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Flooid Power Systems, Inc. Project A

Flooid Power Systems, Inc. Project A

Powered by the Planet, Flooid Power is clean, renewable energy 24/7 for the residential and utility markets. No fuel, no emissions, no BS.

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Deal Type

Equity

Funding Goal

$1,000,000

Current Reservations

$375,000

Minimum Reservation

$25,000

Maximum Reservation

$1,000,000

Deal Stage

Series A

Pre-money Valuation

$1,600,000

Open Date

07/02/2018

Closing Date

N/A

Elevator Pitch

Powered by the Planet and patent-pending, Flooid Power Project A is the first of four megawatt-scale facilities planned in Holyoke, and Flooid Power expects regional, national, and global expansion.

Company Overview

Flooid Power Systems, Inc.

Flooid Power Systems, Inc. (FPS) is a renewable energy R&D company based in Holyoke, Massachusetts and registered in Delaware as a socially responsible B (public benefit) corporation. This standing reflects our commitment not only to ongoing stewardship of the planet, but also to the well-being of its residents, human and otherwise. Our energy systems are Powered by the Planet℠, and provide power to either residential or utility-scale customers. Unlike solar or wind, Flooid Power produces clean, consistent energy 24/7/365, and that's because the force behind Flooid Power--gravity--is unchanging and is unaffected by time-of-day or intermittent weather conditions.

Traction

  • Utility patent filed for Flooid Power system, building on previously filed provisional patent, solidly protecting unique, licensable IP.

    August, 2018
  • Dr. Jon McGowan, mechanical & industrial engineering prof, says Flooid Power "Viable ... unique, doesn't violate laws of thermodynamics."

    June, 2018
  • Provisional patent application filed for super-efficient compression system, an essential component of the Flooid Power process.

    January, 2018
  • FPS signs 20-year letter-of-intent with HG&E, providing for multiple sites and long-term sale at 4 cents per kWh.

    October, 2017
  • Flooid Power Systems, Inc. is registered as a B Corporation, reflecting our commitment to the environment and communities.

    June, 2017
  • Because of our connection to Holyoke Gas & Electric, FPS leases 5,000-sq-ft of space for R&D and offices in Holyoke.

    June, 2017

Key Customers & Partners

Holyoke Gas and Electric Eastern Refrigeration B & M Electric Co.

Previous Funding

  • $550,000 Other
  • Raise Source: Self
  • July 2017

Frequently Asked Questions

What is Flooid Power and how does it work?

We sometimes refer to Flooid Power as being like "Hydropower in a Tower" because both of these systems develop electricity in the same basic way--by passing fluid under pressure through a turbine--and because gravity is the force that drives both of these systems. Hydroelectricity depends upon a displacement cycle, initiated by the sun, in which gravity moves water upward (in the form of vapor) and back down again. If it falls on a hillside where there's a dam, we can capture some of that energy through hydropower. Flooid Power is also a displacement cycle, driven by gravity, in which our super-dense, low-drag, non-toxic flooid is displaced by the most readily abundant fluid--namely, air. Because of our patent-pending, super-efficient compression system, we are able to introduce large amounts of compressed air into our system, developing a continuous motive flow of flooid and producing a significant net gain.

Why have you structured the current offering so favorably for investors, in terms of distributions on the revenue from Project A?

We structured the current offering in a way that repays investors in multiples quickly and provides for ongoing revenue for the life of the plant, which is likely to be a very long time, given that gravity isn't going away anytime soon. When Project A is operational (anticipated early Summe, 2019), accounting for 20% maintenance and operation cost, all available cash goes to investors until you get 125% of your money back. After that, investors get 80% of available cash until you get 3-times your money back. After that, it's a 50-50 split between investors and FPS, inc. On top of that, investors get an equity stake in Flooid Power Systems, Inc., as well as pre-emptive rights for investment in future Flooid Power projects. We structured the investment this way because we want early believers in the Flooid Power process to benefit maximally, while also preparing the company for growth in Holyoke and beyond. Project A allows us to efficiently scale our technology and company while also rewarding early investors.

Why did you choose to locate the Company and begin operations in Holyoke, which has the lowest electricity rates in Massachusetts because of hydroelectricity on the Connecticut River?

We could not think of a better development partner than Holyoke Gas & Electric Department, a public utility owned by the city and operated on a not-for-profit basis. Because Flooid Power is similar to hydropower, the engineering staff at HG&E were able to readily understand the Flooid Power process and its potential impact. As a full-spectrum utility, providing gas, electric, and broadband services, HG&E is an ideal partner as Flooid Power Systems enters the larger utility and distributed power markets. HG&E continues to be supportive, and and their public mission--to provide the city with affordable, reliable electricity--is very much in line with our mission as a B corporation. And because we have no "fuel costs," Flooid Power plants will make significant profit, even at 4 cents per kWh, the long-term price agreed upon with HG&E.

Why did you hire an impartial, third-party expert to validate the Flooid Power process?

Though people utilize gravity on a ongoing basis through hydropower and tidal power systems, Flooid Power is the first and only standalone, closed, controlled system that uses this unchanging force to develop continuous renewable energy anywhere there's solid ground and air. Aware of the understandable skepticism we would face, but also confident in our technology, we hired Dr. Jon McGowan to conduct an in-depth analysis. A professor of mechanical and industrial engineering at UMass/Amherst and a published expert on thermodynamics and fluid dynamics, Dr. McGowan was initially skeptical, but concluded, in part, that the Flooid Power process is "Viable, unique in concept ,,, does not violate the Laws of Thermodynamics ... and deserves to be scaled to produce significant amounts of renewable energy." (The full text of DR. McGowan's analysis is available to potential investors who sign a non-disclosure agreement with Flooid Power Systems, Inc.)

How much land is required for a Flooid Power facility, as compared to other types of renewable energy?

As outlined in our slide deck, Flooid Power has a high, continuous output and a small "footprint," meaning that we require far less land to produce renewable energy constantly, independent of available sunshine or sufficient wind. That means that Flooid Power's Levelized Electrical Cost (LEC) is far below not only those of wind and solar, but also natural gas, coal, nuclear, biomass, large-scale hydropower, and every other mode of power production.

Risks & Disclosures

FLOOID POWER PROJECT A, LLC

FLOOID POWER SYSTEMS, INC.

RISK FACTORS

Offering of Units

with each Unit consisting of

Class A Interests of Flooid Power Project A, LLC

and

Common Stock of Flooid Power Systems, Inc.

July 2, 2018

An investment in the offering of Units (the “Units”) consisting of membership interests (the “Class A Units”) of Flooid Power Project A, LLC (the “Project Company”) and shares of common stock of Flooid Power Systems, Inc. (the “IP Company”) involves a high degree of risk. The following risk factors, in addition to the other information contained in the materials being distributed to prospective investors in connection with this offering, should be considered carefully in evaluating both the Project Company and the IP Company and their businesses before purchasing the Units offered hereby. The risks described below are not the only risks facing the IP Company and the Project Company. Risks and uncertainties not currently known to management or that management currently deems to be immaterial also may materially adversely affect the IP Company’s and Project Company’s business, financial condition and results of operations and liquidity.

The Units being offered hereby should be regarded as speculative, and should be purchased only by individuals or entities that could afford to lose all or part of their investment.

Risks relating to the Business

The IP Company’s limited operating history makes it difficult to evaluate its future prospects and your investment.

The IP Company was organized as a Delaware benefit corporation on June 13, 2017. The IP Company has a limited operating history, which makes an evaluation of its future prospects difficult. No assurances can be given that the IP Company will be able to successfully implement its business plan, or if implemented, that the IP Company will meet its business objectives.

The IP Company may underestimate its development and future operating budget requirements.

The IP Company’s operating results may fluctuate from quarter to quarter, which could make its future performance difficult to predict and could cause its operating results for a particular period to fall below expectations.

The IP Company’s business plan contains financial projections and forward-looking statements that may not prove to be accurate.

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Rising interest rates could adversely impact the IP Company’s business.

The IP Company does not currently own any intellectual property and is reliant on an exclusive, royalty-free license.

The IP Company currently only holds an exclusive, royalty-free license to use the intellectual property for general business purposes, and to sublicense its rights to the Project Company, and any other project companies formed hereafter. However, The IP Company has been granted an option to purchase the intellectual property at any time within the next five years pursuant to that Patent License Agreement, dated as of April 11, 2018. The IP Company’s ability to operate profitably will depend substantially on the IP Company’s ability to secure adequate funding in order to exercise its option to purchase the rights to the intellectual property from Mark Maynard. If purchased, the IP Company’s ability to compete effectively will depend substantially on our efforts in developing, maintaining and protecting proprietary aspects of our intellectual property. The IP Company’s licensed technology may infringe on intellectual property owned by competitors. There can be no assurances that competitors, many of whom have substantial resources, will not seek to apply for and obtain patents, trademarks, or copyrights that will prevent, limit, or interfere with the IP Company’s ability to operate. If the IP Company is unable to raise the necessary funds to be able to exercise its option, the IP Company’s business, results of operations and financial condition are likely to be materially and adversely affected.

If purchased, the IP Company may not be able to adequately protect its intellectual property.

If significant funds are raised which give the IP Company the ability to exercise its option to purchase the rights to the intellectual property from Mark Maynard, the IP Company’s intellectual property will be and will continue to be one of our most important assets and we expect to utilize significant resources to protect it. The IP Company’s ability to compete effectively will depend substantially on our efforts in developing and maintaining proprietary aspects of our intellectual property. Moreover, there can be no assurances that any future patents, copyrights or trademarks that may be issued as a result of the IP Company’s applications will offer any degree of protection to the IP Company’s products against competitive products. The IP Company’s currently licensed technology may infringe on intellectual property owned by competitors. There can be no assurances that competitors, many of whom have substantial resources, will not seek to apply for and obtain patents, trademarks, or copyrights that will prevent, limit, or interfere with the IP Company’s ability to make, use, or sell its products. In addition, if we cannot protect our domain names, our ability to successfully brand our name and our products and services will be impaired.

The Project Company does not own any intellectual property and is reliant on a sublicense from the IP Company.

The Project Company does not own any intellectual property and is reliant on its ability to license the rights to use intellectual property from the IP Company. Moreover, the Project Company’s success is dependent on the IP Company’s ability to secure adequate funding in order to exercise its option to purchase the licensed intellectual property. Upon said purchase, the Project Company’s ability to operate profitably will depend substantially on the IP Company’s efforts in developing, maintaining and protecting proprietary aspects of its intellectual property.

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The intellectual property licensed by the Project Company may infringe on intellectual property owned by competitors. There can be no assurances that competitors, many of whom have substantial resources, will not seek to apply for and obtain patents, trademarks, or copyrights that will prevent, limit, or interfere with the Project Company’s ability to operate.

The IP Company will need to raise additional funding or it will not be able to exercise its option to purchase the intellectual property.

The IP Company’s option to purchase the intellectual property, as well as its license to use the intellectual property, both expire in five (5) years. If the IP Company is not able to raise additional funding in order to purchase the intellectual property within the next five (5) years, its license to use the intellectual property will expire and the IP Company will be forced to cease operations.

The IP Company’s upfront operating expenses may be high and there can be no assurances that it will achieve or maintain profitability.

The IP Company expects to have significant upfront operating expenses and out of pocket costs and expects such costs to continue as the IP Company grows its business. The IP Company will need to develop revenue channels to achieve and sustain profitability. It is possible that the IP Company may never achieve sustained profitability and, even if it does, the IP Company may not sustain or increase profitability on a quarterly or an annual basis in the future. If the IP Company is not successful in becoming profitable, it may be forced to curtail or cease operations.

The IP Company’s business model may change.

The IP Company’s business model has only recently been developed. The IP Company has not had sufficient time to prove whether or not any of the assumptions underlying the business model may be reasonable. The IP Company’s ultimate business model may therefore differ from its current business model, which may adversely affect revenues, expenses, earnings and cash flow.

In order to meet its short-term and long-term business goals, the IP Company is likely to seek additional funding.

Even if this offering is successful and the IP Company receives the proceeds it expects to from the issuance of the Units hereunder, it is likely that the IP Company will have insufficient capital to fund the growth of its business and will require additional financing to meet its business objectives. The IP Company can provide no assurances that it will obtain such additional funding on terms favorable to it. The overall costs for maintaining the long-term growth of the IP Company are substantially in excess of this offering. The IP Company may partner with other entities and employ alternative financing structures.

The IP Company operates in a highly competitive market and may encounter competitors having greater resources and experience.

There can be no assurances that the IP Company’s competitors will not develop technology or services that are superior to the IP Company’s. These competitors may achieve greater and

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more rapid market acceptance than the IP Company will. It is possible that the IP Company’s competitors will enter the IP Company’s exact market space. Although barriers to entry exist, there are no assurances that they will prevent new companies from emerging as significant competitors to the IP Company’s business. If the IP Company cannot successfully compete against these companies, the IP Company’s business, results of operations and financial condition are likely to be materially and adversely affected.

The loss of one or more of the IP Company’s executive officers or key employees may adversely affect its ability to effectively manage its projects.

The IP Company will depend on its ability to recruit and hire an experienced management team and the loss of one or more key executives could have a negative impact on its business. The IP Company’s success also depends on its ability to retain and motivate key employees and attract qualified new employees. The IP Company may not be able to replace departing members of its management team or key employees. Integrating new executives into the IP Company’s management team, and training new employees with no prior experience in the non-conventional renewable energy industry, could prove disruptive to the IP Company’s projects, require a disproportionate amount of resources and management attention, and ultimately prove unsuccessful. An inability to attract and retain sufficient technical and managerial personnel could limit the IP Company’s ability to effectively manage its operating projects within budget, which could have a material adverse effect on the IP Company’s business, financial condition and results of operations.

Any future development of non-conventional renewable energy projects may present unforeseen challenges and result in a competitive disadvantage relative to the IP Company’s more-established competitors.

The IP Company’s strategy includes forming and operating various types of non-conventional renewable energy power projects. There can be no assurance that the IP Company will be able to operate such projects profitably. Additionally, these various projects could expose the IP Company to increased operating costs, unforeseen liabilities or risks, and regulatory and environmental concerns associated with entering new sectors of the power industry, including requiring a disproportionate amount of management’s attention and resources, which could have an adverse impact on the IP Company’s business as well as place it at a competitive disadvantage relative to more established non-conventional renewable energy market participants. A failure to successfully integrate such projects into the IP Company’s existing project portfolio as a result of unforeseen operational difficulties or otherwise, could have a material adverse effect on its business, financial condition and results of operations.

The energy industry in many countries, including the United States, benefits from governmental support that is subject to change.

The energy industry in many countries, including both fossil fuel and renewable energy sources, in general benefits from various forms of governmental support. The existence of these incentives may be reflected in, and may allow the IP Company to reduce, the price it charges for electricity generated by its projects. To the extent that these governmental incentive programs are not continued or similar incentives are not made available, new non-conventional renewable energy projects may need to increase the price of electricity sold to power purchasers, which could

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result in decreased demand for wind, solar and other power, and could reduce the number of projects the IP Company may develop which could have a material adverse effect on the IP Company’s ability to implement its growth strategy and, ultimately, its business, financial condition and results of operations.

Existing regulations and policies governing the electric utility industry, as well as changes to these regulations and policies, may adversely affect demand for non-conventional renewable energy products and services and materially adversely affect the IP Company’s business, financial condition and results of operations.

The market for electricity generation is heavily influenced by federal, state and local government regulations and policies concerning the electric utility industry, as well as policies promulgated by public utility commissions and electric utilities. These regulations and policies govern, among other matters, electricity pricing and the technical interconnection of distributed electricity generation to the grid. The regulations and policies also regulate net metering, which relates to the ability to offset utility-generated electricity consumption by feeding electricity produced by renewable energy sources back into the grid. Utility customer purchases of alternative energy could be deterred by these regulations and policies, which could result in a significant reduction in the projects the IP Company takes on. Changes in consumer electricity tariffs or peak hour pricing policies of utilities, including the introduction of fixed price policies, could also reduce or eliminate the cost savings derived from renewable energy systems and, as a result, reduce the IP Company’s customer demand for its systems.

A prolonged environment of low prices for natural gas, other conventional fuel sources, or competing renewable resources could have a material adverse effect on the IP Company’s long-term business prospects, financial condition and results of operations.

Historically low prices for traditional fossil fuels, particularly natural gas, could cause demand for renewable power to decrease and adversely affect both the price available to the IP Company under power purchase agreements that the IP Company may enter into in the future and the price of the electricity the IP Company generates for sale on a spot-market basis. Low spot-market power prices, if combined with other factors, could have a material adverse effect on the IP Company’s results of operations. Additionally, cheaper conventional fuel sources or competing renewable resources could also have a negative impact on the power prices that the IP Company will be able to negotiate upon entering into agreements with regards to future project companies. As a result, the price of the IP Company’s power could be materially and adversely affected, which could, in turn, have a material adverse effect on the IP Company’s results of operations. Accordingly, in such event, the IP Company’s future growth prospects could be adversely affected.

Certain agreements signed in connection with the IP Company’s business could be subject to public utility commission approval, and such approval may not be obtained or may be delayed.

Certain agreements executed by the IP Company in connection with the development of utility-scale projects could be subject to approval by the applicable public utility commission (“PUC”). It cannot be assured that such PUC approval will be obtained, and if the required PUC approval is not obtained for any particular agreement, the IP Company’s business, results of operations and financial condition are likely to be adversely affected.

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If the IP Company fails to meet changing customer demands, it may lose customers and the IP Company’s sales could suffer.

The industries in which the IP Company operates change rapidly. Changes in the IP Company’s customers’ requirements result in new and more demanding technologies, product specifications and sizes, and manufacturing processes. The IP Company’s ability to remain competitive will depend upon its ability to develop technologically advanced products and processes. The IP Company must continue to meet the increasingly demanding requirements of its customers on a cost-effective basis. The IP Company cannot be certain that it will be able to successfully develop new or enhanced products and processes that satisfy customer needs or achieve market acceptance.

Natural events and operational problems may cause the IP Company’s power production to fall below its expectations.

Electricity generation levels of IP Company projects depend upon the IP Company’s ability to maintain the working order of technology and infrastructure of the applicable project. A natural disaster, severe weather, accident, failure of major equipment, shortage of or inability to acquire critical replacement or spare parts, failure in the operation of any transmission facilities that the IP Company may acquire, including the failure of interconnection to available electricity transmission or distribution networks, could damage or require the IP Company to shut down projects or related equipment and facilities, impeding the IP Company’s ability to maintain and operate its facilities and decreasing electricity generation levels and the IP Company’s revenues.

The IP Company’s projects will generally rely on interconnections to transmission lines and other transmission facilities that are owned and operated by third parties. The IP Company’s projects will be exposed to interconnection and transmission facility development and curtailment risks, which may reduce the return to the IP Company on those investments.

The IP Company’s projects will depend upon interconnection to electric transmission lines owned and operated by regulated utilities to deliver the electricity its projects generate. A failure or delay in the operation or development of these interconnection or transmission facilities could result in the IP Company losing revenues because such a failure or delay could limit the amount of power the IP Company’s operating projects deliver. In addition, certain of the IP Company’s operating projects’ generation of electricity may be curtailed without compensation due to transmission limitations, reducing the IP Company’s revenues and impairing its ability to capitalize fully on a particular project’s potential. Such a failure or curtailment at levels above the IP Company’s expectations could have a material adverse effect on its business, financial condition and results of operations.

In the future the IP Company may develop projects with their own generator leads to available electricity transmission or distribution networks. In some cases, these facilities may cover significant distances. A failure in the IP Company’s operation of these facilities that causes the facilities to be temporarily out of service, or subject to reduced service, could result in lost revenues because it could limit the amount of electricity the IP Company’s operating projects are able to deliver.

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The current project, as well as new projects being developed, may need governmental approvals and permits, including environmental approvals and permits, for construction and operation. Any failure to obtain necessary permits could adversely affect the amount of the IP Company’s growth.

The design, construction and operation of renewable energy projects are highly regulated, require various governmental approvals and permits, including environmental approvals and permits, and may be subject to the imposition of related conditions that vary by jurisdiction. In some cases, these approvals and permits require periodic renewal and a subsequently issued permit may not be consistent with the permit initially issued. The IP Company cannot predict whether all permits required for a given project will be granted or whether the conditions associated with the permits will be achievable. The denial or loss of a permit essential to a project or the imposition of impractical conditions upon renewal could impair the IP Company’s ability to construct and operate a project. In addition, the IP Company cannot predict whether the permits will attract significant opposition or whether the permitting process will be lengthened due to complexities, legal claims or appeals. Delay in the review and permitting process for a project can impair or delay the IP Company’s ability to construct or acquire a project or increase the cost such that the project is no longer attractive to the IP Company. Additionally, the IP Company is subject to the risk of being unable to complete its projects if any of the key permits are revoked. If this were to occur at any future project, it would likely lose a significant portion of its investment in the project and could incur a loss as a result, which would have a material adverse effect on the IP Company’s business, financial condition and results of operations.

The Project Company, as well as new projects being developed, require local, residential zoning approvals and permits for construction and operation. Any failure to obtain the required residential zoning permits could adversely affect the amount of the IP Company’s growth.

The design, construction and operation of the Project Company, as well as other projects, requires local, residential zoning approvals and permits. If the Project Company is unable to secure proper local, residential zoning approvals and permit requirements, then it may not be able to develop and implement its business plan. Specifically, local, residential zoning rules mandate height restrictions and require building code approvals. If the IP Company is unable to secure the proper height and building code approvals for its project companies, then it may not be able to develop and implement its business plan. In some cases, these local, residential approvals and permits require periodic renewal and a subsequently issued permit may not be consistent with the permit initially issued. The IP Company cannot predict whether all residential zoning permits required for a given project will be granted or whether the conditions associated with the permits will be achievable. The denial or loss of a residential zoning permit essential to a project or the imposition of impractical conditions upon renewal could impair the IP Company’s ability to construct and operate a project. In addition, the IP Company cannot predict whether the residential zoning permits will attract significant opposition or whether the permitting process will be lengthened due to complexities, legal claims or appeals. Delay in the review and permitting process for a project can impair or delay the IP Company’s ability to construct or acquire a project or increase the cost such that the project is no longer attractive to the IP Company. Additionally, the IP Company is subject to the risk of being unable to complete its projects if any of the key residential zoning permits are revoked. If this were to occur at any future project, it would likely lose a significant portion of its investment in the project and could incur a loss as a result, which

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would have a material adverse effect on the IP Company’s business, financial condition and results of operations.

The IP Company currently relies on third-party investment to capitalize and fund its business operations.

The IP Company’s business operations currently rely on funding by third-party investors with an appreciation for the positive growth trajectory of the renewable energy industry. The recent change in the United States’ executive administration has created an uncertain political landscape as it relates to our country’s position on global climate change and its efforts to support renewable energy development generally. Any efforts made by the recently elected administration to eliminate, reduce, or terminate United States’ climate change-related commitments, both domestically and internationally, may erode investor confidence in the renewable energy industry, as a whole, and have a negative impact on the IP Company’s ability to secure additional corporate financing. Instability and uncertainty in the geopolitical landscape may reduce investor confidence in the IP Company’s business plan and market projections.

There is no minimum offering amount. Further, subscriptions are irrevocable.

There is no minimum number of Units which must be sold in this Offering and there can be no assurance that all of the Units offered will be sold. Moreover, subscriptions are irrevocable.

The IP Company is dependent upon the Offering to develop its business.

The IP Company is dependent upon the proceeds of the Offering to develop its business. If less than all of the Units offered are sold, the IP Company may have to delay or modify its plans. There can be no assurance that any delay or modification of the IP Company’s plans would not adversely affect the IP Company’s development.

Risks relating to this Offering

No present public market for the Units offered hereby exists and there are general restrictions on the resale of the Units.

The securities offered hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or registered or qualified under the securities laws of any state, but are being sold pursuant to an exemption from registration and qualification contained in the securities laws of the United States and applicable states. The Units must be held indefinitely unless they are subsequently registered under the Securities Act and registered or qualified under applicable state securities laws and unless exemptions from the registration and qualification requirements of such statutes are available.

To the extent the Units are certificated, the certificates will bear a legend to the effect that (i) such Units have not been registered under the Securities Act or registered or qualified under the securities laws of any state; (ii) as a consequence, their transferability is restricted, and (iii) no transfer of such Units may be effected unless the IP Company has received an opinion of counsel

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reasonably satisfactory to the IP Company to the effect that exemptions from the registration requirements of the Securities Act, and all applicable state securities laws, are available. Stop-transfer instructions to the same effect will be issued to the IP Company’s transfer agent.

There is no present market, public or otherwise, for the Units and no such market is likely to develop in the immediate future. Accordingly, any investment in the IP Company and the Project Company cannot be expected to be readily liquidated, if at all, even in an emergency. Further, an investor might be unable to sell his Units for a price approaching his original investment. An investment in the Units should therefore be considered a long-term investment.

A subsequent financing may result in a dilution in the ownership interest represented by the number of shares conferred to you, if any, at the time of a subsequent financing.

Forward-Looking Statements

The documents being distributed herewith contain forward looking statements. These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections about the IP Company’s and Project Company’s industry, its beliefs and its assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” and “estimates,” and variations of these words and similar expressions, are intended to identify forward looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the IP Company’s and Project Company’s control, are difficult to predict and could cause actual results to differ materially from those expressed, implied or forecasted in the forward-looking statements. In addition, the forward-looking events discussed therein might not occur. These risks and uncertainties include, among others, those described above in these “Risk Factors”. Prospective investors are cautioned not to place undue reliance on these forward-looking statements, which reflect the IP Company’s and Project Company’s management’s view only as of the date hereof. Except as required by law, the IP Company and the Project Company undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Documents

Confidential

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