and financial condition.

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The scientific community has not yet studied extensively the long-term health effects of electronic cigarette, vaporizer or e-liquids products use.

Electronic cigarettes, vaporizers and related products were recently developed and therefore the scientific community has not had a sufficient period of time to study the long-term health effects of their use. Currently, there is no way of knowing whether these products are safe for their intended use. If the scientific community were to determine conclusively that use of any or all of these products poses long-term health risks, market demand for these products and their use could materially decline. Such a determination could also lead to litigation and significant regulation. Loss of demand for Turning Point’s product, product liability claims and increased regulation stemming from unfavorable scientific studies on these products could have a material adverse effect on its business, results of operations and financial condition.

Turning Point is required to maintain and contribute cash amounts to an escrow account in order to be compliant with a settlement agreement between it and certain states and territories in the United States.

In November 1998, the major United States cigarette manufacturers entered into the Master Settlement Agreement, or the MSA, and the Smokeless Tobacco Master Settlement Agreement, or the STMSA, with 46 states in the United States and certain United States territories and possessions. Pursuant to the MSA and subsequent states’ statutes, a “cigarette manufacturer” (which is defined to also include a manufacturer of RYO/MYO cigarette tobacco) has the option of either becoming a signatory to the MSA, or, as Turning Point has elected, operating as a non-participating manufacturer, or a NPM, by funding and maintaining an escrow account, with sub-accounts on behalf of each settling state. These NPM escrow accounts are governed by states’ escrow and complementary statutes that are generally monitored by the Office of the State Attorney General. The statutes require NPM companies to deposit, on an annual basis, into qualified banks’ escrow funds based on the number of cigarettes or cigarette equivalents, which is measured by pounds of RYO/MYO tobacco sold. NPM companies are, within specified limits, entitled to direct the investment of the escrowed funds and withdraw any interest or appreciation, but cannot withdraw the principal for twenty-five years from the year of each annual deposit, except to withdraw funds deposited pursuant to an individual state’s escrow statute to pay a final judgment to that state’s plaintiffs in the event of such a final judgment. The investment vehicles available to Turning Point are specified in the state escrow agreements and are limited to low-risk government securities.

Various states have enacted or proposed complementary legislation intended to curb the activity of certain manufacturers and importers of cigarettes or MYO tobacco that are selling into MSA states without signing the MSA or who have failed to properly establish and fund a qualifying escrow account. To the best of Turning Point’s knowledge, no statute has been enacted that could inadvertently and negatively impact Turning Point. Turning Point believes it has been and is currently fully compliant with all applicable laws, regulations and statutes, although compliance-related issues may, from time to time, be disruptive of its business, any of which could have a material adverse effect on its business, results of operations and financial condition.

Pursuant to the NPM escrow account statutes, in order to be compliant with the NPM escrow requirements, Turning Point is required to deposit such funds for each calendar year into a qualifying escrow account by April 15 of the following year with each year’s deposit being released from escrow after 25 years. Turning Point has deposited approximately $0.1 million relating to 2013 sales, approximately $0.1 million relating to 2014 sales and approximately $0.1 million relating to 2015 sales. As of December 31, 2015, Turning Point had on deposit approximately $31.8 million.

Although no such legislation has been proposed or enacted, future changes to the MSA, such as legislation that extends the MSA to products to which it does not currently apply or legislation that limits the ability of companies to receive unused escrow funds after 25 years, may have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Despite the amounts maintained and funded to the escrow account, compliance with the funding requirements for the escrow account does not necessarily prevent future federal and/or state regulations with respect to the OTP industry from having a material adverse effect on Turning Point’s business, results of operations and financial condition.

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Competition from illicit sources may have an adverse effect on Turning Point’s overall sales volume, restricting the ability to increase selling prices and damaging brand equity.

Illicit trade and tobacco trafficking in the form of counterfeit products, smuggled genuine products and locally manufactured products on which applicable taxes are evaded, represent a significant and growing threat to the legitimate tobacco industry. Factors such as increasing tax regimes, regulatory restrictions, compliance requirements and economic downturn are encouraging more consumers to switch to illegal, cheaper tobacco products and providing greater rewards for smugglers. Illicit trade can have an adverse effect on Turning Point’s overall sales volume, restrict the ability to increase selling prices, damage brand equity and may lead to commoditization of Turning Point’s products.

Although Turning Point combats counterfeiting of its products by engaging in certain tactics, such as requiring all sales force personnel to collect its products from retailers in order to be tested by its quality control team, maintaining a quality control group that is responsible for identifying counterfeit products and using a private investigation firm to help perform surveillance of retailers Turning Point suspects is selling counterfeit products, no assurance can be given that it will be able to detect or stop sales of all counterfeit products. In addition, Turning Point has in the past and will continue to bring suits against retailers and distributors that sell certain counterfeit products. While Turning Point has been successful in securing financial recoveries from and helping to obtain criminal convictions of counterfeiters in the past, no assurance can be given that it will be successful in any such suits or that such suits will be successful in stopping other retailers or distributors from selling counterfeit products. Even if Turning Point is successful, such suits could consume a significant amount of management’s time and could also result in significant expenses to the company. Any failure to track and prevent counterfeiting of Turning Point’s products could have a material adverse on its ability to maintain its effectively compete for the products it distributes under its brand names, which would have a material adverse effect on its business, results of operations and financial condition.

Reliance on information technology means a significant disruption could affect Turning Point’s communications and operations.

Turning Point increasingly relies on information technology systems for its internal communications, controls, reporting and relations with customers and suppliers and information technology is becoming a significantly important tool for its sales staff. Turning Point’s marketing and distribution strategy is dependent upon its ability to closely monitor consumer and market trends on a highly specified level, for which it is reliant on its highly sophisticated data tracking systems, which are susceptible to disruption or failure. In addition, Turning Point’s reliance on information technology exposes it to cyber-security risks, which could have a material adverse effect on its ability to compete. Security and privacy breaches may expose Turning Point to liability and cause it to lose customers, or may disrupt its relationships and ongoing transactions with other entities with whom it contracts throughout its supply chain. The failure of its information systems to function as intended, or the penetration by outside parties intent on disrupting business processes, could result in significant costs, loss of revenue, assets or personal or other sensitive data and reputational harm.

Security and privacy breaches may expose Turning Point to liability and cause it to lose customers.

Federal and state laws require Turning Point to safeguard its wholesalers’ and retailers’ financial information, including credit information. Although Turning Point has established security procedures to protect against identity theft and the theft of its customers’ and distributors’ financial information, its security and testing measures may not prevent security breaches and breaches of privacy may occur, could harm its business. Typically, Turning Point relies on encryption and authentication technology licensed from third parties to enhance transmission security of confidential information in relation to financial and other sensitive information that it has on file. Advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or other developments may result in a compromise or breach of the technology used by Turning Point to protect customer data. Any compromise of Turning Point’s security could harm its reputation or financial condition and, therefore, its business. In addition, a party who is able to circumvent its security measures or exploit inadequacies in Turning Point’s security measures, could, among other effects, misappropriate proprietary information, cause interruptions in its operations or

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expose customers and other entities with which it interacts to computer viruses or other disruptions. Actual or perceived vulnerabilities may lead to claims against Turning Point. To the extent the measures it has taken prove to be insufficient or inadequate, Turning Point may become subject to litigation or administrative sanctions, which could result in significant fines, penalties or damages and harm to its reputation.

Contamination of, or damage to, Turning Point’s products could adversely impact sales volume, market share and profitability.

Turning Point’s market position may be affected through the contamination of its tobacco supply or products during the manufacturing process or at different points in the entire supply chain. Turning Point keeps significant amounts of inventory of its products in warehouses and it is possible that this inventory could become contaminated prior to arrival at its premises or during the storage period. If contamination of Turning Point’s inventory or packaged products occurs, whether as a result of a failure in quality control by Turning Point or by one of its suppliers, Turning Point may incur significant costs in replacing the inventory and recalling products. Turning Point may be unable to meet customer demand and may lose customers who purchase alternative brands or products. In addition, consumers may lose confidence in the affected product.

Under the terms of Turning Point’s contracts, Turning Point imposes requirements on its suppliers to maintain quality and comply with product specifications and requirements, and on its third-party co-manufacturer to comply with all federal, state and local laws. These third-party suppliers, however, may not continue to produce products that are consistent with Turning Point’s standards or that are in compliance with applicable laws, and Turning Point cannot guarantee that it will be able to identify instances in which its third-party suppliers fail to comply with its standards or applicable laws. A loss of sales volume from a contamination event may occur, and such a loss may affect Turning Point’s ability to supply its current customers and to recapture their business in the event they are forced to switch products or brands, even if on a temporary basis. Turning Point may also be subject to legal action as a result of a contamination, which could result in negative publicity and affect its sales. During this time, Turning Point’s competitors may benefit from an increased market share that could be difficult and costly to regain. Such a contamination event could have a material adverse effect on Turning Point’s business, results of operations and financial condition.

Turning Point’s intellectual property may be infringed.

Turning Point currently relies on trademark and other intellectual property rights to establish and protect the brand names and logos it owns or licenses. Third parties have in the past infringed, and may in the future infringe, on these trademarks and Turning Point’s other intellectual property rights. Turning Point’s ability to maintain and further build brand recognition is dependent on the continued and exclusive use of these trademarks, service marks and other proprietary intellectual property, including the names and logos it owns or licenses. Despite Turning Point’s attempts to ensure these intellectual property rights are protected, third parties may take actions that could materially and adversely affect its rights or the value of this intellectual property. Any litigation concerning its intellectual property rights, whether successful or unsuccessful, could result in substantial costs to Turning Point and diversions of its resources. Expenses related to protecting Turning Point’s intellectual property rights, the loss or compromise of any of these rights or the loss of revenues as a result of infringement could have a material adverse effect on its business, results of operations and financial condition, and may prevent the brands it owns or licenses from growing or maintaining market share.

Third parties may claim that Turning Point infringes their intellectual property and trademark rights.

Competitors in the tobacco products market have claimed, and others may claim, that Turning Point infringes their proprietary rights. In particular, Turning Point has been involved in ongoing litigation with the Republic Group concerning the Zig-Zag ® trademark in certain territories outside the United States and Canada. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against Turning Point or the payment of damages.

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Turning Point has one customer that represents approximately 10% of its revenue.

Turning Point relied on a single customer, McLane Company Inc., or McLane, for more than 10% of its revenues for the years 2011 through 2014. Furthermore, in 2015, sales to its top three customers accounted for over 20% of its revenues. In 2015, McLane represented 9.8% of Turning Point’s revenues. However, McLane purchases its products on a purchase order basis and Turning Point does not have an agreement with them that requires them to purchase its products as opposed to those of its competitors. If Turning Point’s relationship with McLane ends or is disrupted, Turning Point would experience a material adverse effect on its business, results of operations and financial condition, and may struggle to replace such a significant relationship. Turning Point may also face reputational harm, even if the impact of this loss is temporary, due to the potential loss of market share and a reduction of the presence of its branded products in the end markets.

Turning Point may fail to manage its growth.

Turning Point has expanded over its history and intends to grow in the future. For example, Turning Point acquired the Stoker’s ® brand in 2003, and has continued to develop it through the introduction of new products, such as moist snuff in 2009. Turning Point has also focused on growing its relationships with its key suppliers through expansion into new product lines, such as the addition of cigarillos, which are sourced from JJA and MYO cigar wraps, which are sourced from Durfort. However, any future growth will place additional demands on Turning Point’s resources, and it cannot be sure it will be able to manage its growth effectively. If Turning Point is unable to manage its growth while maintaining the quality of its products and profit margins, or if new systems that it implements to assist in managing its growth do not produce the expected benefits, Turning Point’s business, financial position, results of operations and cash flows could be adversely affected. Turning Point may not be able to support, financially or otherwise, future growth, or hire, train, motivate and manage the required personnel. Turning Point’s failure to manage growth effectively could also limit its ability to achieve its goals as they relate to streamlined sales, marketing and distribution operations and the ability to achieve certain financial metrics.

Turning Point is subject to fluctuations in its month-to-month results that make it difficult to track trends and develop strategies in the short-term.

In response to competitor actions and pricing pressures, Turning Point has engaged in significant use of promotional and sales incentives. Turning Point regularly reviews the results of its promotional spending activities and adjusts its promotional spending programs in an effort to maintain its competitive position. Accordingly, unit sales volume and sales promotion costs in any period are not necessarily indicative of sales and costs that may be realized in subsequent periods. Additionally, promotional activity significantly increases net sales in the month in which it is initiated and net sales are adversely impacted in the month after a promotion. Accordingly, based upon the timing of its marketing and promotional initiatives, Turning Point has and may continue to experience significant variability in its month-to-month results, which could affect its ability to formulate strategies that allow it to maintain its market presence across volatile months. If Turning Point’s monthly fluctuations obscure its ability to track important trends in its key markets, it may have a material adverse effect on its business, results of operations and financial condition.

Turning Point is subject to the risks of exchange rate fluctuations.

Currency movements and suppliers’ price increases relating to premium cigarette papers and cigarette tubes are the primary factors affecting Turning Point’s cost of sales. These products are purchased from Bolloré and Turning Point makes payments in Euros. Thus, Turning Point bears certain foreign exchange rate risk for certain of its inventory purchases. In addition, as part of its strategy, Turning Point has begun strategic international expansions, such as introducing its moist snuff tobacco products in South America. As a result, Turning Point may be more sensitive to the risks of exchange rate fluctuations. To minimize this risk, Turning Point sometimes utilizes short-term forward currency contracts, through which it secures Euros in order to pay for its monthly inventory purchases. In 2005, Turning Point adopted and instituted a formal foreign exchange currency policy and more actively contracted for the forward purchase of Euros. Turning Point engages in hedging transactions from time to time but no assurance can be made that it will be successful in eliminating currency exchange risks or that changes in currency rates will not have a material adverse effect on its business, results of operations and financial condition.

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Adverse United States and global economic conditions could negatively impact Turning Point’s business, prospects, results of operations, financial condition or cash flows.

Turning Point’s business and operations are sensitive to global economic conditions. These conditions include interest rates, energy costs, inflation, recession, fluctuations in debt and equity capital markets and the general condition of the United States and world economy. A material decline in the economic conditions affecting consumers, which cause a reduction in disposable income for the average consumer, may change consumption patterns, and may result in a reduction in spending on tobacco products or a switch to cheaper products or products obtained through illicit channels. Electronic cigarettes, vaporizer and e-liquid products are relatively new to market and may be regarded by users as a novelty item and expendable. As such, demand for Turning Point’s NewGen products may be particularly sensitive to economic conditions such as inflation, recession, high energy costs, unemployment, changes in interest rates and money supply, changes in the political environment and other factors beyond its control, any combination of which could result in a material adverse effect on its business, results of operations and financial condition.

Turning Point’s supply to its wholesalers and retailers is dependent on the demands of their customers who are sensitive to increased sales taxes and economic conditions affecting their disposable income.

Consumer purchases of tobacco products are historically affected by economic conditions, such as changes in employment, salary and wage levels, the availability of consumer credit, inflation, interest rates, fuel prices, sales taxes, and the level of consumer confidence in prevailing and future economic conditions. Discretionary consumer purchases, such as of tobacco products, may decline during recessionary periods or at other times when disposable income is lower and taxes may be higher.

In addition, states such as New York, Hawaii, Rhode Island, Georgia and North Carolina have begun collecting taxes on internet sales where companies have used independent contractors in those states to solicit sales from residents of those states. These taxes apply to Turning Point’s online sales of NewGen products into those states, and may result in reduced demand from the independent wholesalers who may not be able to absorb the increased taxes or successfully pass them onto the end-user without experiencing reduced demand. The requirement to collect, track and remit taxes based on independent affiliate sales may require Turning Point to increase its prices, which may affect demand for its products or conversely reduce its net profit margin, which could have a material adverse effect on its business, results of operations and financial condition.

Turning Point’s failure to comply with certain environmental, health and safety regulations could adversely affect its business.

The storage, distribution and transportation of some of the products that Turning Point sells are subject to a variety of federal and state environmental regulations. In addition, Turning Point’s manufacturing facilities are similarly subject to federal, state and local environmental laws. Turning Point is also subject to operational, health and safety laws and regulations. Turning Point’s failure to comply with these laws and regulations could cause a disruption in its business, an inability to maintain its manufacturing resources, and additional and potentially significant remedial costs and damages, fines, sanctions or other legal consequences that could have a material adverse effect on its business, results of operations and financial condition.

The departure of key management personnel and the failure to attract and retain talent could adversely affect Turning Point’s operations.

Turning Point’s success depends upon the continued contributions of its senior management. Turning Point’s ability to implement its strategy of attracting and retaining the best talent may be impaired by the decreasing social acceptance of tobacco usage. The tobacco industry competes for talent with the consumer products industry and other companies that enjoy greater societal acceptance. As a result, Turning Point may be unable to attract and retain the best talent, which could have a material adverse effect on its business, results of operations and financial condition.

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our inability to obtain additional financing to consummate future investments or acquisitions or to fund the operations and growth of an investment or acquisition, which could compel us to restructure the transaction or abandon a particular investment or acquisition;

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there may be tax consequences associated with our acquisition, holding and disposition of target companies and assets;

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changes in the market prices of publicly traded equity interests that we may acquire, particularly during times of volatility in security prices, could impact the aggregate value of SDOI’s portfolio and equity;

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our ability to dispose of equity interests that we may acquire may be limited by restrictive stockholder agreements and securities laws;

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after consummation of the Contribution and Exchange, our principal stockholders will hold a majority of our outstanding Common Stock and have interests which may conflict with interests of our other stockholders;

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our future acquisitions and dispositions may not require a stockholder vote and may be material to us;

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our officers, directors, stockholders and their respective affiliates may have a pecuniary interest in certain transactions in which we are involved, and may also compete with us;

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our ability to increase the size of our organization and manage our growth;

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litigation defense and settlement costs with respect to our prior businesses may be material;

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we may suffer adverse consequences if we are deemed an investment company and we may incur significant costs to avoid investment company status;

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we may be subject to an additional tax as a personal holding company on future undistributed personal holding company income if we generate passive income in excess of operating expenses;

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the market liquidity for our Common Stock is relatively low and may make it difficult to purchase or sell our stock; and

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price fluctuations in our Common Stock could result from general market and economic conditions and a variety of other factors, including factors that affect the volatility of the Common Stock of any of our publicly held subsidiaries.

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Turning Point

Turning Point’s actual results or other outcomes from those expressed or implied in the forward-looking statements may be affected by a variety of important factors, including, without limitation, the following:

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declining sales of tobacco products, and expected continuing decline of sales, in the tobacco industry overall;

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its dependence on a small number of third-party suppliers and producers;

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the possibility that it will be unable to identify or contract with new suppliers or producers in the event of a supply or product disruption;

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the possibility that its licenses to use certain brands or trademarks will be terminated, challenged or restricted;

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failure to maintain consumer brand recognition and loyalty of its customers;

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substantial and increasing United States regulation and possible increasing international control and regulation;

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regulation of its products by the United States Food and Drug Administration;

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uncertainty related to the regulation and taxation of certain of its products;

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possible significant increases in federal, state and local municipal tobacco-related taxes;

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its reliance on relationships with several large retailers and national chains for distribution of its products;

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intense competition and its ability to compete effectively;

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significant potential product liability litigation;

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the scientific community’s lack of information regarding the long-term health effects of electronic cigarettes, vaporizer and e-liquid use;

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its substantial amount of indebtedness;

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the terms of its credit facilities may restrict its current and future operations;

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competition from illicit sources;

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its reliance on information technology;

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security and privacy breaches;

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contamination of its tobacco supply or products;

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infringement on its intellectual property;

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third-party claims that it infringes on their intellectual property;

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concentration of business with large customers;

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failure to manage its growth;

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fluctuations in our month-to-month results;

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exchange rate fluctuations;

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adverse United States and global economic conditions;

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failure to comply with certain regulations; and

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departure of key management personnel or its inability to attract and retain talent.

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We also caution the reader that undue reliance should not be placed on any forward-looking statements, which speak only as of the date of this document. We do not undertake any duty or responsibility to update any of these forward-looking statements to reflect events or circumstances after the date of this information statement or to reflect actual outcomes.

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The information set forth below should be read in conjunction with “ Certain Information Concerning the Business of SDOI — SDOI Management’s Discussion and Analysis of Financial Condition and Results of Operations ,” and SDOI’s consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus.

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Selected Financial Information of Turning Point

The following tables set forth certain selected historical condensed consolidated financial data as of and for the periods indicated. The consolidated statements of operations data, cash flows data and balance sheet data as of September 30, 2016 were derived from Turning Point’s unaudited consolidated financial statements, included elsewhere in this proxy statement/​prospectus. The consolidated statements of operations data and cash flows data for and balance sheet data as of the fiscal years ended December 31, 2015 and 2014 were derived from Turning Point’s audited consolidated financial statements, included elsewhere in this proxy statement/prospectus. The consolidated statement of operations data and cash flows data for and balance sheet data as of the fiscal years ended December 31, 2013, 2012 and 2011 were derived from Turning Point’s audited consolidated financial information not included in this proxy statement/prospectus. In the opinion of Turning Point’s management, the unaudited financial information includes all adjustments, consisting of normal recurring adjustments, considered necessary for a fair representation of this information. Turning Point’s historical results are not necessarily indicative of the results that may be expected in the future and Turning Point’s results of operations for interim periods are not necessarily indicative of the results that may be expected for the entire year or any other interim period.

The information set forth below should be read in conjunction with “ Management’s Discussion and Analysis of Turning Point’s Financial Condition and Results of Operations ,” and Turning Point’s consolidated financial statements and related notes included elsewhere in this proxy statement/prospectus.

(1)

Per share data includes both voting and non-voting common stock. Turning Point’s non-voting common stock is identical to Turning Point’s common stock, with the exception of voting rights. Holders of Turning Point’s non-voting common stock are entitled to share in the earnings, losses, dividends and distributions to which holders of Turning Point’s common stock are entitled.

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53

THE SPECIAL MEETING

Date, Time and Place of the SDOI Special Meeting

The Special Meeting will be held at           beginning at           on            , 2017.

This proxy statement/prospectus and the enclosed proxy card are being mailed to SDOI stockholders commencing on or about            , 2017.

Record Date and Outstanding Shares

The SDOI board of directors has fixed the close of business on            , 2017 as the record date for the determination of the holders of SDOI Common Stock entitled to receive notice of and to vote at the Special Meeting. Only stockholders of record on the record date are entitled to receive notice of and to vote at the Special Meeting or any adjournments or postponement of the Special Meeting. As of the record date, there were           shares of SDOI Common Stock issued and outstanding. Each holder of record of SDOI Common Stock as of the close of business on            , 2017 will be entitled to one vote on all matters being presented at the meeting for each share of Common Stock held on such date, and there is no cumulative voting.

Purpose of the SDOI Special Meeting

The SDOI board of directors is soliciting proxies from its stockholders for use at the Special Meeting. The purpose of the Special Meeting is to consider and vote upon the following proposals:

1A.   The approval of a proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to:

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change the name of the Company to “Standard Diversified Opportunities Inc.”;

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increase the number of authorized shares of SDOI’s Common Stock, $0.01 par value per share, from 50,000,000 to 330,000,000, of which 300,000,000 shall be a class of Common Stock designated as “Class A Common Stock” and 30,000,000 shall be a class of Common Stock designated as “Class B Common Stock,” which classes shall be identical except that (i) each share of Class B Common Stock shall entitle its holder of record to 10 votes per share and (ii) the shares of Class B Common Stock shall be convertible into shares of Class A Common Stock automatically upon the transfer of such shares of Class B Common Stock, with certain exceptions, or upon the affirmative vote of holders of two-thirds of the then-outstanding shares of Class B Common Stock or voluntarily by the holder of such shares of Class B Common Stock;

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increase the number of authorized shares of SDOI’s preferred stock, $0.01 par value per share, from 19,664,362 to 500,000,000, all of which shall be designated as blank check preferred stock; and

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cause the re-classification of SDOI’s current Common Stock issued and outstanding or held as treasury stock, such that every 25 shares of such current Common Stock shall be reclassified as, and shall become, one fully paid and nonassessable share of Class A Common Stock;

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1B.   The approval of a proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to:

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require that, for a period of 18 months from the effective time of the filing of the Fifth Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware, any merger, consolidation, share exchange or similar transaction as a result of which Standard General L.P. and its affiliates, individually or in the aggregate, would own ninety-five percent (95%) or more of the issued and outstanding shares of the Class B Common Stock and Class A Common Stock of SDOI, shall require the approval of the holders of a majority of the shares of Class A Common Stock held by stockholders of the Company other than Standard General L.P. and its affiliates, and that for such 18-month period, any amendment to such requirement would require the approval of the holders of a majority of the shares of Class A Common Stock held by the stockholders of the Company other than Standard General L.P. and its affiliates;

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permit the stockholders to act by written consent with a majority of the total votes eligible to be cast at a duly constituted meeting; and

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allow for a special meeting of the stockholders to be called by (i) the majority of the board of directors, (ii) the chairman of the board of directors, (iii) the president of the Company, or (iv) stockholders holding a majority of the total votes eligible to be cast by the stockholders;

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1C.   The approval of a proposal to amend and restate the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, to restrict certain persons and entities from owning more than 14.9% of any class of capital stock of SDOI;

2.   The adjournment or postponement of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the Charter Amendment Proposals or the Proposal to Adjourn or Postpone the Special Meeting; and

3.   Any other matters which may properly be brought before the Special Meeting and at any adjournments or postponements thereof.

In approving the Exchange Agreement and the transactions contemplated in connection therewith, the SDOI board of directors has determined that the transaction is advisable, fair to and in the best interests of SDOI and its stockholders and recommends that the SDOI stockholders vote “FOR” the Charter Amendment Proposals to approve the Fifth Amended and Restated Certificate of Incorporation of SDOI.

Voting of SDOI Proxies; Vote Required; Quorum; Revocation of Proxies

Proxies that are completed, signed and returned to SDOI prior to the Special Meeting will be voted as specified. If no direction is given, the proxy will be voted for each of the proposals discussed herein and in accordance with the judgment of the persons named in the proxy as to any other matters that properly come before the meeting. If a stockholder abstains from voting as to any matter, then the shares held by such stockholder shall be deemed present at the Special Meeting for purposes of determining a quorum and for purposes of calculating the vote with respect to such matter, but shall not be deemed to have been voted in favor of such matter. If a broker returns a “non-vote” proxy, indicating a lack of authority to vote on such matter, then the shares covered by such non-vote shall be deemed present at the Special Meeting for purposes of determining a quorum but shall not be deemed to be represented at the Special Meeting for purposes of calculating the vote with respect to such matters.

In order for the Fifth Amended and Restated Certificate of Incorporation of SDOI to be adopted, the Charter Amendment Proposals must be approved by the holders of a majority of the shares of Common Stock of SDOI outstanding and entitled to vote thereon. None of the Charter Amendment Proposals will be adopted unless each of them is approved.

Stockholders who sign and return a proxy may revoke it at any time before it is voted by giving written notice to the Chief Financial Officer of SDOI at its principal executive office. Any written revocation must bear a date later than the date of the proxy stating that the proxy is revoked. SDOI stockholders may execute a new, signed proxy bearing a later date, or if a holder of record, by attending the SDOI Special Meeting and voting in person. If SDOI stockholders hold shares in “street name,” then SDOI stockholders must get a proxy from their broker, bank or other custodian to vote the shares in person at the Special Meeting.

Solicitation of Proxies

Expenses incurred in connection with the solicitation of proxies for the Special Meeting will be paid by SDOI. Proxies are being solicited primarily by mail, but, in addition, officers and employees of SDOI, who will receive no extra compensation for their services, may solicit proxies by telephone or personal calls. SDOI also will request that brokers or other nominees who hold shares of SDOI Common Stock in their names for the benefit of others forward proxy materials to, and obtain voting instructions from, the beneficial owners of such stock at SDOI’s expense.

We have engaged PAG to solicit proxies in connection with the matters to be voted on at the Special Meeting. The terms of our engagement with PAG require us to pay PAG a services fee plus customary disbursements, which are not expected to exceed $18,000 in total.

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THE CONTRIBUTION AND EXCHANGE

The Parties

For a brief description of SDOI and Turning Point, please see the section entitled “ Summary — The Companies, ” above. For a detailed description of the business of SDOI and Turning Point, please see the sections entitled “ Certain Information Concerning the Business of SDOI” and “Certain Information Concerning the Business of Turning Point ,” below.

As of the date hereof, the SG Parties own approximately 34.5% of SDOI’s outstanding Common Stock. As of the date hereof, Standard General L.P., the investment manager of the SG Parties, beneficially owns 10,825,463 shares of Turning Point Common Stock, which in the aggregate constitute approximately 59.0% of the outstanding shares of Turning Point Common Stock.

General Description of the Contribution and Exchange

Pursuant to the Exchange Agreement, the SG Parties will contribute, or cause to be contributed, to the Company, approximately 9,592,373 shares of the voting Common Stock, par value $0.01 per share of Turning Point, or the Turning Point Contributed Shares, consisting of  (i) certain shares of Turning Point Common Stock held by the SG Parties or which the SG Parties have the right to acquire prior to the contribution and (ii) certain shares of Turning Point Common Stock held by certain third parties, or the Additional Persons, over which the SG Parties have certain disposition and other rights, including 500,000 shares of Turning Point Common Stock held by Thomas F. Helms, Jr., Chairman of the board of directors of Turning Point, over which Mr. Helms has provided the SG Parties investment discretion and certain disposition and other rights.

The Turning Point Contributed Shares will represent over 50.1% of the issued and outstanding shares of Turning Point Common Stock.

In exchange for the Turning Point Contributed Shares, the Company will issue to the SG Parties and the Additional Persons (as applicable) shares of the Class A Common Stock of the Company based on the Exchange Ratio, calculated as of the closing of the Contribution and Exchange, equal to the lesser of  (i) the 30-calendar day trailing VWAP of the Turning Point Common Stock divided by the 30-calendar day trailing VWAP of the Common Stock of the Company (as adjusted to reflect the reclassification of the Common Stock of the Company pursuant to the Fifth Amended and Restated Certificate of Incorporation of SDOI) and (ii) the 30-calendar day trailing VWAP of the Turning Point Common Stock divided by the pro forma book value per share of the Company. Any fraction of a share of Class A Common Stock issuable by the Company in the Contribution and Exchange will be rounded up to the nearest whole share if such fraction is equal to or greater than 0.5 and rounded down to the nearest whole share if such fraction is less than 0.5. Prior to the consummation of the Contribution and Exchange, the Company will amend and restate its Fourth Amended and Restated Certificate of Incorporation, as amended, in the form of the Fifth Amended and Restated Certificate of Incorporation, to provide for, among other things, (x) the reclassification of every 25 shares of the Common Stock, par value $0.01 per share, of the Company into a one share of a new class of Common Stock, par value $0.01 per share, designated as “Class A Common Stock,” or the Class A Common Stock, and (y) the authorization for issuance of an additional class of Common Stock, par value $0.01 per share, of the Company designated as “Class B Common Stock,” or the Class B Common Stock. Prior to the closing of the Contribution and Exchange, the Company will declare a dividend of one share of Class B Common Stock for each outstanding share of Class A Common Stock, or the Dividend, with the record date for such dividend occurring immediately following completion of the Contribution and Exchange. The Class A Common Stock and the Class B Common Stock will vote together as a single class and will be substantially the same, except that the Class B Common Stock shall have 10 votes per share and the Class A Common Stock shall have one vote per share, and the shares of Class B Common Stock shall be convertible into shares of Class A Common Stock automatically upon the transfer of such shares of Class B Common Stock, with certain exceptions, or upon the affirmative vote of holders of Class B Common Stock or voluntarily by the holder of such shares of Class B Common Stock. Following the distribution of the Dividend, the SG Parties will deliver a written consent to adopt and approve the Sixth Amended and Restated Certificate of Incorporation.

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SDOI and the SG Parties currently expect the closing of the Contribution and Exchange to occur during the first calendar quarter of 2017. However, as the Contribution and Exchange is subject to the satisfaction or waiver of other conditions described in the Exchange Agreement, it is possible that factors outside the control of SDOI and the SG Parties could result in the Contribution and Exchange being consummated at a later time, or not at all.

Background of the Contribution and Exchange

In April 2013, SDOI entered into an asset purchase agreement with Origene, pursuant to which SDOI sold to Origene substantially all of SDOI’s rights, title and interest in substantially all of its non-cash assets related to its life sciences business for $16.0 million. In July 2013, SDOI completed the asset sale. As a result of the asset sale, SDOI no longer owns its historical operating assets, and its past business operations have been discontinued. SDOI currently is a “shell company” under the federal securities laws.

SDOI has essentially no operating assets, and since April 2013 its business strategy has been primarily identifying new business and investment opportunities. The SDOI board of directors and members of SDOI management and have met periodically since such time to review and assess potential such opportunities.

On August 8, 2016, Mr. Gregory Baxter, a member of our board of directors, discussed with the SDOI board of directors the potential merits and considerations of a transaction with the SG Parties. In light of the fact that Mr. Baxter and Mr. Ian Estus, a member of our board of directors, could be subject to potential conflicts of interest in respect of any potential transaction, the SDOI board of directors resolved to form the Special Committee, initially consisting of independent directors Thomas J. Kelleher, David A. Wurzer, Wayne P. Yetter and Kenneth M. Young. The Special Committee was authorized to take all actions with respect to a potential transaction with the SG Parties and to undertake any review, discussion, consideration, deliberation, examination, investigation, analysis, assessment, evaluation, exploration, response, negotiation, termination, rejection, approval and/or authorization on behalf of SDOI with respect to the terms and conditions of a potential transaction. The SDOI board of directors resolved, among other things, not to approve any potential transaction without the affirmative recommendation of the Special Committee. From August 15, 2016 to November 25, 2016, the Special Committee held approximately thirteen meetings, in addition to various calls and other correspondence, to discuss and analyze a potential transaction with the SG Parties and other transactions related thereto. All members of the Special Committee were present at meetings of the Special Committee described below, unless otherwise noted.

On August 15, 2016, the Special Committee held a meeting with representatives of Young Conaway Stargatt & Taylor, LLP, or Young Conaway, to determine whether to engage Young Conaway as its legal counsel. During the meeting, the members of the Special Committee determined that they did not have any potential conflicts of interest in respect of a potential transaction with the SG Parties. Later that day, Mr. Kelleher determined that Standard General L.P. and its affiliates hold 500,000 shares of common stock of B. Riley Financial, Inc., or approximately 2.6% of the outstanding common stock of B. Riley Financial, Inc., a company for which he serves as President, and for which Mr. Young served as a director, and that, because of this interest, and out of an abundance of caution, neither he nor Mr. Young would continue to serve on the Special Committee. Following such determination, Mr. Kelleher and Mr. Young left the Special Committee.

In late August 2016, the Special Committee, then consisting of Mr. Yetter and Mr. Wurzer, retained Young Conaway to represent it in connection with any potential transactions. Also during this time, and into early September 2016, the Special Committee considered and interviewed several investment banks and financial specialists to serve as its financial advisor.

On August 30, 2016, the Special Committee authorized Young Conaway to contact Debevoise & Plimpton LLP, or Debevoise, counsel for the SG Parties, to discuss the SG Parties’ interest in a potential transaction. In furtherance of the foregoing, representatives of Young Conaway spoke with representatives of Debevoise on September 7, 2016 about a potential transaction, and what the general framework of such a transaction might look like.

On September 12, 2016, the SG Parties delivered to the Special Committee, through its counsel, a letter proposing certain preliminary terms for the Contribution and Exchange and related transactions, or the

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Potential Transaction, including, among other things, the contribution of Turning Point equity by the SG Parties in exchange for newly issued SDOI equity, certain amendments to the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, and the creation of a new class of stock, shares of which would be issued as a dividend to SDOI stockholders.

On September 13, 2016, the Special Committee held a meeting with representatives of Young Conaway to discuss the Potential Transaction and criteria for selecting an investment bank to act as SDOI’s financial advisor. The Special Committee also directed Young Conaway to negotiate appropriate non-disclosure agreements with potential financial advisors and with the SG Parties. On September 28, 2016, the Special Committee and the SG Parties entered into a mutual non-disclosure agreement, which included customary provisions. Shortly thereafter, the advisors to the SG Parties were provided access to certain non-public information concerning SDOI in order to facilitate their due diligence investigation of SDOI. Additionally, the advisors to the Special Committee were provided certain non-public information concerning the SG Parties and certain public information concerning Turning Point in order to facilitate the Special Committee’s due diligence investigation of the SG Parties and the Turning Point Common Stock to be contributed in the Contribution and Exchange. The SG Parties indicated that they would be unable to provide non-public information concerning Turning Point in their possession to the Special Committee for purposes of its due diligence of the Turning Point Common Stock to be contributed in the Contribution and Exchange because such information was obtained by David Glazek in his capacity as a member of the Turning Point board of directors and is subject to confidentiality restrictions. Due diligence continued until the execution of the definitive transaction documents.

In furtherance of selecting a financial advisor, from September 13, 2016 through October 6, 2016, Mr. Yetter and Mr. Wurzer, as the members of the Special Committee, together with representatives of Young Conaway, reviewed information from numerous financial advisors with significant experience in such transactions, including EP Securities LLC, or Excel, and considered their qualifications to serve as financial advisor to the Special Committee. The Special Committee’s criteria for selecting a financial advisor included, among other things, the financial advisor’s relative lack of potential conflicts with respect to the Potential Transaction, its capacity to provide all of the services required of the Special Committee, its fee structure relative to the size of the Potential Transaction and its past experience in advising other companies in connection with similar transactions. Based on these criteria, the Special Committee selected three financial advisors to be interviewed by the Special Committee and Young Conaway. In the course of these interviews, the Special Committee reviewed with each financial advisor its experience, proposed fee structure, potential conflicts and its views on the current state of the capital markets and potential strategic alternatives that might be available to SDOI.

After careful consideration, on October 6, 2016, the Special Committee determined to engage Excel to act as its financial advisor in connection with the Potential Transaction and consideration of other strategic alternatives, and thereafter Excel commenced its financial analysis of the Potential Transaction. On October 18, 2016, the Special Committee formally engaged Excel as financial advisor to the Special Committee in connection with the Potential Transaction and the Special Committee’s consideration of other strategic alternatives.

On October 6, 2016, the Special Committee held a meeting with representatives of Excel and Young Conaway to discuss alternatives to the Potential Transaction, including a potential distribution of cash to SDOI’s stockholders. Mr. Yetter and Mr. Wurzer reported that, over the previous two years, the Company had undertaken a search for potential transactions and had discussed various opportunities, including a real estate transaction that ultimately did not go forward as well as investments in different operating companies. Excel discussed certain costs and challenges associated with undertaking a cash distribution to the Company’s stockholders. The Special Committee then directed Excel to prepare due diligence requests to be submitted to the SG Parties to further explore the Potential Transaction.

On October 18, 2016, following an exchange of information concerning the business and operations of SDOI and Turning Point, representatives of the Special Committee and representatives of the SG Parties participated in a due diligence call relating to the SG Parties’ due diligence investigation of SDOI.

On October 20, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway, to further discuss the Potential Transaction. Excel provided a presentation on the nature and structure of the Potential Transaction, an estimate as to the amount of SDOI equity the SG Parties

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would receive under the proposal, and its view of the purpose behind the creation of the Class B Common Stock. The Special Committee discussed how the Potential Transaction would result in the SG Parties obtaining control over the Company. Excel provided background information on Turning Point’s business and the value of Turning Point’s shares. The discussion included issues that might affect Turning Point’s sales, including government regulations. Excel also discussed Turning Point’s stock price history. Young Conaway then discussed other factors that the Special Committee should consider, including the potential ability of the SG Parties to eliminate unaffiliated stockholders from SDOI after consummation of the Potential Transaction in the absence of negotiated protections.

On October 20, 2016, Debevoise delivered to Young Conaway an initial draft of the Exchange Agreement.

During the period from October 20, 2016 through November 23, 2016, the legal and financial advisors of the Special Committee met frequently by teleconference with representatives of the SG Parties to discuss and negotiate the terms of the Exchange Agreement, including, among other things (i) the Exchange Ratio (as defined in the Exchange Agreement) to be employed in determining the number of shares of Class A Common Stock to be issued in exchange for the Turning Point Common Stock to be contributed in the Contribution and Exchange, (ii) the terms and provisions of amendments to the Fourth Amended and Restated Certificate of Incorporation of SDOI, as amended, that would be adopted in connection with the Potential Transaction, (iii) the SG Parties Registration Rights Agreement, and (iv) additional protective provisions for unaffiliated stockholders of SDOI after consummation of the Potential Transaction.

On October 27, 2016, following an exchange of information concerning the business and operations of SDOI and Turning Point, representatives of the Special Committee and representatives of the SG Parties participated in a due diligence call relating to the Special Committee’s due diligence investigation of the SG Parties and the Turning Point Common Stock to be contributed in the Contribution and Exchange, and the SG Parties’ due diligence investigation of SDOI. Periodic discussions, meetings and correspondence concerning due diligence continued until the execution of the Exchange Agreement.

Also on October 27, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway, to discuss the status of the Potential Transaction including a discussion about the due diligence call held with representatives of the SG Parties earlier in the day, as well as public analyst projections about the projected growth and earnings that might be realized by Turning Point. Discussion was also held regarding the status of the then-current drafts of the transaction documents.

On October 31, 2016, Debevoise delivered to Young Conaway an initial draft of the SG Parties Registration Rights Agreement.

On November 1, 2016, Young Conaway returned to Debevoise a revised draft of the Exchange Agreement, reflecting the comments of the Special Committee and its advisors, and additionally Young Conaway requested that the SG Parties consider certain changes pertaining to the provisions of the Exchange Agreement relating to the Company’s continuing support of the Potential Transaction prior to the stockholder vote, including to permit the Company to terminate the Exchange Agreement in the event of a board of directors recommendation change with respect to a superior proposal rather than allowing the SG Parties to require that a vote be held in such a circumstance, to eliminate the termination fee that would be payable by the Company in certain circumstances and to eliminate the requirement for the board of directors to unanimously reaffirm its recommendation in favor of the Charter Amendment Proposals upon request from the SG Parties (such changes referred to as the Transaction Support Changes).

On November 7, 2016, Young Conaway returned to Debevoise a marked draft of the SG Parties Registration Rights Agreement, reflecting the comments of the Special Committee and its advisors.

On November 9, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway, to discuss the status of the Potential Transaction, including the nature and terms of a provision that would prevent the unaffiliated stockholders of the Company from being required to dispose of their SDOI equity in a merger or other transaction immediately upon, or shortly after, the closing of a transaction with the SG Parties (such provision referred to as the Unaffiliated Stockholder Protective Provision). Excel also discussed the financial terms of the Potential Transaction, and the ways in which the financial terms might be improved.

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On November 10, 2016, Debevoise sent Young Conaway a revised draft of the Exchange Agreement (reflecting the Transaction Support Changes requested by Young Conaway on November 1, 2016), as well as revised drafts of the SG Parties Registration Rights Agreement, and a draft cumulative amended and restated certificate of incorporation of the Company, referred to as the Cumulative Charter Amendment, containing terms to be reflected in the Fifth Amended and Restated Certificate of Incorporation and certain additional provisions to be reflected in the Sixth Amended and Restated Certificate of Incorporation. The respective legal advisors of the Special Committee and the SG Parties continued to negotiate the terms of the Exchange Agreement, the Fifth Amended and Restated Certificate of Incorporation of SDOI and the other transaction documents, and continued to exchange drafts of such documents.

Also on November 10, 2016, representatives of the SG Parties and Excel discussed certain financial aspects of the Potential Transactions, including the desire of the Special Committee to revise the Exchange Agreement to provide for an alternative method of calculating the Exchange Ratio (as defined in the Exchange Agreement) in the event that the Company’s pro forma book value per share exceeds the trailing 30-day VWAP of the SDOI Common Stock as of the consummation of the Contribution and Exchange and to limit the expenses of the SG Parties that would be reimbursable by the Company upon consummation of the Contribution and Exchange (such changes referred to as the Requested Financial Changes).

On November 14, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway, to discuss the status of the Potential Transaction. Discussion was also held regarding the status of the then-current drafts of the transaction documents, the Requested Financial Changes and the expected timing for signing of the Exchange Agreement and closing of the Potential Transaction.

Also on November 14, 2016, Young Conaway sent Debevoise revised drafts of the Exchange Agreement (reflecting proposed language with respect to the Requested Financial Changes) and the Cumulative Charter Amendment (reflecting proposed language with respect to the Unaffiliated Stockholder Protective Provision). The respective legal advisors of the Special Committee and the SG Parties continued to negotiate the terms of the transaction documents, and continued to exchange drafts of such documents.

On November 21, 2016, Debevoise sent Young Conaway revised drafts of the Exchange Agreement (reflecting agreed-upon revisions to Young Conaway’s proposed language with respect to the Requested Financial Changes), the SG Parties Registration Rights Agreement and the Cumulative Charter Amendment (reflecting agreed-upon revisions to Young Conaway’s proposed language with respect to the Unaffiliated Stockholder Protective Provision). The respective legal advisors of the Special Committee and the SG Parties continued to negotiate the terms of the transaction documents, and continued to exchange drafts of such documents.

On November 22, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway, to discuss the status of the Potential Transaction. Excel discussed the status of the proposed exchange ratio contemplated in the Exchange Agreement. Discussion was also held regarding certain proposed termination rights and termination fees in the event that SDOI or the SG Parties elect to terminate the agreement, as well as the treatment of certain transaction-related fees and other expenses under the Exchange Agreement. The status of the-then current drafts of the transaction documents was also discussed.

On November 23, 2016, the Special Committee, the SG Parties, and their respective advisors worked to finalize the Exchange Agreement and the other transaction documents, and current drafts of the Exchange Agreement and the other transaction documents were then provided to the members of the Special Committee.

On November 24, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway, to discuss the final terms of the Potential Transaction, including the number of shares of Turning Point stock that would be contributed to SDOI under the terms of the Exchange Agreement, and to advise that the Exchange Agreement and other transaction documents had been finalized without any material changes from the materials provided to the Special Committee on November 23, 2016.

On November 25, 2016, the Special Committee held a meeting, together with representatives of Excel and Young Conaway. A representative of Young Conaway, referring to a presentation that was included in

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the meeting materials, provided the Special Committee with an overview of the duties of directors and of special committee members under Delaware law. Representatives of Young Conaway also provided an overview of the terms of the Potential Transaction. Representatives of Excel then reviewed and discussed its financial analysis with respect to the Potential Transaction. Thereafter, Excel rendered to the Special Committee its opinion that, as of November 25, 2016, and based upon and subject to the assumptions made, matters considered and qualifications and limitations set forth in such opinion and such other matters as Excel considered relevant, the Exchange Ratio (as defined in the Exchange Agreement) was fair, from a financial point of view, to the Company. After discussion and deliberation, the Special Committee unanimously determined that the Exchange Agreement was advisable, substantively and procedurally fair to, and in the best interest of, SDOI’s unaffiliated shareholders, and resolved to recommend that the full board of directors approve the Exchange Agreement.

On November 25, 2016, immediately following the meeting of the Special Committee, a meeting of the full board of directors of SDOI was commenced, and the full board of directors was informed of the Special Committee’s determination with respect to the Exchange Agreement and the Special Committee’s recommendation that the full board of directors approve the Exchange Agreement and the related transaction documents. Representatives of Young Conaway and Morgan Lewis & Bockius LLP also provided an overview of the terms of the Potential Transaction. Representatives of Excel then reviewed and discussed its financial analysis with respect to the Potential Transaction. Thereafter, Excel rendered to the full board of directors its opinion that, as of November 25, 2016, and based upon and subject to the assumptions made, matters considered and qualifications and limitations set forth in such opinion and such other matters as Excel considered relevant, the Exchange Ratio (as defined in the Exchange Agreement) was fair, from a financial point of view, to the Company. After further discussion and consideration, SDOI’s board of directors unanimously determined that the Exchange Agreement was advisable, substantively and procedurally fair to and in the best interests of SDOI and its shareholders, and adopted resolutions approving the Exchange Agreement.

The Exchange Agreement was entered into following the close of trading on November 25, 2016 and was thereafter publicly announced on that date.

Approval of the Special Committee and SDOI’s Board of Directors; Reasons for the Contribution and Exchange

In evaluating the Contribution and Exchange, the Special Committee and the board of directors consulted with SDOI’s management and the Special Committee’s and the board of director’s legal and financial advisors, in the course of determining that the Contribution and Exchange is fair, advisable to and in the best interests of the holders of the existing SDOI Common Stock. The Special Committee and then, following the recommendation of the Special Committee, our board of directors, considered the following potentially positive factors:

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the belief that the Contribution and Exchange would provide an impetus for future growth and development of SDOI;

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the belief that the Contribution and Exchange represents the strategic option most likely to maximize stockholder value after consideration of risk factors associated with this transaction and other alternatives;

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the opportunity for the SDOI stockholders to participate in the potential future value of the recapitalized company, including future potential value from additional acquisitions to be pursued by SDOI;

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the belief by the Special Committee and the board of directors that we have obtained the most favorable exchange terms to which the SG Parties were willing to agree, taking into account the improvement in terms as a result of the extensive negotiations between the parties;

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current financial market conditions and historical market prices, volatility and trading information with respect to the existing SDOI Common Stock;

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our assessment as to the low likelihood that a third party would offer a more attractive transaction than the SG Parties, especially in light of the work the board of directors has done since April 2013 to seek to identify other new business and investment opportunities;

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historical information concerning the businesses, prospects, financial performance and condition, operations, technology, management and competitive position of SDOI;

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the support for the Contribution and Exchange expressed by the members of our board of directors;

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Excel’s opinion, dated November 25, 2016, first to the Special Committee and then to the full SDOI board of directors that, as of the date of such opinion and based upon and subject to the assumptions made, matters considered and qualifications and limitations set forth in such opinion and such other matters as Excel considered relevant, the Exchange Ratio (as defined in the Exchange Agreement) is fair from a financial point of view to SDOI, which opinion was based on the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Excel in preparing its opinion as more fully described below under the caption “ Opinion of Financial Advisor ”;

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the fact that the Potential Transaction is not taxable to our stockholders for United States federal income tax purposes;

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the fact that the Charter Amendment Proposals, a necessary condition to the completion of the Contribution and Exchange, would be subject to the approval of our stockholders and that if a more favorable offer were to be made to our stockholders prior to the completion of the Contribution and Exchange, our stockholders would be free not to approve the Charter Amendment Proposals, which would have the effect of preventing the Contribution and Exchange; and

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the terms of the Exchange Agreement, as reviewed by our Special Committee and board of directors with our legal advisors, including:

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sufficient operating flexibility for us to conduct our business in the ordinary course between signing and closing;

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the parties’ representations, warranties and covenants;

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the limited closing conditions to the SG Parties’ obligations under the Exchange Agreement;

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the provisions of the Exchange Agreement that allow us, under certain circumstances, to engage in negotiations with, and provide information to, third parties in response to credible inquiries from third parties regarding alternative acquisition proposals;

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the provisions of the Exchange Agreement that allow our board of directors to change its recommendation that our stockholders vote in favor of the approval of the Charter Amendment Proposals in response to certain acquisition proposals and certain intervening events, if our board of directors determines in good faith that the failure to change its recommendation could reasonably be determined to be inconsistent with its fiduciary duties under applicable law; and

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our ability to specifically enforce the terms of the Exchange Agreement.

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The Special Committee and then, following the recommendation of the Special Committee, our board of directors also considered a number of potentially negative factors in its deliberations concerning the Contribution and Exchange, including, but not limited to:

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the fact that the current non-SG Parties SDOI stockholders will own a significantly smaller percentage in the company following the Contribution and Exchange;

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the restrictions on the conduct of our business prior to the completion of the Contribution and Exchange;

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that, under the terms of the Exchange Agreement, we cannot solicit other acquisition proposals, that we must pay to the SG Parties expense reimbursement and a termination fee of up to $1 million if the Exchange Agreement is terminated under certain circumstances, which may deter others from proposing an alternative transaction that may be more advantageous to our stockholders;

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that, while the Contribution and Exchange is expected to be completed, there can be no assurance that all conditions to the parties’ obligations to complete the Contribution and Exchange will be satisfied, and as a result, it is possible that the Contribution and Exchange may not be completed even if approved by our stockholders (see the section entitled “ The Exchange Agreement — Conditions Precedent to the Contribution and Exchange ”); and

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that the Contribution and Exchange is subject to other risks, as described in the section of this proxy statement/prospectus entitled “ Risk Factors .”

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During its consideration of the transaction with the SG Parties, our board of directors was also aware that certain of our directors and executive officers have interests in the Contribution and Exchange that are, or may be, different from, or in addition to, those of our stockholders generally, as described under “ The Contribution and Exchange — Interests of Certain Stockholders, Directors, Officers and other Related Parties in the Contribution and Exchange .”

While our board of directors considered potentially negative and potentially positive factors, our board of directors concluded that, overall, the potentially positive factors outweighed the potentially negative factors.

The foregoing discussion summarizes the material information and factors considered by our board of directors in its consideration of the Contribution and Exchange. Our board of directors collectively reached the unanimous decision to approve the Exchange Agreement in light of the factors described above and other factors that each member of our board of directors felt were appropriate. In view of the variety of factors and the quality and amount of information considered, our board of directors did not find it practicable to and did not make specific assessments of, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination. Individual members of our board of directors may have given different weight to different factors.

The foregoing discussion of the information and factors considered by the Committee and the SDOI board of directors is forward-looking in nature. This information should be read in light of the factors described under “Note Regarding Forward-Looking Statements” beginning on page 47.

Opinion of Financial Advisor

The Special Committee retained Excel to render a fairness opinion to the Special Committee with respect to the fairness of the Exchange Ratio (as defined in the Exchange Agreement), from a financial point of view, to SDOI. On November 25, 2016, Excel delivered its oral opinion, subsequently confirmed in a written opinion of the same date, first to the Special Committee and then to the full SDOI board of directors that, as of the date of such opinion and based upon and subject to the assumptions made, matters considered and qualifications and limitations set forth in such opinion and such other matters as Excel considered relevant, the Exchange Ratio (as defined in the Exchange Agreement) was fair from a financial point of view to SDOI. The opinion does not address any other aspect or implication of the Contribution and Exchange or any other matter. The summary of the opinion of Excel is qualified in its entirety by reference to the full text of its written opinion, which is included as Appendix C to this proxy statement/​prospectus and sets forth the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Excel in preparing its opinion.

The full text of Excel’s written opinion, dated as of November 25, 2016, is attached as Appendix C to this proxy statement/prospectus. We encourage our stockholders to read the full text of Excel’s written opinion carefully and in its entirety for information regarding the assumptions made, methodologies used, factors considered and limitations upon the review undertaken by Excel in rendering its opinion. Excel has not assumed any responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof. Excel provided its opinion for the information and assistance of the Special Committee and the SDOI

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board of directors in connection with its consideration of the fairness of the Exchange Ratio (as defined in the Exchange Agreement), from a financial point of view, to SDOI, and Excel’s opinion, which was provided for the information and assistance of the Special Committee and the SDOI board of directors, is not intended to be and does not constitute a recommendation as to how any stockholder should act on any matters relating to the Contribution and Exchange, the Exchange Agreement or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Excel reviewed, among other things:

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the Exchange Agreement;

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annual reports to stockholders and Annual Reports on Form 10-K of SDOI for the three years ended December 31, 2015;

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certain interim reports to stockholders and Quarterly Reports on Form 10-Q of SDOI and Turning Point;

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the Registration Statement on Form S-1 filed by Turning Point (Registration No. 333-207816), including its prospectus included therein dated May 10, 2016;

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certain other communications from SDOI and Turning Point to their respective stockholders; and

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certain internal financial analyses and forecasts for SDOI prepared by its management, as reviewed and approved for use in connection with Excel’s opinion by management of SDOI, which Excel assumed had been reasonably prepared by the management of SDOI on a basis reflecting the best currently available estimates and good faith judgments of the management of SDOI.

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Turning Point did not provide Excel with any non-public information, and therefore, Excel’s opinion was prepared without the benefit of any non-public information regarding Turning Point. Accordingly, with the Special Committee’s and the SDOI board of director’s approval, all financial analyses regarding Turning Point were based exclusively on publicly-available information, the accuracy of which was assumed and which Excel took no independent steps to verify.

Excel also held discussions with members of the senior management of SDOI regarding their assessment of the strategic rationale for, and the potential benefits of, the transactions contemplated by the Exchange Agreement and the past and current business operations, financial condition and future prospects of SDOI. In addition, Excel reviewed the financial terms of recent business combinations in the “other tobacco products” industry specifically and other industries generally, and performed such other studies and analyses, and considered such other factors, as Excel considered appropriate. Excel did not attribute any particular weight to any analysis or factor it considered, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Excel’s analyses must be considered as a whole.

Excel relied, without independent verification, upon the accuracy and completeness of all of the financial, accounting, legal, tax and other information discussed with or reviewed by it (including without limitation the representations and warranties contained in the Exchange Agreement) and assumed such accuracy and completeness for purposes of rendering its opinion. Excel did not independently verify the accuracy or completeness of any such information, nor will it do so in the future, and Excel did not and does not assume any responsibility for doing so. Excel expressed and expresses no view with respect to the information and data or other assumptions on which they were based. There are significant risks involved in achieving such financial projections, and such projections may not be achieved, a factor which Excel took into account when preparing its analyses. In addition, Excel did not make an independent evaluation or appraisal of the assets and liabilities of SDOI or any of its subsidiaries and Excel was not furnished with any such evaluation or appraisal, nor did it evaluate the solvency of any party to the Exchange Agreement under any state or federal laws relating to bankruptcy, insolvency or similar matters.

Excel assumed, with the Special Committee’s and the SDOI board of directors’ consent, that the transactions contemplated by the Exchange Agreement will be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the

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course of obtaining the necessary regulatory or third party approvals, consents and releases for such transactions, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on SDOI or the contemplated benefits of such transactions. Excel’s opinion relates to the fairness of the Exchange Ratio (as defined in the Exchange Agreement), from a financial point of view, to SDOI. Excel expressed no view as to the federal, state or local tax consequences of the transactions contemplated by the Exchange Agreement.

In connection with rendering its opinion, Excel performed certain financial, comparative and other analyses as summarized below. The preparation of a fairness opinion is a complex process that involves various determinations as to the most appropriate and relevant methods of financial and comparative analysis and the application of those methods to the particular circumstances. Therefore, such an opinion is not readily susceptible to summary description. Accordingly, Excel believes that its analyses must be considered as a whole and that considering any portion of such analysis and factors, without considering all of its analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

In arriving at its opinion, Excel did not ascribe a specific range of value to SDOI, but rather made its determination as to the fairness of the Exchange Ratio (as defined in the Exchange Agreement), from a financial point of view, to SDOI on the basis of such financial, comparative and other analyses as of the date of such opinion. Further, in arriving at its opinion, Excel did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Excel, in its analysis, made numerous assumptions with respect to industry performance, general business, financial and economic conditions and other matters, many of which are beyond the control of SDOI. No company, business or transaction reviewed is identical to SDOI or the transactions contemplated by the Exchange Agreement. An evaluation of these analyses is not entirely mathematical; rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading or other values of the companies, business segments or transactions reviewed. For purposes of the analyses described below, implied multiples for selected companies and selected transactions that were considered not meaningful or were not publicly available were not included in overall low to high multiples ranges. Estimates of future financial performance for SDOI were based upon forecasts prepared by SDOI’s management. Any estimates contained in these analyses were not and are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth in these analyses. In addition, such analyses relating to the valuation of a business do not purport to be appraisals or to reflect the prices at which such business would be sold.

Excel’s opinion did not address the underlying business decision of SDOI to engage in the transactions contemplated by the Exchange Agreement, the relative merits of such transactions as compared to any alternative business strategies that might exist for SDOI or the effect of any other transaction in which SDOI might engage. Excel was not asked to, nor did it, offer any opinion as to the material terms of the Exchange Agreement (other than the exchange ratio, as defined therein) or the form of the transaction. Excel’s opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of its written opinion. Excel did not express any view as to, and its opinion does not address, the fairness (financial or otherwise) of the amount or nature of any other aspect of any compensation to any officers, directors or employees of any parties to the transactions contemplated by the Exchange Agreement, or any class of such persons, relative to the Exchange Ratio (as defined in the Exchange Agreement).

The following is a summary of the material financial analyses used by Excel in connection with providing its opinion to the Special Committee and the SDOI board of directors. Certain of the summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses used by Excel, the tables must be read together with the text of each summary. The tables alone do not constitute a complete summary of the financial analyses of Excel. Accordingly, the analyses listed in the tables and described below must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the results of Excel’s opinion.

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Comparable Companies Analysis.    Excel reviewed and compared certain financial multiples relating to Turning Point to corresponding financial multiples relating to publicly traded companies in the same sector or sub-sector as Turning Point, consisting of the following companies:

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British American Tobacco plc

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Japan Tobacco Inc

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Imperial Brands PLC

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Philip Morris International, Inc.

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Altria Group, Inc.

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Reynolds American Inc.

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Swedish Match AB

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Excel obtained the information for this analysis from Capital IQ and public filings. Stock prices and other financial information for the above-mentioned companies were determined as of November 22, 2016. Turning Point’s stock price was determined as of November 22, 2016. Information specific to Turning Point was based on publicly available information.

Excel calculated valuation multiples implied by the contemplated transactions and compared those valuation multiples to comparable valuation multiples of the selected companies. The valuation multiples for each company were calculated by dividing (a) the enterprise value by expected revenue for 2016 and 2017, (b) the enterprise value by expected EBITDA for 2016 and 2017, and (c) the “P/E” for the comparable company, which equals the stock price divided by fully-diluted earnings per share, as expected for 2016 and 2017. The following table summarizes the results of this analysis for Turning Point and the comparable companies:

The foregoing analysis implied an equity value for Turning Point of  $17.53 to $35.06.

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Comparable Transaction Analysis.    Excel analyzed certain information relating to the following selected transactions (acquiror/target):

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BAT/Reynolds

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BAT/TDR d.o.o. and other tobacco and retail assets

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BAT/Souza Cruz S.A. (24.7% remaining minority stake)

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Scandinavian Tobacco Group A/S/Verellen NV

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Reynolds/Lorillard, Inc.

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Japan Tobacco/JT International Berhad (39.6% remaining minority stake)

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Japan Tobacco/Gryson NV and its related group companies

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Japan Tobacco/Haggar Cigarette & Tobacco Factory Ltd.

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BAT/Productora Tabacalera de Colombia, S.A.S.

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For each of the selected transactions, Excel calculated and compared certain multiples, including the enterprise value to LTM EBITDA. Excel obtained the information for this analysis for each transaction from Capital IQ and public filings through November 22, 2016. The following table presents the results of this analysis: