Company Description We are a newly-organized

capital and borrowed funds in our targeted asset class. We plan to earn returns 

on the spread between the yield on our assets and our costs, including the cost 

of the funds we borrow, after giving effect to our hedges. We plan to identify  

and acquire our target assets, finance our acquisitions with borrowings under  

a series of short-term repurchase agreements at the most competitive interest  

rates available to us and then cost-effectively mitigate our interest rate and  

other risks based on our entire portfolio of assets, liabilities and  

derivatives and our management's view of the market. Successful implementation  

of this approach requires us to address and effectively mitigate interest rate  

risk and maintain adequate liquidity. We believe that the residential mortgage  

market will undergo significant changes in the coming years as the role of  

GSEs, such as Fannie Mae and Freddie Mac, is diminished, which we expect will  

create attractive investment opportunities for us.  

 

We will commence operations upon completion of this initial public offering and 

the concurrent private placement described herein. We intend to elect to  

qualify as a REIT for federal income tax purposes and will elect to be taxed as 

a REIT under the Internal Revenue Code of 1986, as amended (the “Code”),  

commencing with our taxable year ending December 31, 2012. Our qualification as 

a REIT will depend on our ability to meet, on a continuing basis, various  

complex requirements under the Code relating to, among other things, the source 

of our gross income, the composition and values of our assets, our distribution 

levels and the concentration of ownership of our capital stock. We also intend  

to operate our business in a manner that will permit us to maintain an  

exclusion from registration under the Investment Company Act of 1940, as  

amended (the “1940 Act”).  

 

As a REIT, we generally will not be subject to federal income taxes on our  

taxable income to the extent that we annually distribute all of our taxable  

income to stockholders and maintain our intended qualification as a REIT. If we 

fail to qualify as a REIT in any taxable year and do not qualify for certain  

statutory relief provisions, we will be subject to federal income taxes at  

regular corporate rates. Even if we qualify as a REIT for federal income tax  

purposes, we may still be subject to some federal, state and local taxes on our 

income. 

Our success will depend, in large part, on our ability to acquire assets at  

favorable spreads over our borrowing costs. In acquiring our target assets, we  

will compete with mortgage REITs, mortgage finance and specialty finance  

companies, savings and loan associations, banks, mortgage bankers, insurance  

companies, mutual funds, institutional investors, investment banking firms,  

other lenders, governmental bodies and other entities. Many of these  

organizations have greater financial resources and access to lower costs of  

capital than we will have.  In addition, there are numerous mortgage REITs with 

similar asset acquisition objectives, including our target assets, and others  

may be organized in the future. The effect of the existence of additional REITs 

may be to increase competition for the available supply of mortgage assets  

suitable for purchase.
 

-----  We were incorporated in the state of Maryland on June 18, 2012. Our principal  offices are located at 3001 Ocean Drive, Suite 201, Vero Beach, Florida 32963.  Our phone number is (772) 617-4340. Our website is www.javelinreit.com.