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Exhibit 15.1

INSTITUTE FOR WEALTH HOLDINGS, INC.

Maximum offering of $_____________

(Up to ___________ Series D Convertible Preferred Stock)

Offering Circular Date ____________, 2017

Two Galleria Tower

13455 Noel Road, Suite 100

Dallas, Texas 75240

(972) 450-6000

www.iwhinc.com

The Institute for Wealth Holdings, Inc., a Delaware corporation, (the “Company,” “we” or “our”) is offering a maximum of __________ shares of Series D Convertible Preferred Stock, par value $0.001. The offering does not have a minimum number of securities which must be sold. Since there is no minimum amount of securities that must be purchased in this offering, all accepted and approved subscription proceeds will be available to us after release from escrow and no investor funds will be reimbursed if the proceeds of this offering are insufficient to cover the costs of the offering. The offering will continue until the earlier of twelve (12) months from the date of this offering is qualified for sale or the date when all offered securities have been sold.

Prior to this offering, there has been no trading market for our shares.

These are speculative securities. Investing in our shares involves significant risks. You should purchase these securities only if you can afford a complete loss of your investment. See “Risk Factors” beginning on Page 7.

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

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.

This offering circular is following the offering circular format described in Part II (a)(1)(ii) of Form 1-A.

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No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this offering circular. You must not rely on any unauthorized information or representations. This offering circular is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this offering circular is current only as of its date.

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SUMMARY

The following summary highlights selected information contained in this offering circular. This summary does not contain all the information that may be important to your investment in the offered securities. You should read this entire offering circular carefully, including the “Risk Factors” section, our audited, consolidated financial statements and the related notes included elsewhere in this offering circular, before making an investment decision. Unless the context otherwise requires, the terms “Institute for Wealth,” “IWH,” “the Company,” “we,” “us” and “our” in this offering circular refers to Institute for Wealth Holdings, Inc., a Delaware corporation.

Our Company

Background

Our company is the result of a successful business combination in 2016 of two companies, the Institute for Wealth Management, LLC, a Delaware limited liability company (“IWM”), which was founded by Matthew D. Medeiros in 2003, and Institute for Wealth Holdings, Inc., formerly Cherry, Inc., which was founded in 2008 by Dewey M. “Rusty” Moore, Jr. Both of our founders are experienced investment professionals who have demonstrated proven leadership skills and excellence in the development of innovative products and services, and superior team building capabilities in launching successful companies.

We operate a dual investment advisory and investment management platform for our investment advisory representatives (“IARs”) and clients through our various subsidiaries. We provide high quality investment management and advice to clients by enrolling, supporting and supervising qualified investment advisors. Our mission statement clearly articulates our business model: Empowering Trusted Advisors to succeed financially by providing quality and value in wealth management, financial planning, financial tools and investment advisory services based on proven principles and the highest standards of trust. We operate under this combined platform by utilizing our proven management team to recruit and train associate investment advisers and IARs to gather AUM under a successful, client-centric national brand. We provide, through multiple custodians, a single client interface for the administration, execution and reporting for client accounts, and offer advisers online access to fee tracking and payments. This approach allows for higher productivity by granting our advisors and IARs time to focus on existing clients and prospective new clients.

We believe ours is the “Ideal Business Model,” one that derives recurring income from an asset-based revenue model. We function much like a bank, in that client assets are deposited at one or more of our custodians through which we provide our client services for a fee. Our subsidiaries operate investment management, wealth management and investment advisory platforms, which derive fee based compensation based on the amount of assets under management (“AUM”). This is the fiduciary, or investment advisor, model where an increase in total assets is in the client’s and advisor’s best interests, a “win-win” relationship. Our company enjoys an excellent business reputation. Since their inception, neither IWM, IWA nor their affiliates have had an unresolved customer complaint.

We provide our investment advisory, wealth management and portfolio managements services, client services and multiple custodial relationships through our subsidiary, IWM founded in 2003, which is headquartered in Denver, Colorado. (See “Description of Business” on Page 17). In addition, we provide investment advisory support services to our IARs through another subsidiary, Institute for Wealth Advisors, Inc., a Delaware corporation (“IWA”), headquartered in Dallas, Texas. The Institute for Life & Annuity, Inc., a Texas corporation (“ILA”), our affiliated corporate life insurance agency, complements our IARs’ risk management services to clients. We also have recently added Institute for Wealth Consultants, Inc., a Delaware corporation (“IWC”), which provides IAR support services, and access to life insurance and annuity products and comprehensive fee-based financial planning at ILA. (See “Structure of Institute of Wealth Holdings” on Page 21).

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The combined Institute for Wealth family of companies offers a robust platform to support our IARs and capture client AUM. We are growing rapidly, with over $819.4 million AUM through approximately forty IARs. Since December 31, 2015, on a pro forma basis, our total revenue has grown at a compound annual growth rate (“CAGR”) of 113% and AUM has grown at a CAGR of 82%. We expect to grow the number of IARs to over 100 and for AUM to grow to over $5 billion in the next 3 to 5 years if we successfully implement our growth strategy. The capital raised in this offering is expected to facilitate and enhance our growth strategy.

Executive Committee

The Company is led by a veteran leadership team with extensive business and investment management experience. D. M. “Rusty” Moore and Matthew D. Medeiros are our principal executives. Mr. Moore has worked as an executive in the financial management sector since the early 1990s and led Rushmore Financial Group, Inc., through its initial public offering in 1998, and over the following fifteen years as CEO he led his company through a number of public and private offerings, merger and acquisition transactions. Mr. Medeiros has significant investment management experience in the United States and abroad, and has been frequently cited and interviewed by media outlets, universities and professional organizations with respect to this experience. For more information about Mr. Moore, Mr. Medeiros and other vital members of our management team. (See “Directors, Officers and Significant Employees” on Page 40).

The Offering

Overview

We are offering ________________ shares of Series D Convertible Preferred Stock, par value of $0.001 for $10.00 a share. The offered securities: (i) are entitled to 7% annual dividends, payable quarterly in cash as declared by the Board of Directors; (ii) are convertible into shares of our common stock at the option of the stockholder for $10.00 per share; (iii) rank pari-pasu with other preferred stock with respect to liquidation, but maintains a liquidation preference equal to 1.65 times the price of the offered securities; and (iv) are entitled to vote on an as-converted basis with common stock on any matter presented to the stockholders and separately as a class for matters relating to the offered securities.

There can be no assurance that all or any of the offered securities will be sold. To facilitate the offering, we have engaged Lanier Securities, LLC (“Lanier”) to act as our placement agent for the sale of the offered securities.

Opportunities

IWH’s current business structure was created in September 2016 when we, as Cherry, Inc., merged with IWM’s parent company. As a result of this merger, we now appeal to a broader base of successful “break-away” brokers and independent investment advisors and provide expansive investment management and financial planning strategies nationwide. We anticipate that due to market conditions and recent consolidation trends there are significant opportunities to acquire smaller registered investment advisers (“RIAs”) and independent IARs who cannot afford the increased complexity and compliance costs associated with the investment management industry. We are now seeking approximately ___________ to facilitate growth through the acquisition of additional IARs and RIAs, improve our technological infrastructure and reduce our outstanding debt.

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We operate an investment management and investment advisory platform, which receives fee based compensation for our portfolio management services based on the total AUM at IWM, IAR support services at IWA and IWC, and life insurance and annuity overrides from ILA. This is the fiduciary, or investment advisor, model where an increase in total assets is in the client’s and advisor’s best interest. We believe that by increasing the number of IARs and RIAs we work with, we can significantly increase our AUM and profitability.

Current Stock

Our authorized capital stock consists of 50,000,000 shares of Common Stock, par value $0.001 and 10,000,000 shares of Preferred Stock, par value of $0.001 (“Preferred Stock”). The Preferred Stock currently consists of 70,000 authorized shares of Series B Convertible Preferred Stock, 1,925,000 authorized shares of Series C Convertible Preferred Stock and 2,500,000 authorized shares of Series D Convertible Preferred Stock. We previously issued a class of Series A preferred stock, which has been redeemed and may not be reissued. As a result, 5,500,000 shares of Preferred Stock remain undesignated.

These undesignated shares of Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors. The Board is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.

Prior to this offering, our current capitalization consists of the following classes of securities:

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this offering circular, including, without limitation, in the sections captioned “Summary,” “Risk Factors,” “Description of Business” and various other sections. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described under “Risk Factors.”

While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this offering circular describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this offering circular to conform our prior statements to actual results or revised expectations, and we do not intend to do so.

Forward-looking statements include, but are not limited to, statements about:

We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this offering circular.

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RISK FACTORS

Investing in the offered securities involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this offering circular, including the consolidated financial statements and the related notes, before making a decision to buy the offered securities. The risks described below are not the only risks that we face, but the following is a description of what we consider the key challenges and material risks to our business and an investment in our securities. Our company is still subject to the same risks as all other operating companies in the economy.

Inadequacy of Funds

There is no assurance that the proceeds of this offering will capitalize and sustain the Company sufficiently to allow for working and expansion capital, debt repayment, growth acquisition capital, technology development and investment. If only a fraction of this offering is sold, we may have inadequate funds to fully develop our business and may need debt financing or other capital investment to fully implement our business plans.

Dependence On Management

The growth plan proposed by management will be significantly dependent on our management team. Our success will be particularly dependent on Dewey M. “Rusty” Moore, Jr. and Matthew D. Medeiros. The loss of either of these individuals could have a material adverse effect on the Company. We do not currently maintain a “key man” life insurance policy for either Mr. Moore or Mr. Medeiros. See “Directors, Officers and Significant Employees” section.

We have a limited operating history

Since the merger between the Company and the Institute for Wealth Management Holdings, Inc., we have had a limited operating history. There can be no assurance we will ever operate profitably. The likelihood of our success should be considered in the light of the problems, expenses, difficulties, complications and delays usually encountered by companies in their early stages of development. We may not successfully attain the objectives necessary to overcome these risks and uncertainties.

Placement Agent

We have retained Lanier Securities, LLC (“Lanier”), a broker-dealer registered with the Financial Industry Regulatory Authority (FINRA), as placement agent. A portion of the capital contributions from this offering will be paid to Lanier as commission for its services. Lanier has the ability to assemble selling groups to facilitate this offering. The objectives of Lanier and any selling group may differ from those of the Company, management team, shareholders and investors. As such, Lanier’s and the selling group’s participation in this offering may be influenced by their own interests in current or future fees and commissions that are not necessarily in the best interest of the Company or prospective investors.

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Preferred Stock has a liquidation preference over Common Stock

Our preferred stock may be converted into shares of common stock at the discretion of the shareholder. As a general matter, outstanding shares of our preferred stock carry a liquidation preference over shares of our common stock. If an investor chooses to convert its preferred stock into common stock, the holders of the remaining preferred stock would be entitled to a preference over the common stock upon any liquidation of the Company, including the payment of any accrued but unpaid dividends.

Lack of dividends for Common Stock

Our preferred stock may be converted into shares of common stock at the discretion of the shareholder. We do not anticipate paying any cash dividends on common stock in the foreseeable future and intend to retain profits, if any, to finance growth and expansion.

Reservation of proceeds to pay dividends

We currently anticipate reserving a portion of the proceeds of this offering for the payment of quarterly dividends starting the first full calendar quarter following the closing of this offering. The holders of Series B Convertible Preferred Stock are entitled to any accrued but unpaid dividends prior to any other dividend distributions. The reservation of proceeds for dividend distribution to holders of Series B Convertible Preferred Stock and Series D Convertible Preferred Stock will reduce the amount of capital used to finance growth and expansion.

No public trading market for the securities

There is no active trading market for the securities being offered and no market may develop in the foreseeable future for any such securities. If no subsequent market develops, investors may end up with an illiquid investment and not be able to sell or otherwise monetize its stock.

Anti-Takeover Provisions

Our Certificate of Incorporation and Bylaws may make it difficult to effect a change of control and replace incumbent management. Our directors are elected for three-year terms. Advance notice of stockholder nominations for the election of directors must be at least ninety (90) days in advance of the date in which the next annual meeting of stockholders is held. In addition, directors may be removed only for “cause” as defined in the our Certificate of Incorporation, and then only through an action approved by at least two-thirds of the voting power of all of the shares of the Company entitled to vote generally in the election of directors, voting together as a single class. A similar vote is required for stockholders to call a special meeting or to amend the Certificate of Incorporation to amend or repeal any provision related to the Board of Directors. Our Certificate of Incorporation authorizes the Board of Directors to issue preferred stock in classes or series, and to determine voting, redemption and conversion rights and other rights related to such class or series of preferred stock that, in some circumstances, could have the effect of preventing a merger, tender offer or other takeover attempt which the Company’s Board of Directors opposes. Such provisions could also exert a negative influence on the value of our common stock and of a stockholder’s ability to receive the highest value for the common stock in a transaction that may be hindered by the operation of these provisions.

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Risks associated with expansion

We plan on expanding our core business through the deployment of capital invested in this offering. Any expansion of operations we undertake will entail risks, and during our expansion we may have inadequate capital to operate our established business operations. Consequently, investors should assume that (i) such expansion may ultimately involve expenditures of funds beyond the resources available to us at that time, and (ii) management of such expanded operations may divert management’s attention and resources away from our existing operations. These factors may have a material adverse effect on our present and prospective business activities. There can be no assurances our current management team will have the ability to effectively manage our expanded operations, and we may need additional operating capital to hire managers, compliance officers and other administrative persons to manage any expanded operations.

We may need additional capital, which may not be available

We may require funds in excess of our existing cash resources to fund operating deficits, develop new products or services, establish and expand our marketing capabilities, and finance general and administrative activities. Due to market conditions at the time we may need additional funding, or due to our financial conditions at that time, it is possible we will be unable to obtain additional funding as and when we need it. If we are unable to obtain additional funding, we may not be able to repay debts when they are due and payable. If we are able to obtain capital, it may be on unfavorable terms or terms which excessively dilute then-existing equity holders. If we are unable to obtain additional funding as and when needed, we could be forced to delay our development, marketing and expansion efforts and, if we continue to experience losses, potentially cease operations.

Customer Base and Market Acceptance

While we believe we can develop a customer base through the marketing and promotion of our products and services, our inability to further develop such a customer base could have a material adverse effect on our operations. Although we believe our product and services offer advantages over competitive companies, no assurance can be given that our products and services will attain a degree of market acceptance on a sustained basis or that it will generate revenues sufficient for sustained profitable operations.

Competition

The securities and financial services industries are highly competitive, with many large, diversified, well-capitalized brokerage firms, financial institutions, and other organizations. Competition within the financial services industry is intense, with prospective clients solicited by established Wall Street brokerage and investment management firms offering similar services to prospective clients. Many of these competitors spend significant amounts on advertising to attract the investing public. Many Wall Street firms are better capitalized, have more established reputations, greater marketing experience and prowess, better relationships with investment product suppliers or have other competitive advantages. We expect our competitors to continue to improve the performance of their current products, reduce their prices and introduce new services and technologies that may offer greater performance and improved pricing, any of which could cause a decline in revenue or loss of market acceptance of our products. In addition, our competitors may develop enhancements to, or future generations of, competitive products that may render our services or technologies obsolete or uncompetitive. Competitive pressures may adversely affect us and our prospects.

Regulatory Exposure

Our subsidiaries operate in one of the most highly regulated industries in the United States. Detailed restrictions and guidelines govern virtually every aspect of our operations, as well as the operations of three of our wholly owned subsidiaries: Institute for Wealth Advisors, Inc., Institute for Wealth Consultants, Inc. and Institute for Wealth Management, LLC. Violations of these rules and regulations can result in fines,

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suspension or revocation of licenses and other disciplinary action and could have a material adverse effect on the success and profitability of the company. The regulatory agencies involved include the SEC, the Texas State Securities Board, the Colorado Securities Board and other federal or state securities regulatory agencies in states in which we do business. For example, the SEC requires Registered Investment Advisors to maintain a minimum liquid net worth at all times and impose, among others, “sales practices” rules which regulate sales representatives’ conduct, investor suitability rules, funds handling, and stringent record retention requirements.

Our emphasis on growth coupled with the challenges of managing our business could result in increased exposure to regulatory violations. Although we have implemented, and continue to develop, various internal controls and procedures to prevent violation of applicable rules and regulations, there can be no assurance these controls will be sufficient.

Changes in fiduciary definition

The Department of Labor expanded the “fiduciary” definition under the Employee Retirement Income Security Act of 1974 (“ERISA”) to include persons or entities who provide nondiscretionary investment advice to benefit plans and individual retirement accounts. Changes to ERISA’s fiduciary standards could increase compliance costs and potentially cause significant personal and corporate liability. The practical effects of this change are yet to be determined; however, it could have an impact on our daily operations.

General economic conditions effect on investable income

Our business activities and earnings will be affected by the behavior of individual investors within the United States. General business conditions in the United States, such as short-term and long-term interest rates, inflation, unemployment levels, monetary supply, fluctuations in both debt and equity capital markets, the strength of the United States economy and the local economy in which we operate, global financial market instability, and the risks of a recession and/or prolonged periods of stock market volatility, may reduce the amount of investable income of potential clients and may also influence investors’ behavior in ways we cannot predict, which may be particularly detrimental to our business model.

Possible fluctuations in operating results

Our operating results may fluctuate significantly from period to period as a result of a variety of factors, including investing patterns of customers, competitive pricing, debt service and principal reduction payments, and general economic conditions. Our operating cash flow may vary by quarter due to these fluctuations, which could restrict our ability to pay dividends to shareholders.

Unanticipated obstacles to execution of the business plan

Our business plans may change significantly. Many of our potential business endeavors are capital intensive and may be subject to statutory or regulatory requirements. Management believes our chosen activities and strategies are achievable in light of current economic and legal conditions with the skills, background, and knowledge of our principals and advisors. Management reserves the right to make significant modifications to our stated strategies depending on future events. Investors will not have direct voting control regarding potential changes our business plan.

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Management discretion as to use of proceeds

The net proceeds from this offering will be used for the purposes described in “Use of Proceeds.” We reserve the right, however, to use the funds obtained from this offering for other similar purposes not presently contemplated which we deem to be in the best interests of the Company and our shareholders in order to address changed circumstances or opportunities. As a result of the foregoing, our success will be substantially dependent upon the discretion and judgment of management with respect to application and allocation of the net proceeds of this offering. Investors in the offered securities will be entrusting their funds to our management, upon whose judgment and discretion the investors must depend.

Control by Management

As of the commencement of this offering, our executive officers and directors own more than 50% of the outstanding voting securities. Each share of the Series D Stock offered hereby will have one vote per share for all actions that require common stockholder approval and as such may have the ability to vote to remove any member of the Board of Directors. However, if only a portion of this offering is purchased, the executive officers and directors may maintain voting control of the Company. Accordingly, and because there is no cumulative voting for directors, our executive officers and directors may be in a position to control the election of the directors of the Company and to control our business and operations through their stock ownership, positions on the Board of Directors and management roles.

Dividend Policy

A holder of the Series D Stock offered hereby will be entitled to receive dividends only when, as, and if declared by the Board of Directors out of funds legally available. Our Board of Directors will determine the dividend policy based upon our results of operations, financial condition, capital requirements, and other circumstances. Additionally, prior to distributing dividends to

holders of the offered securities, we must pay all accrued but unpaid dividends to holders of Series B Convertible Preferred Stock. Based on the financial position of the Company prior to this offering, without giving effect to any proceeds to be received from this offering, we may be undercapitalized and unable to pay dividends until our financial position is improved.

No assurances of protection for proprietary rights; Reliance on trade secrets

In certain cases, we may rely on trade secrets to protect proprietary technology and processes which we have developed or may develop in the future. There can be no assurances that secrecy obligations will be honored or that others will not independently develop similar or superior technology. The protection of proprietary technology through claims of trade secret status has been the subject of increasing claims and litigation by various companies both in order to protect proprietary rights as well as for competitive reasons even where proprietary claims are unsubstantiated. The prosecution of proprietary claims or the defense of such claims is costly and uncertain given the rapid development of the principles of law pertaining to this area. We may, like other firms, also be subject to claims by other parties with regard to the use of technology information and data which may be deemed proprietary to others.

Cybersecurity

We are, and our service providers are, susceptible to operational, information security and other cybersecurity risks, both directly and indirectly through their certain third parties. Similar types of cybersecurity risks are also present for issuers of securities in which our IARs invest, which could result in material adverse consequences for such issuers and may cause clients’ investment in such portfolio companies to lose value. These risks may not be covered by insurance. In general, cybersecurity incidents can result from deliberate attacks or unintentional events. Cyber-attacks include, but are not

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limited to, gaining unauthorized access to digital systems (e.g., through hacking or use of malicious software coding) for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. Cyber-attacks may also be carried out without ever obtaining direct access to the targeted systems, such as through a denial-of-service attack which could result in the target’s network services becoming unavailable to its intended users. Cybersecurity failures by, or breaches of, the systems of the Company, IARs and other service providers (including, but not limited to, data providers, accountants, custodians, transfer agents and attorneys), market makers or the issuers of securities in which the IARs invest, could cause disruptions and impact business operations, potentially resulting in one or more of the following: material financial losses, unintended disclosure of confidential trading information, material impediments to trading, submission of erroneous trades or redemption orders, the inability of the Company or its service providers to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. In addition, cyber-attacks may render inaccessible, inaccurate or incomplete any or all of the records of our assets, transactions, ownership of offered securities, and other data integral to our functioning. We may have to incur substantial costs in order to prevent or address cyber-incidents in the future. We have established a cybersecurity policy and business continuity procedures to address and mitigate these cybersecurity risks. Despite these efforts, certain risks may not yet have been identified and it is possible that prevention and remediation efforts will be inadequate or unsuccessful. Additionally, because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a company, we may be unable to anticipate these techniques or to implement adequate preventive measures. Furthermore, we are unable to directly control the cybersecurity procedures and systems of any service providers, and the shareholders could be materially and adversely impacted as a result.

Litigation

There is no pending or threatened litigation against us at this time. We expect that, from time to time in the future, we may be engaged in routine litigation incidental to operating a business. Legal proceedings, even frivolous proceedings, can be costly and time consuming. The cost of any litigation would reduce the amount of expansion capital available to us and may materially impact the value of the offered securities.

Terrorist attacks or other acts of violence or war may affect our industry, operations and profitability

Terrorist attacks, whether local, national or international, may harm our results of operations and an investor’s investment as a result of fluctuations in the investing environment. There can be no assurance there will not be more terrorist attacks against the United States, U.S. businesses or key U.S. allies. These attacks or armed conflicts may directly or indirectly impact the value of our stock. Moreover, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy. They could also result in economic uncertainty in the United States or abroad. Any uncertainty in the U.S. markets may affect the amount of investable income of potential clients and may also influence investors’ behavior in ways we cannot predict, which may be particularly detrimental to our business model.

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DILUTION

Private Offering

Prior to this offering’s effective date, the Company conducted an offering relying on the exemption provided in Regulation D 506(c) to sell the offered securities to accredited investors. During this prior private offering, shares of our Series D Stock could be acquired for a discounted purchase price under two scenarios: (i) clients of RIAs could purchase the offered securities for a seven percent (7%) discount for their client’s accounts; and (ii) clients of broker-dealers could purchase the offered securities for a fifteen percent (15%) discount, which was limited to the first 300,000 shares.

Future Dilution

We, for business purposes, may from time to time issue additional shares, which may result in dilution of existing shareholders. Dilution is a reduction in the percentage of a stock caused by the issuance of new stock. Dilution can also occur when holders of stock options (such as company employees) or holders of other convertible securities, such as warrants, exercise these convertible securities. When the number of shares outstanding increases, each existing stockholder will own a smaller, or diluted, percentage of a company, making each share less valuable. Dilution may also reduce the value of existing shares by reducing the stock’s earnings per share. There is no guarantee that dilution of the offered securities will not occur in the future.

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PLAN OF DISTRIBUTION

The Company has engaged Lanier Securities, LLC as a placement agent (the “Placement Agent” or “Lanier”). The Company entered into an engagement letter with the Placement Agent, which defined the terms and conditions of its association with this offering. We will pay Lanier seven percent (7%) of the gross proceeds of the offering and one percent (1%) of gross proceeds of the sale for unaccountable expenses. Upon the completion of this offering we will execute a warrant agreement with Lanier for the purchase of a number of shares of common stock equal to 5% of the Series D Convertible Preferred Stock sold during this offering and a prior private placement, at $2.50 per share, exercisable at any time prior to the seven-year anniversary of the warrant’s effective date. We also paid Lanier $25,000, payable in five monthly installments, upon the execution of the engagement letter related to early stage due diligence. Lanier will provide financial advice related to the offering, and establish a selling group and marketing plan to sell the offered securities.

Dewey M. Moore, Jr., our Chief Executive Officer, is a registered representative and compliance officer for Lanier. As a registered representative of Lanier, Mr. Moore may receive commissions for any sale of Series D Convertible Preferred Stock through Lanier; however, Mr. Moore has no intention to sell Series D Convertible Preferred Stock as a registered representative of Lanier.

We will engage Prime Trust Federal Credit Union as an escrow agent. All proceeds from the sale of Series D Convertible Preferred Stock will be deposited in an escrow account for further transfer to us upon acceptance of the subscription agreement. Since there is no minimum amount of securities that must be purchased in this offering, all accepted and approved subscription proceeds will be available to us after release from escrow and no investor funds will be reimbursed if the proceeds of this offering are insufficient to cover the costs of the offering.

We anticipate applying for a Committee on Uniform Security Identification Procedures (CUSIP) number and Depository Trust Company (DTC) eligibility; however, a trading market for the Series D Convertible Preferred Stock may never develop.

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USE OF PROCEEDS¹

The following section is based on estimates by management. Our actual use of the proceeds may differ depending on the exact amount invested in the offering and any foreseen or unforeseen changes to our operating landscape.

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OUR ACTUAL USE OF PROCEEDS MAY DIFFER DEPENDING ON THE BUSINESS AND REGULATORY LANDSCAPE.

Exchange or Repay Senior Secured Notes. We expect the holders of a significant amount of our 8% Senior Secured Notes will exchange their Notes for shares of the Series D Convertible Preferred Stock. Notes that are not exchanged will be paid off as a portion of the use of proceeds in this section. Management expects to negotiate discounted settlements with other debts and liabilities of the Company.

Holders of our Series B Convertible Preferred Stock will also have an opportunity to exchange their Series B Convertible Preferred Stock for shares of Series D Convertible Preferred Stock. We expect a significant portion of the Series B Convertible Preferred Stock to exchange into the Series D Convertible Preferred Stock.

Technology Investment & Development. We intend to make investments in technology to put us on the “cutting edge” with other nationally recognized RIA and wealth management firms.

Dividend Reserve Account. We intend to keep segregated in a separate account the funds necessary for the payment of dividends on the Series D Convertible Preferred Stock for the first two years, which we believe will provide ample time for us to reach a sustainable level of profitability to service the dividend payments from profits of the Company.

Acquisition & Working Capital. Our sales and business development team at IWA has a pipeline of prospective new recruits and acquisition candidates. The Board of Directors is also considering the purchase of ILA from Mr. Moore after a fair market analysis is competed. In addition, we have developed a growth and acquisition plan for the next four years that allocates a portion of the proceeds to acquisition and aggregation of other smaller RIAs and IARs into IWM and IWA. We believe this will accelerate our growth and acquisition program, thus expanding our footprint from a regional mini-aggregator into a $5-10 billion-plus national super-aggregator.

If this offering is fully subscribed, the capital will serve to accelerate our growth plans. Additionally, we have the internal money management expertise to safely invest the excess funds at favorable risk-adjusted returns until additional acquisition opportunities are realized.

Potential Interested Transaction.

The Company has considered and will consider acquiring the ILA from Dewey M. Moore, Jr. Any transaction will be conducted on an arms-length basis for a price determined by an independent third-party evaluation and must be unanimously approved by the independent members of the Board of Directors.

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DESCRIPTION OF BUSINESS

Institute for Wealth Holdings, Inc.

Summary:

Our company is the result of a successful merger in 2016 of the Institute for Wealth Management, LLC, which was founded by Matthew D. Medeiros in 2003, and Institute for Wealth Holdings, Inc., formerly Cherry, Inc., which was founded in 2008 by Dewey M. “Rusty” Moore, Jr. Both of our founders are experienced investment professionals who have demonstrated proven skills, excellence in leadership in the development of innovative products and services, and superior team building capabilities in launching successful companies.

We operate a dual RIA platform utilizing our proven management team to recruit and train associate investment advisers and IARs to gather AUM under a successful, client-centric national brand. We provide, through multiple custodians, a single client interface for the administration, execution and reporting for client accounts, and offer advisers online access to fee tracking and payments. Our business model separates the money management functions from the advisor marketing functions with added degrees of separation from clients’ AUM, reducing compliance risk and allowing for higher productivity by providing our advisors and IARs more time to focus on existing client relationships and prospective new clients. Our company enjoys an excellent business reputation. Since their inception, neither IWM, IWA nor their affiliates have had an unresolved customer complaint.

Our training process for advisers is structured to provide templates, support, resources, coaching and guidance for greater client retention and growth. When each new advisor joins us, the advisor receives an overview of IWM’s wealth management portfolios, policies and procedures, advertising and marketing guidelines, client enrollment materials and other information to support the advisor’s client development efforts.

Our Growth:

Our 2016 merger was our first major step to expand our national brand and increase our AUM. The merger with IWM provided us with an expansive platform, proprietary wealth management strategies, experienced leadership team, an improved technological infrastructure and a proven portfolio management philosophy.

The merger also provided us with a broader platform from which we can acquire independent IARs and smaller RIAs, and “on-board” each new advisor efficiently and effectively. The growth capital sought by this offering is intended to, in part, accelerate our management team’s ability to execute our growth plans to expand from a regional mini-aggregator, to a national $10 billion-plus super-aggregator of AUM supporting over 200 IARs and tens of thousands of clients.

Our leadership is focused on implementing this growth strategy and we have added twenty new investment advisory professionals over the first half of 2017 alone. Our AUM has increased from under $200 million on December 31, 2016, to approximately $500 million by March 2017, over $750 million at the end of June 2017, and $819.4 million as of the end of September 2017. Since December 31, 2015, on a pro forma basis, our total revenue has increased at a CAGR of 113% and AUM has grown at a CAGR of 82%. Although this indicates robust economic growth, our management team anticipates continued rapid development and growth if we are able to obtain the expansion capital necessary to acquire new advisors and AUM.

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Our future marketing and growth plans focus on five primary distribution channels, as aligned to our own core competencies and anticipated market opportunity:

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Our Products:

We have competitive advantages as a result of our management philosophy, proven leadership, our proprietary wealth management products and technologies and our scalable investment architecture. All of our wealth management strategies are developed and managed internally, and we are therefore not dependent on using “outside” or third-party money managers. This adds to IWM’s profit center and also provides our IARs a cost effective advantage, as most independent RIAs and IARs must either hire outside money managers for a portion of the fees they charge, which cuts into their profitability, or they attempt to manage client account assets themselves. Very few independent RIAs and IARs are successful with this approach.

Through selective recruiting of advisors, we believe we are in a position to optimally manage and support the activities of our prospective advisors, providing them with our proprietary wealth management portfolios and advisor support platform as compared to smaller to mid-sized traditional RIAs that are faced with the challenges of trying to do it all themselves. The merger with IWM provided us with the brand, the advisor support platform and proprietary wealth management products to recruit or to acquire less profitable advisors and reform them into successful advisors. Our operations are dependent on the ability of our management team to recruit, manage and train enthusiastic investment advisers.

Our technology allows us to manage each of our proprietary portfolio strategies through the management of a single model for each portfolio strategy. We are then able to allocate those efficiently and cost effectively as Separately Managed Accounts (“SMAs”) across hundreds or thousands of our client accounts. These SMAs function like mutual funds, but without the costs, fees and constraints required by the mutual fund industry, thus giving our clients a lower cost, more efficient actively managed account, presumably with a greater upside potential. Our proprietary wealth management products and SMAs offer a differential advantage for our IARs and clients. These products include the following:

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Our investments strategies have significant track records of producing meaningful risk-adjusted returns, remaining focused on the overall strategy of managing a client’s risk first and returns second. Our various strategies include the following:

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Structure of Institute of Wealth Holdings⁴

		The Institute for Wealth Holdings, Inc.

Our core competencies align with our mission to provide a comprehensive suite of premier client and advisor-centric services. Our diversified services platform and our multiple channels of distribution also provide the opportunity for multiple revenue streams to IWH divided in four (4) major components. We derive revenues from: (1) IWM’s portfolio and wealth management services, (2) IWA’s advisor support in practice management, coaching & development, back-office services & technology, (3) financial planning, and (4) life insurance and annuity offerings, all more specifically described below.

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Portfolio & Wealth Management. Our investment philosophy is based on managing risk first and returns second. Our investment management arm has over forty strategies with significant track records, providing the full spectrum of investment options necessary for any practice, some of these are outlined in the preceding paragraph. By offering these same solutions to various outside broker-dealer and third-party asset management platforms, we are also able to effectively leverage our intellectual property, generating revenue from assets held away from our direct platforms.

Practice Management, Coaching & Development. Each advisor is encouraged to work one-on-one with an experienced investment manager or coach to learn important aspects of the business, while focusing on the individual advisors’ strengths and weaknesses. By doing so, we are able to create a personalized plan to improve their overall practice management objectives. This hands-on management increases our appeal to break-away prospects, while simultaneously increasing current AUM for an advisor and the firm.

Back-Office Service & Technology. Through direct investments in technology and close partnerships with allied firms, our technology platform allows advisors to spend more time with their clients and less time administrating each account. Our back office team actively supports new advisors allowing them to focus on client development and asset management, as most independent advisors must spend approximately fifty percent (50%) of the time conducting back-office services. We also feature strong relationships with each of the major custodians to provide world-class client and advisor choice.

A Financial Planning Focus. We provide financial planning services to help advisors and IARs focus on providing a more comprehensive advisory service to clients, thereby enhancing their client relationships. Our financial planning division helps advisors perform at a higher level of service to clients, and ultimately gather more AUM, additional fee based income and uncover estate planning needs for life insurance and annuities. This capability and support for IARs and clients is available to advisors through a service support desk, a dedicated para-planner to enter the clients’ data as well as a customized and IWM branded software platform with a virtual cloud storage component.

Licensed Insurance Agency Solutions. Our IARs have access to ILA, our corporate insurance agency affiliate of IWH, to offer life insurance and annuity products to their clients. Having a breadth of non-investment solutions, such as expertise and access to diversified life insurance and annuity products, means helping clients with risk management, estate planning, retirement planning and other complex life and annuity strategies to complement their full wealth management and life planning goals. Additionally, our Agency offers additional revenues for the Company and for our advisors and IARs.

Why we believe IWH will continue to grow and thrive as a successful company:

We have clear, executable growth strategies that are focused on expanding our network of IARs and growing our AUM. Since our 2016 merger, we now appeal to a much broader base of successful advisors across the country. Further, because our RIA subsidiaries are registered with the U. S. Securities and Exchange Commission, (“SEC”) rather than on a state by state basis, we can enter a new state and recruit new IARs in that state with a simple notice filing in most cases.

We believe we can continue our rapid growth and expansion over the next few years, due to the following:

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As shown above, since our merger with IWM, we have been able to rapidly accumulate AUM.

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Consistent with our AUM growth, since the merger with IWM, we have seen an increase in revenue, as shown above.

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Access to acquisition and growth capital will allow us to acquire smaller RIAs and independent IARs, which will result in a growth in AUM, as projected above. We believe that with increased capital, we can acquire additional RIAs and IARs and effectively incorporate their clients and AUM into our companies.

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If we are able to expand our AUM through the expenditure of growth capital, our revenue should correspondingly increase, as projected above.

Management Team:

We host a growing team of experienced, top-tier managers and financial professionals. Members of our team have led publicly-traded financial companies through numerous private equity and merger transactions and have managed pensions, endowments, and some of the most cutting-edge portfolios on the market today.

We operate through four functional teams:

Executive Management Team – Our executive management team is generally responsible for, together with the Board of Directors, establishing and maintaining our vision and mission and our values, setting our strategy, growing profitably, developing our people and managing the financial, budgets, major projects, and structure of the organization. The executive management team handles major administration policies and human resource matters as well. The executive management team consists of:

D. M. Rusty Moore – IWH Chairman and President of IWA; and

Matthew D. Medeiros – IWH Executive Vice President and President of IWM.

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Investment Management Team – IWM Investment Committee & Capital Markets Team – Our investment management team is responsible for the creation, maintenance, performance and risk management attributes of IWM’s forty proprietary investment models and products, portfolio management strategies and separately managed accounts. Each portfolio manager reports to and is held accountable by the investment management team. They meet at least weekly to review evolving market dynamics, portfolio and strategy performances and recommended changes. The investment management team consists of:

Matthew D. Medeiros – Chief Investment Officer and IWM Investment

Committee Chairman;

Jeffrey Pietsch, JD, CFA – Senior Portfolio Manager, Head of Capital Markets;

Creg Schaeffer – Chief Economist; and

D. M. Rusty Moore – Member, Value Portfolio Strategist.

Operations Team – Our operations team is responsible for implementing our mission and strategies established by the Board of Directors and executive management team, and for executing our day-to-day tactical plan, policies and procedures. In particular, the operations team oversees our financial reporting, treasury and compliance functions, and coordinates and manages staff members to efficiently and cost effectively manage across inter-company lines. The operations team leaders consist of:

Matthew D. Medeiros – Chief Executive Officer of IWM;

Jeffrey Jorgensen – Chief Operations Officer of IWM;

Donald Schulz, CPA – Chief Financial Officer of IWH; and

T. Scott Brooks – Chief Compliance Officer of IWA.

Sales, Marketing & Business Development Team – Our sales, marketing & business development team is responsible for RIA acquisitions, mergers, business development recruiting new IARs, relationships with our existing RIAs and broker-dealers, and attracting new relationships with RIAs, services and product offerings. The sales, marketing & business development team leaders consist of:

D. M. Rusty Moore – CEO, President of IWA

Matthew D. Medeiros – CEO and President of IWM; and

John H. Moore, III – Managing Director of National Recruiting.

Services Team – Finally, the above team leaders and our six (6) other support staff members currently make up a total of fourteen full-time and part-time support staff and operations employees who are ready to assist our growing advisor base with their daily administrative and practice management needs. With the exception of the CEO and CFO, all employees are employed either at IWM or IWA, with several that serve across inter-company lines.

For biographies of our executive officers, directors and other significant employees, see “Directors, Officers and Significant Employees.”

Investment Management Industry:

Industry Trends:

The wealth management industry around the world is witnessing a multitude of changes due to weak economies in the developed world, strong growth in developing markets like China and India, uncertain political future in Europe, increasing regulatory supervision, and new competition from rising FinTechs and their innovative services for High Net Worth Individuals (HNWIs).

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With evolving digitization in the industry, more customers and asset managers are leveraging the power of massive amounts of financial information for real-time asset and portfolio management. This means that there are proprietary and third-party services that have access rights to clients’ and firm’s financial information in order to provide the end-user a window into their investment performance and management.

FinTechs are making inroads throughout the wealth management lifecycle by innovating standard wealth management functions ranging from client acquisition and advice, to compliance. New FinTech offerings, including automated advice platforms, open investment communities, and third-party capability plug-ins are increasingly being embraced for HNWIs as alternatives to traditional face-to-face advice.

Wealth management firms of all sizes are harnessing the power of artificial intelligence and analytics to enable faster decision making by wealth managers. Using automated platforms provides cost benefits for the companies in the long run as they are able to replace existing legacy infrastructure with a more efficient data management platform.

For decades, the wealth management industry has been resistant to transformative digital technology, but now, driven by the changes in client behaviors, wealth managers are demanding digital capabilities. Wealth managers, including those who may have been reluctant, are embracing digital tools to compete with technology-enabled advisory services.

Traditionally HNWIs have been paying for the wealth services they avail on the basis of their assets under management, but now their preference for fee structure is changing, such as paying according to investment performances. Also, the investment management model has evolved from a pure transaction-based model to a more holistic goals-based financial planning model.

Approximately $10 trillion of wealth transfers will take place in the U.S., Germany, and Japan. China is also expected to witness a significant intergenerational wealth transfer after tremendous HNWI wealth growth over the past decades of robust economic growth. Many young people inheriting their parents’ assets are expected to sell such businesses and set up family offices, which will provide IWH with an opportunity to obtain new advisors.

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Investor demands and regulations are forcing new business models in the wealth management industry that focus on providing better customer experience. Investment advisors must now have multiple investment models to be successful, which typically include: pure automated advisory model, holistic goals-based financial planning and wealth management model, and hybrid advice model.

Regulation:

IWM, IWA and IWC are involved in one of the most heavily regulated industries in the country. Any amendments to SEC rules or regulations can increase compliance costs significantly. The Department of Labor’s updates to the fiduciary duties of investment manager (including non-discretionary managers) with respect to Individual Retirement Accounts, if not repealed, could significantly increase liability exposure and compliance costs. Smaller RIAs and independent IARs will need to join larger platforms to handle the expense of regulatory costs.

Opportunity:

The financial services sector represents about 14% of the S&P 500 for a total market capitalization of approximately $2.9 trillion. Currently, the industry faces a confluence of trends supportive of significant opportunity for well-positioned RIAs. These trends include: transition to fiduciary pricing, de-emphasis of national brands, demographic and regulatory changes, and disruptive technologies.

Business Model Shift: In prior decades, brokers were compensated for their investment advice based on a transactional model. Typically a broker would assess a fee for each trade. Accordingly, brokers were incentivized to increase trading frequency instead of providing quality advice. While this model continues to be utilized by the nation’s approximately 1,350 independent broker-dealers, the current trend features a shift towards charging a set percentage fee against AUM. This is considered the fiduciary, or investment advisor model, where client and advisor interests are aligned to increase total wealth.

Although this shift is hardly new, the industry continues to see strong migration among the nation’s approximately 167,000 advisors. Typically, these brokers seek to transition to RIA practices that provide fixed-fee or hybrid business models, and feature similar back-office and regulatory oversight infrastructure they were accustomed to at larger firms. In fact, Cerulli Associates forecasts independent RIAs will control more assets than all brokerage firms by the year 2020.

Traditional Break-Aways: Just as the industry has seen a shift in dominant business models, so too are the power of old brands giving way to emergent innovators providing similar, yet better targeted services for significantly less overhead cost to the advisor. The disruption of traditional media by the internet has materially reduced the power of the familiar old national ‘wire-house’ brands. Supported by superior, more agile technology and far less administrative overhead, newer ‘aggregator’ firms supporting multiple advisors are able to offer much improved advisor economics, driving demand among ‘break-away’ advisor prospects.

To adjust to this market-driven downsizing, many traditional wire-houses are now responding by releasing their smaller advisors. However, the emergent RIA aggregators are situated to profitably service this segment, further accelerating their rise.

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Seasoned Advisors Aging-Out: As technology has lured talented, young advisors away from the financial services sector and it has lost an element of prestige since the great recession, studies by Fidelity Clearing suggest that there are now significantly more financial advisors over the age of 70 than there are under 30, with an average advisor age of 51. This demographic trend has several relevant consequences. First, typically younger RIA advisors have superior access to the next generation of wealth as compared to their older broker-dealer counterparts. Second, advisors must clearly establish its succession plan. A well-positioned RIA aggregator should be both culturally appealing and able to offer mentoring to younger advisors, while at the same time have capital available to offer buy-out options to retiring advisors seeking to monetize their practices. Buying out aging advisors may be a fast-track approach to garner profitable assets given the 8,600-plus advisers expected to retire annually well into the next decade. IWH has implemented an internal policy to address any IWA advisors aging out, IWA IARs are required to establish a succession plan for their practice.

Evolving Regulatory Landscape: Recent legislation now going into effect, including the revised Department of Labor (DOL) retirement account standards and Anti-Money Laundering (AML) rules are raising the regulatory bar and cost of compliance. As costs and expertise requirements rise, they present an increasing compliance barrier to entry for smaller firms, leaving larger ‘aggregators’ again in the best position to spread such costs across their wider base of advisors. Further, in the case of the DOL rules, RIAs are also better positioned relative to broker-dealers, as they already meet the requisite fiduciary standards. Meanwhile, with the Securities Exchange Commission (SEC) increasing its examination rate, the trend of increasing regulation appears likely to continue.

Fin-Tech Altering Nature of Advice: ‘Robo-Advisors’, providers of automated investing advice, trading and account maintenance, now represent over $20 billion in assets under management (AUM). While this public-facing technology is the most visible, lesser known but equally disruptive back-office technologies are also making an impact on the industry. These technologies include customer relationship management, document management, trading, billing, reporting, cyber-security and compliance retention software. Access to an integrated, low-cost technology stack is increasingly important to operating a cost-efficient RIA.

As a result of these various converging trends, the market opportunity for well-positioned, growth-oriented RIAs is rising geometrically. Well-rounded skill sets from money management to back-office services and technology, along with access to growth and acquisition capital are critical to participating in this opportunity.

Mergers and acquisitions among RIAs are one indicative measure of this fact, with a 16% compound annual growth rate seen in transaction volume subsequent to the 2008 market crash. In addition, average deal size is growing, now exceeding $1B in assets under management.

IWH is well positioned, structurally and with the organizational team and talent to capitalize on this active merger and acquisition market to expand our platform and consistently acquire a significant position and national market share in advisors, clients and AUM.

Company Information

Our corporate headquarters are located at Two Galleria Tower 13455 Noel Road, Suite 100 Dallas, Texas 75240, telephone (972) 450-6000. IWM’s headquarters is located at 1776 Lincoln Street, Suite 950 Denver, Colorado 80203.

Our websites are http://iwhinc.com/, http://iwainc.com/ and https://instituteforwealth.com/. We do not incorporate the information on or accessible through our website into this offering circular, and you should not consider any information on, or that can be accessed through, our website a part of this offering circular.

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DESCRIPTION OF PROPERTY

The Company does not own any real estate. We lease two primary locations, our corporate headquarters in Dallas, Texas and our IWM headquarters in Denver, Colorado. Our Dallas office is located at Two Galleria Tower, 13455 Noel Road, Suite 100, Dallas, Texas 75240, and consists of approximately 2,000 square feet. Our Denver office is located at 1776 Lincoln Street, Suite 950 Denver, Colorado 80203, and consists of approximately 3,345 square feet. We currently do not have a policy with respect to investments or interests in real estate, real estate mortgages or securities of, or interests in, persons primarily engaged in real estate activities and generally do not engage in such activities.

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MANAGEMENT AND FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Summary

Our company is the result of a successful business combination in 2016 of two companies, the Institute for Wealth Management, LLC (“IWM”), founded in 2003, and Institute for Wealth Holdings, Inc., formerly Cherry, Inc., founded in 2008. We operate a dual investment advisor platform to recruit and train associate investment advisers and investment advisory representatives to gather assets under management under our brand. Among other services, we provide, through our multiple custodians, a single client interface for the administration, execution and reporting for client accounts, and offer advisers online access to fee tracking and payments.

We conduct our operations through several subsidiaries. Our primary operating subsidiaries or affiliated entities are:

Institute for Wealth Management, LLC. IWM is our wealth management company which provides over 40 distinct portfolio management strategies or models of separately managed accounts (“SMAs”) held at one or more of IWM’s several custodians. IWM also provides money management services and charges an investment management fee for client accounts, usually as a percentage of their AUM. Fees for total investment advisory services are collected by IWM’ s various custodians and remitted to IWM either monthly or quarterly in advance. IWM retains a portion for its investment management services, on average about 50 bps, and remits the balance to IWA as the introducing RIA or, in the case of a third party RIA referring firm, to that RIA.

Institute for Wealth Advisors, Inc. (“IWA”). IWA is our investment advisory representative and advisor service support platform. For the services provided, IWA receives a portion of the total fees charged to clients, which ranges between 1% to 2% annually depending on the size of the client’s AUM. IWA services and collects investment advisory fees, charged to client accounts either monthly or quarterly in advance, as forwarded from IWM, retaining a portion for IWA’s operations and profit margins, and disbursing the balance to our IARs for the net fees they derive from providing investment advisory services to their clients. IWA also provides financial planning for clients of its IARs based on a flat fee for service, usually $1,500 to $5,000 per plan. IWA retains a portion of the planning fee to cover administrative, technology and para planner costs and remits the balance to the IAR.

Institute for Life & Annuity, Inc. (“ILA”). ILA is our affiliated corporate life insurance agency and field marketing organization for approximately 40 life insurance and annuity carriers. IARs that are also licensed insurance agents become appointed with our various carriers through ILA to offer life insurance and annuity policies to their clients. ILA derives a portion of the commissions generated by the producing agents. ILA is owned by Dewey M. Moore, our Chief Executive Officer, and contributes its associated revenue through an expense sharing agreement.

Key Factors Affecting Our Performance

Long-Term Growth in AUM. Our growth strategy is dependent upon enrolling new clients with one or more of our custodians who provide our wealth management, investment advisory and financial planning services. We also plan on expanding our investment management capabilities, enhancing our technology infrastructure, expanding our product offerings, and enhancing customer experience and lifetime value.

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We plan to continue to invest significant resources to accomplish these goals, and we anticipate our operating expenses will continue to increase for the foreseeable future, particularly our sales and marketing, technology, and infrastructure expenses. These investments are intended to contribute to our long-term growth, but they may affect our near term profitability.

Recruiting and Maintaining Quality IAR Relationships. Our revenues decreased from 2015 to 2016, but have grown substantially since our merger in 2016. This growth is primarily a result of the addition of new IARs which enhanced the growth of our assets under management. In addition to increasing the number of IARs, this revenue growth was helped by increasing investments from our existing and new IARs and increases in our average customer account size.

We anticipate our future growth will continue to depend in part on attracting new IARs and AUM to our platform. We plan to increase our sales and marketing spending to attract these customers as well as the acquisition of other RIAs and to expand our efforts to recruit IARs. If we are able to invest more in our recruiting and acquisition efforts, we believe we will increase our growth in AUM at a faster rate than in the past, as evidenced by our 2017 results.

Primary Components of Results of Operations

Revenue. We generate the majority of our revenue from (i) investment management fees from client accounts held at our various custodians with which we partner, (ii) investment advisory and financial planning fees paid by clients, and (iii) life insurance and annuity sales and override commission income.

Investment Advisory Compensation Expenses. Our IARs receive compensation based on the amount of fee revenue generated. Our investment advisory compensation expense generally increases in proportion to increases in AUM.

Operating Expenses. Our operating expenses consist primarily of employment and compensation costs, operations and support staff, rent and office maintenance, sales and marketing, technology and software costs and other general and administrative expenses.

Advertising and Marketing Expenses. Our advertising and marketing expenses consist primarily of expenses of recruiting IARs and the engagement of third party broker-dealers and RIAs for enrollment of our wealth management and portfolio strategies and programs. Costs attributable to marketing and distribution of our products includes costs of building general brand awareness, travel and trade show expenses, and salaries and benefits expenses related to our sales and marketing teams.

Other General and Administrative Expenses. Other general and administrative expense consists primarily of salaries and benefits expense for our accounting, legal, and operations teams, and professional services fees.

Results of Operations

We completed our merger with IWM in September 2016 and have operated on a consolidated financial basis since that time. As a result, our consolidated financial statements are only available beginning the fourth quarter of 2016. However, our auditors have prepared consolidated pro forma financial statements for 2015 and 2016, as if the merger had taken place January 1, 2015 and the information presented in this offering circular is presented on such basis.

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In the year ending December 31, 2016, we had pro forma revenue of $2,343,745, and operating expenses of $2,917,503, resulting in a net operating loss of $573,758. On a pro forma basis, our 2015 revenue was $3,209,422 and our operating expenses were $3,152,958, resulting in a net operating profit of $56,464.

Comparison of Years Ended December 31, 2016 and 2015

For the years ended December 31, 2016 and 2015, our total revenue was $2,343,745 and $3,209,422, respectively, representing a year-over-year decrease of 27.0%. The decline in revenue was caused by the departure of a number customers of two client RIAs, which began offering their own money management services.

Fees paid to IARs and other direct compensation declined from $1,776,687 to $1,402,440, a decline of 21.1% due to the reduction in average AUM and associated management and advisory fees from the events described above. Gross margin declined in 2016 to $941,305 or 40.2% of revenue from $1,432,736 or 44.6% of revenue in 2015.

Other operating expenses increased to $1,515,063 in 2016 compared with $1,376,272 in 2015. Part of the increase was due to expenses associated with our September 2016 merger. In addition, we experienced an increase in wages and benefits expense due largely to building out a sufficient platform to support our operations and growth following the merger.

For the year ending December 31, 2016, we had a net operating loss of $573,758, versus an operating profit of $56,464 for the year ending December 31, 2015.

We recorded non-operating income of $1,714,340, offset by merger expenses of $712,321, interest expense of $290,000 and depreciation & amortization of $85,138 in the year ended December 31, 2016. This resulted in a net profit before taxes of $52,123. For the prior period, we had non-operating income of $226,478, offset by interest expense of $280,493 and depreciation & amortization of $8,645, resulting in a net loss before taxes of $6,196.

Non-operating income in 2016 was primarily due to a gain on debt settlements. As part of the merger, each of IWH and IWM settled certain obligations for less than the amount historically reflected on the balance sheet, resulting in an increase in shareholder equity and a corresponding increase in non-operating income in 2016.

Liquidity and Capital Resources

As of December 31, 2016, we had cash of $37,491. Our primary uses of cash were for IAR and employee compensation, sales and marketing and working capital. Our main source of cash is from investment management and advisory fee revenue and the private debt offering as part of our September 2016 merger. We believe we will require additional cash for our operations in the future in order to fund:

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The following summarizes the key components of our cash flows for the calendar year 2016 compared to 2015, on a pro forma basis:

Since inception through September 30, 2017, we have financed our operations primarily through private offerings of debt and our equity securities. We plan to fund our future activities through our existing cash on hand, revenues generated from our operating subsidiaries and affiliates and the capital raised in this offering. The capital raised in this offering, if successful, is expected to fund our growth and acquisition capital needs, and meet our liquidity requirements for the foreseeable future. We believe we have a strong business model and have recently scaled up our expenses to accelerate our growth with the expectation we can raise growth and acquisition capital through the proceeds raised from this offering. We cannot be certain that adequate funding will be available on acceptable terms or available at all. To the extent we raise additional funds by issuing debt or equity securities, our stockholders may experience significant dilution. If we are unable to raise funds when required or on acceptable terms, we may have to significantly scale back our operations to attain a sustainable level of profitability which would be a setback to our business and growth plans. We plan to hold our excess unrestricted cash in short-term interest-bearing money market funds at highly-rated financial institutions.

Subsequent Events:

In the first nine months of 2017, we have increased our AUM from $198.0 million at the end of 2016 to $819.4 million though the combination of acquisitions of books of business from retiring IARs, the affiliation of IARs with our company and the recruitment of new IARs. This growth was funded primarily from the September 2016 private placement of debt and revenues from operations. As of September 30, 2017, we had cash of $6,126. For the nine month period ended September 30, 2017, our cash flow is summarized in the table below:

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Interim Results

STATEMENTS OF OPERATIONS

FOR THE PERIODS ENDING SEPTEMBER 30, 2016 and 2017

Comparison of Nine-Months Ended September 30, 2016 and 2017

For the nine-months ended September 30, 2017 our revenue increased from $1,788,165 in 2016 to $3,213,626, in 2017, representing a year-over-year increase of 79.7%. The increase in revenue was primarily a result of the recruitment of new IARs and the corresponding growth of AUM to $819.4 million as of September 30, 2017 compared with $195.4 million in the prior period.

Fees paid to IARs and other direct compensation increased from $967,058 to $2,047,310, an increase of 111.7% due to an increase in average AUM and a higher payout percentage on some acquired business.

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Gross margin increased in the first nine months of 2017 to $1,037,730 or 32.3% of revenue from $738,460 or 41.3% of revenue in the same period of 2016.

Other operating expenses increased to $1,478,039 in the first nine months of 2017 compared with $1,074,268 in 2016. We experienced an increase in wages and benefits expense due largely to building out a sufficient platform to support our operations and growth following the merger.

For the period ending September 30, 2017, we had a net operating loss of $440,309, versus an operating loss of $335,808 for the same period a year ago.

In the 2016 period, we recorded non-operating income of $1,714,340, offset by merger expenses of $705,638, interest expense of $243,160 and depreciation & amortization of $5,891, which resulted in a net profit before taxes of $423,844. For the period ended September 30, 2017, we had non-operating income of $2, offset by interest expense of $149,276, merger expenses of $36,037 and depreciation & amortization of $235,663, resulting in a net loss before taxes of $861,282.

Key Operating and Financial Metrics

We regularly review a number of metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions. The table below shows our year-end AUM and our review of our components of revenue and detail of our expenses and gross profits as a percentage of management fee revenue and/or total revenue. The table below is on a pro-forma consolidated basis, as if the merger had been completed on January 1, 2015.

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DIRECTORS, OFFICERS AND SIGNIFICANT EMPLOYEES

The following table sets the name, position, age, term in office and, for part time employees, approximate hours per week, for our executive officers, directors’ and significant employees’. Each director is elected by the shareholders and holds such office until his successor is duly elected and qualified. The executive officers are chosen by the directors and can be removed by the directors with or without cause at any time by an affirmative vote by the majority of the directors.

Leadership Team

Dewey M. “Rusty” Moore, Jr. – Chairman, President & CEO, Director

Rusty Moore is the co-founder of IWH (formerly Cherry, Inc.), which was formed in 2008 as a holding company for its related financial and investment advisory platform. Mr. Moore serves as our Chairman of the Board, President and CEO and is also President of IWA. From September 2006 to March 2008, Mr. Moore served as a director of Puritan Financial Companies, Inc., where he was the CEO of Puritan Investment Advisors, Inc., and was also chairman of the board and president of Puritan Life Insurance Co.

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Mr. Moore served as Chairman and CEO of Rushmore Financial Group, Inc., a financial services group of companies which he founded in 1991. Under his leadership, the company grew rapidly from a startup to a retail brokerage organization with a nationwide account base and a network of more than 2,000 agents and registered representatives. During his 15-year tenure with Rushmore, Mr. Moore took the company public in April 1998 and guided the company through a number of public and private-equity transactions, culminating with the merger and acquisition of Terra Nova Trading, L.L.C. in May 2006, after which he retired from the company. Rushmore/Terra Nova was subsequently taken private, being acquired by Lightspeed Technologies of New York.

Mr. Moore earned a BBA from Southern Methodist University and currently holds FINRA Series 6, 23, 24, 26, 62, 63, 65 and 79 Securities Registrations and is a registered investment advisor. He also holds a Certificate of Completion for the Program in Financial Planning from Southern Methodist University as a candidate for the CFP^® certification and is a Certified Estate Planner, CEP^®. Mr. Moore has previously served on the boards of directors of Rushmore Financial Group, Inc., a NASDAQ listed company, two life insurance companies, several private companies and a not-for-profit international ministry organization, MentorLink International, where he also served on the audit and development committees. He is a frequent speaker to business, community and church groups and is a past member of the National Association of Corporate Directors.

Matthew D. Medeiros – President and Chief Executive Officer of IWM, Executive Vice President and Director

Matthew Medeiros is the founder, President and Chief Executive Officer of IWM, the company he founded in Denver, Colorado in 2003, and currently serves as a member of our Board of Directors, Executive Committee, Capital Markets Team and as our Executive Vice President and Secretary. Prior to founding IWM, Mr. Medeiros was the chief executive officer at The Peak Companies from 1995 until 2003.

Mr. Medeiros has been cited in articles appearing in the Wall Street Journal, Investment News, Wall Street Wire in addition to television appearances on CBS News and CW2 News. He is a frequent guest lecturer at universities, academic and professional associations, trade organizations and business groups.

Mr. Medeiros’ career in the investment industry began and expanded beyond the United States. In conjunction with his seven year career in professional baseball in Europe and his interest in the financial markets, he helped create a multi-national European-based financial services organization that was also one of the few civilian businesses permitted on European U.S. Military bases to assist U.S. soldiers in their financial needs. During this period, he was often a guest speaker at the University of Chicago and University of Maryland business classes.

Mr. Medeiros’ prior community involvement has included serving as board chair for Community in Schools, one of Colorado’s largest high school dropout prevention programs, and as a board member of the Colorado Arts Foundation. Mr. Medeiros earned his Bachelor of Science in finance from LaSalle University and has passed the Series 6, 7 and 63 securities examinations.

Donald Schulz, Jr. – Chief Financial Officer

Don Schulz, CPA serves as our Chief Financial Officer, joining us in 2016 after taking a year-long sabbatical. Mr. Schulz is a Certified Public Accountant in the state of Colorado with over 30 years of experience in accounting and financial management. Mr. Schulz has extensive experience working with private equity backed companies ranging from start-ups to mid-cap size companies.

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From November 2012 to August 2015, Mr. Schulz served as Director of Finance, Compliance and Tax/Controller in a consulting capacity for Westmount Realty Capital, LLC, a national real estate company. His prior experience included serving as chief financial officer, controller and as a consultant for New Core Technology Partners, LLC, a zero revenue start-up wine industry service company. Prior to that, Mr. Schulz served in various financial positions with Pluris Holding Company, Stockdale Investments, Inc. and Earth Green Products, Inc., companies ranging from $3 million to $80 million in annual revenue.

Mr. Schulz earned a Bachelor of Science degree in Business Administration and Accounting from the University of South Dakota.

Lloyd. E. Allen, Jr. – Rear Admiral, U.S. Navy, (Ret.) Vice Chairman of the Board of Directors

Admiral Allen has served as a member of the IWH board of directors since August 2009. His military service career spanned 30 years in the U.S. Navy where he led six operational commands: an F-14 Squadron, a Carrier Air Wing Commander, an Amphibious Assault ship, an Attack Aircraft Carrier (The USS Coral Sea), Naval Space Command and a Carrier Battle Group Commander/NATO Strike Force. He also served as Joint Task force Commander at sea and Deputy Joint Task Force Commander in Southwest Asia. He also served with the Joint Chiefs of Staff at the Pentagon. He was awarded the Tail hooker of the Year Award and the United States Navy League John Paul Jones Award for Inspirational Leadership.

After retiring from the Navy, from May 1996 to May 2007 Admiral Allen served as Vice President Business Development for Oracle Corporation, where he focused on e-Business solutions for Department of Defense agencies, the U.S. Navy and Marine Corps and the public sector health industry. He was also responsible for Oracle’s Leadership Development and Executive Coaching initiatives. Since 2000, Admiral Allen has been a business and leadership coach with the Executive Success Group. In addition to his roles and responsibilities as Vice Chairman of our Board of Directors, Admiral Allen also serves as an executive coach and leadership development resource for our Executive Management Team.

Admiral Allen received his undergraduate degree from the University of Texas at Austin and holds a Master’s Degree in International Relations and Business. He graduated from the National War College, and completed graduate business studies in Information Technologies.

J. Timothy Brittan – Member of the Board of Directors

Mr. Brittan has served as a member of our Board of Directors since September 2016. Mr. Brittan is President of Infinity Oil & Gas, Inc., based in Denver, an industry leader in the shale revolution in United States. Mr. Brittan is also the Vice Chairman of Indigena Capital, a new initiative with American Indian Tribal Nations.

Mr. Brittan is also a three-term City Councilman for Westlake, Texas where he also serves as the Chairman of the Planning & Zoning Commission. He has served on the boards of several public and private oil companies as well as audit and compensation committees for certain of these companies. Mr. Brittan earned his Engineering Degree from the Colorado School of Mines and he also completed graduate studies at the University of Colorado.

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Significant Employees and Executives of Subsidiaries

Jeff Jorgensen – Chief Operating Officer of IWM

Jeff Jorgensen joined IWM in September 2007 and currently serves as the Chief Operating Officer for IWM, a position he has held since January 2010. Prior to becoming Chief Operating Officer for IWM, Mr. Jorgensen was the Vice President of Operations for IWM.

Prior to joining IWM, Mr. Jorgensen worked for Columbia Funds from October 2004 to August 2007 where he assisted advisors and clients with back office support and corporate training. Formerly, Jeff was a life insurance agent for New York Life Insurance Company.

Mr. Jorgensen earned his BA Degree in Business Administration with an emphasis in Entrepreneurial Management and a Minor in Accounting from Western Washington University.

John H. Moore, III – Managing Director of Corporate Development

Mr. Moore joined IWA in October 2016 as an IAR. Early in 2017 his role was expanded to Managing Director for Business Development for IWH and as a Regional Vice President for IWA, where he leads the recruitment process for individual advisors, teams and full-service RIAs and is involved in sourcing deals, transactions and other joint ventures and partnerships for the Company.

Prior to joining IWA, Mr. Moore served as a financial advisor at Wells Fargo Advisors from November, 2014 to August 2016. Prior to Wells Fargo, he was a financial advisor at UBS Financial Services from April 2008 to November 2014 and as a financial advisor with at Morgan Stanley from 2003 to 2008. His experience included managing high net worth and middle-market relationships, including hedge funds and family offices.

Mr. Moore also previously served as a senior consultant for five years at Ernst & Young in Dallas and San Francisco. Mr. Moore earned his BBA in Accounting from the University of Texas at Arlington.

Jeff Pietsch – Senior Portfolio Manager, Head of Capital Markets of IWM

Jeff Pietsch, JD, CFA, joined IWM in June 2017, heads up the Capital Markets Team and serves on IWM’s Investment Committee. He is a Registered Investment Adviser Representative in the State of Washington who has worked in the active and alternative investment industry since 2001. Since December 2011, he has been the Managing Director of Eastsound Capital Advisors, LLC (ECA). ECA is a specialty RIA owned by Mr. Pietsch that does not compete with, and is not in conflict with IWM or IWA. Prior to forming ECA, he managed his own private investment fund and authored a popular financial education newsletter. Mr. Pietsch serves as Head of Capital Markets for IWM as a contract consultant.

Previously, Mr. Pietsch served as President and Head of Investments for Concert Wealth Management, Inc., a registered investment advisor from October 2013 to March 2017, Executive Manager of Purcell Advisory Services, LLC, a tactical manager of managers advisor as a contract consultant from May 2012 to August 2013, CEO of Typenex Medical, LLC, a venture-backed hospital products company, Senior Investment Associate for Chicago Venture Partners, LLC, a private-equity fund, Principal at RE2 Market & Economic Advisors, a real estate consulting firm, and COO of Attractions Hawaii, high-end themed attractions partnership. Mr. Pietsch began his career in Honolulu as a Management Consultant for KPMG Peat Marwick.

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Mr. Pietsch has been a Chartered Financial Analyst since 2002. He received a Bachelor of Science degree from Cornell University, his MBA in finance from Northwestern University, Kellogg School of Management, and a Juris Doctorate degree from the Northwestern University School of Law.

Creg Shaffer – Chief Economist, Investment Committee Member of IWM, Investment Advisor

Creg Shaffer has served on IWM’s Investment Committee as Chief Economist since his transition to the Company in late 2016. Creg is also a registered investment advisor based in Reno, Nevada. In his dual roles with IWM, he applies macro-economic theory and trends to market behaviors at the asset class level in the design and implementation of practical, actively-managed investment portfolios.

Creg served as an investment advisor and as a member of the Investment Advisory Committee as Chief Economist from 2013 through 2016 with Concert Capital Management. Mr. Shaffer obtained his investment advisor registration when he assumed the Managing Partner responsibilities at a boutique investment consulting company in 2008.

Mr. Shaffer previously served as a financial systems developer for multiple corporate clients from 2003 to 2009 and as a Senior Manager at Deloitte & Touche from 1998 to 2003. Prior to his time at Deloitte, Mr. Shaffer worked as Manager, Planning & Control for the Federal Reserve Bank of Minneapolis, and Research Economist for the Federal Reserve Bank of Kansas City.

Mr. Shaffer earned a Bachelor of Science degree in Economics from Idaho State University and a Master’s Degree in Economics from Iowa State University.

Thomas Scott Brooks – Chief Compliance Officer for IWA

Scott Brooks has served IWA and IWC as a Compliance Consultant since 2013. He most recently served as President and Chief Compliance Officer with Puritan Brokerage Services, Inc., a FINRA broker/dealer and Puritan Investment Advisors, Inc. both of which he help establish as a subsidiaries of Puritan Financial Companies, Inc. from their inception in 2007 through October 2013.

Scott formerly served as President of RushTrade Securities, Inc., a division of RFGI under the direction of Mr. Moore as CEO. He joined RushTrade in November of 2004 and served as President and Chief Compliance Officer until late 2006. His duties included overseeing advertising, new accounts, client services, software trading systems and compliance for RushTrade Securities, a national direct access, online brokerage firm.

Scott has over 22 years of experience in the securities industry. He previously served as President of Online Securities, Inc., with operations in both Europe and the U.S. Prior to Online Securities, he served as President of Brokerage Services for Momentum Securities, Inc. Mr. Brooks’ earlier career included positions in the Securities Trading with Goldman Sachs, Texas First Brokerage, and Kemper Securities.

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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

We compensate our employees fairly and in alignment with industry standards. There are no salaries paid to any director. Independent directors (currently J. Timothy Brittan and Lloyd E. Allen, Jr.) are paid $1,000 per in person board meeting, $250 per telephonic meeting and 10,000 shares of Common Stock per complete year as a director. Only Mr. Moore and Mr. Medeiros have employment agreements, the remaining members of the management team are independent contractors or at-will employees. The below chart summarizes the compensation of the three most highly paid directors or executive officers at the Company.

DIRECTOR COMPENSATION

There are no salaries paid to any director, except for the salaries paid to Mr. Moore and Mr. Medeiros for their roles as officers. Independent directors (currently J. Timothy Brittan and Lloyd E. Allen, Jr.) are paid $1,000 per in person board meeting, $250 per telephonic meeting and 10,000 shares of Common Stock per complete year as a director. Our directors are elected for three-year terms. Advance notice of stockholder nominations for the election of directors shall be at least ninety (90) days in advance of the date in which the next annual meeting of stockholders is held. In addition, directors may be removed “only for cause” as defined in the our Certificate of Incorporation, and such certificate require an action by at least two-thirds of the voting power of all of the shares of the Company entitled to vote generally in the election of directors, voting together as a single class.

EMPLOYMENT AGREEMENTS

Dewey “Rusty” Moore, Jr.

We executed an employment agreement with Mr. Moore on September 23, 2008. The initial term of his agreement expired on September 23, 2011, but is automatically renewed each year, unless either party gives one hundred and twenty (120) days’ prior written notice. Mr. Moore is entitled to a base salary of $250,000 per annum plus an incentive bonus and any commissions or overrides from fees or commissions generated by associates under his direction or authority. His commissions and overrides for 2016 amounted to approximately $110,000. We may terminate Mr. Moore’s employment at any time; however, if he is terminated without cause then he will be entitled to receive any compensation through the date of termination, an amount equal to his base salary for the remainder of the term of his agreement, any vested commissions and any incentive bonus that would otherwise be due and payable. Mr. Moore is restricted from competing with us or soliciting any of its current or former employees for two years following his employment with us.

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Matthew D. Medeiros

Mr. Medeiros, the Company and IWM executed an employment agreement on September 12, 2016. The initial term of his agreement expires on September 12, 2019 and will automatically renew each year, unless either the Company and IWM on the one hand or Mr. Medeiros on the other hand gives one hundred and twenty (120) days’ prior written notice. Mr. Medeiros is entitled to a base salary of $320,000 per annum plus stock options and an incentive bonus. We may terminate Mr. Medeiros’ employment at any time; however, if he is terminated without cause then he will be entitled to receive any compensation through the date of termination, an amount equal to his base salary for the remainder of the term of his agreement and any incentive bonus that would otherwise be due and payable. Mr. Medeiros is restricted from competing with us or soliciting any of its current or former employees for two years following his employment with us.

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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

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INTERESTED TRANSACTIONS

Merger with Institute for Wealth Management Holdings, Inc.

On September 12, 2016, the Company’s former subsidiary, Cherry Acquisitions, Inc., a Delaware corporation (“Cherry”) merged with Institute for Wealth Management Holdings, Inc., a Delaware corporation (“IWMH”), the parent company of IWM. IWMH was the surviving company post-closing, and has subsequently transferred all of the outstanding membership interest in IWM to IWH. In exchange for the Merger, IWMH shareholders surrendered all of their ownership interest in IWMH and were issued forty-seven percent (47%) of the outstanding stock of the Company on a fully-diluted basis.

Mr. Medeiros was an executive officer of IWMH prior to the merger and J. Timothy Brittan was a director of IWMH. Pursuant to the merger, Mr. Medeiros and Mr. Brittan were nominated to the Board of Directors of the Company and subsequently voted onto the Board of Directors. Subsequent to the transaction, Mr. Medeiros was appointed as the Executive Vice President of the Company and joined the Company’s Executive Committee along with Dewey M. Moore.

In exchange for all of his ownership in IWMH, Mr. Medeiros received 1,281,040 shares of Series C Convertible Preferred Stock, which is held by him individually and as a trustee of KM Investment Trust, and 200,163 shares of Common Stock. Mr. Medeiros also agreed to release and waive, pursuant to that certain Release and Waiver of Compensation Claims dated September 12, 2016, all claims to $886,067 worth of accrued compensation.

Potential Interested Transaction.

The Company has considered and will consider acquiring the ILA from Dewey M. Moore, Jr. Any transaction will be conducted on an arms-length basis for a price determined by an independent third-party evaluation and must be unanimously approved by the independent members of the Board of Directors.

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DESCRIPTION OF CAPITAL

The following summary is a description of the material terms of our capital stock and is not complete. For more detailed information, you should refer to our certificate of incorporation, as amended, and our bylaws, which have been filed with the Securities and Exchange Commission as part of this offering circular.

Overview

Our authorized capital stock consists of 50,000,00 shares of Common Stock, par value $0.001 (“Common Stock”) and 10,000,000 shares of Preferred Stock, par value of $0.001 (“Preferred Stock”). The Preferred Stock currently consists of 70,000 authorized shares of Series B Convertible Preferred Stock, 1,925,000 authorized shares of Series C Convertible Preferred Stock and 2,500,000 authorized shares of Series D Convertible Preferred Stock. The Series C Convertible Preferred Stock currently pays no dividend. We previously issued a class of Series A preferred stock, which has been redeemed and may not be reissued. As a result, 5,500,000 shares of Preferred Stock remain undesignated. These undesignated shares of Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the Board of Directors. The Board is further authorized, subject to limitations prescribed by law, to fix by resolution or resolutions the designations, powers, preferences and rights, and the qualifications, limitations or restrictions thereof, of any wholly unissued series of Preferred Stock, including without limitation authority to fix by resolution or resolutions the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption price or prices, and liquidation preferences of any such series, and the number of shares constituting any such series and the designation thereof, or any of the foregoing.

Offered Securities

Series D Convertible Preferred Stock.

We have authorized 2,500,000 shares of Series D Preferred Stock (“Series D Stock”), par value of $0.001, of which 6,259 shares are outstanding as of the beginning of this offering. Series D Stock ranks, with respect to dividends, redemption, liquidation, dissolution and winding up, on par with the Series B Convertible Preferred Stock (“Series B Stock”) and the Series C Convertible Preferred Stock (“Series C Stock”). Series D Stock has a cumulative dividend rate of 7% per annum, accruing quarterly, payable as declared by our Board of Directors. On matters presented to our stockholders each holder of Series D Stock is entitled to one vote per share of Series D Stock. Additionally, the affirmative vote of a majority of the outstanding Series D Stock is needed to (i) amend any right applicable to Series D Stock, or any provision of the Certificate of Incorporation that adversely affects Series D Stock, (ii) create a class of stock, unless such stock ranks junior to Series D Stock with respect to dividends and liquidation, or (iii) issue or obligate the Company to issue any additional shares of Series D Stock, Series B Stock or Series C Stock. Each share of Series D Stock is convertible into one share of Common Stock at a conversion price of $10.00 per share at the election of the holder. In the event of a liquidation, Series D Stock is entitled to an amount equal to 1.65x of the original issue price, plus any accumulated but unpaid dividends. Series D Stock can be redeemed, in our discretion at any time, for an amount equal to 1.65x of the original issue price, plus any accumulated but unpaid dividends and may not be reissued after redemption. The foregoing is a brief description of certain terms of Series D Stock and are subject to the specific terms and rights as provided for in the Certificate of Designation attached to this offering circular.

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Other Securities

Common Stock

Holders of Common Stock are entitled to one vote for each share held of record on all matters to be voted on by the shareholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than fifty percent of the shares voted for the election of directors can elect all of the members of the Board of Directors. The holders of Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefore, subject to the rights of outstanding Preferred Stock. In the event of the Company’s liquidation, dissolution, or winding up, the holders of Common Stock are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the common stock. Holders of Common Stock do not have preemptive rights.

Series B Convertible Preferred Stock.

We authorized 70,000 shares of Series B Stock, par value of $0.001, of which 59,180 shares are currently outstanding. Series B Stock ranks on par with Series D Stock and Series C Stock with respect to dividends, redemption, liquidation, dissolution and winding up. Series B Stock has a cumulative dividend rate of 7% per annum, accruing quarterly, payable as declared by the Company’s Board of Directors. The dividend rate payable on the Series B Stock is indexed to the Consumer Price Index if such index is 7% or greater. The Series B Stock does not have the right to vote, except for (i) an amendment to any right applicable to Series B Stock or provisions to the Certificate of Incorporation that adversely affects Series B Stock, (ii) the creation of a class of stock, unless such stock ranks junior to Series B Stock with respect to dividends and liquidation preference, or (iii) the issuance or obligation to issue additional Series B or Series C Stock. In the event of a liquidation, holders of Series B Stock are entitled to the greater of $10 per share plus any accumulated but unpaid dividends or the amount such share would have been entitled to had it been converted into Common Stock. Each share of Series B Stock is convertible into four shares of Common Stock at a conversion price of $2.50 per share at the election of the holder. Series B Stock can be redeemed for $10 per share plus any accumulated but unpaid dividends and may not be reissued after redemption. The Company must redeem the outstanding shares of Series B Stock in the event of a “deemed liquidation event” as defined under the terms of the Series B Stock certificate of designation.

Series C Convertible Preferred Stock.

We authorized 1,925,000 shares of Series C Stock, par value of $0.001, of which 1,904,404 shares are currently outstanding. The Series C Stock currently pays no dividends. Holders of Series C Stock vote as a class with Series D Stock and the Common Stock on an as converted basis. An affirmative vote of the majority of the Series C Stock is needed to (i) amend any right applicable to Series C Stock or any provision of the Certificate of Incorporation that adversely affects Series C Stock, (ii) create a class of stock, unless such stock ranks junior to Series C Stock with respect to dividends and liquidation, or (iii) issue or obligate the Company to issue any additional shares of Series D Stock, Series B Stock or Series C Stock. In the event of a liquidation, holders of Series C Stock are entitled to the greater of $1.2489 per share plus any accumulated but unpaid dividends or the amount such share would have been entitled to had it been converted into Common Stock. Holders of Series C Stock may elect to convert their shares into shares of Common Stock. In addition, outstanding shares of Series C Stock are subject to mandatory conversion into shares of Common Stock on the occurrence of certain events, including a public offering of the Common Stock pursuant to an effective registration statement and the written consent of holders of at least 50% of the then outstanding shares of Series C Stock.

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PART F/S

INSTITUTE FOR WEALTH HOLDINGS, INC.

Financial Statements

and Independent Auditors’ Report

and

Supplemental Information

For Years Ended December 31, 2016 and 2015

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		CHAPMAN, HEXT & CO., P.C. An Integrated Professional Services Firm Certified Public Accountants Management Consultants		5001 Spring Valley Road, Ste. 850W Dallas, TX 75244-3946 (972) 644-7112 Fax (972) 680-8685 www.chapmanhext.com

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

Institute for Wealth Holdings, Inc.

Dallas, Texas

Report on the Financial Statements

We have audited the accompanying financial statements of Institute for Wealth Holdings, Inc. (a Delaware corporation), which comprise the balance sheets as of December 31, 2016 and 2015, and the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Institute for Wealth Holdings, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOPUNTANTS, TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTS AND PRIVATE COMPANIES PRACTICE SECTION (PCPS)

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Institute for Wealth Holdings, Inc.

Page 2

Report on Supplemental Information Audited

The form and content of the information included in the financial statements and supplemental information, as it pertains to Institute for Wealth Management Holdings, Inc., have been audited by us in accordance with auditing standards generally accepted in the United States of America and, in our opinion, present fairly, in all material respects, the financial position of Institute for Wealth Management Holdings, Inc. as of December 31, 2016.

Report on Supplemental Information Unaudited

The form and content of the pro forma information included in the supplemental information, as it pertains to Institute for Wealth Holdings, Inc. and Institute for Wealth Management Holdings, Inc., have not been audited by us in accordance with auditing standards generally accepted in the United States of America and we do not express an opinion on the financial position of Institute for Wealth Holdings, Inc. and Institute for Wealth Management Holding, Inc., as of December 31, 2016 and 2015.

Dallas, Texas

November 7, 2017

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INSTITUTE FOR WEALTH HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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INSTITUTE FOR WEALTH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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INSTITUTE FOR WEALTH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICT)

As of December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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INSTITUTE FOR WEALTH HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2016 and 2015

The accompanying notes are an integral part of these financial statements.

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INSTITUTE FOR WEALTH HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 1. SUMMARY OF ACCOUNTING POLICIES

Description of Business and Basis of Presentation

The Institute for Wealth Holdings, Inc. (“IWH” or the “Company”), through its wholly owned subsidiaries; Institute for Wealth Advisors, Inc. (“IWA”) and Institute for Wealth Management, LLC (“IWM”) provides investment advisory, portfolio management, and financial planning through a network of registered investment advisors (“IARS”) to individual and institutional clients. Both IWM and IWA are registered with the SEC as a Registered Investment Adviser (“RIA”). The Company’s other subsidiary, Institute for Wealth Partners, Inc. (“IWP”) provides various advisor services, along with its affiliate, Institute for Life and Annuity, Inc. (“ILA”) to support IARs for life insurance and annuity sales. The Company acquired by merger the Institute for Wealth Management Holding, Inc. (“IWMH”), the holding company of IWM, on September 12, 2016. The financial statements for IWH include the fourth quarter 2016 financial results of IWM. The majority of revenue is derived from a full range of services related to investment management and investment advisory services from retail, 401(k), sub advisory fees and life insurance and annuity sales. The Company was incorporated in Delaware on September 3, 2008 and operations are based primarily in Dallas, Texas. Its wealth management division operates primarily in Denver, Colorado. The Company’s fiscal year ends on December 31.

Principles of Consolidation

The accompanying consolidated financial statements present the consolidated financial position, results of operations and cash flows of the Company and its subsidiaries. Significant intercompany balances and transactions have been eliminated.

Use of Estimates

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America that require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, the reported amount of revenues and expenses during the reporting period, as well as the accompanying notes. These estimates are based on information available to the Company. Actual results could differ from these estimates.

Basis of Accounting

The consolidated financial statements of the Company are prepared on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist primarily of cash in the bank and cash investments which have an initial maturity of three months or less. Cash equivalents are valued at cost, which approximates market.

Accounts Receivable

Receivables recorded in the financial statements represent valid claims against debtors for services rendered or other charges arising on or before the balance sheet date. Management makes estimates of the collectability of accounts receivable. Specifically, Management analyzes accounts receivable and historical bad debts, customer credit-worthiness, current economic trends, and changes in customer payment terms and collections trends when evaluating the adequacy of the allowance for doubtful accounts. Any change in the assumptions used in analyzing a specific accounts receivable may result in additional allowances for doubtful accounts being recognized in the periods in which the change occurs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Property, Equipment and Software

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the life of the contract or estimated useful lives ranging from three to seven years. Costs incurred for upgrades and enhancements, which will not result in additional functionality, are expensed as incurred.

M&A Assets/Goodwill and Purchase Price Allocation

The mergers and acquisitions (“M&A”) by the Company are accounted for using the purchase method of accounting. For this purpose, identifiable assets acquired and liabilities and contingent liabilities assumed through business combinations are measured at their fair value at the acquisition date. The cost of an acquisition is measured as the Company’s best estimate of fair value at the date of purchase in exchange for the consideration or, assets given, liabilities assumed and any equity or debt instruments issued by the Company in exchange for title or control, plus any costs directly attributable to the acquisition.

The excess of the cost of acquisition over the Company’s estimate of fair value of the acquired assets and liabilities is recorded as M&A assets/goodwill.

The Company tests goodwill semi-annually for impairment. The assessment as to whether long-lived assets are impaired is highly subjective. The calculations involve management’s best estimate of the holding period, investment returns and attrition rates. Many factors may influence management’s estimate of impairment. These conditions may change in a relatively short period of time. A change in any one or more of these factors could materially impact whether assets under management (“AUM”) are impaired as of any given assessment date. No impairment was recognized for the period ended December 31, 2016.

Income and Other Taxes

The determination of the Company’s provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items.

The Company files an income tax return for Institute for Wealth Holdings, Inc. and subsidiaries as a single consolidated tax return.

Deferred income taxes are determined based on the difference between financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the years in which such differences are expected to reverse. The temporary differences in these financial statements relate primarily to a net operating loss (“NOL”) carry-forward, deferred compensation and notes payable. Management routinely evaluates all deferred tax accounts to determine the likelihood of their realization. See Note 6 for discussion of income taxes.

Interest and penalties on income tax related items are included within the income tax provision and are accrued through Income Tax expense. Interest and penalties on any other tax expense are recorded in other operating expenses.

In the normal course of business, the Company and its subsidiaries consolidated tax return may be subject to an Internal Revenue Service (“IRS”) audit. As of the date of this report, management has not been notified that it is subject to an IRS audit and further, the Company is not aware of any proposed adjustments by the IRS that may directly impact the Company.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 1. SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

Investment management and investment advisory fee revenues are computed under individual agreements between IWM, IWA and various clients for which these subsidiary RIAs act as an advisor or subadvisor. These fees are generally based on the market value of the AUM. Advisory fees are recognized as revenue as services are performed.

The Company, through its RIAs and investment advisory representatives (“IARs”) provide various investment advisory and sub-advisory services for clients. These fees are generally based on the current market value of the assets under management. Sub-advisory fees are recognized as revenue during the period such services are performed and are presented net of expense reimbursements, customer refunds and shareholder servicing fees.

Fair Values of Financial Instruments

FASB ASC 825-10-50 requires the Company to disclose estimated fair values for its financial instruments. Management has estimated the fair values of cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses to be approximately their respective carrying values reported on these statements because of their short maturities.

Concentration Risk

The Company provides, through IWM and IWA, investment advisory and related services to IARs, customers and clients in approximately twenty states. The Company believes that it does not have individually or significantly large client accounts or revenue concentrations that, in the event of the loss of such client account(s), would materially or adversely impact the Company.

NOTE 2. DEFERRED COMPENSATION

The Company has entered into agreements with its two executive officers to defer annual compensation. Deferred compensation balances as of December 31, 2016 and 2015 are $932,903 and $397,222, respectively.

NOTE 3. GOODWILL AND OTHER INTANGIBLES

The Company acquired Institute for Wealth Management Holdings, Inc. (“IWMH”), the holding company of IWM, on September 12, 2016. The strategy behind the merger of IWM into IWH was to operate a dual investment advisory and investment management platform for the IARs and clients through these RIA subsidiaries, which provide investment management and advisory services to clients by enrolling, supporting and supervising qualified registered investment advisors (“IARs”).

The total purchase price of this transaction was $4,551,924, which consisted of $2,177,371 of the Company’s shares and $2,374,553 of assumed IWM debt.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 3. GOODWILL AND OTHER INTANGIBLES (CONTINUED)

The Company acquired 100% of IWM through a merger transaction with the exchange of the Company’s shares for the outstanding shares of IWMH. The IWH shares issued to IWMH shareholders were as follows:

Upon the merger and acquisition of IWMH and IWM, the Company allocated the purchase price to acquired tangible assets, consisting of current assets, prepaid assets, equipment and technology, deferred assets and intangible assets. Intangible assets include assets under management (AUM), customer and IAR relationships, and customer lists which are recorded as M&A Assets/Goodwill below.

In connection with the acquisition of IWM, the Company incurred transaction costs of $711,893 and other expenses and transaction costs, which are listed in the accompanying statement of operations.

M&A Assets/Goodwill will be amortized over a ten year period. Amortization expense recorded as of December 31, 2016 was $76,936.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 4. NOTES PAYABLE

Notes Payable

The Company has various notes payable to individuals with interest rates ranging from 7.5% - 12% per year and a default rate of interest of 9% - 12% per year. These notes mature at dates ranging from June 15, 2012 to March 1, 2017, which have been extended and/or waived by agreement with the parties. The notes payable balances as of December 31, 2016 and 2015 were $759,178 and $433,828 respectively.

Debenture Notes

The Company has various convertible debentures owed to individuals with interest rates ranging from 8% - 12% per year and a default rate of interest of 18% per year. These debenture notes call for principal and interest payments to mature December 31, 2009, and were extended annually by agreement with the parties. As of December 31, 2016 and 2015, these notes include accrued interest of $155,463 and $135,463, respectively. The convertible debentures balances as of December 31, 2016 and 2015 were $215,000, respectively.

Senior Secured Notes

The Company issued $1,900,000 of 8% Senior Secured Notes to several individual investors in connection with the IWM merger in September 2016 which mature September 30, 2021. The senior notes are collateralized with corporate stock and membership interests of IWA and IWM subsidiaries. The senior notes call for quarterly interest-only payments with the principal due in full on September 30, 2021. The senior notes payable as of December 31, 2016 and 2015 were $1,900,000 and $0, respectively.

Line of Credit

IWM has a $100,000 working capital line of credit with a financial institution with no stated maturity date. Interest is payable monthly at prime plus 1% (4.75% at December 31, 2016). The line is collateralized by all of the equipment and assets of IWM and guaranteed by IWM’s manager. Outstanding borrowings under the agreement at December 31, 2016 amounted to $87,079.

NOTE 5. COMMITMENTS AND CONTIGENCIES

Operating Leases

The Company leases facilities in both Dallas and Denver under non-cancelable operating leases. Rent expense for years ended December 31, 2016 and 2015 were $75,170 and $54,488, respectively.

Minimum future rental commitments under these lease agreements as of December 31, 2016 are as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 5. COMMITMENTS AND CONTIGENCIES (CONTINUED)

Litigation

In the normal course of business, the Company may be subject to various legal proceedings and claims. The Company’s management is not aware of any threatened claim or potential liability that could materially affect its financial condition.

NOTE 6. INCOME TAX PROVISION

Income tax expense (benefit) consists of the following:

The net deferred tax assets (liabilities) are reported on the accompanying balance sheet as of December 31, 2016 and 2015:

The provision for income taxes shown on the Statements of Operations differ from the amount that would result from applying statutory tax rates to income before income taxes primarily because of the blended marginal tax rate (estimated at approximately 31% at December 31, 2016) used to compute deferred taxes, and permanent differences between determining income for financial statement purposes and computing taxable income. Permanent differences are primarily from nondeductible meals and entertainment expenses and other tax return adjustments.

NOTE 7. RELATED PARTY TRANSACTIONS

The Company has several Senior Secured notes payable to related parties. As of December 31, 2016, the outstanding balances due to related parties as holders of the senior notes were $875,000, described in Note 4.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2016 and 2015

NOTE 8. CAPITAL STRUCTURE

Preferred Stock

Current Preferred Stock outstanding includes the Company’s designated Series B and C Convertible Preferred Stock (the “Preferred Stock”). As of December 31, 2016, the Company had the following shares outstanding: