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You should rely only on the information contained in this prospectus. We have not, and the underwriters have not authorized anyone to provide you with information different from or in addition to that contained in this prospectus. We are offering to sell, and are seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. Our business, financial conditions, results of operations and prospects may have changed since the date of this prospectus.

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		Page
Prospectus Summary			1
Risk Factors			8	5
Use of Proceeds			28	21
Dividend Policy			29	21
Capitalization			30
Dilution			32
Management’s Discussion and Analysis of Financial Condition and Results of Operations			34	22
Business			46	31
ManagementDirectors, Executive Officers and Corporate Governance			68	50
Management Services AgreementExecutive Compensation			74	54
Executive CompensationSecurity Ownership Of Certain Beneficial Owners and Management and Related Stockholder			77	61
Certain Relationships and Related Party Transactions			87	62
Principal Stockholders			89
Description of Capital Securities			92	64
Shares Eligible for Future SaleSelling Stockholders			97	67
UnderwritingPlan of Distribution			98	68
Legal Matters			105	69
Experts			105	69
Where You Can Find Additional Information			105	69
Index to Financial Statements			F-1	71

For investors outside the United States:   Neither we nor any of the underwritersWe have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

Industry and Market Data

:In this prospectus, we rely on and refer to information and statistics regarding our industry. We obtained this statistical, market and other industry data and forecasts from publicly available information. While we believe that the statistical data, market data and other industry data and forecasts are reliable, we have not independently verified the data.

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THE OFFERING

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We have been informed that two holders of greater than 5% of our shares of common stock, Raging Capital Fund L.P. and Raging Capital Fund Q.P., L.P. intend to purchase up to an aggregate of $3,500,000, or 700,000 units,

(1)  Unless otherwise stated in this offering. Such 700,000 units purchased by Raging Capital Fund L.P. and Raging Capital Fund Q.P., L.P. will not be included as part of the Directed Unit Purchase Program described herein.prospectus, information in this prospectus:

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RISK FACTORS

Investing in our securities involves a high degree of risk. YouBefore purchasing our common stock, you should carefully consider the following risk factors and allas well as other information contained in this prospectus before making a decision to invest inProspectus, including our units.financial statements and the related notes. The risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us. If any of the following eventsrisks occur, our business, financial conditions and operatingcondition or results may beof operations could materially and adversely affected. In that event,case, the trading price of our securities could decline, and you couldmay lose allsome or partall of your investment.

Risks Specific to

Factors That May Affect Our Business

and Results of Operations

We have an unproven business model and it is uncertain whether the purchase, lending or sale of indium will generate sufficient revenues for us to sustain operations.

Our model for conducting business is still new and unproven. The proceeds from this offering designatedOur unrestricted, available for general corporate purposes, including working capital, will generate enoughcash balance at December 31, 2011 was $3.5 million. Subsequent to December 31, 2011, we raised $7.5 million in the 2012 Private Placement of which we intend to use $6.4 million to purchase and stockpile indium and $1.1 million unrestricted cash for us togeneral corporate purposes. We estimate that our unrestricted cash balance at March 31, 2012 will sustain our operations for approximately 53 months after the completion of this offering.through at least 2014. After such 53 months,time, our ability to support ongoing annual operationalcash operating expenses may depend upon our ability to either raise capital or our ability to generate revenue streams from purchasing, lending and selling indium. However, it is uncertain whether we will be able to raise additional capital or that the purchase, lending and sale of indium can generatecangenerate sufficient revenues for us to survive. Accordingly, we are not certain that our business model will be viable.

We address a new market which may not develop as we predict or in a way that will justify our purchase of indium.

There is no public market for the sale of indium. Since indium is primarily a byproduct of zinc mining, the supply does not necessarily vary directly with market price. Currently, increases in primary indium production have been correlated to increases only if zinc miners increasein zinc production. We may not, and our Manager may not, be able to acquire indium, or once acquired, lend or sell indium for a number of years. The pool of potential purchasers and sellers is limited and each transaction may require the negotiation of specific provisions. In addition, the supply of indium is limited. World refinery production of indium was estimated by the U.S. Geological Survey or USGS atto have increased from 582 metric tonsmt in 2006 563 metric tonsto 640 mt in 2007, 573 metric tons in 2008 and 597 metric tons in 2009.2011. The total size of the primary indium market was approximately $237.3$446 million in 20092011 based on the USGS’s estimated production figure and Metal Bulletin’s average price for indium of $397.55$696.28 per kilogram in 20092011 as posted on Bloomberg L.P. We will utilize at least 85.0%As of March 31, 2012, we took delivery of and contracted to take delivery of a sufficient quantity of indium to fulfill our commitment to spend 85% of the net proceeds from our IPO to purchase indium. Further, we intend to use approximately $6.4 million of this offering to create a stockpile of indium within 18 monthsthe proceeds from the date2012 Private Placement of this prospectus, which may require us to acquire indium from several sources and at wide ranging prices. Based on the spot indium price of $547.50 per kilogram on December 1, 2010, we would needour common stock to purchase approximately 72.2 metric tons to utilize 85.0% of the net proceeds of this offering.additional indium. We may experience additional difficulties purchasing indium in the event that we are a significant buyer. The inability to purchase and sell on a timely basis in sufficient quantities could have a material adverse effect on the share price of our common stock.

We may distribute unused proceeds of this offering to our stockholders as a return of capital and, in such event, our stock price and NMV may decrease.

If the Manager has not, within 18 months from the date of this prospectus, purchased or contracted to purchase indium in sufficient quantity to utilize at least 85% of the net proceeds of this offering or 100% of the proceeds that have been allocated for the purchase of indium, our board of directors will distribute such unused proceeds to our stockholders, pro-rata, as a return of capital. Any such distributions will lower the amount of cash available to purchase additional indium which will, in turn, lower the NMV of our company. Such unused proceeds will be calculated based upon the sum of (i) monies spent by us to acquire the indium during the 18 month period and (ii) monies contracted to be spent by our company on acquiring indium over the ensuing 12 months from the end of such 18 month period. In the event such proceeds are returned to the stockholders, the stockholders may not recover their initial investment due to the fact that a portion of such proceeds will be used to pay expenses related to this offering and other operational fees and expenses.

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Information regarding the indium industry’s largest producers and users, including data regarding exclusive long-term purchase or supply agreements, is limited and not readily available. Such inability to access this information places us at a potential competitive disadvantage, which may adversely affect our ability to purchase and stockpile indium.

Indium industry producers and users do not publicly disclose sufficient information to determine with certainty the largest producers and users of indium. In addition, company-specific indium usage is not information that is typically publicly disclosed by industry participants. This makes it difficult for investors to assess indium industry dynamics, our competition, and various other risks we face.

Industry producers, recyclers, secondary fabs, and end users do not reveal industry data quantifying the amount of indium purchased or sold under long-term exclusive supply contracts. As a result, we may not be able to determine if certain suppliers have long-term supply contracts with other parties, which may adversely affect our ability to obtain indium from such supplier. The lack of industry information could hinder our ability to purchase and stockpile indium.

In addition, we are not aware of any additional information, if any, regarding the indium market or the type of market information other industry producers, purchasers, suppliers and other market participants may possess. Our inability to access this information, if any, places us at a potential relative competitive disadvantage to other market participants who may have access to such information. This may adversely affect our ability to purchase and stockpile indium.

Investors may face difficulty accessing the quoted price for indium on a daily basis, which may negatively impact an investor’s ability to assess the value of their investment.

Indium’s market price is infrequently quoted and investors may have to pay for subscriptions to various data service providers to access such information. Metal Bulletin PLC, as posted on Bloomberg L.P., publishes the spot price of indium on a bi-weekly basis. We intend to post on our website Metal Bulletin’s published spot price of indium on a bi-weekly basis as well. Therefore, shareholdersstockholders will not be able to access an updated spot price on a daily basis. Accordingly, investors in our common stock may not be able to readily access information regarding the current market price for indium prior to making an investment decision.

The lack of a recognized indium commodity exchange may negatively impact an investor's ability to assess the value of their investment.

Indium is not traded on any recognized commodity exchange. As such, direct hedging of the prices for future purchases cannot be undertaken. We do not currently have any long-term supply contracts with indium suppliers, so prices will vary with each transaction and the individual bids and offers received. Prices will vary based on the supply and demand for indium. There are no recognized futures or forwards market for indium. The pool of potential purchasers and sellers of indium is limited and each transaction may require the negotiation of specific provisions. Accordingly, a purchase or sale cycle may take several months to complete. In addition, the supply of indium is limited and we may experience additional difficulties purchasing indium in the event we are a significant buyer. The lack of a standardized indium exchange affects our ability to purchase and sell indium on a timely basis and could have a material adverse effect on the price of our securities.

In late April 2011, Metal-Pages.com, a subscription based metals information service provider, reported that the Kunming Fanya Non-ferrous Metals Exchange opened in China. Metal-Pages.com indicated that the exchange began trading silver and indium in standard lots of 100 grams. Based on indium closing price of $695 per kilogram on March 30, 2011, the Fanya Exchange's standard lot size of 100 grams is the equivalent of $69.50. Our average indium purchase order typically ranges from 500 kilograms to 2000 kilograms. This is approximately 5,000 to 20,000 times larger than the 100 gram standard lot size for indium on the Fanya Exchange. In mid-May 2011, Metal-Pages.com reported that physical delivery has not progressed smoothly on the Fanya Exchange. We have not been able to verify the veracity of these statements or if the Fanya Exchange is indeed a legitimate exchange and there is very little information available with regards to the Kunming Fanya Non-ferrous Metals Exchange. Based on the limited information available, it does not appear that the Fanya Exchange is large enough to satisfy the needs of regular indium industry market participants which may negatively impact an investor’s ability to assess the value of their investment.

We expect to rely on a limited number of potential suppliers and purchasers of indium, which could affect our ability to buy and sell indium in a timely manner and negatively influence market prices.

The indium market is illiquid and considered small compared to the markets for base metals. There are a limited number of suppliers and purchasers of indium. If new companies are formed to purchase and stockpile indium, this would adversely affect our ability to procure sufficient quantities of indium on a timely basis or even at all.

Relying on a limited number of potential suppliers of indium and potential customers who purchase indium could (1) make it difficult to buy and sell indium in a timely manner, (2) negatively influence market prices by potentially having to sell indium to cover our operating expenses, or (3) drive up market prices if we are a large purchaser of indium and there is an indium shortage. As of the date of this prospectus,March 31, 2012, we have purchased and contracted to purchase an aggregate of 9.2 tons42.5 mt of indium using the proceeds of the 2009 Private Placement from threeseven regular indium suppliers at an average price of $500.00$623 per kilogram. Except for purchasing the 9.2 tons of indium from threethese suppliers, we have had limited discussion with other potential suppliers of indium and no other contracts or negotiations have been entered into with any other suppliers or purchasers of indium, and we cannot be certain that we will be able to meet our required purchases ofpurchase inventory in a timely manner or at favorable prices to purchase indium.

We purchased 78.2%

One of our current indium stockpile utilizing the proceeds from the 2009 Private Placement fromprincipal stockholders controls a currentsubstantial interest in us and thus may influence certain actions requiring a stockholder Traxys North America LLC,vote.

William C. Martin, a member of our board of directors and, future purchases may presentthrough an entity he controls, a conflictmember of interest.

Traxys Projects LP, 100% owned by Traxys S.a.r.l and itsour Manager, beneficially owns approximately 45.0% of our common stock with voting rights through wholly owned subsidiary, Traxys North America LLC,entities Raging Capital Fund L.P, Raging Capital Fund Q.P., L.P and Traxys Commodity Fund LP each invested $500,000 in our 2009 Placement.his Individual Retirement Account. Mr. Martin, through his wholly owned entities is also the Selling Stockholder. This represents beneficialpercentage ownership in our Companydoes not take into consideration the exercise of any stock options and warrants controlled by entities affiliated with Traxys North America LLCWilliam C. Martin either individually or through Raging Capital Management LLC. Mr. Martin is able to influence the outcome of 15.2% prior to this offering and 2.1%, if we successfully completeall matters requiring stockholder approval, including the proposed offering. We purchased an

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aggregate 7.2 tonselection of indium, approximately 78.2%directors, amendment of our current stockpile, from Traxys North America LLC utilizing proceeds from the 2009 Placement in which we spent approximately $4.6 million between December 2009certificate of incorporation and March 2010 in 21 separate purchase orders. We believe we paid the fair market price at the timeapproval of each particular purchase order. Traxys North America LLC is an establishedsignificant corporate transactions, and reputable indium supplier. We did nothe will have significant influence over our management and do not have any outstanding special agreements or arrangements with Traxys S.a.r.l or anypolicies. The interests of its affiliates including its wholly owned subsidiary, Traxys North America LLC. Neither Traxys S.a.r.l nor any of its subsidiaries has any capital interest in Traxys Commodity Fund L.P. (the “Fund”) either as a general partner or as a limited partner; it does however have a portion of the carried interest in the FundMr. Martin and is entitled to receive management fees from the Fund for providing management services. The Chairman and the CEO of Traxys North America LLC comprise two of the four members of the board of the Fund’s general partner and, subject to the Board’s approval, are primarily responsible for the Fund’s investment decisions. We may attempt to purchase additional indium from Traxys North America LLC in the future and weour stockholders’ interests may not always align and taking actions which require stockholder approval, such as selling the company, may be ablemore difficult to negotiate similar or more favorable pricing terms.accomplish.

The substitution of other materials for indium may decrease demand for indium and adversely affect the price of indium and, thus, our stock price.

Indium has substitutes in many, perhaps most, of its uses. Silicon has largely replaced indium in transistors. Gallium can be used in some applications as a substitute for indium in several alloys. In glass-coatingglass- coating applications, silver-zinc oxides or tin-oxides can be used. Zinc-tin oxides can be used in liquid crystal displays (“LCDs”)LCDs’. Other possible substitutes for indium glass coating are transparent carbon nanotubes and graphene. Indium phosphide can be substituted by gallium arsenide in solar cells and in many semiconductor applications. Hafnium can replace indium alloys in nuclear reactor control rods. The substitutions of such materials for indium may decrease the overall demand for indium, thereby lowering the price of indium and our common stock.

It will take time to acquire our supply of indium and during such time the price of indium may fluctuate and we may not purchase our stockpile at favorable prices.

We will expend 85% of the net proceeds of this offering to purchase our stockpile of indium within 18 months from the date of this prospectus. The price we pay for 99.99% purity indium ingots will fluctuate with the spot price of indium. Therefore the price per kilogram of indium may increase and we may not be able to purchase indium at favorable prices.

Our operating results are subject to fluctuation in the price of indium, which is subject to macroeconomic conditions that are largely outside of our control.

Our activities almost entirely will involve purchasing and stockpiling the metal indium. Therefore, the principal factors affecting the price of our securities are factors which affect the price of indium and are thus beyond our control. We may engage in lending transactions or sell portions of our indium stockpile if we need additional capital to cover annual operating expenses, so the value of our securities will depend upon, and typically fluctuate with, fluctuations in the price of indium. The market prices of indium are affected by rates of reclaiming and recycling of indium, rates of production of indium from mining, demand from end users of indium and indium-tin-oxide, and may be affected by a variety of unpredictable international economic, monetary and political considerations.

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Macroeconomic considerations that may affect the price of indium include expectations of future rates of inflation, the strength of, and confidence in, the U.S. dollar, the currency in which the price of indium is generally quoted, and other currencies, interest rates and global or regional economic events. In addition to changes in production costs, shifts in political and economic conditions affecting indium producing countries may have a direct impact on their sales of indium. The fluctuation of the prices of indium is illustrated by the following table, which sets forth, for the periods indicated, the highs and lows of the spot price for indium:

		Spot Indium Prices(1) 99.99% Purity (U.S.$/KG)																																				Spot Indium Prices(1) 99.99% Purity (U.S.$/KG)
		2002				2003				2004				2005				2006				2007				2008				2009				2010				2003				2004				2005				2006				2007				2008				2009				2010				2011
High			110				330				910				1070				1025				750				730				550				650				330				910				1070				1025				750				730				530				650				870
Low			70				80				305				800				680				510				350				300				470				80				305				800				680				510				350				300				480				525

(1) Source: Metal Bulletin PLC from Bloomberg L.P.

The price of indium has declined substantially since it peaked in March 2005. The price for indium has declined 48.8%48.6% from its high of $1,070 per kilogram in March 2005 to $547.50$550 per kilogram as of December 1, 2010.April 18, 2012. If we began operations in March 2005, and we purchased our stockpile at peak prices, the value of our stockpile would have decreased by more than 48.8%48.6% in approximately fiveseven years.

There are additional supply and demand factors that could influence indium price volatility that could adversely impact our NMV.

Our activities primarily involve purchasing and stockpiling indium. The value of our securities will be highly sensitive to fluctuations in the price of indium. Historically, the fluctuations in these prices have been, and will continue to be, affected by numerous factors beyond our control. Such factors include, among others: demand for products that utilize indium directly or as a key ingredient including FPDs, LCDs, touch screens, LEDs specialty solders, low e-glass, and next generation CIGS thin film photovoltaics. The supply of indium could be impacted by increased or decreased levels of zinc production and increases or decreases in indium recycling and or reclamation. Furthermore, there is the risk of indium substitution in certain applications that could impact supply and demand.

Occupational exposure to indium-tin-oxide (ITO) has been linked to severe respiratory issues and may affect future demand for indium.

Publicly available epidemiological studies confirmed case reports which associated occupational exposure to ITO with the development of severe respiratory problems. Therefore, worker exposure due to ITO's growing use in the fabrication of LCDs is of particular concern and may potentially lead to manufacturers' substituting ITO with different transparent conductive oxides and thusly reducing demand for indium.

There may be a lack of correlation between indium prices, our NMV and our stock price.

Given the fee structure with our Manager and our operational expenses, the trading price of our common stock as listed on the NASDAQ Capital Market,OTC Bulletin Board, the OTCQB marketplace operated by Pink OTC Markets, Inc., or other quoted exchange, may not correlate with the trading price of indium. Regardless of our ability to purchase indium in a timely manner, we will incur initial offering expenses of approximately $500,000 and projected yearly operating expenses of approximately $1,548,000 prior to spending any proceeds from this offering to stockpile indium. We anticipate our yearly operating expenses will increase by approximately $152,000 to approximately $1,700,000 per annum once we are able to fully utilize the net proceeds from this offering allocated to purchase and stockpile indium.$1.4 million. The price of indium would need to appreciate substantially to offset the reduction in our NMV due to the expenses listed above. The percentage increase required cannot be accurately determined at this time. It is highly dependent upon various variable factors including, but not limited to, the exact number of kilograms of indium purchased, and the average price paid and the amount of time it takes for us to fully spend 85% of the allocated netgross proceeds from this offeringthe 2012 Private Placement to complete the buildup of our indium stockpile. As a result, there may be a lack of correlation between the trading price of indium, our NMV and our stock price.

The amount the price

There may be a lack of indium needs to appreciate for us to achieve breakeven resultsinvestment liquidity in our NMVshares because we are not a mutual fund, a closed end fund, a trust company, an ETF or an ETN.

We are not a mutual fund, a closed end fund, a trust company, an exchange traded fund ("ETF") or an exchange traded note ("ETN") and our shares are not quoted on a national exchange. Therefore an investment in our common shares is difficultnot redeemable, not redeemable for potential investors to accurately determine because it is highly dependent upon several variables.

Regardlessour indium and liquidity may be limited. Furthermore, management currently controls the majority of our abilitycommon shares, which are subject to purchase indium in a timely manner, we will incur initial offering expenseslock-up requirements and Rule 144 restrictions, which serves to further reduce the float of approximately $500,000common stock and projected yearly operating expenses of approximately $1,548,000 prior to spending any proceeds from this offering to stockpile indium. We anticipate our operating expenses will increase by approximately $152,000 to approximately $1,700,000 per annum once we are able to fully utilize the net proceeds from this offering allocated to purchase and stockpile indium. The price of indium would need to appreciate substantially to offset the reduction in our NMV due to the expenses listed above and for us to achieve breakeven results in our NMV. The percentage increase in the price of indium required cannot be accurately determined at this time. It is highly dependent upon several variables including, but not limited to, the exact number of kilograms of indium purchased, the average price paid and the amount of time it takes for us to fully expend the net proceeds from this offering to complete the buildup of our indium stockpile.its liquidity.

Our NMV is based on the price of 99.99% purity indium as quoted by Metal Bulletin and posted on Bloomberg L.P. Other information service providers may quote indium prices that differ from Metal Bulletin as posted on Bloomberg L.P., which may affect investors’ ability to determine our NMV.

Metal Bulletin quotes the price of 99.99% (known as “4N”‘‘4N’’) purity indium in US Dollars per kilogram in Rotterdam warehouse, the universally recognized standard for location and industry-wide pricing for physical metals. Other services may quote the price of indium differently from Metal Bulletin’s price as quoted on

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Bloomberg L.P. for a variety of reasons such as variations in purity levels, location of material and source of origin. This may affect investors’ ability to accurately determine our NMV.

99.97% purity indium (3N7) may differ in price from 99.99% purity indium (4N) or even 99.999% purity indium (5N) based on market conditions.

There is no fixed price ratio between 3N7, 4N or 5N material in the indium industry. All purchases and sales of indium are individually negotiated. Typically, in a regular indium market, balanced supply and demand, the higher the purity of the indium, the more it costs. 4N indium is slightly more expensive than 3N7.than3N7. 5N is slightly more expensive than 4N. In a declining indium market, the price of 3N7 purity indium is often quoted at an even greater discount to indium with purities of 4N or 5N. In some cases, the prices may be as much as 2.0% to 5.0% lower. Typically, when the price of indium is appreciating, there is often no difference in the price of 3N7 purity indium compared to 4N or 5N purity metal. These variations in indium prices may affect investors’ ability to accurately determine our NMV.

New York dealer price quotations may differ from European price quotations and Far East price quotations due to a variety of factors, which differences may affect investors’ ability to accurately determine our NMV.

At any given time, there are varying price quotations between different regions in the world. Some factorsSomefactors that may influence price variability include regional natural disasters that may drive up the price within that certain region because a local shortage of material may develop. At times, a surplus of indium may develop in certain regions that drive down prices locally as compared to the rest of the world. We will publish on our website our NMV bi-weekly. These changes in market conditions could negatively affect an investor’s ability to accurately determine our NMV on a daily basis.

There has been no prior market for

Our securities have had limited trading since our units,IPO, the price of our unit pricesecurities may experience extreme price and volume fluctuations and any volatility in our unitsecurities price could result in claims against us.

Prior to this offering, investors could not buy or sell our units publicly.

An active public market for our units, maycommon stock or warrants has not developdeveloped or bebeen sustained after the offering. The initial public offering price will be determined by negotiations between the underwriters’ representatives and us.since our IPO. The market price of our units may decline belowsecurities has declinedbelow the initial public offering price after this offering.

IPO price. The market price of our units may fluctuate significantly in response to the following factors, some of which are beyond our control:

In the past, securities class action litigation has been brought against a company following periods of volatility in the market price of its securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and divert management’s attention and resources.

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Due to our size and the illiquid nature of the indium market, we may have a direct impact on the price of indium.

We may have a direct impact on the price of indium. Due to our size and the illiquid nature of the indium market, we may inadvertently push prices up when deploying our cash to build our stockpile or conversely negatively impact the price of indium when and if we sell indium from our stockpile. This could have a substantial negative impact on our NMV and would be expected to cause a decrease in our stock price.

Approximately 50% of the world’s refined indium production is controlled by China and more than 70% of the world's reserves of indium are located in the ground in China, which may adversely affect our ability to purchase indium.

China controls over 50% of the world’s refined indium production.production and more than 70% of the world's indium reserves are located in the ground in China. There are a number of major producers in China, but also numerous smaller producers, relying on purchasing the concentrates, or unrefined ore, from the larger base-metal refiners. China produces approximately 250 to 350340 metric tons of indium per year. The Chinese government restricts indium’s export with taxes. In October 2010, the Chinese Ministry of Commerce issued a quota allowing China to export 233 metric tons of indium in 2011, unchanged from 2010. Most of China’s indium output is exported, with domestic demand unable to currently sustain production. If the Chinese government reduces export quotas or ceases all of its exports of indium, it may affect the availability of indium and our ability to purchase indium in a timely manner and may limit us to purchasing primary indium production from countries outside of China.

The Chinese government restricts indium’s export with taxes and quotas. In October 2010, the Chinese Ministry of Commerce issued a quota allowing China to export 233 metric tons of indium in 2011, unchanged from 2010. In January 2012, China reduced their first half 2012 indium export quota by 1 metric ton compared to its first half 2011 indium export quota. Most of China’s indium output is exported, with domestic demand unable to currently sustain production. If the Chinese government reduces export quotas or ceases all of its exports of indium, it may affect the global availability of indium and our ability to purchase indium. In addition, it may cause a severe global supply shortage resulting in substantial volatility in the price of indium, our NMV and our securities.

Any disruptions in the operations of mining for zinc and other base metals, including earthquakes or other natural disasters, would have a direct impact on the production and availability of indium, which may adversely affect our ability to purchase indium.

Indium is primarily a byproduct of zinc mining. Zinc mines and other base metal mines by their nature are subject to many operational risks and factors that are completely outside of our control and could impact our business, operating results and ability to purchase indium. These operational risks and factors include, but are not limited to:

In May 2008, an earthquake in China completely halted ten zinc smelters in Sichuan province’s Deyang, Hanyuan and Ganzi regions, as well as in nearby southern regions of Shaanxi province and Gansu Province, due to damaged facilities and power supply failures. It was estimated that 510,000 metric tons of zinc smelting capacity was affected, or approximately 7.0% of China’s national total. If those zinc smelters were refining indium and were shut down for one full year, it is estimated that as much as 21.7 metric tons, or

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3.8% of primary indium production would have been lost. The lack of availability of indium could hinder our ability to purchase and stockpile indium.

Any cessation in production by zinc metallurgical plants or shut down of base metal smelters capable of processing indium would have a direct impact on the availability of indium, which may adversely affect our ability to purchase indium.

Indium is primarily a byproduct of zinc mining. Indium is processed in metallurgical plants that specifically smelt, refine and extract indium from zinc.zinc and other base metals. Metallurgical plants by their nature are subject to many operational risks and economic factors that are completely outside of our control and could impact our business, operating results and ability to purchase indium. In December 2009,2010, Xstrata Plc announced that on May 1, 2010 it will permanently cease operationceased operations of its copper and zinc metallurgical plants at the Kidd Metallurgical site in Timmins, Ontario, Canada. According to Roskill, a service provider of information on international metals and minerals markets, in its report titled “The‘‘The Economics of Indium, 2003,”’’ the Kidd Metallurgical Division was capable of refining up to 40 tons per year of indium. According to the USGS, Xstrata produced 11 tons of refined indium at Kidd Creek in 2007 and eight tons in 2008. Although the exact volume of lost output is still unclear, the American Metal Market reported on May 13, 2010 that Xstrata confirmed the smelter produced 11.5 tons in 2009. If the Kidd Metallurgical plant was operating at full capacity and is subsequently shutdown, it is estimated that there will be a 6.7% decrease in the primary supply of indium based on the USGS’s 2009 yearly production figures. If global indium production remains flat in 2010, based on Xstrata’s confirmed 2009 production rate of 11.5 tons of refined indium, the closure of Kidd Creek will reduce primary output of global indium production by 1.9%. This reductionSimilar reductions in the supply of indium could hinder our ability to purchase and stockpile indium.

The shutdown of smelters due to excessive environmental pollution may hinder our ability to purchase indium in a timely manner.

The smelting process used to extract indium from zinc ore and to refine indium to higher purities uses highly toxic chemicals like sulfuric acid. Heightened global environmental concerns may lead to the closure of smelters that excessively pollute the environment. The closure of smelters that extract and refine indium may affect our ability to purchase indium in a timely manner.

Technological obsolescence may reduce demand for indium, which would adversely impact our NMV and our stock price.

It is possible that the next generation TV or portable device market (“PDA”(‘‘PDA’’) screens may render the use of indium-tin-oxide obsolete. Considering 84.0% of indium demand currently comes from the FPD market, this would drastically reduce demand for indium and cause a precipitous drop in the price of indium. This would have a substantially negative impact on our NMV and our stock price.

Recycling of indium has increased in recent years which may reduce the demand for newly refined indium.

The recycling of indium has increased in recent years. The indium recycling market is now larger than primary refinery production. The USGS does not provide specific data for the recycling market but stated in their 2008 indium summary that global secondary indium production increased significantly during the past several years and now accounts for a greater share of indium production than primary production. The USGS also stated in their 2008 indium summary that this trend is expected to continue in the future and several major secondary indium producers in Japan and the Republic of Korea announced plans to further increase their recycling capacity. It is not known when the supply of recycled material from end products such as FPDs, LCDs or PDAs will re-circulate back into the recycling market, which may increase indium supply and negatively affect indium prices. If recycling activity continues to grow and becomes more efficient, this may adversely impact the price of indium and therefore the value of our stock.

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We may not be able to stockpile indium in a timely manner because we cannot purchase indium from recyclers.

There is little firm data provided by any of the indium recyclers. We do not expect that we will be able to purchase any indium directly from the recycling market. Industry insiders consider the recycling market a “closed‘‘closed loop.”’’ End users (i.e., FPD manufacturers) recapture residual indium scrap from Indium-Tin-OxideITO in an unusable form during the manufacturing process. The end user then contracts with an indium recycler to specially reprocess and refine the scrap indium back into 3N7 minimum purity indium metal ingot. The process is extremely complex and can take in excess of 12 weeks from collection to re-fabrication back into purified usable indium. This “closed‘‘closed loop,”’’ from end user to recycler back to end user, is performed under contract and will operate to limit our purchases of indium to the primary refinery market, which is smaller than the recycled market. Our inability to purchase indium from recyclers may impact our ability to stockpile indium in a timely manner.

Our stockpile of indium may decrease over time due to sales of indium necessary to pay our annual operating expenses. Without increases in the price of indium sufficient to compensate for such decreases, the price of our stock and our NMV may also decline.

The quantity of indium held in our stockpile may decrease over time due to sales of indium necessary to pay our annual expenses. Without increases in the price of indium sufficient to compensate for that decrease, the price of our stock and our NMV will decline. Since we do not have any income, we need to sell indium to cover our yearly operating expenses. We may also be subject to other liabilities (for example, as a result of litigation) which have not been calculated into our business plan. Our only current source of funds to cover those liabilities will be sales of indium held in our stockpile. An increase in our annual operating expenses, or the existence of unexpected liabilities affecting us without any additional capital raising activities, will force us to sell larger amounts of our indium stockpile, and will result in a more rapid decrease in our NMV.

Potential recessionary economic conditions may decrease demand for indium-based products and therefore adversely affect the price of indium and lower our NMV and stock price.

There is a direct correlation between the price of indium and the NMV of our company. Potential recessionary economic conditions in the United States and/or globally could result in decreased demand for the products that are manufactured using indium, such as FPDs, LCDs, LEDs and PDAs. This could cause the price of indium to drop and reduce our NMV, negatively affecting our stock price.

The Manager might have a conflict of interest insofar as the management fee to be paid by us to our Manager will increase as we sell more stock in subsequent offerings thereby increasing the NMV of the indium stockpile on which the management fee is based.

The management fee to be paid by us to the Manager is dependent on our NMV. Therefore, if we raise additional capital, we will have more cash available for the purchase of indium. In making the decision to raise additional capital and negotiate the terms of future offerings, there is a risk that the Manager may value its own interest in the management fee more than the interests of our public stockholders, resulting in a conflict of interest, which may not necessarily be resolved in the best interests of our public stockholders (including that it may be more likely that we conclude to pursue subsequent issuances of stock and increase our stockpile of indium, and therefore make an effort to increase our NMV).

We willmay issue a minimum of 11,476,320 additional shares of our common stock upon the effectiveness of this offering, which would result in a dilution of our stockholders.

Immediately prior

We are authorized to the consummation of this offering, our certificate of incorporation, as amended, will authorize the issuance ofissue up to 40,000,000 shares of common stock, par value $0.001 per share, and 1,000,000and1,000,000 shares of preferred stock, par value $0.001 per share. Immediately after this offering (assuming conversion of the shares of Class A common stock offered in the 2009 Private Placement reflecting the 20% adjustment feature, not reflecting the NMV adjustment feature (not determined until immediately preceding the closing of this offering) and no exercise of the underwriters’ over-allotment option),Currently there will be 15,509,561are 21,929,598 authorized but unissued shares of our common stock available for issuance (after appropriate

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reservation for the issuance of shares of common stock upon full exercise of 11,201,400 6,998,101 outstanding warrants, resulting from this offering1,000,000 stock options reserved under our stock option plan, and the 2009 Private Placement, the exercise of an additional 232,720 warrants to be issued to the investors in the 2009 Private Placement, the240,000 unit purchase option granted to the representatives of the underwriters, 155,000 options granted to the Managerunderwriters in connection with the 2009 Private Placement, 150,000 options granted to the Manager for conversion of the promissory note payable by us to the Manager in the aggregate amount of $265,000 plus interest, 150,000 options granted to the Manager for conversion of 75,000 common shares by the Manager, an aggregate of 124,999 options granted to members of our board of directors and Chief Financial Officer pursuant to our 2008 Long-Term Incentive Compensation Plan) and all of the 1,000,000 shares of preferred stock available for issuance.IPO.) Although we currently have no commitment, as of the date of this prospectus, we may issue a substantial number of additional shares of our common or preferred stock, or a combination of common and preferred stock, to obtain future financing. The issuance of additional shares of our common stock or any number of shares of our preferred stock:

Immediately after successful completion of this offering, our Private Placement's Class A Shareholders are entitled to an adjustment reflecting: (i) the 20% increase in units associated with the failure to complete an IPO within a certain timeframe; plus (ii) the NMV adjustment which is computed by multiplying the number of kilograms of indium held by us by the last spot price for indium published by Metal Bulletin posted on Bloomberg L.P., plus cash and other assets, less any liabilities. Assuming the NMV approximates $4.53 (assumes that the indium value approximates the book value at such date) upon successfully completing this offering, we will record a preferential dividend charge to the Common Shareholders of approximately $1,054,000 relating to the additional 232,720 shares issued to the Class A Shareholders.

The NMV is determined by multiplying the number of kilograms of indium held by us by the last spot price for indium published by the Metal Bulletin posted on Bloomberg L.P., plus cash and other assets, less any liabilities. The spot price for indium is published by the Metal Bulletin and posted on Bloomberg L.P. on a bi-weekly basis. Assuming the Indium value approximates the book value at such date; then the NMV would thus approximate the Net Tangible Book Value Per Share at the IPO date which as noted in the Form S-1 is approximately $4.53 per share

Our NMV may be negatively impacted by the number of common shares issued to the 2009 Private Placement shareholders which includes an adjustment factor determined by the change in our NMV.

The number of common shares to be issued to the 2009 Private Placement shareholders in connection with this offering is determined based on an adjustment factor that reflects the change in the NMV of our company from the closing of the 2009 Private Placement to the consummation of this offering. To determine the final adjustment factor, the closing NMV of our company is calculated based on the valuation of our stockpile of indium held in inventory prior to this offering plus cash and any other assets, less any and all of our outstanding payables, indebtedness and any other liabilities. If the price of indium at the closing of this offering is lower than the average price for indium in the previous three month period, this may be dilutive to the NMV at the time of this offering and result in the issuance of additional shares of our common stock to the 2009 Private Placement shareholders, which dilution will negatively impact new shareholders.

If our NMV substantially decreases, the Manager may have an increased incentive to liquidate our stockpile and return the proceeds to the stockholders.

Pursuant to the Management Services Agreement, as amended and restated, our Manager is entitled to a 2.0% management fee per annum based on our NMV. Since some members of our board of directors are also

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members of our Manager, our board of directors may elect to liquidate our business in the event there is a substantial reduction to our NMV in accordance with the Manager’s wishes. Such liquidation may occur at an inopportune time, when the disposition of indium could result in a loss to our stockholders.

Our officers and directors have limited experience in purchasing, stockpiling, selling, storing, insuring and lending indium and our officers and directors have limited experience in purchasing, selling, storing, insuring and lending minor metals.

Our officers and directors have only limited experience purchasing storing, and insuring the metal indium. Our officers and directors have only limited experience in purchasing, selling, storing, insuring and lending minor metals. Only our Chief Executive Officerchief executive officer has experience purchasing, selling, storing, insuring and lending precious metals, minor metals, base metals, non-exchange metals and illiquid metals, but not indium. As a result they may not be able to effectively manage our business.

We may lend some of the indium that we acquire and the inability of the borrower to return to us equivalent quantity and purity indium so loaned could have a material adverse effect on the share price of our common stock.

We

We may engage in lending indium from time to time if we need additional capital to cover operating expenses. In such lending transaction, we will physically deliver indium to the borrower. At the end of the loan term, the borrower is required to return an equivalent quantity and purity level of physical indium to us and pay us a fee based upon the value of the metal loaned and the time duration of the loan. If the borrower is unable to return to us an equivalent quantity and level of purity of indium, we may not be able to replacethe indium loaned from other sources at favorable prices. In such instances, we may not be able to recoup our losses through litigation and we would incur a loss which could have a material adverse effect on the share price of our common stock.

We will depend upon third parties to provide us with warehousing services, and system failures or other problems at these third-party warehousing facilities could cause us to lose revenues.

We

We currently and will continue to store indium in secure facilities owned and operated by third-party warehousing providers. If we are unable to continue to rely on third parties to provide us with these services and warehousing space in a timely fashion or if these services or warehousing space become impaired, whether through labor shortage, slow down or stoppage, deteriorating financial or business condition or other system failures, or if we face competition for these services, or for any other reason, we would not be able, at least temporarily or at competitive prices, to store or acquire indium. We also may be unable to engage alternative warehousing services on a timely basis, which could have a material adverse effect on ourbusiness.

We will not engage a custodian to safeguard the indium held in third-party storage facilities.

We have not and will not retain a custodian to oversee our indium holdings stored at third-party facilities. A custodian is responsible for safekeeping of the metal and selecting direct subcustodians, if any. A custodian facilitates the transfer of the metal in and out of the trust account, allocates specific bars of metal to the trust allocated account and provides the trustee with regular reports detailing the metal transfers in and out of the trust. The custodian is also a market maker, clearer and approved weigher of such metal. The third-party storage facilities we use to store our indium provide services similar to those provided by a custodian, such as storage and safeguarding of the indium stockpile, visual inspections, spot checks, arranging and facilitating for independent third-party assays, confirmation of deliveries to supplier packing lists, and reporting of transfers and inventory status to our company and auditors. If the third-party storage facilities we engage cannot adequately provide such similar services as provided by a custodian, then this could adversely affect the value, the security, the quantity and our ability to keep track of our indium holdings. In addition, it may jeopardize our ability to comply with NASDAQ’s listing requirements for a CSC.

Potential additional regulation of the purchase, sale or storage of indium may adversely affect our operations and may increase our costs.

We may be affected by changes in regulatory requirements, customs, duties or other taxes regarding indium. Although we are not currently aware of any potential changes in the regulatory requirements regarding indium, such changes could, depending on their nature, adversely affect us by increasing our costs.

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The proceeds of this offering will not be held in an escrow account.

The net proceeds of this offering will not be held in an escrow account. Except for the requirement to spend 85% of the net proceeds from this offering on the purchase and stockpile of indium, there are no other restrictions on our ability to use such funds for any corporate purpose we deem necessary to accomplish our corporate objectives as described herein. In the event we distribute unused proceeds to our stockholders, there can be no assurance as to the amount of proceeds which will then be available for such distribution resulting from losses, third-party claims, damages, liabilities and any and all other costs and expenses associated with the operation of our business.

Our Manager and the contracted third-party storage facilities it utilizes will not be responsible for hiring independent labs to perform assay tests on every ingot of indium delivered to us to verify that such indium meets the minimum 99.99% purity requirements referred to in our prospectus.business plan. If the indium purchased is below spec grade of 99.99% purity, the value of our indium stockpile will be worth less than stated.

Our Manager will beis responsible for ensuring that the contracted third-party storage facilities it utilizes conducts visual inspections and spot checks and hires independent labs to randomly assay, at our expense, the indium delivered to us. In addition, the facility must be capable of arranging and facilitating random assay testing to be conducted by independent third-party assayers, at our expense. Our Manager and contracted third-party storage facilities will not be responsible for conducting chemical assays or other tests designed to verify that every indium ingot delivered meets the minimum 99.99% purity requirements referred to in our prospectus.requirements. Our Manager will rely on the good faith of its suppliers to provide indium that meets our requirements. If the indium purchased is below spec grade of 99.99% purity, the value of our indium stockpile will be worth less than stated, we would therefore incur a write down, which would negatively impact the NMV of our company and harm our reputation. If indium is purchased from or loaned to a third-party supplier that is not known to be a regular industry supplier, our Manager, at its discretion, may hire, at our expense, an independent lab to perform random assay tests using glow-discharge mass spectrometry (GDMS) to verify the purity of the indium. The Manager anticipates purchasingpurchases indium with a minimum purity of 99.99%. We do not intend to brand specific companies and assayers. We consider the miners, refiners, suppliers and trading houses listed in our “Competition”‘‘Competition’’ section to be a partial list of known regular indium industry suppliers. The contracted third-party facilities we utilize will only use, at our expense, reputable independent assayers to randomly test indium delivered to us. It is possible that our indium stockpile will contain ingots of a purity level below 99.99%, which would decrease our NMV and negatively impact our share price.

We are a development stage company with a limited operating history and, accordingly, you will have a limited basis on which to evaluate our ability to achieve our business objective.

We are a development stage company with a limited operating history. Therefore, our ability to scale operations is dependent upon obtaining financing through a public offering of our securities. Since we have only limited operations and a limited operating history, you will have a limited basis upon which to evaluate our ability to achieve our business objective, which is to acquire and stockpile indium. We will not generate any revenues or income until, at the earliest, after lending or selling some or all of the indium that we acquired with the proceeds from the 2009 Private Placement and/or with the proceeds from this offering.

Our ability to continue as a going concern is dependent on us raising funds in this offering.

We have no present revenue and will not generate any revenue until, at the earliest, after the sale or lending of indium that we acquire with the offering proceeds. We have a limited amount of available cash and working capital. The report of our independent registered public accountants on our financial statements includes an explanatory paragraph referring to conditions that raise substantial doubt about our ability to continue as a going concern. Our ability to commence operations and realize our business plan is dependent upon our ability to complete this offering. There is no assurance that we will be able to complete this offering or that the completion of this offering will lead to the successful execution of our business plan. Further, should we be unable to complete this offering by November 24, 2011, our corporate charter states that our existence shall be terminated, our affairs shall be wound up and we shall liquidate. In the event we are able to complete this offering prior to November 24, 2011, our corporate charter will be amended to extend the life of our Company to perpetuity immediately prior to completion of the offering. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

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We may suffer from losses as a result of our inability to obtain insurance to cover loss or theft of our inventory.

We

We currently store and expect to continue to store our inventory at third-party warehouse facilities and require the third-party facilities to maintain an adequate level of insurance to protect us from loss due to theft, damage or other events. We may, in the alternative, seek our own insurance coverage for such potential losses. We may not be able to obtain such insurance, or that the level of coverage will keep us fully insured due tothe fluctuating value of indium. Further, the cost of such insurance may impact our operating expenses, whether obtained by us or through the third-party facility.

We may need to raise additional capital and may encounter unforeseen costs. If the terms on which the additional capital is available are unsatisfactory or if the additional capital is not available at all, we may not be able to pursue our objective and strategy.

Our expenses will beare funded from cash on hand from the proceeds from the sale of the offeringsecurities not otherwise utilized for the purchase of indium. Once such cash available has been spent, we will be required to generate cash resources from the sale or lending of indium, debt incurrence or the sale of additional equity securities. Our ability to obtain additional financing in the future will depend in part upon the prevailing capital market conditions, as well as our business performance and the value of indium. We may not be successful in our efforts to arrange additional financing on terms satisfactory to us or at all. If additional financing is raised by the issuance of common stock, youstockholders may suffer additional dilution and if additional financing is raised through debt financing, it may involve significant restrictive covenants which could affect our ability to operate our business. If adequate funds are not available, or are not available on acceptable terms, we may not be able to continue our operations, grow our business or take advantage of opportunities in connection with the operation of our business.

We may choose to redeem our outstanding warrants at a time that is disadvantageous to our warrant holders.

Subject to there being a current prospectus with respect to the common stock issuable upon exercise of the warrants, we may redeem the warrants included in our units at any time after six months following the effective date of this prospectus in whole and not in part, at a price of $.01 per warrant, upon a minimum of 30of30 days prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $8.00 per share for any 20 trading days within a 30-trading day period ending three business days before we send the notice of redemption. In addition, we may not redeem the warrants unless the warrants comprising the units sold in this offeringthe IPO and the shares of common stock underlying those warrants are covered by an effective registration statement from the beginning of the measurement period through the date fixed for the redemption. Redemption of the warrants could force the warrant holders (i) to exercise the warrants and pay the exercise price at a time when it may be disadvantageous for the holders to do so, (ii) to sell the warrants at the then current market price when they might otherwise wish to hold the warrants, or (iii)or(iii) to accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants. We expect most purchasers of our warrants will hold their securities through one or more intermediaries and consequently youwarrant holders are unlikely to receive notice directly from us that the warrants are being redeemed. If you failthe warrant holder fails to receive notice of redemption from a third-party and yourthe warrants are redeemed for nominal value, youwarrant holders will not have recourse to us.

We are required to use our best efforts to have an effective registration statement covering the issuance of the shares of common stock underlying the warrants at the time that our warrant holders exercise their warrants. We cannot guarantee that a registration statement will be effective, in which case our warrant holders may not be able to exercise our warrants.

Holders of our warrants will be able to exercise the warrants only if (i) a current registration statement under the Securities Act of 1933, as amended (the “Securities Act”) relating to the shares of our common stock underlying the warrants is then effective and (ii) such shares of common stock are qualified for sale or exempt from qualification under the applicable securities laws of the states in which the various holders of warrants reside. We will undertake in the underwriting agreement to be executed between us and the underwriters, and therefore will have a contractual obligation, to use our best efforts to maintain a current registration statement covering the shares

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of common stock underlying the warrants following completion of this offering to the extent required by federal securities laws, and we intend to comply with our undertaking. We may not be able to comply with such undertaking. In addition, we will agreeagreed to use our reasonable efforts to register the shares of common stock underlying the warrants under the blue sky laws of the states of residence of the existing warrant holders, to the extent an exemption is not available. The value of the warrants may be greatly reduced if a registration statement covering the shares of common stock issuable upon the exercise of the warrants is not kept current or if the securities are not qualified, or exempt from qualification, in the states in which the holders of warrants reside. Holders of warrants who reside in jurisdictions in which the shares of common stock underlying the warrants are not qualified and in which there is no exemption will be unable to exercise their warrants and would either have to sell their warrants in the open market or allow them to expire unexercised. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to qualify the underlying securities for sale under all applicable state securities laws.

We depend upon our senior management and their loss or unavailability could put us at a competitive disadvantage.

We

We currently depend upon the efforts and abilities of our senior executive officers, particularlyAlan Benjamin, our Chairmanchairman and Chief Executive Officer,chief executive officer, Ailon Grushkin, our President,president, and Richard Biele, our Chief Operating Officer,chief operating officer, each of whom is also a member of our Manager. The loss or unavailability of the services of any of these individuals for any significant period of time would have a material adverse effect on our business, prospects, financial condition and results of operations. Further, we have not purchased any key- man insurance for our executive officers and directors or any members of the Manager.

Our Manager may terminate the Management Services Agreement, as amended and restated, after the initial term in accordance with the terms thereof. We may not be able to readily secure similar services as those to be provided under the Management Services Agreement and our operations will therefore be adversely affected if our Management Services Agreement is terminated.

Members of our Boardboard of Directorsdirectors have not worked together as a group for a significant period of time and they each have only some or no experience as a director of a public company. As a result, they may not be able to effectively manage our business.

Our board of directors consists of threefour executive directors and fourthree independent directors. Only one of our current independent directors has experience as a director of a public company. As a result, our board of directors will lack a history of working together as a group and currently lacks significant experience in operating a public company. The lack of shared experience and lack of significant experience of our board of directors in operating a public company could have an adverse effect on its ability to quickly and efficiently respond to problems and effectively manage our business and deal effectively with the issues surrounding the operation of a public company.

Our officers and directors may allocate their time to other businesses, thereby causing conflicts of interest regarding the amount of time such officers and directors will devote to our affairs, which could affect our business.

Our officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. Our Manager, officers and board of directors will allocate, in the aggregate, approximately 89 hours per week during the stockpiling phase of the business plan. Once the stockpiling effort is complete, the number of hours allocated by the Manager, officers and board of directors to our affairs in the aggregate will be approximately 49 hours per week. Our executive officers and directors are currently employed by other entities and are not obligated to devote any specific number of hours to our affairs. If other entities require them to devote more substantial amounts of time to their business and affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our operations. These conflicts may not be resolved in our favor.

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We have limited protections in place to prevent our Manager from competing with us, which may adversely affect our business.

We have limited protections in place to prevent our Manager from competing with our company or taking on a potential business opportunity intended for our company for itself. Pursuant to the Management Services Agreement as amended and restated, the Manager may compete with us or take a business opportunity for itself as long as the Manager does not interfere with, disrupt or attempt to disrupt any then existing relationship, contractual or otherwise, between our company or our subsidiaries and any of our customers, suppliers, clients, executives, employees, vendors, licensees or business relations or other persons with whom we or our subsidiaries deal or in any way disparage our company to any of the above. As a result, this would have a material adverse effect on our business, prospects, financial condition and results of operations if such persons were to compete with the company.

Stockholders willdo not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940, as amended, or the protections afforded by the Commodity Exchange Act of 1936 (“(‘‘Commodity Exchange Act”Act’’ or “CEA”‘‘CEA’’).

We are not registered as an investment company under the Investment Company Act of 1940, as amended, and are not required to register under such act. Consequently, stockholders willdo not have the regulatory protections provided to investors in investment companies. We will not hold or trade in commodity futures contracts regulated by the CEA, as administered by the Commodity Futures Trading Commission (“CFTC”(‘‘CFTC’’). Furthermore, we are not a commodity pool for purposes of the CEA, and neither we nor the Manager is subject to regulation by the CFTC as a commodity pool operator or a commodity trading advisor in connection with our securities. Consequently, stockholders willdo not have the regulatory protections provided to investors in CEA-regulated instruments or commodity pools.

Geopolitical and International Risks

International and political events could adversely affect our results of operations and financial condition.

A significant portion of our revenue may be derived from non-United States operations and our indium will be warehoused at locations outside the United States, including Canada, the United Kingdom and the Netherlands, which exposes us to risks inherent in doing business in each of the countries in which we transact business. The occurrence of any of the risks described below could have a material adverse effect on our results of operations and financial condition.

Operations in countries other than the United States are subject to various risks peculiar to each country. With respect to any particular country, these risks may include:

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We could be subject to taxation in various jurisdictions with varying tax laws, which could adversely affect our operations.

We

We may have operations in countries other than the United States. Consequently, we could be subject to the jurisdiction of a significant number of taxing authorities. The income earned in these various jurisdictions is taxed on differing bases, including net income actually earned, net income deemed earned, and revenue-basedrevenue- based tax withholding. The final determination of our tax liabilities involves the interpretation of local tax laws, tax treaties, and related authorities in each jurisdiction, as well as the significant use of estimates andassumptions regarding the scope of future operations and results achieved and the timing and nature of income earned and expenditures incurred. Changes in the operating environment, including changes in tax law and currency/repatriation controls, could impact the determination of our tax liabilities for a tax year.

Foreign exchange and currency risks could adversely affect our revenues and operating expenses.

A portion of our revenue and operating expenses may be in foreign currencies. If we choose to store indium in Canada, we may be adversely affected by fluctuations in the U.S. dollar relative to the Canadian dollar. If we choose to store indium in the United Kingdom, we may be adversely affected by fluctuations in the U.S. dollar relative to the British Pound. If we chose to store indium in the Netherlands, we may be adversely affected by fluctuations in the U.S. dollar relative to the Euro. As a result, we would be subject to significant risks, including:

We may conduct business in countries that have non-traded or “soft”‘‘soft’’ currencies which, because of their restricted or limited trading markets, may be more difficult to exchange for “hard”‘‘hard’’ currency. We may accumulate cash in soft currencies, and we may be limited in our ability to convert our profits into United States dollars or to repatriate the profits from those countries.

We

We may selectively use hedging transactions to limit our exposure to risks from doing business in foreign currencies. For those currencies that are not readily convertible, our ability to hedge our exposure would be limited because financial hedge instruments for those currencies are nonexistent or limited. Our ability tohedge would also be limited because pricing of hedging instruments, where they exist, is often volatile and not necessarily efficient.

In addition, the value of the derivative instruments could be impacted by:

Risks Related to Our Units, Common Stock and This Offering

Warrants

We do not anticipate paying cash dividends on our common stock in the foreseeable future.

We are not a mutual fund and an investment in our units shall not be redeemable. In addition, our liquidity will rely principally on our ability to lend and sell indium. Accordingly, we are unlikely to have resources to declare any dividends or make other cash distributions unless and until a determination is made to sell a portion of our indium holdings. Since our inception we have not declared any dividends and we have no current intention to declare any dividends.

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Determination of the NMV of our securities will materially impact the market price of our securities.

Our reported NMV per share is based on the spot prices of indium published by Metal Bulletin as posted on Bloomberg L.P. The per share NMV shall be determined by (x) multiplying the number of kilograms of ourofour indium holdings by the last spot price for indium published by Metal Bulletin posted on Bloomberg L.P., plus cash and any other assets, less any and all of our outstanding payables, indebtedness and any other liabilities, (y) divided by our total number of outstanding shares of our common stock. Accordingly, the NMV is a market value that may not necessarily reflect the actual “realizable value”‘‘realizable value’’ upon the sale of our indium holdings. The market price of our securities is expected tomay or may not vary based on the NMV. We will post our NMV on our website bi-weekly. We cannot predict whether theour common stock or units will trade above, at or below our NMV.

Currently there is no liquid market for indium. Indium is often quoted on various data service providers with a price differential in excess of $50 per kilogram among providers. A price posted by one data service provider may be higher or lower than the price at which we can actually sell or purchase all or part of our indium stockpile. This will makemakes it difficult for investors to determine our exact NMV and therefore the value of our stock.

If an active, liquid trading market for our unitssecurities does not develop, youholder of our securities may not be able to sell yourtheir units, common stock or warrants quickly or at or above the initial offeringtheir purchase price.

Prior to this offering, there has not been a public market for our units.

An active and liquid trading markettradingmarket for our units maysecurities has not developdeveloped or be sustained following this offering. Youbeen sustained. Holders of our securities may not be able to sell yourtheir units, common stock or warrants quickly or at or above the initial offeringtheir purchase price if trading in our unitssecurities is not active. The initial public offering price may not be indicative of prices that will prevail in the trading market. See “Underwriting” for more information regarding the factors that will be considered in determining the initial public offering price.

Purchasers in this offering will experience immediate dilution in the book value of their investment.

The initial public offering price of our units is higher than the net tangible book value per share of our units immediately after this offering. Therefore, if you purchase our units in this offering, you will incur an immediate dilution of $0.47 per share (or 9.4%) in net tangible book value per unit from the price you paid, based upon the initial public offering price of $5.00 per unit. Conversion of the Class A common stock into shares of common stock and the exercise of outstanding options, warrants issued in and pursuant to the 2009 Private Placement and warrants underlying the units will result in further dilution of your investment. In addition, if we raise funds by issuing additional securities, the newly issued securities may further dilute your ownership interest.

Our outstanding options, warrants and unit purchase option may have an adverse effect on the market price of common stock and make it more difficult to obtain future financing.

Prior to this offering, as a result

As of the 2009 Private Placement,April 18, 2012, we hadhave outstanding warrants, options and unit purchase options to purchase up to 1,201,4007,870,600 shares of common stock issued and outstanding. Upon completion of this offering, we will issue an additional 232,720 warrants to the 2009 Private Placement investors. In connection with this offering, we will be issuing warrants to purchase up to 10,000,000 shares of common stock (11,500,000 shares of common stock if the underwriters’ over-allotment is exercised in full), and have agreed to issue to the representatives of the underwriters of this offering an option to purchase up to a total of 500,000 units. In connection with the 2008 Long-Term Incentive Compensation Plan, we have agreed to issue options to purchase 124,999 shares of common stock to our chief financial officer and the independent members of our board of directors, which will fully vest and will become exercisable only upon the completion of this offering. Further, upon the closing of this offering, our Manager will hold options to purchase up to an aggregate of 455,000 shares of common stock, at an exercise price of $4.50 per share, resulting from compensation in connection with the 2009 Private Placement, the conversion of promissory notes issued pursuant to a revolving credit line in the principal amount of $265,000 plus interest and the conversion of 75,000 common shares into stock options.

The sale or even the possibility of sale of the shares of common stock underlying the warrants and such options could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants and options are exercised, youholders may experience dilution to yourtheir holdings.

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The determination for the offering price of our units is more arbitrary compared with the pricing of securities for an operating company in a particular industry.

The public offering price of the units and the terms of the warrants were negotiated between us and the representatives of the underwriters. Factors considered in determining the prices and terms of the units, including the common stock and warrants underlying the units, include:

However, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since we have no historical operations or financial results to compare them to.

We could issue “blank check”‘‘blank check’’ preferred stock without stockholder approval with the effect of diluting then current stockholder interests and impairing their voting rights.

Our certificate of incorporation, as amended, authorizes the issuance of up to 1,000,000 shares of “blank check”‘‘blank check’’ preferred stock with designations, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying or preventing a change in control. For example, it would be possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of our company.

If we cannot initially satisfy, or continue to satisfy,

Our securities are quoted on the NASDAQ Capital Market’s listing requirements, includingOTC Bulletin Board and the requirements as a “Commodity Stockpiling Company”,OTCQB, which limits the liquidity and other applicable regulatory rules, including NASDAQ’s director independence requirements, our securities may not be listed or may be delisted, which could negatively impact the price of our securities and your ability to sell them.

We have applied to havemore than if our securities approved for listingwere to be quoted or listed on the NASDAQ CapitalNasdaq Stock Market upon consummation of this offering. or another national exchange.

Our company is considered to be a “commodity stockpiling company” or “CSC” as defined by the NASDAQ,units, common stock and therefore our company is subject to heightened initial and continued listing requirements. Such additional requirements include: (i) within 18 months of the effectiveness of a CSC’s initial public offering registration statement, the CSC must invest at least 85% of the net proceeds of such offeringwarrants trade in the raw material over-the-counter market and are quoted on the OTC Bulletin Board, a FINRA-sponsored and operated inter-dealer automated quotation system for equity securities not included in the Nasdaq Stock Market, and/or other commoditythe OTCQB, a similar marketplace operated by Pink OTC Markets Inc. Quotation of our securities on the OTC Bulletin Board and the OTCQB limits the liquidity and price of our securities more than if our securities were quoted or returnlisted on the unused amount pro-rataNasdaq Stock Market or a national exchange. Lack of liquidity limits the price at which our securities may be sold or whether our securities may be sold at all.

A market for our securities may cease to its shareholders. The unused amount will be calculated based uponexist, which would adversely affect the sum of: a) monies spent byliquidity and price of our securities.

Our securities are quoted on the CSC on acquiringOTC Bulletin Board and the raw material or other commodity during the 18 month period,OTCQB. Stockholders and b) monies contracted to be spent by the CSC on acquiring the raw material or other commodity over the ensuing 12 months; (ii) the CSC must publish, or facilitateprospective stockholders have only limited access to at no costinformation about prior trading history on which to base their investment decision. The price of our securities may vary significantly due to our reports of operating losses, one or more potential business transactions, the filing of periodic reports with the SEC and in an easily accessible manner, regular pricing information regardinggeneral market and economic conditions. An active tradingmarket for our securities may never develop or, if developed, it may not be sustained. In addition, the raw material or other commodity from a reliable, independent source, at least as frequently as current industry practice of pricing such raw material or other commodity, and no less frequently than twice per week; (iii) the CSC must publish the NMV on a daily basis, or where pricing information for the raw material or other commodity is not available on a daily basis, no less frequently than twice per week, provided, however, if the spot price of the raw material or other commodity fluctuates by more than 5%, the CSC shall publish its NMV within one business day of such fluctuation; (iv) the CSC must publish the quantity of the raw material or other commodity held in inventory, the average price paidsecurities varies due to general economic conditions and forecasts, our generalbusiness condition and the CSC’s

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NMV within two business daysrelease or our financial reports. Unless a market can be established or sustained, holders of any change in inventory held; (v) the CSC must employ the services of one or more independent third-party storage facilities, to safeguard the physical holdings of the raw material or other commodity that the CSC acquires, and such third-party facility should provide services consistent with those provided by custodians, including storage and safeguarding, insurance, transfer of the raw material or other commodity in and out of the facility, visual inspections, spot checks and assays, confirmation of deliveries to supplier packing lists, and reporting of transfers of inventory to the CSC and its auditors, and the review of the third-party storage facilities, including all lending, sales and delivery arrangements, must be overseen by a committee of independent directors; (vi) the CSC must create a committee comprised solely of independent directors who shall consider, at least quarterly, whether the CSC’s purchasing activities have had a measurable impact on the market price of the raw material or other commodity and shall report such determinations and make subsequent recommendations to the board of directors. We cannot assure you that we will be able to meet those initial listing requirements at that time. Even if our securities are listed on the NASDAQ Capital Market, we cannot assure you that our securities will continue tomay be listed on the NASDAQ Capital Market.unable it sell their securities.

In addition, following this offering, in order to maintain our listing on the NASDAQ Capital Market, we will be required to comply with certain NASDAQ Capital Market rules, including those regarding minimum stockholders’ equity, minimum share price and certain corporate governance requirements. If we are unable to satisfy the NASDAQ Capital Market criteria for maintaining our listing, our securities could be subject to delisting.

If the NASDAQ Capital Market does not list our securities, or subsequently delists our securities from trading, we could face significant consequences, including:

In addition, we would no longer be subject to the NASDAQ Capital Market rules, including rules requiring us to have a certain number of independent directors and to meet other corporate governance standards.

If penny stock regulations impose restrictions on the marketability of our common stock, the ability of our stockholders to sell shares of our common stock could be impaired.

The Securities and Exchange Commission, or the SEC has adopted regulations that generally define a “penny stock”‘‘penny stock’’ to be an equity security that has a market price of less than $5.00 per share or an exercise priceexerciseprice of less than $5.00 per share, subject to certain exceptions. Exceptions include equity securities issued by an issuer that has (i) net tangible assets of at least $2,000,000,$2 million, if such issuer has been in continuous operation for more than three years, or (ii) net tangible assets of at least $5,000,000,$5 million, if such issuer has been in continuous operation for less than three years, or (iii) average revenue of at least $6,000,000$6 million for the preceding three years. Unless an exception is available, the regulations require, that prior to any transaction involving a penny stock, a risk disclosure schedule must be delivered to the buyer explaining the penny stock market and its risks.

You should be aware that, accordingAccording to the SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

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We are aware of the abuses that have occurred in the penny stock market. We doare not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market. We will strive within the confines of practical limitations to prevent such abuses with respect to our common stock.

Provisions in our charter documents and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.

Our charter and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. Our board of directors is divided into two classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. As a result, at any annual meeting only a minority of the board of directors will be considered for election. Since our “staggered board” would prevent our stockholders from replacing a majority of our board of directors at any annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the best interests of stockholders.

Moreover, our board of directors has the ability to designate the terms of, and issue new series of preferred stock.

We are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

TABLE OF CONTENTSCautionary Statement Regarding Forward-Looking Statements

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” TheseThe statements involvecontained in this prospectus that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,, and Section 27A of the Securities Act of 1933, as amended.  Forward-looking statements may be identified by the use of forward-looking terminology such as “should,” “could,” “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intends,” “continue,” or similar terms or variations of those terms or the negative of those terms.  All forward-looking statements are management’s present expectations of future events and are subject to a number of risks and uncertainties and other factors which maythat could cause our actual results performance, or achievements to bediffer materially different from any future results, performance, or achievements expressed or implied bythose described in the forward-looking statements.These statements appear in a number of places in this prospectus and include statements regarding the intent, belief or current expectations of SMG Indium Resources Ltd. Forward-looking statements include, but are merely our current predictions of future events. Investors are cautioned that any such forward-looking statements are inherently uncertain, are not guaranties of future performance and involve risks and uncertainties. Actual results may differ materially from our predictions. There are a number of factors that could negatively affect our business and the value of our securities, including and not limited to statements about:

In some cases, you can identify forward-looking statements by termswe cannot predict whether, or to what extent, any of such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties.may be realized, nor is there any assurance that we have identified all possible issues that we might face. We discuss many of these risks inthisprospectus in greater detail under the heading “Risk Factors” beginning on page 8.5. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward looking statements represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly or to update the reasons actual resultscould differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

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USE OF PROCEEDS

We estimate that our netwill not receive any of the proceeds from the sale of 10,000,000 unitsthe common stock by the selling stockholders named in this offering at a price per unitprospectus. All proceeds from the sale of $5.00the common stock will be approximately $46,500,000 after deducting estimated offering expenses of $500,000, underwriting discounts and commissions of $2,500,000, and a corporate finance fee of $500,000, and assuming an initial public offering price of $5.00 per share. Ifpaid directly to the over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $53,550,000.

We currently intend to use the proceeds of this offering as follows:

		Approximate Allocation of Net Proceeds				Approximate Percentage of Net Proceeds
Purchase of Indium(1)(3)		$	39,525,000				85.0	%
General corporate purposes, including working capital(2)(3)		$	6,975,000				15.0	%
Total		$	46,500,000				100.0	%

The allocation of the net proceeds of the offering set forth above represents our estimates based upon our current plans and assumptions regarding industry and general economic conditions and our future revenues and expenditures.

Investors are cautioned, however, that expenditures may vary substantially from these estimates. Investors will be relying on the judgment of our management, who will have broad discretion regarding the application of the proceeds of this offering. The amounts and timing of our actual expenditures will depend upon numerous factors, including the amount of cash generated by our purchases and sales and the amount of competition we face.selling stockholders. We may find it necessary or advisable to use portions of thereceive proceeds from this offering for other purposes.

Circumstances that may give rise to a change in the use of proceeds include:

The proceeds we receive from the exercise of the warrants issued in this offering and the 2009 Private Placement will be allocated to the purchase of additional indium and for general working capital purposes, including but not limited to the payment of our operating expenses. The exact percentagewarrants. If all of the warrant proceeds allocated toward purchasing additional indium and the time period to purchase indium using such proceeds will be determined by the Manger, in its sole discretion.

From time to time,warrants exercisable for shares of common stock are exercised, we evaluate these and other factors and we anticipate continuing to make such evaluations to determine if the existing allocation of resources, including the proceeds of this offering, is being optimized. Pending such uses, we intend to invest thecould receive net proceeds of this offering in direct and guaranteed obligationsup to approximately $40.2 million. The holders of the United States, interest-bearing, investment-grade instruments or certificates of deposit.

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Ifwarrants are not obligated to exercise the Manager has not, within 18 months fromwarrants and we cannot assure that the date of this prospectus, invested in indium at least 85%holders of the warrants will choose to exercise all or any of the warrants.

We intend to use the estimated net proceeds received upon exercise of the offering or 100% of the proceeds that have been allocatedwarrants, if any, for the purchase ofpurchasing and stockpiling indium, our board of directors will distribute such unused proceeds pro-rata to our shareholders as a return of capital. The unused amount will be calculated based upon the amount of net proceeds from this offering less the sum of: a) monies spent by us in acquiring indium during the 18 month period,working capital and b) monies contracted to be spent by us in acquiring indium over the ensuing 12 months. Any such distributions will be subject to applicable law. Any interest earned on the proceeds of this offering shall be utilized for general corporate and working capital expenses and shall not be distributed to shareholders in the event that the board of directors distributes the unused proceeds to shareholders. Whether or not the board of directors returns the capital to shareholders, our operations will remain limited to purchasing, stockpiling, lending and selling the metal indium.purposes.

DIVIDEND POLICY

We have never paid or declared any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the purchase of indium and expansion of our business, and we do not anticipate paying any cash dividends for the foreseeable future following this offering. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors deems relevant. In addition, the terms of any future debt or credit facility may preclude us from paying dividends.

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CAPITALIZATION

Market Price and Dividend Information

Our units, common stock and warrants are quoted on the OTC Bulletin Board and/or the marketplace operated by Pink OTC Markets Inc. (“OTCQB”) under the symbols “SMGIU.OB” “SMGI.OB” and “SMGIW.OB.” The following table sets forth the capitalizationhigh and low sales prices for our units, common stock and warrants, as of September 30, 2010, both before andreported by the OTCQB since our securities began trading after giving effect to the sale of 10,000,000 units at the initial public offering price of $5.00 per unit, conversion of the 2009 Private Placement units, consisting of Class Aour IPO in May 2011:

Quarterly Common Stock and warrants, after deducting underwriting discounts, commissions, the corporate finance fee, and estimated offering expenses payable by us:Price Ranges

		As of September 30, 2010
		Actual				Pro Forma				Pro Forma, as Adjusted
Cash and cash equivalents		$	703,178			$	703,178	(1)		$	47,476,178	(4)
Total long term liabilities, including current maturities		$	306,715			$	—	(2)		$	—
Stockholder Equity:
Preferred Stock, $.001 par value, 1,000,000 shares authorized, no shares issued and outstanding, actual, pro forma, and pro forma as adjusted			—				—				—
Class A Common Stock – $.001 par value; 2,000,000 shares authorized, 1,003,600 issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted			1,164				—				—
Common Stock, $.001 par value, 5,000,000 shares authorized, 155,000 shares issued and outstanding, actual; 5,000,000 shares authorized, 1,476,320 shares issued and outstanding, pro forma; and 40,000,000 shares authorized(7) 11,476,320 shares issued and outstanding pro forma as adjusted			155				1,477	(1)			11,477
Additional paid in capital			5,373,771				5,675,328(1),(2)				52,420,738(3),(4)
Deficit accumulated during the development stage			(392,890	)			(392,890	)			(392,890	)
Total Stockholders Equity		$	4,982,200			$	5,283,915			$	52,039,325
Total Capitalization		$	5,288,915			$	5,283,915			$	52,039,325	(5)(6)

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DILUTION

The difference betweenAs of April 20, 2012, the public offeringclosing sales price per share of our units, common stock assuming no value is attributed toand warrants on the warrants included in the units,OTC Bulletin Board was $3.50,$3.055 and the pro forma net tangible book value per share$0.35, respectively. As of April 18, 2012, there were approximately265 stockholders of record of our common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities by the number of outstanding shares of our common stock.

At September 30, 2010, our net tangible book value was $4,982,200. Our pro forma tangible net book value of $52,039,325 or $4.53 per share is comprised of the following: (i) the effect of the sale of 1,163,600 private placement units on January 8, 2010 at $5.00 per unit and the subsequent conversion of the shares of Class A common stock issued in the 2009 Private Placement into shares of common stock in this offering; (ii) 10,000,000 shares of common stock included in the units at an initial public offering price of $5.00 per unit; (iii) the deduction of underwriting discounts, the corporate finance fee and the estimated expenses of this offering; and (iv) the conversion of the note payable to the Manager. The pro forma net tangible book value of $4.53 per share represents an immediate increase in net tangible book value of $0.76 per share to the existing stockholders and an immediate dilution of $0.47 per share or 9.4% to new investors.

The following table illustrates the dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units:

Public offering price(1)		$	5.00
Net tangible book value before this offering(5)		$	3.78
Increase attributable to new investors		$	0.76
Pro forma net tangible book value after this offering(2)(3)(4)		$	4.53
Dilution to new investors		$	0.47

The following table sets forth information with respect to our existing stockholders and the new investors:

		Shares Purchased								Total Consideration								Average Price Per Share
		Number				Percentage				Amount				Percentage
Founding stockholders			80,000				0.70	%		$	5,000				0.01	%		$	0.06
Private Placement Shareholders(2)(3)			1,396,320				12.16	%		$	5,818,000				10.42	%		$	4.17
New investors			10,000,000				87.14	%		$	50,000,000				89.57	%		$	5.00
			11,476,320				100.0	%		$	55,823,000				100.0	%		$	4.86

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The pro forma net tangible book value after the offering is calculated as follows:

Numerator:
Net tangible book value before this offering(1)		$	4,982,200
Net proceeds from this offering(2)			46,500,000
Conversion of Note Payable to Manager			301,715
Offering costs paid in advance and excluded from net tangible book value before this offering			255,410
		$	52,039,325
Denominator:(5)(6)(7)(8)
Shares of common stock outstanding prior to private placement			155,000
Shares of common stock converted to stock options upon closing of this offering			(75,000	)
Shares of common stock issued to private placement shareholders upon conversion of the Class A common stock(3)(4)			1,396,320
Shares of common stock included in the units offered			10,000,000
Total			11,476,320

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations and financial condition should be read in conjunction with and is qualified in its entirety by, our financial statements (andand related notes related thereto) and other more detailed financial information appearing elsewhere in this prospectus. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Some of the information contained in thisThis discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-lookingcontains forward looking statements that involve risks, uncertainties and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could causeassumptions. The actual results tomay differ materiallyfrom those anticipated in these forwarding looking statements as a result of certain factors, including but not limited to, those which are not within our control.

Overview

We were formed under the laws of the State of Delaware on January 7, 2008. On April 2, 2008, we changed our name from Specialty Metals Group Indium Corp. to SMG Indium Resources Ltd. On May 4, 2011, we amended our certificate of incorporation to provide for 40,000,000 shares of authorized common stock, par value $0.001 per share and 1,000,000 shares of authorized preferred stock, par value $0.001. In addition, we amended our corporate charter extending the life of the Company to perpetuity. We were formed to purchase and stockpile the specialty metal indium. We intend to utilize cash derived from the results describedproceeds of offerings of our capital stock, debt, or a combination of cash, capital stock and debt, for acquiring and storing indium.

In 2010, we completed a private placement that resulted in or implied bynet proceeds of approximately $5.6 million. With the forward-looking statements containedcapital raised through the private placement, we began purchasing and stockpiling indium. In May 2011, we completed an IPO of an aggregate of 5,084,750 units at $5.00 per unit and raised aggregate net proceeds of approximately $24.0 million including the partial exercise of the underwriters’ overallotment option.  Each IPO unit consisted of one share of the Company’s common stock and one redeemable common stock purchase warrant. Each warrant entitles the holder to purchase from the Company one share of common stock at an exercise price of $5.75 per share commencing with the effective date of the registration statement and expiring on May 4, 2016. Of the total raised in the following discussionIPO, 85% of the net proceeds, or approximately$20.4 million, was committed to be used to purchase and analysis.stockpile indium and 15% of the net proceeds, or approximately$3.6 million, is used for general working capital to fund operations. As of March 31, 2012, we have purchased or committed to purchase a sufficient quantity of indium to satisfy our commitment to use 85% of the net proceeds of the IPO for the purchase of indium.

Effective August 4, 2011, the units sold in the IPO were eligible to be separated and in addition to the units trading under the ticker symbol SMGIU.OB, the common stock and the warrants trade separately under the ticker symbols SMGI.OB and SMGIW.OB, respectively.

On January 5, 2012, we closed a private placement, the 2012 Private Placement, of an aggregate of 2.0 million shares of our common stock at $3.75 per share to two accredited investors, Raging Capital Fund, L.P. and Raging Capital Fund (QP), L.P., for an aggregate purchase price of $7.5 million. Raging Capital Management, LLC is the general partner of Raging Capital Fund, L.P. and Raging Capital Fund (QP), L.P., respectively, and collectively, the entities represent our largest stockholder(s). Such entities are affiliated and controlled by William C. Martin, our director and member of our Manager, Specialty Metals Group Advisors LLC. We intend to use 85% of the gross proceeds, or approximately $6.4 million, from such transaction to purchase and stockpile the metal indium and 15% of the gross proceeds, or approximately $1.1 million, for general corporate purposes.

Our Company

Overview

We were formed to purchase and stockpile the metal indium. Our strategy is to achieve long-term appreciation in the value of our indium stockpile, and not to actively speculate with regard to short-term fluctuations in indium prices. We plan to achieve long-term appreciation in the value of our indium stockpile primarily through price appreciation of the physical metal. Although the price of indium has declined 48.8%substantially from its high in March 2005, it is our belief that the long-term industry prospects for indium are attractive and over time the price of the metal will appreciate. However, there is no assurance that the price of indium or the value of the Company’s securities will increase over time. To our knowledge, this is currently the only investment that allows potential stockholders to participate in the price appreciation of indium other than physical delivery of the metal itself. Our structure provides a simple and efficient mechanism by which a potential public stockholder may benefit from the appreciation in the price of indium. Our shareholdersstockholders have the ability to effectively purchase an interest in indium in a manner that does not directly include the risks associated with ownership of companies that explore for, mine and process indium. Our common shares represent an indirect interest in the physical indium we own.

All of the indium we purchase and own is, and will be, insured and physically stored in third-party warehouses or storage facilities located in the United States, Canada, Rotterdam and the Netherlands and/or the United Kingdom. Our Manager, Specialty Metals Group Advisors LLC, which is a related party, will negotiate storage arrangements for our indium holdings and is required to use commercially reasonable efforts to ensure that the indium holdings have the benefit of insurance arrangements obtained on standard industry terms.

We currently store and intend to store our indium stockpile in reputable, adequately capitalized and insured third-party facilities that have the following characteristics:

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We utilize and expect to continue to utilize facilities that meet our requirements that are either (i) located closest in proximity to our indium suppliers in order to reduce transportation fees or (ii) facilities located closest in proximity to our corporate headquarters or satellite offices in order to facilitate our ability to inspect our inventory and reduce future corporate expenses associated with travel. We believe there are numerous third-party storage facilities that provide more than adequate services that meet our criteria, which eliminates the need for hiring a custodian. Subsequent to our 2009 Private Placement, our ManagerAs of December 31, 2011, we purchased on our behalf approximately 9.2 tons34.5 mt of indium aggregating approximately $22.3 million of indium which is currently stored in ana secure insured securebonded warehouse facility located in New York owned and operated by Brink’s Global Services U.S.A., Inc. (“Brink’s”), a bonded warehouse.

Initially, a member of our senior management will be responsible for warehouse facilities’ inspection. We expect our chief executive officer or our chief operating officer to inspect the facilities.Brink’s. The facilities will be visited at least once per year for inspection. We may insure the warehouse contents above and beyond a bonded warehouse to guarantee we will not sustain a loss in the event of an unforeseen catastrophe or we deem the warehouse company’s insurance inadequate.

We will monitor the ratio of our common share price to the value of our indium holdings and may sell some of our indium holdings and buy back common shares when the common share price is less than the NMV per share or sell common shares and buy indium when the common share price is higher than the NMV per share.

Our expenses will be required to be satisfied by cash on hand that is not set aside for the purchase of indium. Cash on hand following completion of this offering is expected to be sufficient to satisfy our expenses for approximately 53 months.three years. Our annual cash operating expenses, including corporate taxes,management fees, are estimated to be approximately $1,700,000. While it is not our current intention to do so in the short-term, at our discretion, we$1.4 million. We may subsequently lend or sell some, or all, of our indium stockpile to cover our operating expenses. Alternatively, we may seek to raise additional capital to cover our operating expenses through potentially dilutive equity offerings or debt financing. For a detailed description of such expenses, please see “Management‘‘Management of SMG Indium Resources Ltd. —- Management Services Agreement.”’’ We are a taxable United StatesU.S. corporation and are subject to federal and state taxes.

Our stockpile of indium may decrease over time due to sales of indium necessary to pay the expenses of this offering and our annual operating expenses. Without increases in the price of indium sufficient to compensate for such decreases, our NMV may also decline. Regardless of our ability to purchase indium in a timely manner, we will incurincurred initial offering expenses of approximately $500,000$1.5 million and projected yearly cash operating expenses of approximately $1,548,000 prior$1.4 million. Further, we have and expect to spending any proceedscontinue to incur, from this offeringtime to stockpile indium. We anticipate ourtime, non-cash share-based compensation expenses which are not included in the aforementioned yearly cash operating expenses will increase by approximately $152,000 to approximately $1,700,000 per annum once we are able to fully utilize the net proceeds from this offering allocated to purchase and stockpile indium.expenses. The price of indium would need to appreciate substantially to offset the reduction in our NMV due to the expenses listed above. The percentage increase required cannot be accurately determined at this time. It is highly dependent upon several variables including, but not limited to, the exact number of kilograms of indium purchased, the average price paid and the amount of time it takes for us to fully spend the allocated net proceeds from this offeringthe 2012 private placement to complete the buildup of our indium stockpile.

On January 8, 2010, we completed a private placement offering of an aggregate of 1,163,600 units to 61 investors for gross proceeds of $5,818,000. Each unit consisted of one share of Class A common stock, par value $.001 per share, and one warrant to purchase one share of common stock at an exercise price of $5.75 per share, which shall become exercisable upon the closing of this offering. In accordance with the terms of the private placement, upon the successful completion of this offering, each share of Class A common stock shall automatically convert into one share of common stock, subject to certain adjustments. The private placement shareholders will receive shares and warrants adjusted for increases or decreases based upon the increase or decrease of our NMV from the closing of the 2009 Private Placement to our NMV

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immediately preceding the consummation of this offering. Based on the terms of the 2009 Private Placement, upon the final closing of the 2009 Private Placement, our NMV was approximately $5,526,800. This was calculated by applying the $5,818,000 gross proceeds from the 2009 Private Placement to our cash of $8,737 and adding the prepaid expenses of $3,077 then deducting (i) $265,000 revolving credit note payable to the Manager; (ii) $29,658 of interest payable on the revolving credit note and (iii) $8,356 in accrued expenses.

An example of the private placement adjustment feature in operation is described below.

Assuming that immediately preceding the closing of this offering we hold in inventory 10,000 kilograms (10.0 metric tons) of indium, $500,000 in cash and debt payable of $300,000 (the revolving credit note payable outstanding plus interest payable) and theannual average monthly price of indium for the three month period immediately preceding the closing date of this offering is $600.00increased approximately 23.0% in 2011. It increased from $567 per kilogram our NMV would be $6,200,000 (10,000 kilogramsin 2010 to $696 per kilogram in 2011. According to the USGS, the U.S. producer price for indium began the year 2011 at $570 per kilogram, increased to $690 per kilogram in April, and rose further to $785 per kilogram in May; the price remained at that level through early November. The New York dealer price range for indium began the year at $520 - $570 per kilogram and increased through early June, reaching a high of indium multiplied$800 - $875 per kilogram. The price then decreased to $630 - $670 per kilogram by early November before falling further to $540 - $600 per kilogram plus $500,000 in cash minus $300,000 (revolving credit note payable plus interest)). To calculate the adjustment ratio per private placement Class A common share: $6,200,000 (NMV immediately preceding this offering) minus $5,526,800 (NMV from 2009 Private Placement) divided by the initial public offering unit priceend of $5.00 equals 134,640 shares, which represents the total number of NMV based adjustment shares that would be issued to the private placement shareholders. To calculate the adjustment ratio per private placement share, 134,640 (total adjustment shares to be issued to the private placement shareholders) is divided by 1,163,600 (total number of shares of Class A common stock outstanding) which equals 0.1157. Hence, under this scenario, from the NMV adjustment factor only, for every one share of Class A common stock held byDecember. As a private placement shareholder, they would receive an additional 0.1157 units in connection with the initial public offering. A private placement shareholder who owns 10,000 shares Class A common stock would receive 1157 additional units in connection with this offering (10,000 multiplied by 0.1157).

In the scenario described above, ifresult, the price of indium at the date of the initial public offering is $600 per kilogram, exactly equivalent to the average monthly price of indium for the three month period immediately precedinghas declined since the closing date of the initial public offering used to calculate theour IPO in May 2011 resulting in a decline in NMV adjustment factor, there would be no additional dilutive or anti-dilutive effect on the initial public offering investors.

If the average monthly price of approximately 12.6% and a write down of our indium for the three month period immediately preceding the closing dateinventory of this offering used to calculate the NMV adjustment factor is $600 per kilogram and theapproximately $3.3 million at December 31, 2011. The price of indium on the date of closing this offering is $650 per kilogram, there will be an anti-dilutive effect for the investors in this offering. The investors in this offering will essentially assume control of the 10.0 metric ton indium stockpile at $600 per kilogram which is lower than the current price of $650 per kilogram. In this scenario, the investors in this offering would benefit. The net effect of the benefit to the investors in this offering would be the current price of indium, $650, minus the adjustment price received by the private placement shareholders of $600 per kilogram multiplied by 10,000 kilograms, or a positive effect of $500,000 to our NMV upon the consummation of this offering. Assuming we complete this offering prior to November 25, 2011 and the private placement investors receive the 20% increase in units associated with the time value adjustment factor plus the 0.1157 per Class A common share NMV adjustment and we sell 10,000,000 shares in this offering, the positive effect is $0.04 per share outstanding ($500,000 divided by 11,610,960 [1,163,600 private placement shares + 232,720 (20% time value adjustment) + 134,640 (NMV adjustment) + 80,000 (management common shares) + 10,000,000 (investors in this offering)]. Our NMV upon the consummation of this offering would increase from $4.53 per share to $4.57 per share.

Conversely, if the average monthly price of indium for the three month period immediately preceding the closing date of this offering used to calculate the NMV adjustment factor is $600 per kilogram and the price of indium on the date of closing of this offering isApril 18, 2012 was $550 per kilogram there will be a dilutive effectpublished by Metal Bulletin as posted on the investors in this offering because they will essentially assume control of the 10.0 metric ton indium stockpile at $600 per kilogram which is higher than the current price of $550 per kilogram. In this scenario, the investors in this offering would be diluted. The net effect of the dilution to the investors in this offering would be the current price of indium, $550, minus the adjustment price received by the private placement investors of $600 per kilogram multiplied by 10,000 kilograms or a negative effect of $500,000 to our NMV in this offering. Assuming we complete this offering prior to November 25, 2011 and the private placement investors receive the 20% increase in units associated with the time value adjustment factor plus the 0.1157 per Class A

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common share NMV adjustment and we sell 10,000,000 shares in this offering, there would be a dilutive effect of $0.04 per share outstanding to our NMV ($500,000 divided by 11,610,960 [1,163,600 private placement shares + 232,720 (20% time value adjustment) + 134,640 (NMV adjustment) + 80,000 (management common shares) + 10,000,000 (investors in this offering)]. Our NMV in this offering would decrease from $4.53 per share to $4.49 per share.

Critical Accounting Policies and Estimates:

Estimates

Use of Estimates

The preparation of financial statements and related disclosures in conformity with United States generally accepted accounting principles generally accepted in the United States(“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the audited financial statements and accompanying notes. Estimates are used for, but not limited to, purchasesvaluation of indium inventories, income taxes, loss contingenciesshare-based compensation and revenue recognition. Share based payment arrangement and derivative accounting to the extent it may apply with respect to any financial instruments we may issue. In addition, we will be required to review, at each reporting date, the applicability of the variable interest consolidation model prescribed under FASB ASC 810 with respect to our relationship with the Manager since it is owned by our founding stockholders. Management will base its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.

Since the date of inception, we have not produced any revenues. Accordingly, our activities have been accounted for as those of a “Development State Company” as set forth in FASB ASC 910-10 “Accounting for Development Stage Entities”. Among the disclosures required by FASB ASC 910 are our financial statements being identified as those of a development stage company. In addition, the statements of operations and comprehensive loss, stockholders equity (deficit) and cash flows are required to disclose all activity since our date of inception.

We will continue to prepare our financial statements and related disclosures in accordance with FASB ASC 910 until such time that we have generated significant revenues and are deemed to have exited the development stage.

Common Stock Purchase Warrants and Other Derivative Financial Instruments

We account for the issuance of common stock purchase warrants and other free standing derivative financial instruments in accordance with the provisions of FASB ASC 505. Based on the provisions as contained therein, we classify as equity any common stock purchase contracts thatthat: (i) require physical settlement or net-share settlement or (ii) gives us a choice of net-cash settlement or settlement in ourits own shares (physical settlement or net-share settlement).settlement, and (ii) is index to our common stock. We classify as assets or liabilities any contracts thatcommon stock purchase contracts: (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or, (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). or (iii) is not indexed to our common stock. We assess classification of our common stock purchase warrants and other free standing derivativesequity-classified contracts at each reporting date to determine whether a change in classification between assets and liabilities is required.

We currently have no Our outstanding free standing derivatives. Notwithstanding, we, as a matter of policy, will evaluate any common stock purchase warrantscontracts (warrants and unit purchase options) were accounted for as equity through December 31, 2011.

Employee Share-Based Payment Arrangements

We measure the cost of employee services received in exchange for an award of equity instruments (share based payments or other free standing derivatives at each reporting date to assess their proper classification using the applicable classification criteria enumerated in FASB ASC 505.

Employee Share Based Payment Arrangements

We plan to account for employee share based payment arrangements in accordance with the provision of FASB ASC 718-10-S99, “Share-Based Payments” (“SBP’s”“SBP”). FASB ASC 718 addresses all forms of SBP’s and awards including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. Under FASB ASC 718, SBP awards result in a cost that is measured at fair value on the awards’ grant date, based on the estimated numbergrant-date fair value of awards that are expectedthe award. That cost is recognized over the period during which an employee is required to vest and will resultprovide service in a charge to operations. We only recently adopted an equity incentive plan but have not yet issued any employee share-based payments and there is currently no compensationexchange for the periods.SBP award—the requisite service period (vesting period). For SBP awards subject to performance conditions compensation is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the Black-Scholes-Merton option pricing model. Compensation expense for SBP awards granted to nonemployees is remeasured each period as the underlying options vest.

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Inventory or “Stockpile”‘‘Stockpile’’ of the Metal Indium

Our inventory or “stockpile” of the metal indium is recorded at cost including all associated costs of delivering the indium to the bonded storage warehouse on the date we take delivery of the physical metal. Cost is determined using the specific- identification method. The stockpile of the physical metal indium is classified as noncurrent as we do not expect to sell any of the indium during the next twelve months. The stockpile of the physical metal indium is carried at the lower of cost or market with cost being determined on a specific identificationspecific-identification method and market being determined as the net realizable value as computedbased the spot prices obtained from the closing spot price as posted by Metal Bulletin on Bloomberg L.P., a real timereal-time financial information services data platform, basedplatform. We will charge against earnings on an interim basis the last dayamount by which the spot price of the period. The difference betweenindium is less than cost and fair market value is reviewed on a periodicspecific-identification basis. Increases in the spot price of indium for the same lot of indium held in inventory in later interim periods within the fiscal year are recognized in the later interim period. Increases in value recognized on an interim basis do not exceed the previously recognized diminution in value within that fiscal year. However, it should be noted that there may not be a correlation between the spot price of indium as publish by Metal Bulletin and posted on Bloomberg L.P. and the amount we may realize upon selling indium in the open market.

Further, we periodically review the indium stockpile to determine if a loss should be recognized where the utility of indium has been impaired.impaired on an other-than-temporary basis. Where such impairment is viewed as something other than temporary, we will reflect incharge against earnings the valueamount by which the fair market value is less than the cost. Realized gains (losses) from othersale transactions will be determined for income tax and for financial reporting purposes on specific identification method.a specific-identification method when incurred. At December 31, 2011, certain of lots of indium were adjusted to reflect a lower of cost or market write-down of approximately $3.3 million.

Income Taxes

We follow FASB ASC 740 “Accounting

Income taxes are accounted under the asset-and-liability method. Deferred tax assets and liabilities are recognized for Income Taxes.” Under FASB ASC 740, we establishthe future tax consequences attributable to the differences between the financial accounting assumptions that affect the reportedstatement carrying amounts of existing assets and liabilities and disclosure of contingentthe respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities atare measured using enacted tax rates expected to apply to taxable income in the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Additionally, FASB ASC 740 clarifies the accounting for uncertaintyyears in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken orwhich those temporary differences are expected to be takenrecovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The portion of any deferred tax asset for which it is more likely than not that a tax return. Under FASB ASC 740,benefit will not be realized must then be offset by recording a valuation allowance. A valuation allowance has been established against all of the impactdeferred tax assets, as it is more likely than not that these assets will not be realized given our history of an uncertainoperating losses. We recognize the effect of income tax position(s) on thepositions only if those positions are more likely than not of being sustained. Recognized income tax return must be recognizedpositions are measured at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has lessgreater than a 50% likelihoodlikely of being sustained. Additionally, FASB ASC 740 provides guidance on derecognition, classification, interest and penalties, accountingrealized. Changes in interim periods, disclosure and transition. There were no such amount to be recorded under FASB ASC 740 for the year ended December 31, 2009 andrecognition or measurement are reflected in the period ended December 31, 2008.

Recently Issued Accounting Pronouncements:

FASB ASC 718-740-50 provides guidance forin which the “Accounting for Income Tax Benefits on Dividends on Share-Based Payment Awards” and addresses share-based payment arrangements with dividend protection features that entitle employees to receive (a) dividends on equity-classified non-vested shares, (b) dividend equivalents on equity-classified non-vested share units, or (c) payments equal to the dividends paid on the underlying shares while an equity-classified share option is outstanding, when those dividends or dividend equivalents are charged to retained earnings under FASBASC 718 and resultchange in an income tax deduction for the employer. A realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings are paid to employees for equity-classified non-vested shares, non-vested equity share units, and outstanding equity share options should be recognized as an increase in additional paid in capital. The amount recognized in additional paid-in capital for the realized income tax benefit from dividends on those awards should be included in the pool of excess tax benefits available to absorb potential future tax deficiencies on share-based payments. The Company does not expect that the adoption of this pronouncement had a material impact on its financial position or results of operations.judgment occurs.

In January 2010, FASB ASC 505 provided guidance on “Accounting for Distributions to Shareholders with Components of Stock and Cash”. This codification clarifies thatthe stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in EPS prospectively and is not a stock dividend for purposes of applying Topics 505 and 260 (Equity and EPS). Those distributions should be accounted for and included in the EPS calculations in accordance with paragraphs 480-10-25-14 and 260-10-45-45 through 45-47 o the FASB Accounting Standards Codification. The Company does not envision any such distributions to shareholders and thus does not expect that the adoption of this pronouncement had a material impact on its financial position or results of operations.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s financial statements upon adoption.

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In March 2010, the FASB issued ASU No. 2010-17,Revenue Recognition — Milestone Method (Topic 605): Milestone Method of Revenue Recognition. This standard provides that the milestone method is a valid application of the proportional performance model for revenue recognition if the milestones are substantive and there is substantive uncertainty about whether the milestones will be achieved. Determining whether a milestone is substantive requires judgment that should be made at the inception of the arrangement. To meet the definition of a substantive milestone, the consideration earned by achieving the milestone (1) would have to be commensurate with either the level of effort required to achieve the milestone or the enhancement in the value of the item delivered, (2) would have to relate solely to past performance, and (3) should be reasonable relative to all deliverables and payment terms in the arrangement. No bifurcation of an individual milestone is allowed and there can be more than one milestone in an arrangement. The new standard is effective for interim and annual periods beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the adoption of this pronouncement to have a material impact on its financial position and results of operations.

Revenue Recognition — Accounting for Direct Sales and Lending Transactions

We envision that our

The stockpile of indium may be used from time to time for “direct salessales” and or “lending” transactions if we need additional capital to cover annual operating expenses.transactions. Under a “direct sale” transaction, we would record a gain (loss) equal to the difference between the proceeds received from the sale of indium and the indium carrying value.

We may also elect to enter into a lending transaction. In indium lending transactions, we would exchange a specified tonnage and purity of indium for cash. Title and the risks and rewards of such indium ownership would pass to the purchaser/counterparty in the lending transaction. We would simultaneously enter into an agreement with such counterparty in which weit would unconditionally commit to purchase and the counterparty would unconditionally commit to sell a specified tonnage and purity of indium that would be delivered to us at a fixed price and at a fixed future date in exchange for cash (the Unconditional Sale and Purchase Agreement or “USPA”). The USPA would also contain terms providing the counterparty with substantial disincentives (“penalty fees”) for non-performancenonperformance of the return of indium to the companyCompany as a means to assure our future supply of indium. While we believe that this risk would be mitigated by the penalty fee features of the USPA, it is nonetheless a risk associated with a transaction of this type. We anticipate recognizing revenuesaccounting for any USPA transaction on purchasesa combined basis (sale and salespurchase) and will evaluate whether, and in what period, revenue may be recognized based on the specific terms of indium under these arrangements in accordance FASB ASC 845-25 “Non-Monetary Transactions” and “Accounting for Purchases and Sales of Inventory with the Same Counterparty.” Accordingly weany arrangements. We will disclose unconditional purchase obligations under these arrangements (“Disclosure of Long Term Obligations”) and, if applicable, accrue net losses on such unconditional purchase obligations in accordance with FASB ASC 440-10-50.obligations. On March 2, 2012, we entered into a USPA where we agreed to sell 1,000 kilograms of 99.99% purity indium at a fixed price and the buyer agreed to sell back to us 1,000 kilograms of 99.99% purity indium at a fixed price that is $20 less per kilogram than we originally sold indium to the buyer.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements did not, or are not believed by management to, have a material effect on the Company’s present or future financial statement.

Results of Operations

Year 2011 compared to Year 2010

The following table provides an overviewresults of the operating resultsoperation for the respective periods noted:

		For the Year Ended December 31, 2009				For the Period January 7, 2008 (Inception) to December 31, 2008				Nine Months Ended
										September 30, 2010				September 30, 2009
Costs and Expenses:
Operating costs		$	89,652			$	3,357			$	26,677			$	31,876
Interest expense – Manager			16,120				13,538				12,057				12,057
Deferred offering costs			231,489				—				—				231,489
Total Costs and Expenses			337,261				16,895				38,734				275,422
Net Loss		$	(337,261	)		$	(16,895	)		$	(38,734	)		$	(275,422	)

We were formed under the laws of the State of Delaware on January 7, 2008. On April 2, 2008, we changed our name from Specialty Metals Group Indium Corp. to SMG Indium Resources Ltd. We were formed to acquire, store and sell the specialty metal indium. We intend to utilize cash derived from the proceeds of this offering, our capital stock, debt, or a combination of cash, capital stock and debt, in acquiring and storing indium.

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In early September 2009, we engaged placement agents to assist us in the 2009 Private Placement. We held the first two closings of the private placement in November and December of 2009, respectively, raising a cumulative total throughyears ended December 31, 2009 of $5,018,000. In January2011 and 2010 we closed the last piece of the private placement offering raising an additional $800,000. The aggregate gross proceeds raised in the 2009 Private Placement was $5,818,000. With the capital raised through the 2009 Private Placement, in December 2009 we began purchasing and stockpiling indium. As of September 30, 2010, we purchased approximately $4,591,000 of indium. Our indium is currently stored in a secure insured bonded warehouse facility located in New York owned by The Brink’s Company. We did not generate any revenue in the first nine months of 2010 or in 2009 and 2008.are as follows:

Revenues

We have not generated any revenues to date. Our activityWe do not expect to generate revenues since our primary business plan is to purchase and stockpile already mined and processed indium ingots. Notwithstanding the closingrise and fall of the private placement has centered on purchasing indium and preparing for an initial public offering. As of the date of this prospectus, the Manager has purchased on our behalf approximately 9.2 tonsprice of indium from three regularperiod to period, the value of our indium suppliersstockpile or inventory of indium, will be recorded on our balance sheet at an averagethe lower of cost of $500 per kilogram. These purchases were funded from the net proceeds received from the 2009 Private Placement.or market. We have incurred storage fees of approximately $9,051 since December 2009.

We have purchased indium but havewill not generatedrecord any revenues to date. Our entire activity since inception has been to commenceuntil such time we either sell indium from our acquisition of a stockpile of indium and to prepare for our proposed initial public offering through an offering of our equity securities. From inception,inventory or until we have raised approximately $5,828,000. On January 8, 2010, we completed a private placement offering of approximately $5,818,000 of convertible units. To date, we have used the proceeds of such offering to purchase 9.2 tons of indium and to provide for general corporate and working capital expenses. Prior to obtaining these funds, on January 8, 2008, we entered into a revolving line of credit with our Manager, pursuant to which an aggregate of $265,000 plus interest was drawn under such line of credit. On January 25, 2010, we amended our revolving line of credit as follows: (i) the maturity date was amended to be due and payable on the earlier of: (a) the date we complete an initial public offering, which such note shall automatically convert into options to purchase 150,000 shares of common stock at an exercise price of $4.50 per share for a term of five years; (b) the date of a dissolution, liquidation, winding up or insolvency proceeding commenced by or on our behalf in the event we do not complete an initial public offering; or (c) February 25, 2011. Upon consummation of this offering, such amount due to the Manager will be automatically converted into 150,000 common stock options exercisable at $4.50 per share for a period of five years.lend indium.

During 2008, we primarily focused our attention on organizing the business operations in anticipation of an initial public offering, including but not limited to appointing a Chief Executive Officer and Board of Directors, engaging underwriters, negotiating contracts to become effective upon the successful consummation of the anticipated initial public offering and conducting road shows. However, prior to consummating the initial public offering in 2008, unforeseen events severely affected the global markets and such events forced us to delay our initial public offering. As of

Year ended December 31, 2008, we did not abandon our initial public offering plans, but decided it would be prudent2011 compared to wait for stock market conditions to improve. During January and February 2009, the global economies continued to decline, as did the stock market. On February 27, 2009, we formally withdrew our registration statement and decided to pursue a private placement as an alternative method to try and raise capital.December 31, 2010 comparable period

For the nine months ended September 30, 2010, we reported a net loss of $38,734 as compared with an operating loss for the nine months ended September 30, 2009 of $275,422. The nine months ended September 30, 2010 primarily reflects the operating expenses of $26,677 and accruals relating to the interest on the revolving line of credit with the Manager in the amount of $12,057. For the nine months ended September 30, 2009, the loss primarily reflects the 2009 decision to abandon pursuing the IPO at that time and the write-off of $231,489 of deferred offering costs associated with our attempt to go public in 2008 and operating expenses of $31,876.

For the year ended December 31, 2009, we reported a net loss2011, total operating costs were approximately $4.8 million including approximately $3.3 million for the non-cash, lower of $337,261cost or an increase inmarket write-down of indium inventory for specific lots of indium. Total operating costs, exclusive of the net loss of $320,366 compared withwrite-down for the year ended December 31, 2008.2011 were approximately $1.5 million compared to operating expenses of approximately $38 thousand for the year ended December 31, 2010, representing an increase of approximately $1.5 million. The principal reasonsincrease in operating expenses during 2011 was due to (1) approximately $0.7 million of expenses of the Manager, a related party, including the 2% manager fee under the MSA of approximately $0.4 million, approximately $0.1 million bonus award and non-cash compensation expense of approximately $0.2 million, and (2) director and officers’ compensation expenses of approximately $0.2 million including non-cash compensation expenses relating to options and share awards of approximately $0.1 million for the year ended December 31, 2011. Upon the closing of the IPO in May 2011, we became a public, operating company and were no longer in the development stage and have incurred operating expenses aggregating approximately $0.6 million associated with our business plan including higher storage fees for our inventory of indium, expenses, including legal and accounting fees associated with being a public company and higher franchise taxes. Based on our current business plan, we expect that our normal cash operating expenses will approximate $1.4 million over the next few years. Interest expense decreased approximately $11 thousand during the year ended December 31, 2011 and interest income increased approximately $27 thousand when compared to the year ended December 31, 2010, due to the exchange of the note payable for stock options and the increase in cash and cash equivalents available for investing, respectively.

For the 2009year ended December 31, 2011, we reported net loss applicable to common stockholders of approximately $7.1 million (or $1.61 per basic and diluted share) as compared with a net loss for the year ended December 31, 2010 of approximately $54 thousand (or $0.35 per basic and diluted share). The increase of approximately $7.1 million for the year ended December 31, 2011 was substantially due to (i) formationthe non-cash preferential dividend to Class A Common Stockholders of approximately $2.4 million, the non-cash inventory write-down of approximately $3.3 million mentioned above and higher operating expenses.

We expect our monthly expenses associatedto increase or decrease with the 2009 Private Placement of $89,652; and (ii) the February 27, 2009 decision to abandon the initial public offering process, withdraw the

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Registration Statement and thus write-off $231,489change in deferred offering costs previously capitalized in connection with the uncompleted 2008 initial public offering filing.

Shares of Capital Stock

We were incorporated on January 7, 2008, with 50,000,000 shares of authorized common stock, par value $.001 and 1,000,000 shares of authorized preferred stock, par value $.001. On December 5, 2008, we conducted a forward split, where each stockholder received six shares for every one share of common stock held by the stockholders. On June 5, 2009, we conducted a reverse split where all stockholders received one share of common stock for every 3.6 shares held. On November 25, 2009, we further amended out certificate of incorporation to reduce the overall authorized capital to 8,000,000 shares consisting of 2,000,000 shares of designated as Class A common stock, 5,000,000 shares of common stock and 1,000,000 shares of preferred stock. Immediately prior to the consummation of this offering, we had 155,000 shares of common stock issued and outstanding, 1,163,600 shares of Class A common stock issued and outstanding and no shares of preferred stock issued and outstanding. Further, 1,201,400 shares of common stock have been reserved for the exercise of the warrants issued in the 2009 Private Placement and 232,720 shares of common stock have been reserved for the exercise of the additional warrants to be issued to the investors in the 2009 Private Placement upon completion of this offering.

Further, 550,000 shares of common stock are currently reserved for issuance pursuant to 2008 Long-Term Incentive Compensation Plan. On July 7, 2010 our board of directors authorized an increase from 550,000 shares of common stock to 1,000,000 shares of common stock to be reserved for issuance pursuant to the 2008 Long-Term Incentive Compensation Plan. Prior to the consummation of this offering, such increase will be submitted to shareholders for their approval. Under the 2008 Long-Term Incentive Compensation Plan, 124,999 have been awarded, 455,000 shares of common stock have been reserved for the exercise of options issuedNMV. The monthly management fee payable to our Manager, (155,000 options issued pursuanta related party, is directly correlated to our NMV, which fluctuates primarily based on the price of indium. Furthermore, our monthly storage and insurance expense is directly correlated to the 2009 Private Placement, 150,000 optionsquantity of indium held in inventory and to be issued upon conversionthe increase or decrease in the value of our indium stockpile. Given the fee structure with our Manager and our operational expenses, as NMV increases our expenses will increase without any additional cash to pay such expenses.

GAAP vs. Non-GAAP Disclosure

We use the term NMV throughout this report when we discuss the value of our indium holdings. We define the term NMV, as used in this report, as the product of multiplying the number of kilograms of indium held by us at any given point by the spot price for indium as published by the Metal Bulletin as posted on Bloomberg L.P., plus cash and our other assets, less any liabilities.  The use of the $265,000 promissory note plus accrued and unpaid interest and 150,000 options to be issued upon conversion of 75,000 common shares).

Upon consummation of this offering, we will amend our certificate of incorporation to provide for 40,000,000 shares of authorized common stock, par value $.001 per share and 1,000,000 shares of authorized preferred stock, par value $.001. Immediately after the consummation of this offering, we will have approximately 11,476,320 shares of common stock issued and outstanding (assuming (i) 10,000,000 shares are issued in connection with this offering; (ii) conversionterm NMV is a non-GAAP financial measurement. A reconciliation of the 1,163,600 shares Class A common stock into 1,163,600 shares of common stock; (iii) the issuance of 232,720 additional sharesNon-GAAP NMV to the investors inGAAP historical net book value is as follows:

The reason why the 2009 Private PlacementCompany relies on this term is because:

No assurances can be given that we could liquidate our indium holdings at the IPO date (this does not include the NMV based adjustment factor which will be determined immediately prior to the closing of this offering); and (iv) the 80,000 shares of common stock heldmarket prices published by the Manager following the exchange of 75,000 shares of common stock for 150,000 common stock options.Metal Bulletin as posted on Bloomberg L.P.

Liquidity and Capital Resources

Since our inception, we have incurred net losses of approximately $5.2 million and as of September 30, 2010, we had an accumulated deficit of $392,890. We have not yet achieved profitability. We also recorded an approximate $2.4 million non-cash preferential dividend to Class A Common Stockholders resulting in an accumulated deficit of approximately $7.5 million at December 31, 2011. We expect that our normal cash outlays for general and administrative expenses will continue to increase as our inventory of indium increases and, as a result, we will need to generate significant product revenues to achieve profitability. WeHowever, we do not expect to generate significant revenues over the near term or achieve profitability because our primary business plan is to purchase and stockpile already mined and processed indium ingots. As a result, we expect to continue to incur operating losses and we may never achieve profitability. Our strategy is to achieve long-term appreciation in the value of our indium stockpile and not to actively speculate with regard to short-term fluctuations in indium prices. However, there is no assurance that there will be long-term appreciation in the price of indium. In fact, the price of indium has declined since the closing of our IPO. Historically, the fluctuations in these prices have been, and will continue to be, affected by numerous factors beyond our control.

On November 25,

The purpose of our Company is to permit a simple and efficient mechanism by which an investor may benefit from the appreciation in the price of indium. The value of our Company is designed to track and correspond with fluctuations in the price of indium. In theory, our stock price should correlate to increases or decreases in the value of our Company, which is directly tied to fluctuations in indium prices. We will not generate any revenues until such time as we either sell indium from our inventory or lend indium. We expect our monthly expenses to increase or decrease with the change in our NMV. The monthly management fee payable to our Manager is directly correlated to our NMV, which fluctuates primarily based on the price of indium. Furthermore, our monthly storage and insurance expense is directly correlated to the quantity of indium held in inventory and to the increase or decrease in the value of our indium stockpile.

As of December 31, 2011, we have cash and cash equivalents of approximately $3.5 million and cash and cash equivalents restricted for indium purchases of approximately $2.7 million for aggregate cash and cash equivalents at December 31, 2011 of approximately $6.2 million compared to cash and cash equivalents of $0.7 million at December 31, 2010. Our primary source of funds has been from the public and private sale of equity securities. In 2009 and December 11, 20092010, we completed the first two closings of the 2009 Private Placement and accordingly raised a total of $5,018,000. From this total, closing fees consisting of legal and commission expenses totaled $220,000. Thereceived net proceeds of $4,798,000$5.6 million in connection with a private placement of our Class A common stock and warrants and in May 2011, we raised net proceeds of approximately $24.0 million in connection with our IPO. See Note 3 of notes to financial statements. Further, in January 2012, we raised net proceeds of $7.5 million from the 20092012 Private Placement arePlacement.

We were required to be utilized as follows: (i) at least 90%utilize 85% of the net proceeds from the private placement will be used to begin stockpiling indium; and (ii) 10% will be used for general working capital purposes. As a result of the 2009 Private Placement, we issued 1,003,600 shares of Class A common stock and warrantsIPO to purchase 1,003,600 sharesindium. As on March 31, 2012, we have purchased or committed to purchase a sufficient quantity of common stock. Additional Warrants were issuedindium to satisfy our commitment with respect to the finders in the amount of 37,800. The Warrants have an exercise price of $5.75 per share and become exercisable upon completion of an initial public offering. OnIPO. In January 8, 2010, the 2009 Private Placement’s final closing date,2012, we sold 160,000 additional units forraised net proceeds of $800,000. No fees were paid out in connection with the sale of these additional units. The aggregate monies secured in connection with the 2009 Private Placement totaled

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$5,818,000. After deducting the $220,000 in closing costs associated with legal expenses and broker’s commissions, the net proceeds available pursuant to the 2009 Private Placement amounted to approximately $5,598,000 of which 90%, or $5,038,200, was available for indium purchases and $559,800 was to be used for general working capital purposes. The total Class A common shares and warrants issued in connection with the 2009 Private Placement were 1,163,600. After including the broker warrants of 37,800, the total warrants issued aggregated 1,201,400.

As of September 30, 2010, we purchased and took delivery of approximately 9.2 tons of indium at an average price of $500 per kilogram utilizing $4,591,016 of the proceeds from the 2009 Private Placement. In December 2009, we purchased approximately 2.5 tons of indium at an average purchase price of $462 per kilogram. In the first quarter of 2010, we purchased and took delivery of approximately 6.7 tons of indium with an aggregate purchase price of $3,419,963. As a result, we must purchase $447,184 of indium in order to fulfill the 90% requirement outlined$7.5 million in the 20092012 Private Placement for indium purchases.

We estimate that the net proceeds from the sale of the units in this offering will be approximately $46,500,000 (or $53,550,000 if the underwriters’ over-allotment option is exercised in full).Placement. We intend to use at least $39,525,000 (or $45,517,500 if the underwriters’ over-allotment option is exercised in full) of the net proceeds of this offering to acquire indium. Pursuant to a Management Services Agreement, we shall pay to the Manager a fee equal to 2.0% per annum of our NMV. We intend to pay such management fee from the proceeds of the offering not used to purchase indium.

On January 8, 2008, we entered into a revolving line of credit with the Manager in the aggregate amount of $300,000. The revolver was used to fund the deferred offering costs incurred by us in connection with our attempted initial public offering in 2008. To date, we have borrowed $265,000 under the revolving line of credit. The revolving line of credit is unsecured and bears interest at the rate of 6.0% per annum. As of September 30, 2010, 996 days of interest have been accrued thereunder and we recorded an interest expense of $41,715 in connection therewith. On January 25, 2010, we amended our revolving line of credit as follows: (i) the maturity date was amended to be due and payable on the earlier of: (a) the date we complete an initial public offering; (b) the date of a dissolution, liquidation, winding up or insolvency proceeding commenced by or on our behalf in the event we do not complete the initial public offering, whereas upon the completion of such offering, the amount due under the note will automatically convert into options to purchase 150,000 shares of common stock at an exercise price of $4.50 per share; or (c) November 24, 2011.

Going Concern

Our ability to commence operations is contingent upon our obtaining the necessary capital resources through our proposed public offering of 10,000,000 Units. Our management has specific guidelines as to how the proposed public offering proceeds will be used. Specifically, a minimum of 85.0% of such proceeds will be used to purchase and stockpile indium and the balance or 15.0% will be used for working capital purposes. In the event we are unable to utilize all 85% of the netgross proceeds from this offering to purchase and stockpile indium within 18 months from the date of this prospectus, we will return to the shareholders their pro-rata share of the unused proceeds designated2012 Private Placement, or approximately $6.4 million for the purchase and stockpile of indium.

As of September 30, 2010, we had $703,178 in cash and an accumulated deficit of $(392,890). Further, after the initial public offering, we expect annual operating costs to approximate $1,700,000 comprised of $115,000 for storing and holding the indium, $60,000 for insuring the indium, $150,000 for shareholder communications and relations; initial annual Management Fee of $1,050,000 subject to fluctuations of our NMV; $150,000 for directors and officers liability insurance premiums; and $175,000 for other/administrative expenses including legal, accounting and director fees. As with the indium purchases, we expect to pay for these expenses and asset purchases through the offering proceeds.

There is no assurance that we will complete the proposed initial public offering or that the completion of the proposed initial public offering will lead to the successful execution of our business plan. Further, should we be unable to complete our initial public offering by November 24, 2011, the 2009 Private Placement Memorandum states that our existence shall be terminated, our affairs shall be wound up and we shall liquidate. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

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Sources of Liquidity

We initially financed our operations and capital expenditures by issuing revolving credit notes and selling common stock to our Manager, which is owned by our founders. We received a $265,000 advance from our Manager as part of a $300,000 revolving credit line. Since January 7, 2008, through the issuance of shares in our 2009 Private Placement, we have received net proceeds of $5,018,000 as of December 31, 2009 and we received an additional $800,000 in January 2010 for total gross proceeds in connection with the 2009 Private Placement of $5,818,000. With such proceeds, we have purchased and paid for approximately $4,591,000 of indium as of September 30, 2010. In December 2009, we purchased and paid15%, or approximately $1.1 million, for general corporate purposes. We have available approximately 2.5 tons of indium$4.5 million at an average price of $462 per kilogram utilizing $1,171,053. During the first nine months ended September 30, 2010, we purchased and paid for approximately 6.7 tons of indium spending $3,419,963 at an average price of $514 per kilogram. In aggregate, we purchased a total of 9.2 tons of indium at an average purchase price of $500 per kilogram for $4,591,000 as of September 30, 2010. At September 30, 2010 we had cash and cash equivalents of $703,178 which reflects since December 31, 2009 the January, February and March 2010 indium payments of $3,419,963, the other expenses relating1, 2012 available to the IPO filing of $255,000, other operating expenses of $19,000 and then adding the January 2010 private placement funding of $800,000.

Working Capital and Capital Expenditure Needs

Upon consummation of the offering, 15.0% of the net proceeds of $46,500,000 or $6,975,000 (or $8,032,500 if the underwriters’ over-allotment option is exercised in full) shall be allocated tofund general working capital purposes. Thesecorporate expenses. We expect that these funds will be sufficient to allow us to operate for approximately 53 months.at least three years from December 31, 2011. Over this time period, we will use these funds for paying the annual managementrelated party Manager’s fee to the Manager for the acquisition, storage, insuring and disposition of indium on our behalf and reviewing corporate, title, environmental, and financial documents and material agreements regarding the acquisition, storage, insuring and disposition of indium on our behalf. Once we have spent all of the allocated net proceeds of this offering on our indium stockpile, weWe anticipate that we will incur annual cash expenses of approximately $1,700,000$1.4 million in the aggregate including: (i) storage and holding ofinsurance for indium — $115,000;$0.1 million; (ii) insurance — $60,000; (iii) shareholder communications and relations and maintaining the effectiveness of our registration statement for the shares of common stock underlying our public warrants — $150,000; (iv) the annual related-party Manager’s fee — $1,050,000; (v)$0.7 million; (iii) director and officer liability insurance premiums — $150,000;$0.1 million; and (vi) other/(iv) other general and administrative expenses including legal, accountingofficer and director expenses and public company costs including legal and accounting fees — $175,000.$0.5 million. Further, we have and we expect to continue to incur, from time to time, non-cash compensation expenses, which are not included in the aforementioned normal cash operating expenses. Although we do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business over the next three years, we may need to raise additional capital if we encounter unforeseen costs.

The proceeds, if any, we may receive from the exercise of theoutstanding options and warrants issued in this offering and the 2009 Private Placement will be allocated to the purchase of additional indium and for general working capital purposes, including but not limited to the payment of our operating expenses. The exact percentage of the warrant proceeds allocated toward purchasing additional indium and the time period to purchase indium using such proceeds will be determined by the Manger,Manager, in its sole discretion.

Although we are currently not a party to any agreement or letter of intent with respect to potential investments in, or acquisitions of, businesses, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all. We currently have no plans, proposals or arrangements with respect

Discussion of Cash Flows

The Company’s cash flow activity was a follows:

Cash Flows Used in Operating Activities

The net cash used in operations in 2011, principally represents the usage of the restricted cash (85% of the net proceeds) from the IPO for indium purchases and cash used to any specific acquisition.

Infund the event we needoperating losses less non-cash compensation expense in 2011. Net cash used in operating activities for the year ended December 31, 2011 was approximately $21.4 million compared to raise additional capital, we may do sonet cash used in operating activities for the year ended December 31, 2010 of approximately $3.5 million. The increase of approximately $17.9 million was due primarily to approximately $2.7 million in restricted cash for indium purchases at December 31, 2011, approximately $14.2 million in increased purchases of indium in the formyear ended December 31, 2011 when compared to the purchases of equity or debt. The issuanceindium in the comparable period in 2010 and the corresponding increase in net loss less non-cash compensation charges of additional sharesapproximately $1.1 million. In addition, accounts payable and accrued expenses increased $0.2 million as a result of higher operating costs since the completion of our capital stock:IPO in 2011.

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Similarly, if we incur substantial debt, it could result in:

Contractual Obligations

On January 8, 2008, we entered into a Revolving Lineindium stockpile is metal of Credit Note with our Manager, where our Manager agreed to provide usChinese origin with a revolving linepurity level of credit up99.995%, or 4N5. At December 31, 2011, we recorded a $3.3 million lower of cost or market write-down as a result of the quoted price of indium at December 31, 2011 being less than our costs for certain lots in inventory.

Since completion of the IPO and through December 31, 2011, we purchased and took delivery of an aggregate of 25,277 kilograms of indium in 17 purchase orders from five separate suppliers at an average purchase price of $699 per kilogram at a total cost of approximately $17.7 million. As of December 31, 2011, we were committed to $300,000spend an additional $2.7 million on indium purchases to meet our commitment to spend 85% of the net proceeds from our IPO. Subsequent to December 31, 2011 and through March 1, 2012, we purchased and took delivery of an additional 5,012 kilograms of indium from three purchase orders at a price of $527 per kilogram for a total cost of $2.6 million. Also, through March 1, 2012, we have one outstanding purchase commitment for 2,000 kilograms of indium at a price of $520 per kilogram for a total cost of approximately $1.04 million for which $265,000 was outstandingwe have neither taken delivery nor paid for such purchases. Such purchases and purchase commitments of indium aggregated approximately $3.6 million as of September 30, 2010. The principal balance, including all accruedMarch 1, 2012 fully completing our commitment to expend 85% of the net proceeds from the IPO. Since inception and unpaid interest, outstanding pursuantthrough March 31, 2012, we have purchased and committed to purchase an aggregate of approximately 42,475 kilograms at an average purchase price of $623 per kilogram.

Off-Balance-Sheet Transactions

We are not party to any off-balance-sheet transactions.

Contractual Commitments

Our major contractual obligations relate to the Note shall become due on the earlier of: (i) the consummation of theMSA. The MSA has an initial public offering which such principal balance and all accrued but unpaid interest due under the Note will automatically convert into 150,000 options, with each option to purchase one share of common stock at an exercise price of $4.50 per share or (ii) liquidation of our company. The Note bears an interest rate of 6.0% per annum. As of September 30, 2010, 996 days of interest have been accrued thereunder and we recorded an interest expense of $41,715 in connection therewith. In the event of default, all amounts due pursuant to the Note shall become immediately payable.

On February 8, 2010, we entered into a common stock for option exchange with the Manager. Upon consummation of this offering, 75,000 shares of common stock owned by the Manager will be automatically converted into 150,000 common stock options exercisable at $4.50 per share for a periodterm of five years, followingwith options to renew the consummation of this offering.

Prioragreement on terms mutually acceptable to the consummation of this offering, we amendedeach party and restated the Management Services Agreementmay be terminated by either party upon 90 days prior written notice. The Company is responsible for paying all costs and expenses incurred in connection with the Manager, initially executed on November 24, 2009. Pursuant to such agreement, the Manager will, on a bi-weekly basis, prepare a report on the NMV of each share of our common stock, which shall be determined by multiplying the number of kilograms of indium held by or for usbusiness, except those expressly assumed by the last spot price for indium published by Metal Bulletin posted on Bloomberg L.P., plus cash and any of our other assets, less any and all of our outstanding payables, indebtedness and any other liabilities. Such report, which will include the last spot price of indium published by Metal Bulletin and the quantity of indium held in our inventory,

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will be made available on our website on a bi-weekly basis. We shall pay toManager. The Company pays the Manager a fee equal to 2.0%2% per annum, payable monthly, of its NMV beginning upon the successful completion of the IPO. Such Manager fees aggregated approximately $0.4 million during the year ended December 31, 2011.

Business

Introduction

We are a corporation established pursuant to the laws of Delaware on January 7, 2008. On April 2, 2008, we changed our NMV, which shall be paid monthly.

Disclosure Controlsname from Specialty Metals Group Indium Corp. to SMG Indium Resources Ltd. We operate a single-segment business whose primary business purpose is to purchase and Procedures

A company’s internal control over financial reportingstockpile indium, a specialty metal that is being increasingly used as a process designed by, or under the supervisionraw material in a wide variety of a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. As a private company, we have designed our internal control over financial reporting to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of financial statements. As a public company, we will be required to complyconsumer electronics manufacturing applications. Effective with the internal control requirements of the Sarbanes-Oxley Act. All internal control systems,quarter ended June 30, 2011 we are considered an operating company and are no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Special Information Regarding Forward-Looking Statements

Some of the statements in this Management’s Discussion are “forward-looking statements.” These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the factors set forth above under “Risk Factors.” The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements.longer considered a development stage company.

We caution investors not to place undue reliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future developments.

Off Balance Sheet Transactions

We are not party to any off balance sheet transactions. We have no subsidiaries or equity ownership in any other entity. We have no guarantees or obligations other than those which arise out of normal business operations, i.e. the purchase and sale of indium, and costs of being a public company that will significantly increase our operating costs or cash requirements in the future.

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BUSINESS

Overview

We were formed to purchase and stockpile the metal indium. Our strategy is to achieve long-term appreciation in the value of our indium stockpile, and not to actively speculate with regard to short-term fluctuations in indium prices. Our indium is and will be insured and physically stored in third-party facilities. While it is not our current intentionWe plan to do soachieve long-term appreciation in the short term, at our discretion and based on market conditions, we may subsequently lend or sell some or allvalue of our indium stockpile primarily through price appreciation of the physical metal. Although the price of indium has declined substantially from its high in March 2005, it is our belief that the long-term industry prospects for indium are attractive and over time the price of the metal will appreciate. Price appreciation of the metal indium held in our stockpile is critical for us to cover operating expenses.maintain our NMV and for investors to receive a return on their investment.However, there is no assurance that the price of indium or the value of our securities will increase over time. To our knowledge, this is currently the only investment that allows potential stockholders to participate in the price appreciation of indium other than physical delivery of the metal itself. Our shareholdersstructure provides a simple and efficient mechanism by which a public stockholder may benefit from the appreciation in the price of indium, if any. Our stockholders have the ability to invest in a company whose value may be tied to itseffectively purchase an interest in indium in a manner that does not directly include the risks associated with ownership of companies that explore for, mine and process indium. Our common shares represent an indirect interest in the physical indium we own.

All of the indium we purchase and own is, and will be, insured and physically stored in reputable, adequately capitalized and insured third-party warehouses or storage facilities located in the United States, Canada, the Netherlands and/or the United Kingdom. These third party facilities provide storage and safeguard of our indium inventory, insurance, handle the transfer of our indium inventory in and out of the facility, visual inspections, spot checks, arrange and facilitate independent third-party random assays, confirmation of deliveries to supplier packing lists, and reporting of transfers of inventory to us.

We utilize and expect to continue to utilize facilities that meet our requirements that are either (i) located closest in proximity to our indium suppliers in order to reduce transportation fees or (ii) facilities located closest in proximity to our corporate headquarters or satellite offices in order to facilitate our ability to inspect our inventory and reduce future corporate expenses associated with travel. We believe there are numerous third-party storage facilities that provide more than adequate services that meet our criteria, which eliminates the need for hiring a custodian. From inception until December 31, 2011, our Manager, Specialty Metals Group Advisors LLC, which is a related party, purchased on our behalf approximately 34.5 mt of indium, which is currently stored in an insured, secure facility in New York owned and operated by Brink’s, a bonded warehouse. We expect our chief executive officer or our chief operating officer to inspect the facilities. The facilities are visited at least once per year for inspection. We may insure the warehouse contents above and beyond a bonded warehouse to guarantee we will not sustain a loss in the event of an unforeseen catastrophe or we deem the warehouse company’s insurance inadequate.

Our expenses will be required to be satisfied by cash on hand that is not set aside for the purchase of indium. Cash on hand that is not set aside to purchase indium is expected to be sufficient to satisfy our operating expenses for approximately three years. Our annual cash operating expenses, including management fees, are estimated to be approximately $1.4 million. We may subsequently lend or sell some, or all, of our indium stockpile to cover our operating expenses. Alternatively, we may seek to raise additional capital to cover our operating expenses through potentially dilutive equity offerings or debt financing. Our stockpile of indium may decrease over time due to sales of indium necessary to pay our annual operating expenses. Without increases in the price of indium sufficient to compensate for such decreases, our net market value (“NMV”) may also decline. Our stockpile of indium may also decrease over time due to sales of indium against purchases of common shares that are priced lower than our NMV per common share. In such instances, our NMV per common share would rise.

All of our indium transactions have been and will beare negotiated by our Manager.Manager, a related party. Our Manager will beis paid a 2.0% per annum fee based on our NMV as compensation for these services. The per share NMV shall be determined by (x) multiplying the number of kilograms of our indium holdings by the last spot price for indium published by Metal Bulletin PLC posted on Bloomberg L.P., plus cash and any other assets, less any and all of our outstanding payables, indebtedness and any other liabilities, (y) divided by our total number of outstanding shares of our common stock. Our Manager is entitled to receive the 2.0% management fee regardless of its ability to successfully purchase and stockpile the metal indium. Our officers and directors havedirectorshave limited experience in stockpiling the metal indium, although our Chief Executive Officerchief executive officer has experience purchasing, selling, storing and lending precious metals, base metals, minor metals, non-exchange traded metals, and illiquid metals. Our Manager:

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We will publish on our website, or facilitate access to, at no cost and in an easily accessible manner, regular indium pricing information from a reliable, independent source no less frequently than twice per week. We currently intend to post on our website, www.smg-indium.com, Metal Bulletin’s bi-weekly indium price quotation. If for any reason we cannot post Metal Bulletin’s bi-weekly indium price quotation we will contract with another independentis posted on our website,www.smg-indium.com. If for any reason, Metal Bulletin’s bi-weekly indium pricingprice quotation provider. Otheris not available, other independent indium quotation providers are available to us include and are not limited toincluding Platt’s Metals Week, Metal-Pages Ltd., Asian Metal Ltd. and Metal Prices.

We will publish on our website our NMV no less frequently than twice per week. We currently intend to post our NMV on our website bi-weekly. In addition, if the spot price of indium fluctuates more than 5%, we will publish our updated NMV within one business day of such fluctuation.

We will publish on our website the quantity of indium we hold in inventory, the average price paid and our NMV within Within two business days of any change in inventory held. In addition, if we contract to purchase or sell a materialheld, the quantity of indium such information will be disclosed in a Form 8-K filing within four business days.

In addition, our Market Impact Committee, which is composed solely of independent directors, shall consider, on a quarterly basis, whether our company’s indium purchasing activities have had a measurable impact on the market price of indium and shall report such determination and make subsequent recommendations to our board of directors. The Market Impact Committee may rely upon, and has the authority to engage and pay, at our expense, an industry expert in conducting such review. Should our board of directors disagree with, or not accept the recommendations of the Market Impact Committee, we will be required to file a Current Report on Form 8-K with the SEC outlining the relevant events, the Market Impact Committee’s determination and recommendations and the rationale for the board’s determination.

Our expenses will be required to be satisfied by cash on hand that is not set aside for the purchase of indium. Cash on hand following completion of the offering is expected to be sufficient to satisfy our expenses for approximately 53 months. Once we have spent all of the allocated net proceeds of this offeringpublished on our indium stockpile, our expenses, including corporate taxes, are estimated to be approximately $1,700,000. For a detailed description of such expenses please see “Management of SMG Indium Resources Ltd. —  Management Services Agreement”. We are a taxable United States corporation and are subject to federal and state taxes.website.

Our objective is to purchase and stockpile already processed and mined indium ingots with a minimum purity of 99.99%. Potential stockholders will only receive a return on their investment if our acquired indium stockpile increases in value more than we spend on operating expenses. Price appreciation of the metal indium is critical for investors to receive a return on their investment.

Our primary objective is to purchase and stockpile the metal indium, The Manager will fully utilize the designated proceeds from this offering to purchase and stockpile indium within 18 months of the date of this prospectus. If the Manager has not, within 18 months from the date of this prospectus, purchased indium in sufficient quantity to utilize at least 85% of the net proceeds of this offering or 100% of the proceeds that have been allocated for the purchase of indium, our board of directors will distribute such unused proceeds pro-rata to our stockholders as a return of capital. The unused amount will be calculated based upon the sum of: a) monies spent by us on acquiring indium during the 18 month period, and b) monies contracted to be spent by us on acquiring indium over the ensuing 12 months. If we are unable to promptly use all of the designated proceeds from this offering to purchase and stockpile indium, then there will be a direct and materially adverse impact on the possibility that a potential shareholder could receive a positive return on their investment. In addition, the price of indium would need to appreciate substantially to offset the reduction in our NMV associated with the initial offering expenses and our operating expenses regardless of our ability to purchase indium in a timely manner. Price appreciation of the metal indium held in our stockpile is critical for us to maintain our NMV and for investors to receive a return on their investment. If we need additional capital to cover our operating expenses, we may lend or sell indium from our stockpile to cover such operating expenses. Deciding on whether to lend or sell in these instances can only be determined by a careful analysis of each option and its particular benefit to us at that particular point in time. All lending, sales and delivery of our indium from our stockpile will be negotiated and arranged by our Manager and such process

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will be overseen by the Market Impact Committee. Alternatively, we may seek to raise additional capital to cover our operating expenses through potentially dilutive equity offerings or debt financing. Market conditions will dictate which option we would elect to pursue. Although weWe are not legally prohibited from pursuing other business strategies pursuant to our Certificatecertificate of Incorporation,incorporation, as amended, or any other corporate documents, we do not intend to change our stated strategy.document. If based on market conditions our Manager determines that it may be in our best interest to expand our lending and/or selling activities beyond what is necessary to cover operating expensesor if the Manager determines that we should begin actively speculating on short-term fluctuations in indium prices or pursue strategic transactions with other companies operating in the indium market including the Federal Government, the Manager will be required to obtain the approval of our board of directors to adopt such a strategic change in our business directive. Additionally, we will promptly notify shareholdersstockholders of any such modifications to our stated business plan. OurPresently, our operations are and will remain, limited to purchasing, stockpiling, lending and selling only the metal indium.

Suppliers

We will monitor the ratiohave and intend to stockpile already mined and processed indium ingots with a minimum purity level of the common share price to the value of our indium holdings and may sell some of our indium holdings and buy back common shares when the common share price is less than the NMV per share99.99%, known as 4N or sell common shares and buy indium when the common share price is higher than the NMV per share. The decision is not based on a predetermined ratio and will be based on market conditions.

four nines grade. Based on common industry knowledge and our established indium industry relationships, we can determine which companies are regular indium industry suppliers. We consider companies granted indium export licenses from the Chinese government as regular indium industry suppliers. We consider companies like Teck Resources Limited., Xstrata Plc, Indium Corporation of America, Umicore Indium Products Co. Ltd., and Aim Specialty Materials as regular industry suppliers because they are all well known within the industry and have well established reputations. We consider metal trading houses listed in our “Competition” section‘‘Competition’’section like Traxys North America LLC, Glencore International AG, Wogen PLC, MCP Metal Specialties,5N Plus Inc., etc. that have years and in some cases, decades of experience within the industry as regular indium industry suppliers. We intend to use subjective criteria to determine whom we plan to do business with and for competitive reasons we do not disclose specifically which companies we intend to do business. Currently, an established regular indium industry designated supplier list does not exist. We consider the miners, refiners, suppliers

Strategy and trading houses listed in our “Competition” section to be a partial list of known regular indium industry suppliers. Our ManagerPolicies

Through December 31, 2011, we purchased on our behalf approximately 9.234.5 metric tons of indium. As of March 31, 2012, we have either taken delivery of or contracted to take delivery of approximately an additional 8 metric tons of99.99% purity indium from three regular indium industry suppliers utilizing the proceeds from the 2009 Private Placement. Our indium is stored in(at an insured, secure facility in New York owned and operated by Brink’s Global Services U.S.A., Inc. (“Brink’s”), a bonded warehouse. Brinks provides storage and safeguard of our indium inventory, insurance, handles the transfer of our indium inventory in and out of the facility, visual inspections, spot checks, arranges and facilitates for independent third-party random assays, confirmation of deliveries to supplier packing lists, and reporting of transfers of inventory to our company and auditors.

We have and intend to stockpile already mined and processed indium ingots with a minimum purity level of 99.99% known as 4N or four nines grade. The specific purity of the actual metal is very important to each of indium’s specific applications. The purity of the indium used in alloys is typically 2N material. Thin-film coatings such as Indium-Tin-Oxide (ITO) use 4N8 purity indium. Therefore, refiners and suppliers will upgrade 3N7 material to 4N8 for use in ITO production via a basic electro-refining process dissolving the indium in hydrochloric acid and plating out the purified indium. In its purest form, 6N and 7N, indium is used in smaller quantities for research and development and as the raw material used to make Indium Phosphide (InP), Indium Arsenide (InAs) and Gallium Indium Arsenide (GaInAs). Preparation of 6N high-purity indium is also done by a method of physical-chemical purification and electro-refining. While the purity of the metal is important to each of its applications, theaverage price of the higher purity indium is not considered significant relative$524 per kilogram) to the industry standard gradefully meet our commitment of 3N7. Manufacturers typically customize the purity of the indium to its customer’s specific needs and charge a small fee to convert standard grade into its higher purity forms.

Strategy and Policies

We based our business model projections on having approximately $39.525 million available from the proceeds of the IPO (85.0%utilizing 85% of the net proceeds after expenses)from our initial public offering (“IPO”) to purchase approximately 72.2 metric tons of 99.99% purity indium paying an average price of $547.50 per kilogram for indium. Based on projected expenses, per cash remaining from the offering should be able to sustain operations for 53 months, without our needing to sell or lend any indium from our stockpile. If the price of indium rises prior to our being able

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to purchase our stockpile of indium, we would purchase fewer tons of indium to spend the 85.0% of the net proceeds of the offering. This in turn would result in lower storage fees for fewer tons of indium held in our stockpile and higher values for our stockpile could result in higher annual management fees. If the price of indium decreases, we may purchase additional indium and our storage fees would increase accordingly and lower values for our stockpile could result in lower management fees, either shortening or lengthening how long our cash on hand may last. Our business model is premised on the long-term appreciation in the value of our indium stockpile. We currently have approximately 9.2 tons of indium in inventory purchased utilizing the proceeds from the 2009 Private Placement. In order to facilitate our business plan, over the next 18 months, our Manager may elect to purchase indium under long-term supply contracts. Information regarding how much and whatthe percentage of the total indium supply is currently under long-term contracts is not known. This may hinder our ability to enter into long-term supply contracts with industry suppliers, purchase and stockpile indium, and fulfill our business plan in a timely manner.

Our ability to complete our business plan could be adversely affected by the substantial competition we face in the marketplace. There are a substantial number of manufacturers that require indium for the production of FPDs, LCDs, PDAs, LEDsflat panel displays (“FPDs”), liquid crystal display (“LCDs”), personal digital assistant (“PDAs”), light emitting diodes (“LEDs”) and CIGScopper indium gallium selenide (“CIGS”) thin film photovoltaics. We expect to compete with themmanufacturers for purchase of the primary indium supply. The fact that many of these companies have more substantial resources than us and have established relationships with indium industry suppliers may prove to be detrimental to our ability to consummate our business plan.

We may face direct competition from market participants in purchasing our stockpile of indium. There are no other companies, known to us, that have a business model solely dedicated to the purchasing and stockpiling of indium. However, we would have to potentially compete with miners, refiners, suppliers, end-users,end- users, traders and other market participants in purchasing indium from suppliers. The companies listed in the “Competition”the‘‘Competition’’ section are a partial list of companies that are well known indium industry participants that either mine, refine, use, and or trade indium. These companies would be considered indirect competition.

In addition, we are not aware of any additional information, if any, regarding the indium market, or the type of market information other industry producers, purchasers, suppliers and other market participants may possess. Our inability to access this information, if any, places us at a potential relative competitive disadvantage to other market participants who may have access to such information. This may adversely affect our ability to purchase and stockpile indium.

We do not expect to purchase indium from the recycling market. After extensive discussions with indium industry participants, we determined that it is not feasible for us to buy directly from the recycling companies. Recycling scrap indium into 3N7 or higher purity metal ingot is extremely complex and time consuming. Typically, end users (ie.(i.e. FPD manufacturers) establish contracts directly with the recyclers. Pursuant to such contracts, the end user supplies the recycler with scrap indium and the recycler specially processes, refines,and then returns the purified recaptured indium to the end user. Recyclers cannotTypically, recyclers do not sell the recycled indium to anyone else other than the end user who supplied the scrap indium. Industry insiders consider the recycling market a “closed loop”.

‘‘closed loop.’’ End users and recyclers do not disclose the particulars of their relationships and contracts. This inaccessibility will limit us to the primary indium market. The primary market is smaller than the recycling market and may affect our ability to purchase enougha sufficient quantity of indium to meet our business plan’s objectives in a timely manner.

Furthermore, Chinese export restrictions may serve to further reduce our access to more than 50% of the world’s primary indium production. In May 2008, an earthquake in China completely halted ten zinc smelters in Sichuan Province’s Deyang, Hanyuan and Ganzi regions, as well as in nearby southern regions of Shaanxi Province and Gansu Province, due to damaged facilities and power supply failures. It was estimated that 510,000 metric tons of zinc smelting capacity was affected or approximately 7.0% of China’s national total. If those zinc smelters were refining indium and were shut down for one full year, it is estimated that as much as 21.7 metric tons or 3.8% of primary indium production would have been lost.

In furtherance of our strategy, our board of directors will establish the following policies which will be included in our By-laws.

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1. We shall be required to spend at least 85% of the net proceeds raised in an initial public offering on the purchase of indium within 18 months of the effectiveness of the initial public offering registration statement, or return the unused amount of the 85% net proceeds designated to the purchase of indium to the shareholders, pro-rata. The unused amount will be calculated based upon the sum of: a) monies spent by us on acquiring the indium during the 18 month period, and b) monies contracted to be spent by us on acquiring the indium over the ensuing 12 months.

2. All purchases, lending and sales of indium shall be made by our Manager in accordance with the Management Services Agreement, as amended from time to time. In such capacity, our Manager shall use commercially reasonable efforts to purchase, lend and or sell indium at the best price available to us.

3. In the event that our Manager elects to purchase indium under long term contracts with an indium supplier, we shall have the funds set aside to satisfy the purchase price.

4. In the event that our Manager elects to lend or sell indium under long term contracts with an indium customer, we shall have indium set aside to satisfy the delivery commitments.

The indium market is illiquid and considered small compared to the base metals. There are a limited amountnumber of suppliers and purchasers of indium. If new companies are formed to purchase and stockpile indium, and in the event we raise additional capital to purchase more indium, this wouldmay adversely affect our ability to procure sufficient quantities of indium on a timely basis or even atall.

Indium Price Trends in 2011

The annual average price of indium increased approximately 23% in 2011. It increased from $567 per kilogram in 2010 to $696 per kilogram in 2011. According to the USGS, the U.S. producer price for indium began the 2011 year at all. It is our intention$570 per kilogram, increased to spend$690 per kilogram in April, and rose further to $785 per kilogram in May; the net proceeds fromprice remained at that level through early November. The New York dealer price range for indium began the offering2011 year at $520 - $570 per kilogram and increased through early June, reaching a high of $800 - $875 per kilogram. The price then decreased to purchase 8.1%$630 - $670 per kilogram by early November before falling further to $540 - $600 per kilogram by the end of the next eighteen monthsDecember 2011. The price of global primary indium production after the completion of this offering without disrupting the indium market. If we cannot purchase indium from China, we would need to purchase 16.2% of the rest of the world’s eighteen months of annual primary indium production to spend the proceeds from our offering. These calculations are based on the assumption that global primary indium supply remains constant at 597 metric tonsApril 18, 2012 was $550 per year and China produces 300 metric tons per year over the next eighteen months. We do not anticipate purchasing indium from the recycling market. If we are unable to purchase indium from China, we may not be able to purchase the 72.2 tons we require to spend 85.0% of the net proceeds from the offering basedkilogram published by Metal Bulletin as posted on current prices within 18 months from the date of this prospectus.Bloomberg L.P.

Accounting for Direct Sales and Lending Transactions

We envision that our stockpile of indium may be used from

From time to time for “directwe may enter into ‘‘direct sales and or “lending”or‘‘lending’’ transactions. Under a “direct sale”‘‘direct sale’’ transaction, we would record as income, or loss, the difference between the proceeds received from the sale of indium and the indium carrying value.

Wevalue.We may engage in lending indium from time to time if we need additional capital to cover annual operating expenses. A typical loan contract would be for terms of six months or less, and in almost no circumstance would it exceed a period of one year. As lender, we will negotiate an Unconditional Sale and Purchase Agreement (“USPA”(‘‘USPA’’) with a prospective borrower. As part of the USPA, once all terms are reviewed and approved by our management team, we will physically deliver indium to the borrower.

The USPA arrangement involves us negotiating, as lender, and physically delivering

In indium lending transactions, we would exchange a pre-agreed upon quantityspecified tonnage and purity of indium for cash. Title and the risks and rewards of such indium ownership would pass to the borrower. The borrower will pay us a negotiated dollar value forpurchaser/counterparty in the value of the indium delivered. Typically thislending transaction. We would be done when market conditions favoredsimultaneously enter into an agreement with such a transaction and wecounterparty in which it would record income (loss) equal to the value of the negotiated price over (under) our carrying value of indium lent. At the same time, we would record a liability for the unconditional obligationunconditionally commit to purchase backand the counterparty would unconditionally commit to sell a pre-determined amount of indium from the borrower of like purity based upon the negotiated terms as detailed in the USPA. Such lending transaction(s) will include in the USPA a provision that the borrower return to us a like quantity and purity of indium. Failure to fulfill this return commitment will subject the borrower to a “penalty fee” thus discouraging the borrower from borrowing indium but never replenishing the indium to us. The ability of the borrower to satisfy the commitment to return the quantityspecified tonnage and purity of indium isthat would be delivered to us at a businessfixed price and at a fixed future date in exchange for cash (the USPA). The USPA would also contain terms providing the counterparty with substantial disincentives (“penalty fees”) for nonperformance of the return of indium to the Company as a means to assure our future supply of indium. While we believe that this risk that we would face in a transaction like this. However,be mitigated by the penalty fee aspect as detailed infeatures of the USPA, would partially mitigate our overall businessit is nonetheless a risk in that, the penalty fee would provide usassociated with greater flexibility in recovering indium from other sources at less than favorable prices (if applicable) if the borrower defaulted on its returna transaction of indium.this type. We anticipate recognizing gainsaccounting for any USPA transaction on a combined basis (sale and lossespurchase) and will evaluate whether, and in what period, revenue may be recognized based on purchases and salesthe specific terms of indium under these arrangements in accordance with FASB ASC 845-25 “Non-Monetary Transactions” and “Accounting for Purchases and Sales of Inventory with the Same

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Counterparty.” Accordingly weany arrangements. We will disclose unconditional purchase obligations under these arrangements (“Disclosure of Long Term Obligations”) and, if applicable, accrue net losses on such unconditional purchase obligations in accordance with FASB ASC 440-10-50.obligations.

There is no established market lending rate for indium. The terms of the USPA contracts will stipulate that the indium returned must be of equivalent quantity and purity. An example of a loan to facilitate future purchases of indium would be made to an indium producer, to be repaid by the return of equivalent indium of the same quantity and purity along with the possible purchase of additional indium from the producer. In the event of a loan to the producer, in which we have received dollars for the indium lent, there is a risk that the producer will not return the equivalent quantity or quality indium. Our Manager will be responsible for conducting limited inspectionsFailure of the indium delivered to us. Our Manager will be responsible for ensuring that the contracted third-party storage facilities it utilizes conducts visual inspections, spot checks and hires independent labs to randomly assay, at our expense, the indium delivered to us to verify that such indium meets the minimum 99.99% purity requirements referred to in our prospectus. The third-party storage facility must also confirm the deliveries match the supplier packing lists. Our Manager will rely to a limited extent on the good faith of its suppliers to provide indium that meets our requirements. We do not intend to brand specific companies and assayers. We consider the miners, refiners, suppliers and trading houses listed in our “Competition” section to be a partial list of known regular indium industry suppliers. We will use only reputable assayers recommended by reliable third-party sources. Indium typically comes delivered with a certificate of analysis in sealed boxes. Our Manager, at its discretion, may hire, at our expense, an independent lab to perform random assay tests using glow-discharge mass spectrometry (GDMS) to verify the purity of the indium, if the indium loan was done with a company that is not known to be a regular indium industry supplier. Failureproducer to perform is a risk to our businessourbusiness if the price of indium appreciates and we cannot replace the loaned indium at the same or a lower price than we loaned the indium. The ability of the borrower to satisfy the commitment to return the equivalent quantity andquantityand purity of indium is a business risk that we face in a lending transaction. However, the penalty fee aspect as detailed in our USPA would somewhat mitigate our overall business risk because the penalty fee would provide funds for us to purchase indium from other sources at less than favorable prices (if applicable). Notwithstanding the foregoing, if the borrower defaults inon its obligations under the USPA, there is always the risk that we might not be able to replace the indium lent at favorable prices. In such instances, we may not be able to recoup our losses through litigation and we would assume the loss which could negatively impact our NMV.

Indium Market Overview

About Indium

Indium (symbol In) is a rare, very soft, silvery-white malleable metal with a bright luster. It is number 49 on the Periodic Table of Elements with an atomic weight of 114.81. Indium is chemically similar to aluminum and gallium, but more closely resembles zinc. Indium is a rare element and ranks 61^st61st in abundance in the Earth’s crust at an estimated 240 parts per billion by weight. This makes it about three times more abundant than silver or mercury. Indium occurs predominantly in the zinc-sulfide ore mineral, sphalerite. Indium is produced mainly from residues generated during zinc ore processing but is also found in iron, lead, and copperandcopper ores. TheAccording to the USGS, the average indium content of zinc deposits from which it is recovered, ranges from less than 1than1 part per million to 100 parts per million. Its occurrence in nature with other base metal ores is sub-economicissub-economic for indium recovery. Pure indium in metal form is considered non-toxic by most sources.

Properties and Characteristics of Indium

Indium is very malleable and ductile and can be easily formed into a wide variety of fabrications. Another distinctive characteristic of indium is that it retains its softness at temperatures approaching absolute zero degrees, making it ideal for cryogenic (freezing or very low temperature) and vacuum application.applications. The properties of indium may be summarized as follows:

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Indium is an indispensible raw material to the LCD market. Currently, a very small amount of indium is required in the fabrication of the vast majority of flat panel displays produced. This is the primary use of indium today, accounting for 84% of consumption, according to the USGS.

Source: U.S. Geological Survey 2008

Demand for indium, driven by the LCD industry, has grown rapidly in the last decade as flat panel displays have effectively driven the once dominant cathode ray tube (“CRT”) into obsolescence. Indium, in the form of indium-tin-oxide (“ITO”), creates the optically transparent electrodes that drive LCD displays on TVs, computer monitors, laptops, tablets, cell phones and other devices. Beyond a few niche applications, LCDs currently do not function without indium and, there is no practical, large scale, substitute transparent conductive oxide. According to Displaybank,investor presentations made by Corning Incorporated, one of the world's largest LCD glass manufacturers, LCD glass demand has grown from 1.2 billion square feet in 2006 to about 3.2 billion square feet in 2011 and expected to grow to 3.6 billion square feet in 2012.

Source: LCD TV Association		LCD Glass Demand Source: Corning Inc. Annual Reports

The cost of the indium contained within an LCD display, relative to the cost of the actual LCD display, is marginal, representing about 1% of the total cost of production. Therefore, industry experts believe that a sharp rise in the price of indium is unlikely to significantly reduce demand for the metal by the LCD industry.

Source: DisplaySearch website: HDTV Status and Outlook

Indium supply is constrained by global smelting capacity capable of indium extraction and production levels, as reported by USGS, has increased over the last two years after decreasing from 2006 through 2009. Indium is a minor by-product of zinc mining (and to a lesser extent, lead and tin) representing a small credit to production. The value of indium mined in 2011 was approximately $446 million, representing 1.6% of the value of the $27 billion zinc market in 2011. Currently, there are no indium mines and zinc producers do not increase zinc production for the purpose of extracting additional quantities of indium.

Source: U.S. Geological Survey, 2010

Although production scrap is reworked in the normal course of operations, it is not currently economical to recycle indium from post-consumer scrap from sources such as used LCD displays.

We believe the indium market may be in a structural deficit and that sales from unreported above ground stocks of the metal could be supplementing annual production to compensate for what otherwise would be a supply gap. Furthermore, we believe, based on information obtained from our industry contacts, that these unreported above ground stocks, primarily in China, may be in the process of being drawn down. New technology driven applications for indium are emerging in LED lights, thin-film solar PVs and high performance semiconductors. In recent government sponsored reports, the U.S. and Europe have each identified indium as a critical metal upon which important industries, including clean energy, are dependent. China, Japan and South Korea also view indium as critical to their industries and are either developing strategic stockpiles, or laying the groundwork to do so.

According to USGS, the total production of primary indium was 861 tons in 2006 and was expectedestimated to be about 1,000 tons640 mt in 2007.2011. We calculated, based on the prices Metal Bulletin reportedposted on Bloomberg L.P., that the average price for indium was $822$696.28 per kilogram in 2006.2011. Based on these figures, we determined that the total size of the primary indium market was approximately $708$446 million in 2006. Although the actual size of the indium market in 2007 has yet to be determined, Displaybank expects the total sales of indium in 2007 to be $533 million.2011. Industry information with regards to monthly sales volumes and dollar values of indium transactions is not readily available. Indium does not trade on any forwards or futures exchangeexchanges and there are no indium forwards or futures contracts.

Applications

Flat Panel Displays, LCDs & LCDs

Indium is an essential raw material for a number of consumer electronics applications. The primary commercial application of indium is in coatings for the flat panel display (“FPD”)FPD industry. Indium is onlymost useful when chemically processed with tin-oxide to form indium-tin-oxide (“ITO”) to allow for electrical conductivityITO, an optically transparent and optical transparency.electrically conductive material. Sputtering targets are placed in a vacuum and since ITO is conductive and optically transparent, thin layers of ITO are then applied as electrical contacts onto LCD glass; the thin, technically pristine sheets of glass which can in turn be used as Liquid Crystal Display (LCD)to produce LCDs on electronic devices like television sets, computers and mobile phones. TheIn addition to its unique combination of transparency and conductivity, ITO transparent conductor is currently popularly usedalso preferred for use in LCD technology due to its other unique qualities of low melting point, good uniformity (which is suitable for large LCDs), fast etching time and long life span. Next generation LED backlit LCD TVs and computer monitors as well as organic light emitting (“OLED”) TVs and displays all use indium.

Solar Energy Technology

Indium is increasingly being used as a crucial raw material in the solar energy industry. Copper Indium Gallium Selenide (CIGS) is a new semiconductor material comprised of copper, indium, gallium, and selenium. Its main use is for high-efficiency photovoltaic cells (CIGS cells), in the form of thin-film photovoltaic. The thin-film photovoltaic has several advantages over traditional solar energy technologies. It is lightweight, can be applied on uneven surfaces and can be rolled up when not in use. CIGS show great promise in achieving high conversion efficiencies at low costs. According to the USGS, CIGS solar cells require approximately 50 metric tons of indium to produce 1 gigawatt of solar power. Research is underway to develop a low-cost manufacturing process for flexible CIGS solar cells that would yield high production throughput. We believe that flexible CIGS solar cells could be used in roofing materials and in various applications in the aerospace, military and recreational industries.

Other Uses

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Indium-Tin-Oxide Applications

Indium-Tin-Oxide (ITO, or tin-doped indium oxide) is a mixture of indium (III) oxide (In₂O₃) and tin (IV) oxide (SnO₂), typically 90% In₂O₃, 10% SnO₂ by weight. It is transparent and colorless in thin layers. In bilk form, it is yellowish to grey colored powder with a molecular weight of 277.64. It is a stable ceramic-like material, insoluble in water and volatizes at 850 degrees Celsius. ITO’s main feature is the combination of electrical conductivity and optical transparency. Thin films of ITO are most commonly deposited on surfaces by electron beam evaporation, physical vapor deposition, or a range of sputtering deposition techniques.

Production of ITO thin-film coatings accounted for approximately 84.0% of global indium consumption. Of the remaining 16.0% of the global indium market, other end uses include solders and alloys, 8.0%; compounds, 5.0%; electrical components and semiconductors, 2.0%; and research and other, 1.0%.

Currently, the new generation of LED backlit LCD TVs and computer monitors, as well as organic light emitting (‘‘OLED’’) TVs and displays, all use indium. LED is a semiconductor device that emits visible light or infrared radiation when an electric current is passed. The visible emission, often a high-intensity light, is useful in a whole host of applications. Most LED’s, such as blue, green and white LEDs, require indium. LEDs are a rapidly expanding market. An early use of high brightness LEDs (“HB-LEDS”) was in the automotive sector in the form of lights, dashboard lights and in traffic signals. Backlighting for TVs, computers and cell phones currently drive the bulk of LED demand. LED use in general lighting is in the early stages of adoption and is expected to be a very large market. Japanese LED light bulb sales surpassed incandescent sales in 2011.

Solar Energy Technology

Indium is increasingly being used as a crucial raw material in the solar energy industry. CIGS is a new semiconductor material comprised of copper, indium, gallium, and selenium. Its main use is for high-efficiency photovoltaic cells (CIGS cells), in the form of a thin-film photovoltaic. The thin-film photovoltaic has several advantages over traditional solar energy technologies. It is lightweight, can be applied on uneven surfaces and can be rolled up when not in use. CIGS shows great promise in the lab in achieving high conversion efficiencies at low costs. According to the USGS, CIGS solar cells require approximately 50 metric tons of indium to produce 1 gigawatt ("GW") of solar power. We believe that over time, as manufacturing efficiencies are achieved through mass production, consumption of indium per GW of CIGS production will decrease by as much as fifty percent compared to USGS's estimate. Research is underwayto develop a low-cost manufacturing process for flexible CIGS solar cells that would yield high production throughput. Flexible CIGS solar cells are already in use in roofing materials, and we believe they could also be used in other building integrated photovoltaics (“BIPVs”) and in various applications in the aerospace, military and recreational industries.

Other Uses

Indium is also used in the manufacture of low-melting-temperature alloys. An alloy consisting of 24.0% indium and 76.0% gallium is liquid at room temperature.

Some indium compounds such as indium antimonide, indium phosphide, and indium nitride are semiconductors with useful properties.

Indium is also used in Laser Diodes (LDs) based on compound semiconductors.

Ultrapure indium, specifically high purity trimethyl indium, is used in compound semiconductors.

Indium oxide is used as transparent conductive glass substrate in the making of electroluminescent panels.

Indium is also used as a light filter in low pressure sodium vapor lamps.

Indium is suitable for use in control rods for nuclear reactors, typically in an alloy containing 80.0% silver, 15.0% indium, and 5.0% cadmium.

111-Indium (isotope) is used in medical imaging to monitor activity of white blood cells.

Other uses accounted for 16% of the global indium market, including solders and alloys, 8.0%; components, 5.0%; electrical components and semiconductors, 2.0%; and research and other 1.0%.

Supply of Indium

According to the USGS, the top five indium producing countries in the world in 2011 were China, Japan, Canada, Republic of Korea and Belgium. China’s refinery production of indium was approximately 340 metric tons in 2011. This is approximately 53% of the annual total global refined primary production of 640 mt.

According to the USGS, primary refined production of indium had been relatively flat between 2006 and 2009. Annual worldwide production had ranged between 546 mt to 582 mt per year. Worldwide production actually decreased from 582 mt in 2006 to 563 mt in 2007 and edged up slightly to573 mt in 2008. Worldwide production fell to 546 mt in 2009 and increased to609 mt in 2010. Worldwide annual production further increased to an estimated 640 mt in 2011.

During the past decades, dwindling zinc prices forced some high cost and low-grade underground zinc mines and a few older and less efficient zinc refineries to close. Zinc prices soared in 2005 and 2006 to record high levels. In turn, according to the USGS, world mine production of zinc increased from 10 million mt in 2006 to an estimated 11.6 million mt in 2008. The average London Metals Exchange (LME) price for zinc in July 2004 was approximately US$1,020 per mt. The average LME price for zinc increased to approximately US$3,340 per mt by July 2006. We believe that this increased primary indium production as well. Higher prices for indium also resulted in increased recycling of production scrap. Despite increasing demand for indium, as with most commodities, higher prices generally leads to increases in production, therefore worldwide supply is expected to be adequate to meet demand through increased primary production and recycling. More recently, by early2009, the price of zinc plummeted from the lofty levels witnessed in 2006 and early 2007. Weak zinc prices resulted in curtailed production of zinc. This is reflected in the 2011 USGS Zinc Report which estimates zinc production fell from 11.6 mt in 2008 to 11.2 mt in 2009. Zinc prices more than doubled from its early 2009 lows and maintained those gains in both 2010 and 2011. Consequently, zinc production increased to 12.0 million mt in 2010 and further increased to an estimated 12.4 million mt in 2011. Similarly, primary indium production fell from 573 mt in 2008 to 546 mt in 2009 before rebounding to 609 mt in 2011 and rising to an estimated 640 mt in 2011.

The recycling of indium has increased in recent years. The indium recycling market is now larger than primary refinery production. Recycling scrap indium into 3N7 or higher purity metal ingot is extremely complex and time consuming. Japan is the primary market for indium recycling, with over 450 metric tons per year (“tpy”) of secondary indium production capacity, according to Roskill. If recycling activity continues to grow and becomes more efficient, this may serve to increase the total worldwide indium supply.

China

According to the USGS, China controls over 50% of the world’s refined indium production. There are a number of major producers in China, but also numerous smaller producers, relying on purchasing the concentrates from the larger base-metal refiners. China produces approximately 340 metric tons of indium per year.

Source: U.S. Geological Survey 2012

World Refined Indium Production (Metric Tons)

		2006				2007				2008				2009				2010				2011
China			350				320				310				280				340				340
Korea, Republic of			50				50				75				70				70				100
Japan			55				60				65				67				70				70
Canada			50				50				45				40				67				65
Belgium			30				30				30				30				30				30
Russia			16				12				12				4				n/a				n/a
France			10				10				0				0				n/a				n/a
Brazil			n/a				n/a				n/a				n/a				5				5
Peru			6				6				6				25				n/a				n/a
United States			0				0				0				0				0				0
Other Countries			15				25				25				30				27				30
World Total			582				563				568				546				609				640

(1) Table is taken from the U.S. Geological Survey Minerals Commodities Summaries, January 2007 through January 2012.

China is responsible for most of the increased global zinc and indium production in the last two decades. China has now become the world’s largest producer and consumer of metals and minerals. Much of China’s demand for zinc is a result of infrastructure expansion. The massive development of their mining and smelting industry strained the resources of the country and had a detrimental impact on the environment. The Chinese government responded to this adversity with a policy of replacing small, dirty and inefficient plants with large, new and efficient smelters and refineries designed to comprehensively recover by-products that would otherwise be waste. Additionally, Chinese zinc ores are uncommonly high in their indium content. As Chinese zinc output swelled to 40% of global production, the Chinese policy of comprehensive recovery resulted in a surge of indium production that we believe is unlikely to be replicated outside of China.

Source: USGS and Roskill (2003, 2010)		Source: USGS

The Chinese government restricts the export of indium with taxes and quotas. In December 2009, China announced it would reduce export taxes on unwrought indium, indium scrap and indium powder from the10.0% to 15.0% level in 2009 to 5.0% in 2010. In December 2011, The Ministry of Commerce issued a quota allowing China to export 139 mt of indium in the first half of 2012, approximately 1 mt less than the level in 2011. In October2010, Bloomberg LP reported that the Ministry of Commerce in China announced the full year 2011 export quota for indium would remain unchanged from 2010 levels at 233 mt. No announcement has yet been made about full year 2012 export quotas.

We believe that most of China’s indium output is exported, with domestic demand currently unable to absorb production. Reuters reported in September 2010 that China’s top zinc producer, Zhuzhou Smelter Group Co. Ltd. had agreed to sell 140 mt of indium ingot to leading Chinese metals trader Minmetal, a sister company controlled by the Chinese Government. We believe this material represents a portion of the unreported above ground stocks of indium discussed earlier.

Canada

The USGS estimated that in 2011 Canada produced 65 mt of indium, a slight decrease from the 67 mt produced in 2010. Teck Resources Ltd. is the largest producer of indium in Canada.

United States

The United States does not produce any primary domestic indium and relies on imports from China, Canada, Japan, Russia, and other countries. Very little indium is recycled in the United States. We believe this is because there is no infrastructure for the collection of used indium-containing products.

New Production

“Critical Materials Strategy”, a 2010 U.S. Department of Energy report highlighting the availability of metals required for the development of clean energy technologies identified approximately 50 mt of new indium production that they expect annually by 2015. The countries and respective supplies that are assumed to be coming online by 2015 are (i) Australia (15 mt per year), (ii) South America (15–20 mt per year), (iii) Brazil (15 mt per year) and (iv) Russia (2 mt per year).

Zinc Supply

According to the USGS, total worldwide zinc production was 8.5 million mt in 2003, 9.6 million mt in 2004, 9.8 million mt in 2005, 10.0 million mt in 2006, 10.9 million mt in 2007, 11.6 million mt in 2008, 11.2 million mt in 2009, 12.0 million mt in 2010 and an estimated 12.4 million mt in 2011. Yearly zinc production dwarfs the 2011 estimated total primary refined indiumproduction figures of 640 mt and the USGS’s 2008 estimated 850 mt of recycled indium. Total indium production represents less than one hundredth of one percent of total zinc production on anannual basis.

Zinc is a loosely amalgamated industry, with the top 10 producers accounting for only 40% and 44% respectively of mined and smelted zinc, as reported by Zincor at the July 2011 Southern African Metals Conference:

Source:

Zincor, 6th Southern African Metals Conference July 2011, Further credit to Brook Hunt, June 2011

Source:

Zincor, 6th Southern African Metals Conference July 2011, Further credit to Brook Hunt, June 2011

Demand for Indium

Roskill, in their 2010 publication, “Global Industry Markets and Outlook”, stated that, “The use of ITO in LCDs will remain the major market for indium and will continue to drive growth in indium demand. PVs for solar applications are a newer and perhaps faster growing application, but there remain significant questions over growth rates and also the technologies involved.” They further report that the table below, “shows some forecasts produced by AIM Specialty Materials in 2010, which give a growth rate for global primary indium demand of over 15%py between 2009 and 2013. Consumption of indium in ITO applications is expected to grow at 17%py, while solar applications for indium could increase at nearly 40%py, albeit from a much smaller base level. Even if solar applications were to be removed from the forecasts due to the uncertainty surrounding them, demand for primary indium would still be forecast to grow at around 13%py.” We believe that due to structural changes in the solar industry that current industry-wide forecasts for growth in CIGS may be overly optimistic in both the short and intermediate term.

World: Indium demand, by application, 2009 to 2013 (t)

Application				2009				2010				2011				2012				2013
ITO1					395				494				568				654				752
Solar2					50				75				95				160				185
Other					260				274				292				312				333
Total					705				843				955				1,126				1,270

Source:   Brian O’Neill - AIM Specialty Materials, MMTA conference April 2010

Notes:    1) “Real” ITO demand – spent/scrap ITO targets removed from demand calculation

2) Indium demand for solar applications based on industry forecasts

[As reported in Roskill’s publication “Indium: Global Industry Markets and Outlook – 2010”]

Based on the USGS’s primary production figures and Bloomberg’s calculation of the average yearly price of indium using the prices reported by Metal Bulletin on Bloomberg, the size of the primary indium market was $479 million in 2006, $385 million in 2007, $314 million in 2008 $217 million in2009, $345 million in 2010 and an estimated $446 million in 2011. According to the USGS, global consumption of primary and secondary indium was estimated to be more than 1,800 mt. This would translate into a total market size of approximately $1.25 billion based on Metal Bulletin’s average price of $696 per kilogram for indium in 2011.

The USGS estimates that U.S. indium consumption was 120 mt in 2011, up substantially from the 55 mt consumed in 2000 and the 30 mt in 1990. This supports our belief that many of the traditional applications utilizing indium have a long-term upward trajectory in demand.

Source: U.S. Geological Survey

According to the USGS, indium consumption in Japan (the leading global consumer of indium) was expected to increase by 20% in 2010 from that of 2009. Dowa, a Japanese based recycler of indium,estimated that Japanese indium consumption in 2009 totaled 602 mt, with 525 mt (87%) used for the production of ITO. Primary indium consumption was 240 mt, with 70 mt (29%) from domestic producers, and the balance was imported. Secondary indium consumption was 362 mt. Primary and secondary indium consumption by the Japanese may have declined in 2011 due to the temporary disruptions at LCD and ITO production facilities caused by the March 11, 2011 earthquake and tsunami.

According to a Metal-Pages.com article published on June 17, 2010 titled ‘‘EU Warned of PotentialCritical Metal Shortage,’’ a taskforce of experts supplied a report to the European Commission on June 17,2010 warning that there is long-term potential for critical metal shortages. The experts listed 14 raw materials, including indium, as critical to the European Union due to their high relative economic importance and tohigh relative supply risk. The 14 metals and minerals were singled out of the 41 studied in total as most acutely vulnerable to shortage due to demand in Europe outstripping supply. Based on a study commissioned by the German Federal Ministry of Economics and Technology, referenced in the report, the demand for indium from emerging technologies is expected to grow from 234 mt in 2006 to 1911 mt in 2030. Indium’s demand in 2030 could outstrip 2006 supply levels by 3.29 times. A December 2010 report published by the U.S. Department of Energy entitled, “Critical Materials”, suggests that over 1500 mt of indium could be consumed annually by 2025 for clean energy technologies alone.

Flat Panel Displays (FPDs)

We believe the demand for indium will grow for the foreseeable future. We believe the markets for flat panel displays are strong, particularly for computer monitors, televisions, lap tops, tablets and smartphones. We expect that overall growth in the LCD industry driven by the increase in average display size and growth in unit sales of LCD displays will continue to generate increased demand for indium.

LCD TV demand has grown approximately 34% annually since 2007. According to the LCD TV Association, LCD TV unit sales grew from 10 million units in 2005 to 105 million units in 2008 and an estimated 210 million units in 2011. A January 18, 2012 Metal-Pages article states that global LCD TV shipments are forecast to grow more slowly at around 10 percent in 2012 to 216-217 million units. The same article stated that most LCD panel makers, including AU Optronics, Chimei Innolux, Sharp and Samsung Electronics will concentrate on the production of new and very large panel sizes in 2012. Larger display panels consume substantially larger quantities of indium. In general, mainstream LCD devices are trending toward larger panel sizes, which require more indium per unit. Touch screens also routinely use ITO in the touch subsystem as well as in the LCD front plane, requiring an extra layer of ITO. Apple’s iPhones and iPads are examples of capacitive touch screen technology utilizing ITO to offer higher clarity and quality of the display image. NanoMarkets LC, a leading provider of market and technology research and industry analysis services, expects the market for ITO to grow from $3.2 billion in 2009 to $10.9 billion in 2016.

LED Industry

The LED TV market has grown rapidly over the last few years, reaching nearly 60 million units in 2010 and is estimated to have captured a majority of the LCD backlit market in 2011.

Source: Veeco September 2011 Investor Presentation

The LED Lighting markets are also expected to grow rapidly over the next few years. In a KGI research report dated September 16, 2009, titled ‘‘LED Sector — Golden Decade Ahead for LED TV and LED Lighting,’’ analyst Yvonne Lu states ‘‘the growth potential of LED Lighting is huge, as at present LED accounts for only 0.5% of the global lighting market estimated at US$122 billion in 2009.’’ According to Strategies Unlimited, a research firm, and J.P. Morgan’s North America Equity Research, overall HB LED revenue growth is expected to exceed 30.0% annually from 2009 to 2013. This rapid growth will be mostly driven by LCD backlighting and the general lighting market segments. Combined, these two applications are estimated to grow at a compound annual growth rate of 83.0% between 2009 and 2013. They project that within five years, the LED market will grow from $4.9 billion in 2009 to $14.9 billion in 2013.

In September 2009, Bloomberg News reported that at a metals conference in Beijing, Feng Juncong, an analyst at Beijing Antaike Information Development Co., Ltd., the state-backed research group, stated that‘‘Indium used in LED may exceed 100 mt by 2015.’’ We believe this would represent a very large new demand driver for indium and consume a substantial portion of the world’s primary indium supply, if this projection were to become a reality.

Solar Industry

Indium is increasingly being used as a crucial raw material in the solar energy industry. According to the United States’ National Renewable Energy Laboratory, to produce 20 gigawatts of solar power by the year2050, the United States will need 400 mt of indium per year for the production of photovoltaic modules and systems alone. Based on the same report, the shortage of either indium or tellurium (another raw material for photovoltaic production) could result in serious bottlenecks to such growth unless such cells were made thinner or substitutes were found. We believe that if mass production issues are mastered by industry participants, CIGS based solar photovoltaic panels could be a large new market for the usage of indium.

The market for solar installations based on CIGS thin-film panels will nearly double in size to $2.35 billion in 2015, as manufacturers signaled a breakout year in 2011 by taking advantage of falling production costs, improving module conversion efficiencies and increasing adoption in commercial rooftops, according to a Lux Research report titled, "Sorting through the Maze of CIGS Technologies: Who Will Cash in on the Breakout Year?."

Solar Frontier, a 100% subsidiary of Showa Shell Sekiyu K.K. completed construction of the world's first GW-scale CIS (Copper-Indium-Selenium) module factory in late 2011. The USGS reported the Showa Shell's 1,000-MW/yr solar manufacturing plant could consume 30 mt of indium per year. CIS panels are similar to CIGS panels, but may be easier and possibly cheaper to make, however, they are not as efficient at turning sunlight into power as CIGS panels. In January 2012, GTM Research, a Greentech Media company that provides market research and strategic consulting, reported that Solar Frontier shipped 577 MW of solar panels in 2011 up from 70 MW in 2010 and 46 MW in 2009.

Another notable entrant into the CIGS space is TSMC Solar, a subsidiary of Taiwan Semiconductor. According to TSMC Solar's web site, "TSMC Solar will serve the global solar market with CIGS thin-film modules manufactured in its own facilities, with production capacity reaching 1 GW in the next 3-5 years. Construction began on the first production facility in September 16, 2010 in Taichung, Taiwan. TSCM Solar plans to invest US$258 million for the first phase of the facility which is scheduled to enter commercial production in Q1 2012 and reach yearly capacity of 100MW (megawatts) in thin-film photovoltaic modules by the end of 2012. A second phase is planned for the 5.2 hectare site, which will expand production to over 700MW."

According to GTM Research, the estimated 2011 production numbers for CIGS manufacturers were as follows:

	CIGS Manufacturers			Estimated 2011 Production
	•	Solar Frontier		577 MW
	•	Solibro		95 MW
	•	Mia Sole'		60 MW
	•	Avancis		25 MW
	•	Nanosolar		20 MW
	•	Global Solar		19 MW
	•	Soltecture		14 MW

Based on this data and industry information, we believe that CIGS consumed anywhere from 24 mt to 40 mt of indium in 2011. It is possible that if mass production issues are mastered by industry participants, CIGS based solar photovoltaic panels could potentially be a very large new market driving significant new demand for indium.

Government Stockpiling

In December 2008, The State Reserve Bureau of China (‘‘SRB’’) purchased 30 metric tons of indium ingots from Huludao Zinc Industry for a strategic stockpile. Most traders and producers believe that the SRB plans to continue stockpiling additional indium ingot in the future, although the exact tonnage is uncertain.

In 2006, the South Korean government announced plans to launch a stockpile of thirteen rare metals and ferroalloys. Indium was on their list. In May 2009, Platts reported that South Korea’s Public Procurement Service purchased at least 5 metric tons of indium from Korea Zinc.

In June 2009, Metal Bulletin Ltd. reported that the Japanese government plans to purchase 60 metric tons of refined indium from its own domestic companies through a public tender. In May 2009, Platts reported that a Japanese official from the Ministry of Economy, Trade and Industry stated that the Japanese government plans to stockpile indium and gallium for the first time. The Ministry has requested a 200 million Yen($2 million) supplementary budget for stockpiling, some of which would be used to purchase indium and gallium according to an official in charge of the country’s stockpiling policy. The second supplementary budget, which includes the 200 million Yen stockpiling allowance, is currently before the Parliament. There are no official reports stating whether or not the Japanese government has purchased any indium as of December 31, 2011.

Substitutes and Alternatives to Indium