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Electric Vehicle Supply Equipment #1, LLC

Electric Vehicle Charging Infrastructure

A minimum of $1,280,000 up to $2,215,000 of

12% Participating Preferred Membership Units

  • Electric Vehicle Supply Equipment #1, LLC (“EVSE1”, or the “Company”), is a newly formed entity that owns two electric vehicle charging facilities currently in operations (the “Existing Chargers”) and has plans to construct a third facility (the “New Chargers”) in the rapidly growing Californian EV charging industry. The Company was formed as EVSE1, LLC and is pursuing a fictitious name authorization for “Electric Vehicle Supply Equipment #1, LLC”.
  • EVSE1, in partnership with an established construction and engineering firm, Alco Charging Solutions, LLC (“ACS”), will continue operations of 7 DC Fast Chargers and 47 Level II Chargers which are in place in Sacramento, and fund the construction of an additional 5 DC Fast Chargers in a premier location in Los Angeles.
  • Recent trends have seen a sharp rise in the purchase of electric vehicles, with legislation and consumer preferences driving increases in demand. Substantial investments in EV charging infrastructure will be necessary to support these vehicles, and well-located EV chargers are projected to see substantial increases in utilization.
  • Situated in prime locations the Existing and New Chargers owned by EVSE1 are poised to participate in the projected 36.9% compound annual growth rate of the industry from 2022-2030 (Grandview Research).

Electric Vehicle Supply Equipment #1, LLC, (“EVSE1”, the “Issuer”, or “The Company”) is issuing a minimum of $1,280,000 and up to $2,215,000 in Preferred Membership Units (the “Units”, “Equity”, or “Security”) to (i) purchase 100% of the fully diluted capitalization of Electric Vehicle Supply Equipment #1, LLC (“EVSE1”), (ii) finance 100% of the costs associated with the construction and implementation of the New Chargers by EVSE1 (iii) pay any legal and setup costs associated with EVSE1, and (iv) pay any issuance expenses associated with this Offering.

By registering with Carofin, Members have access to more extensive due diligence materials, additional private investment opportunities, and can proceed with making an investment.

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Investment Considerations

1) Purpose of the Financing

  • Proceeds from this financing will be used to:
    • Acquire 100% of the fully diluted capitalization in Electric Vehicle Supply Equipment #1, LLC and its assets, 7 DC Fast chargers and 47 Level II chargers;
    • Fund 100% of the construction costs of 5 new DC Fast Chargers at a premier location in Los Angeles;
    • Pay legal and setup costs associated with EVSE1; and,
    • Pay issuance expenses associated with this Offering.

2) Issuer - Electric Vehicle Supply Equipment #1, LLC

  • Electric Vehicle Supply Equipment #1, LLC (“EVSE1”) is a recently created limited liability company formed to act as a vehicle for third-party ownership of operated EV chargers. EVSE1 has in place or will negotiate a 20-year lease (10-year lease term with two automatic 5-year extensions) with commercial landowners interested in providing EV Charging services to their customers and will provide turnkey solutions, including construction, maintenance, and operations of the chargers.
  • Manager: Carolina Financial Group will act as manager for EVSE1 and handle administrative agent responsibilities including governance, accounting, and processing of distributions.
  • Operator: Alco Charging Solutions, LLC (“ACS”, or the “Operator”) will manage all day-to-day operations of the Existing Chargers, and construct, and manage activities of, the New Chargers. The relationship between EVSE1 and ACS will be governed by a Master Services Agreement, which is available in the diligence files included alongside this Offering.
  • ACS and its parent company, Alco Building Solutions (“ABS”), have successfully completed 2,500+ construction and electrical engineering projects over a 25-year history and currently operate 114 EV chargers in California.
  • Co-Investment: ACS will invest 15% of the total preferred units offered, and will participate in capital expenditures, profit and losses pari pasu with owners of the Units.

3) Security Description – 12.0% Participating Preferred Membership Units

  • Dividend: 12.0% Annual Cumulative Preferred Dividend.
  • Distributions to Preferred: 12.0% Annual Dividend and 100% of Distributable Cash (defined further below), if any, on a monthly basis for the 20-year lease period, or until such time as there is a dissolution of EVSE1 or a sale of its assets.
  • Preferred Membership Units in EVSE1, LLC: Investors will purchase preferred membership units in EVSE1, LLC (the “Preferred Units”) representing 100% of the fully diluted capitalization of the Company, together with the Operator Co-Investment described below.
  • Operator Co-Investment: Alongside the issuance of the Preferred Units, ACS will invest 15% of the requisite capital in the Offering.
  • Lease Term/Hold Period: EVSE1 has in place, or will negotiate, 20-year leases (10-year term with two automatic 5-year extensions) with landowners. EVSE1 will have the right to provide charging services for a period of 20 years, although management will actively seek an exit beginning in Year 5, the timing of which will be largely dependent on utilization, which is projected to grow rapidly. An exit cannot be guaranteed.
  • Liquidation Preference: First preference with regards to accrued dividends and outstanding capital in a sale of the Company or its assets.

4) Repayment

  • Monthly Distributions: The 12.0% Preferred Dividend distribution, a return of capital, and ongoing cash flow participation will be paid monthly on the 10th of each month, if available, and are generated from utilization of EV chargers and grants & credits associated with owning and operating EV charging stations.
  • Participation in Sale: Investors will also participate in proceeds from the eventual sale of the chargers. Net profits and valuation of the Chargers are anticipated to increase based on increasing utilization, and the Manager will begin efforts to sell the Chargers 5 years from the closing of this financing. An exit cannot be guaranteed.
  • Sale of Assets: If necessary, the Manager reserves the right to sell the 12 DC Fast Chargers and 47 Level II Chargers, on behalf of the Members, as a source of repayment.

5) Investment Risks

  • Rapid Growth in Technology: The EV vehicle market is dynamic and growing quickly. New technology may render the proposed infrastructure outdated during the proposed lease term.
  • Legislation and Policy Risk: More than 45% of revenue to EVSE1 in the first five years will be from government incentives. Significant changes to policy could negatively impact the investment.
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Value Proposition

Business Opportunity

There is a shortage of charging infrastructure needed to service the rapidly growing electric vehicle industry and commercial and private landowners are seeking turnkey solutions to provide charging services to their clients.

  • McKinsey & Co recently projected the need for capital expenditures totaling $35 billion to construct 14 million electric vehicle chargers in the coming ten years, based on an increase in total energy demand from 6 billion kWh in 2020 to 53 billion kWh in 2030.
  • The National Renewable Energy Laboratory estimates that 380 charging ports per day for the next nine years will have to be installed to keep up with federally legislated emissions goals.
  • Landowners (e.g. hotels, auto maintenance facilities, restaurants) have recognized the need to provide electric charging capabilities to their customers in their parking lots but are ill-equipped to design, engineer, install and operate and maintain the chargers, creating the need for a turnkey solution with third-party ownership.
  • Without substantial investment in the public charging space, currently existing bottleneck will continue to grow as the automotive industry moves toward the federal targets of 50% zero emissions vehicles by 2030. The Chargers are located in California, where 50% of all U.S. sales of plug-in electric vehicles, and the 5th most of any country in the world, take place.

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EVSE1 Solution

Provide expertise in installation, operation and management of electric vehicle chargers to provide turnkey solutions in a replicable third-party ownership model.

  • EVSE1, in partnership with Alco Charging Solutions, addresses the growing need for electric vehicle chargers head-on by providing design, engineering, installation, operations, and maintenance to interested parties.
  • In a third-party ownership model highly sought-after by landowners, EVSE1 will provide electric vehicle charging capabilities to businesses in various industry sectors (hotels, automotive repair facilities, office parks, etc.)
  • EVSE1 will initially purchase 7 DC Fast Chargers and 47 Level II chargers, which are currently in place and operational in Sacramento, CA, and begin construction on 5 new DC Fast Chargers in Los Angeles, CA.
  • The Existing Chargers are ideally located on busy thoroughfares and in office parks, where utilization is forecasted to increase substantially.

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COMPANY INFORMATION

Introduction

The years ahead will bring significant changes to one of the core aspects of modern civilization: mobility. With the imminent and devastating effects of climate change being felt around the globe, significant policy pressure and changes in consumer behavior have led to an explosion of household EV purchases in recent years, with over 20 million passenger EVs now on the road. Electrification has also spread to other segments of the transportation landscape, including commercial fleets of vocational trucks, and busses and two and three wheelers.

Substantial investments in electric vehicle charging infrastructure will be required to service this rapidly growing number of zero-emissions vehicles. EV mkt dist *Source: Bloomberg New Energy Finance

The state of California has emerged as the leader of the electric vehicle revolution in the United States, with over 40% of the total US sales of plug-in electric vehicles taking place in California through 05/22 requiring infrastructure to charge. EVSE1 and Alco Charging Solutions are addressing this problem head-on by installing Level II and DC Fast Chargers in Sacramento and Los Angeles.

Background: Types of EV Chargers

Chargers are assessed in five main groups: home, public, workplace, direct current (DC) fast, and multiunit dwelling. Home chargers are chargers at private residences, typically single-family homes with garages or on-street parking. Multiunit dwelling chargers are home chargers at residential locations with several tenants. Public chargers and DC fast chargers are those with some public access, including those with membership-constrained usage. Workplace chargers are intended primarily for employees that commute to work. There is some overlap in usage between the categories: for example, workplace chargers are sometimes accessible to the public, whereas public chargers are often used by people charging during work hours. Roughly 80% of employers provide some form of parking at their workplace (Winters & Hendricks, 2003), suggesting that public charging usage during work hours will fall if adequate workplace charging is provided.

The home, multiunit dwelling, workplace, and public chargers can be classified as Level 1 or Level 2, which are electrical standards corresponding to voltages and charging speeds. Level 1 charging is typically done with a standard 120-volt outlet and provides roughly five miles of battery range per hour of charging, whereas Level 2 charging is done with a 240-volt outlet and provides roughly 20 miles of range per hour, though it is possible to supply more than twice that if the vehicle allows for it. DC fast chargers are normally rated to powers of at least 50 kilowatts (kW), up to over 300 kW, with voltages of 400 to 800 volts, providing anywhere from 50 to 300 miles of charge in 20 minutes. These chargers require specialized and expensive equipment, and are suitable for corridor charging along major highways, as well as charging depots analogous to gas stations in and around cities.

Precise delineation of chargers by location and use can be more complex. In some cases, curbside public chargers located in residential areas will be used overnight by people without access to home charging. The International Clean Council on Transportation (“ICCT”) defines public Level 2 charging as any station not located at a workplace that is open to all EV owners, including destination charging at supermarket parking lots and parking garages, and curbside charging stations owned by local or state governments. Public chargers can include chargers at government buildings’ parking garages, and commercial or recreational destinations like grocery stores, movie theaters, and parks.

DC fast charging includes both stations in urban areas and along highway corridors to serve long-distance travel. (Adapted and presented from information on the ICCT White Paper). EVSE1 will acquire 47 Level II Chargers and 7 DC Fast Chargers as part of this program.

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Program Overview

  1. Investors fund EVSE1 with up to $2.215MM for the acquisition of the Existing Chargers and the financing of the construction of the New Chargers. (Total 47 Level II Chargers, and 12 DC Fast Chargers).

  2. The Existing Chargers continue operations overseen by ACS. Proceeds from utilization and any grants or credits earned by EVSE1 are now attributable pari passu to the Investors.

  3. The New Chargers are built by Alco Charging Solutions, on behalf of EVSE1 and similarly, all profit and loss is now attributable pari passu to Investors.

Flow of funds

Economic Overview

The profitability of EVSE1 is based on two key criteria: the utilization rate of the chargers and government incentives provided by the California Air Resources Board (“CARB”).

Over the twenty-year projected period, annual revenue grows from the ~$200,000 in 2021 (actuals) to nearly $1.8MM based on increasing utilization and corresponding government incentives. Similarly, EBITDA grows to nearly $1MM annually by 2032.

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In the first years post investment, the contribution to revenue from government vouchers and credits represents greater than 50% of the revenues of EVSE1 (description of how the CARB incentives work below). As utilization increases, this contribution stabilizes at ~30%.

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Government Incentives

To incentivize the construction of EV charging infrastructure, the government of California provides two vouchers based on certain criteria. The Existing Chargers, acquired by EVSE1, received revenue from the voucher program in calendar years 2021 & 2022.

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The “Voucher”, represented above in blue, of $0.16 per kWh sold is only earned when the EV Chargers are utilized. This works similarly to a matching 401(k), where per kWh sold to a customer for $0.16/kWh, CARB will pay EVSE1 an additional $0.16/kWh.

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The “Capacity Voucher”, represented above in orange, is reserved for DC Fast Chargers only, and is intended to incentivize investment in the latest technology. An amount of $0.16 per kWh AVAILABLE is paid to EVSE1.

Importantly, the amount generated by the Capacity Vouchers, will be received by EVSE1 for providing availability to the DC Fast Chargers. In essence, this means a projected amount of $852,000 will be paid to EVSE1 for the construction and operation of its DC Fast Chargers.

An additional $30,000 in tax credits are available per site installed; these are currently not modeled into EVSE1 projections.

Utilization Rate

The utilization rate of the EV chargers is a key driver of economic performance, and the assumptions used are based on a limited set of historical data, market trends for electric vehicle purchases, and government legislation and mandates to move to zero emissions.

Utilization rates for EV chargers were substantially negatively affected by COVID as there was less travel and fewer people working at offices. These rates have steadily increased since the effects of COVID have dissipated.

EVSE1 is conservatively modeling utilization rates at the actuals for the first-year post investment (~8%) with a modest growth curve on forward utilization, spurred by the large increase in demand for electric vehicles.

Ut assmpt

Location: Go, No-Go Analysis

Like real estate, the profitability of an investment in EV charging infrastructure is highly dependent on its location, a key driver of utilization. Alco Charging Solutions (more information on “ACS” below) does a detailed analysis of multiple criteria prior to assigning a final “score”, guiding selection of an appropriate site for charging infrastructure. Analyzed criteria include, but are not limited to:

crit notes

After this analysis a score between 0-100 is assigned to the location:

gng

Only sites which are above 70% are considered in the go no-go analysis phase, after which substantial further research, including site visits and engineering studies are done to derisk the economic opportunity.

Alco Charging Solutions (“ACS” or the “Operator”)

Introduction

Alco Charging Solutions, LLC. (ACS), founded in October 2019, is a wholly owned subsidiary of Alco Building Solutions founded in February 1995. ACS was founded as a division of the parent company to specifically target third-party ownership electric vehicle charging infrastructure opportunities on behalf of the parent company and its partners.

ACS’ approach to the market has been concentrated on multi-site location portfolios of both retail and commercial properties, evaluating the aggregate value proposition with an internal set of proprietary metrics for financial forecasting.

The third-party owner approach is unique in nature relative to other competitors within the charging space, allowing for the syndication of said assets to qualified interested parties. On behalf of its partners and property owners, ACS manages the following activities within their work:

  • site evalution/revenue forecasting;
  • design, professional engineering (multi-discipline);
  • permitting and regulatory;
  • material procurement;
  • installation;
  • startup/commissioning; and,
  • equipment operations/maintenance.

These activities are governed by a Master Services Agreement between EVSE1 and ACS.

History of Operations

Alco Charging Solutions, LLC. (ACS) signed its first operations & maintenance contract in November 2019, which remains in effect to date. The firm operates the Maintenance & Operations (M&O) component of the business for both third-party ownership contracts and for ownership of their EV Charging equipment that is installed at their properties as well.

Since its inception, ACS has nearly 100 EV Charging ports that the company has both installed and currently manages M&O activities in the State of California. ACS has experience implementing and maintaining electric vehicle charging stations for several household names, as seen below.

EV Infrastructure Experience

Alco Charging Solutions, LLC. has successfully implemented EV Charging equipment installations with partners, including but not limited to, the following: experience

Financial Background

21/22 fin

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INDUSTRY INFORMATION

Overview of the EV Charging Infrastructure Industry

As EV markets swell, access to public charging will need to expand as well. Today most EV charging takes place at residences and workplaces. Consumers will increasingly expect the same services, simplicity and autonomy for EVs as they do for conventional vehicles. (source IEA)

Electric vehicles surpassed 10 million cumulative sales globally in late 2020 announcements from automakers and the U.S. government regarding manufacturing goals, new vehicle emission standards, incentives, and infrastructure investments suggest the U.S. electric vehicle market could expand dramatically in the years ahead. These developments spur broad questions about how much infrastructure is needed to support electric vehicle growth, and the associated costs.

This research, conducted and presented by the International Council of Clean Transportation (“ICCT”), assesses growing home, workplace, and public charging needs through 2030 to support the transition to electric vehicles in the United States. The analysis incorporates local market trends, evolving charging technology and behavior, household characteristics, and home charging availability. It includes charging needs for lower income communities, rural areas, highway corridor charging, and ride-hailing vehicles.

The charging analysis is also integrated with bottom-up charging costs to estimate the associated infrastructure investment required to support the electric transition. Figure ES-1 (below) summarizes the results for the number of non-home chargers needed (left) and associated cost (right) to support an electric vehicle stock of 26 million electric vehicles in the United States by 2030, up from 1.8 million at the end of 2020. This growth includes 5.9 million new electric vehicle sales in 2030, representing 36% of all new vehicle sales, putting the market on track to reach 100% electric vehicle sales by 2040. To support these vehicles, public and workplace charging will need to grow from approximately 216,000 chargers in 2020 to 2.4 million by 2030, including 1.3 million workplace, 900,000 public Level 2, and 180,000 direct current fast chargers. The associated costs amount to $28 billion from 2021 to 2030. (Source: Adapted and presented from information on the ICCT White Paper)

chargers info

ICCT presents four high-level findings with regards to EV Charging Infrastructure:

Steady charging infrastructure additions are needed to support the transition to electric vehicles. To support electric vehicle growth through 2030, public and workplace chargers will need to increase 27% annually, which is less than the rate of charger growth between 2017 and 2020 but requires adding an average of over 200,000 chargers each year by 2026. This growing charging network would include 500,000 public chargers by around 2027, several years faster than the Biden administration’s goal for 2030.

Broad charging infrastructure investments will be needed to support an expanding electric vehicle market. The charging infrastructure network will need to provide greater coverage for a broader set of drivers by 2030. About a million chargers will be needed at multiunit dwellings to support apartment residents and charging will need to grow at greater rates in many rural areas and across the Midwest and South. Lower-income communities will need persistent investments, amounting to about 30% of chargers and charging investments through 2030, to ensure equitable infrastructure access.

Associated charging infrastructure costs are substantial but are in line with recent trends. The associated 2021–2030 charging investments are $28 billion for public and workplace chargers, including $15 billion for charger installation labor. Direct current fast chargers are 7% of these chargers, provide 57% of the charging energy, and represent 66% of the costs, reinforcing the need to install inexpensive and convenient home and workplace charging. Near-term charging needs are being covered by public funding, utility investments, Volkswagen’s diesel gate settlement funds, and other private companies. More sustained long-term funding is needed, especially where investments through 2020 have been limited. Such investments fit well within the infrastructure and climate goals, and they would represent just 1%-2% of the associated budgets in policymakers’ 2021 proposed infrastructure plans.

Charging infrastructure costs can be shared across many interested stakeholders. The diverse charging infrastructure needs present opportunities for coordination and broad cost sharing. Electric power utilities, private charging companies, automakers, and property owners each have roles in developing the charging infrastructure network. Charging investments can be spurred by public support from federal, state, and local governments via direct funding, cost-sharing, tax credits, regulations, and city codes. Further exploration into the ideal combination of new policies, standards, investments, and coordination across the players is warranted.

Although electric vehicle charging infrastructure costs are substantial, the benefits are also great. Charging infrastructure enables a fleet of electric vehicles that will themselves have lower upfront costs than conventional vehicles and will deliver thousands of dollars in fuel savings per vehicle by 2030. The benefits of the electric vehicle transition are at least an order of magnitude greater than charging infrastructure costs, making charging infrastructure a modest down payment to decarbonize the transport sector.

Adoption in California

California, where all of the project’s charging infrastructure is, or will be, located is home to the 5th largest fleet of personal and commercial electric vehicles by country in the world as of December 2021.

ev region

California is also projected to have the highest number of ‘conversions’ from internal combustion engines to battery electric vehicles, with more than 50% of all new vehicle sales projected to be electric by 2030.

ev cities

Competitors

There are multiple competitors in the electric vehicle charging space including market leading ChargePoint, Tesla and Blink and EVGO. These vertically integrated business models require substantial investment in R&D and are a radically different profile to the EVSE1 investment thesis.

EVSE1, through its relationship with ACS, has identified high traffic areas to drive utilization and cash flow through the assets, offering an investment structure in which charging infrastructure assets are owned seeking to leverage increases in utilization generated from EV adoption and document shortage in charging stations.

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FINANCIAL OVERVIEW

Scenario 1: Base Case, 10 Year Exit

The projected revenues in this model are based on the Company’s best estimates of the utilization of electric vehicle charging. This scenario presents base case utilization assumptions around the adoption of electric vehicles.

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Scenario 2: Optimistic Case, 10 Year Exit

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Model Assumptions:

  • Revenue assumptions are based on increasing utilization of the chargers as detailed above.
  • Cost projections are provided by the Operator and include the cost of energy and estimated software and maintenance fees based on the Operator’s experiences from the Existing Chargers.
  • CARB credits for utilization and capacity are based on legislation and receipts by the Operator for the Existing Chargers.
  • The exit, modeled at the tenth year post financing in the above financial statements, is valued at the net present value of future cash flows, with a 12% discount rate.

The projected revenues in this model are based on the Company’s best estimates of the utilization of electric vehicle chargers. Presented above are base case and optimistic case assumptions with a ten-year exit.

Conservative assumptions are also included in the model provided in the diligence file. The figures illustrated above are solely hypothetical illustrations of mathematical principles flowing from contractual provisions in the Issuer’s Operating Agreement and should not be interpreted as projections or guarantees of performance. Exit valuations are based on issuer metric multiples (e.g., multiples on Revenue, EBITDA, etc.) and such that are highly industry, time, and market condition dependent. It cannot be guaranteed that exit multiples utilized at the time of these hypothetical illustrations will be applicable at the time of a sale or other exit for the Company’s investors.

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SECURITY TERMS

Carofin, LLC (“Carofin”) is offering a minimum of $1,280,000 and up to $2,215,000 of 12.0% Preferred Units (the “Offering”, “Securities” or “Units”) in Electric Vehicle Supply Equipment #1, LLC (“EVSE1”, the “Company” or the “Issuer”).

Proceeds from this offering will be used to (i) acquire the assets associated with two electric vehicle charging station sites, namely 107 Level II Chargers and 7 DC Fast Chargers in Sacramento, CA (ii) finance the construction cost and working capital needed to install 5 DC Fast chargers at an additional site in Los Angeles, CA (iii) pay any legal and setup costs associated with EVSE1, and (iv) pay any issuance expenses associated with this Offering.

The Offering

Issuer

Electric Vehicle Supply Equipment #1, LLC, a single purpose California Limited Liability Company established by Alco Charging Solutions with the sole purpose of supporting the construction and installation of the Chargers for third-party owners (each, a “Host”).

Securities Offered

12.0% Preferred Membership Units in EVSE1 (the “Preferred Units”). The Preferred Units are the only equity capital of the Issuer other than its initial common membership interest capital ($100). The Issuer will not incur any third-party debt, or any other form of indebtedness, other than trade payables incurring during the normal course of business.

Offering Amount

A minimum of $1,280,000 up to $2,215,000 of Preferred Membership Units will be issued on a contingent basis.

Use of Proceeds

Following a minimum closing of $1,280,000, proceeds from this offering will be used to (i) acquire the assets associated with two existing electric vehicle charging station sites, (ii) finance the construction cost and working capital needed to install Level 2 and 3 chargers at an additional site, (iii) pay any legal and setup costs associated with EVSE1, and (iv) pay any issuance expenses associated with this Offering.

Investors

Individuals and institutional investors who qualify as accredited investors as defined by Rule 501 of Regulation D of the US securities laws (“Members”).

Manager

Carolina Financial Group, LLC (“CFG”), a North Carolina based limited liability company, shall serve as the Manager of EVSE1 (the “Manager”).

Operator

Alco Charging Solutions, LLC (“ACS”), a California based limited liability company, with expertise in construction and operation of electric vehicle charging stations.

Operator Co-Investment

The Operator will invest 15% of the total required capitalization of EVSE1, in this Offering and participate in the resulting profit and losses pari passu with the Preferred Investors.

Operator Responsibilities

As further described in a Services Agreement in form substantially similar to that attached hereto as Exhibit B.

Host

The Host is a third-party owner of the land being leased and/or licensed by EVSE1 with the express purpose of installing and administering electric vehicle charging stations (terms defined further herein).

The Host for the Los Angeles site will be a premier location in L.A.

Lease Term

10 years, with two additional automatic 5-year extensions.

Lease Payment to Host

Lease payments for the first two sites (1610 Arden and Basin Street) will be waived by Alco Charging Solutions, LLC.

Terms of the lease for the Los Angeles site are described further in Exhibit D and may include fixed monthly payments, or a profits interest as mutually agreed upon by EVSE1, Host and Operator.

Minimum Subscription Amount

The minimum investment amount required by a Member is $10,000, although the Manager reserves the right, in its sole discretion, to accept smaller investments.

Escrow Account

The Company will establish an escrow account at an FDIC-insured banking institution (the “Custodian”). Under escrow instructions with the Custodian, all subscription amounts will be deposited into the escrow account until EVSE1 has received, and is prepared to accept, subscriptions for the entire minimum amount of $1,280,000 (the “Minimum Escrow Amount”). In addition to cash investments, the Custodian may accept certain alternative considerations towards the Minimum Escrow Amount (each an “Alternative Consideration”). Any consideration held by the Custodian shall not incur interest or a Preferred Return until advanced to the Company. In the event a single Member subscribes for the Minimum Escrow Amount or more, the Company shall forego the escrow process, and funds will be advanced directly to the Company.

In the event that the Custodian fails to receive a combination of cash and Alternative Considerations equal to the Minimum Escrow Amount before December 31, 2022, funds shall be returned to Members in a timely manner without interest thereon.

Please review the Risk Factor entitled “Purchases by Affiliates of the Issuer or Other Parties with a Financial Interest in the Offering” regarding purchases of the Securities by affiliated parties and those with a financial interest in this transaction.

Termination Date

The termination date for this Offering is set as December 31, 2022, with additional investment to be accepted at the discretion of the Company, through January 30, 2023. The Offering Period may be extended at the sole discretion of the Company.

Flow of Funds

Issuer Cashflows

All costs and expenses of the Issuer will be funded using proceeds of this Offering, including, but not limited to, financing the construction of Chargers and paying any issuance expenses.

After construction is complete, ACS will operate the Charging Station ensuring the functionality and efficacy of the Chargers. Revenues are expected to be earned both from the utilization of the Chargers as well as government credits for the operation of electric vehicle charging stations, as further defined herein (“CARB Credits”).

Lease payments will be made to the Host based on agreements between the Operator and the Host.

Distribution to Investors

The Issuer will make monthly distributions of Distributable Cash (defined below), if any, using funds received from the operation of Chargers by the Operator, if the Manager determines, in its sole discretion, that Distributable Cash is available to be distributed to Investors. For these purposes the following definitions shall apply:

“Tier 1 Preferred Return” means an amount equal to a twelve percent (12.0%) per annum return, as if it were interest, on the Unreturned Capital of a Member, cumulative but not compounding.

“Unreturned Capital” is defined in the Operating Agreement as, for each Investor at any given time, the amount by which the aggregate Capital Contributions made by such Investor, if any, exceeds all distributions of Distributable Cash made to such Investor under the Operating Agreement, excluding amounts paid to such Member in respect of the Tier 1 Preferred Return.

“Distributable Cash” is defined in the Operating Agreement as gross cash received by the Company from all sources other than Capital Contributions and reduced by the portion used to pay Company operating expenses.

In the event that the Manager makes a distribution of Distributable Cash, the Operating Agreement provides that the proceeds will be distributed to the Members in the following order of priority, with no distribution being made in any category set forth below until each preceding category has been satisfied in full:

first, to the Members to the extent of their respective unpaid Tier 1 Preferred Return, on a pari passu basis;

second, to the Members with Unreturned Capital, on a pari passu basis, until the Unreturned Capital of each Member is reduced to zero;

and third, to the Members pari passu with their ownership.

Investor Options for Exit

The Manager will actively seek a disposition of the asset at the net present value of future earnings, with efforts beginning in the 5th year from the Closing of this Offering. An exit cannot be guaranteed.

Investor Rights

Allocation of Income, Expense, Gain and Loss

Income, expense, gain, and loss generally will be allocated to the Members and the Manager in a manner consistent with the proceeds from the operations of the Charging Stations.

Information Rights

So long as a Member holds Preferred Units in the Issuer, the Member will receive standard financial reporting, including monthly, year-to-date, and annual income, balance sheet, and cash flow statements as compared to the current budget and compared to results for the comparable period for the prior year, and annual unaudited financial statements and his/her/its Schedule K-1 to the Issuer’s tax return. In the event that a majority in the interest of the Members request audited financials of the Company, such audit shall be conducted by Goldman & Company, CPA’s, P.C., and the Manager may increase its Management Reserve (as defined below) to accommodate such expense.

Management Reserve & Fee

A sum of $15,000 is being retained, and an amount of $5,000 per year starting three years from the closing date of this Offering will be assessed by the Manager for the payments of certain expenses incurred in the organization and management of the Company.

Such expenses include but are not limited to: the preparation of tax filings, securities failings, preparation of financial statements, formation expenses, etc.

Other Matters

Indemnification

The Issuer will indemnify the Manager, its principals, employees, officers, directors, and agents, as well as its advisors, accountants, and attorneys to the fullest extent permitted by law against any cost, expense, judgment or liability reasonably incurred by or imposed upon it in connection with any action, suit, or proceeding, except in the case of fraud or gross negligence.

Withdrawals and Transfers

Except as provided in the Operating Agreement, no Member may withdraw as an investor or sell, assign or transfer its referred Interests in the Issuer. The Preferred Interests are also subject to resale restrictions under applicable securities laws.

Placement Agent Fees and Acquisition Fees

The Issuer is offering the Preferred Units to investors through Carolina Financial Securities, LLC (the “Placement Agent”), a 75% subsidiary of CFG, on a “best efforts” basis and the Issuer shall pay the Placement Agent a 7.0% cash placement fee based upon the amount of capital raised in this offering.

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FAQ

What is Carofin?

Carofin is a FINRA broker dealer, an investment bank headquartered in Brevard, North Carolina, that specializes in financing smaller businesses. Carofin’s parent company Carolina Financial Group, LLC, was established in 1995 and its affiliates have privately placed over $1.2 billion of debt and equity securities.

Is this security registered with the Securities Exchange Commission (S.E.C.)?

No. It is being privately placed under Rule 506c of Regulation D of the S.E.C.

Must Investors in the Company be Accredited Investors?

Yes. They must have household income of $300,000 (for married couples) OR a net worth of $1,000,000, excluding the value of their primary residence, OR qualify for an institutional category of investor.

Will Investors Continue to Receive Information About the Security After Issuance?

Given its role as the administrative agent, CFG Financial Services is able to keep Investors informed about any unexpected changes in the Issuer's business and general operational updates.

What if I have questions in the future about the Business’s performance?

Carofin will distribute updates to investors at least quarterly, including account statements. You should feel free to also email Carofin at [email protected] or telephone us at 828.393.0088

Company Specific FAQ can be provided upon request.

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RISK FACTORS

AN INVESTMENT IN THE SECURITIES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT. AN INVESTMENT IN THE SECURITIES OFFERED HEREIN SHOULD NOT BE A MAJOR PART OF YOUR INVESTMENT PORTFOLIO. YOU SHOULD REVIEW THE RISKS OF THIS INVESTMENT WITH YOUR LEGAL OR FINANCIAL ADVISORS.

THIS OFFERING INVOLVES SUBSTANTIAL RISKS. THESE RISKS INCLUDE, BY WAY OF ILLUSTRATION AND NOT LIMITATION, THE FOLLOWING: RISKS ASSOCIATED WITH THE FACT THAT THE MEMBERS WILL NOT HAVE THE RIGHT TO VOTE ON OR APPROVE MOST DECISIONS REGARDING THE BUSINESS AND, AS SUCH, WILL NOT BE IN CONTROL OF THEIR INVESTMENTS IN SECURITIES OF THE COMPANY AND THE BUSINESS; AND THE OPERATION OF THE COMPANY INVOLVES TRANSACTIONS BETWEEN THE COMPANY, THE MANAGER, AND THE OWNER WHICH MAY INVOLVE CONFLICTS OF INTEREST.

THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM, AND WITH THE PRIOR CONSENT OF THE MANAGER, WHICH CONSENT MAY BE WITHHELD IN THE MANAGER’S SOLE DISCRETION. PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

SOME OF THE INFORMATION IN THIS PRESENTATION MAY CONTAIN “FORWARD-LOOKING” STATEMENTS. YOU CAN IDENTIFY SUCH STATEMENTS BY THE USE OF FORWARD-LOOKING WORDS SUCH AS “MAY,” “ANTICIPATE,” “ESTIMATE,” “COULD,” “SHOULD,” “WOULD,” “EXPECT,” “BELIEVE,” “WILL,” “PLAN,” “INTEND,” “PROJECT,” “PREDICT,” “POTENTIAL” OR OTHER SIMILAR WORDS. THESE TYPES OF STATEMENTS DISCUSS FUTURE EXPECTATIONS OR CONTAIN PROJECTIONS OR ESTIMATES WHICH MAY OR MAY NOT HAPPEN AS PROJECTED HEREIN. WHEN CONSIDERING SUCH FORWARD-LOOKING STATEMENTS, YOU SHOULD KEEP IN MIND THE RISK FACTORS LISTED BELOW, WHICH COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN CONJUNCTION WITH THE OTHER INFORMATION ABOUT THE SECURITIES BEFORE PARTICIPATING IN THIS OFFERING. THE RISKS DISCUSSED IN THIS PRESENTATION CAN ADVERSELY AFFECT THE COMPANY’S OPERATION, OPERATING RESULTS, FINANCIAL CONDITION AND PROSPECTS FOR SUCCESS. THIS COULD CAUSE THE VALUE OF THE SECURITIES OFFERED HEREIN TO DECLINE AND COULD CAUSE YOU TO LOSE PART OR ALL OF YOU INVESTMENT. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES THE COMPANY FACES BUT DO REPRESENT THOSE RISKS AND UNCERTAINTIES KNOWN TO THE COMPANY AND THAT THE COMPANY BELIEVES ARE MATERIAL TO THE COMPANY’S FUTURE OPERATING PERFORMANCE.

A. Investment Related Risks

Speculative Investment

The Securities being offered should be considered a speculative investment. The ability of the Company to achieve its objectives may be determined by factors beyond its control that cannot be predicted at this time. Consequently, there can be no assurance that the Company’s efforts to continue its business operations will prove to be sufficient to enable the Company to generate the funds required to make distributions. Anyone investing in the Securities should do so only if they are financially able to sustain the loss of their entire investment and should recognize that such a possibility exists.

Dependence on the Electric Vehicle Industry

The Issuer’s business is dependent on the sales and usage of electric vehicles. If sales in the electric vehicle industry slowdown and/or there is a shift away from electric vehicles, it will damper the demand of electric vehicle chargers and utilization.

No Secondary Market for the Securities

As this security is a private transaction, there is currently no public market for the securities being offered herein. These Securities are not a publicly registered securities and will have no secondary sale liquidity.

Limited Operating History

EVSE1 is an SPV founded for this transaction. While the management team and operator (ACS) are well established, there has not yet been a proof of concept for this transaction.

Purchases by Affiliates of the Issuer or Other Parties with a Financial Interest in the Offering

Units may be purchased by the affiliates of the Issuer, or by other persons who will receive fees or other compensation or gain dependent upon the success of the Offering. Such purchases may be made at any time and will be counted in determining whether the required minimum level of purchases has been met for the closing of the Offering. Therefore, Investors should not expect that the sale of sufficient Units to reach the specified minimum, or in excess of that minimum, indicates that such sales have been made to investors who have no financial or other interest in the Offering, or who otherwise are exercising independent investment discretion.

The sale of the specified minimum, while necessary to the business operations of the Issuer, is not designed as a protection to investors, or to indicate that their investment decision is shared by other unaffiliated investors. Because there may be substantial purchases by affiliates of the Issuer, or other persons who will receive fees or other compensation or gain dependent upon the success of the Offering, no individual investor should place any reliance on the sale of the specified minimum as an indication of the merits of the Offering. Each investor must make his own investment decision as to the merits of this Offering.

Lack of Certainty Regarding Exit Opportunities and Valuations

Any and all hypothetical illustrations of exit opportunities described herein are highly dependent on industry, time and market dependent multiples on certain issuer metrics (e.g., revenues, EBITDA, etc.). It cannot be guaranteed that reasonable multiples utilized in the hypothetical illustrations contained herein will be applicable at the time an exit opportunity is pursued by the Company. Furthermore, it cannot be guaranteed that an exit opportunity will be available whatsoever, regardless of its value.

B. Industry-Related Risks

Demand related

Any substantial decline in the demand for products administered by the SPV including, but not limited to, the introduction of new technology, may cause a decline in the market value of Issuer’s product and negatively impact the Issuer’s financial performance.

Pandemic and Epidemic Related Risks

The rapid spread of a contagious illness such as the coronavirus (COVID-19), or fear of such an event, can have a material adverse effect on the demand for automobile travel and therefore have a material adverse effect on the Issuer’s business and results of operations. Similarly, travel restrictions or operational issues resulting from the rapid spread of contagious illnesses may have a material adverse effect on the Issuer’s business and results of operations.

Quality & Safety of the Products

Success for the Issuer’s business depends, in part, on the quality and safety of the chargers. If the products are found to be defective or unsafe, or if they otherwise fail to meet consumer’s standards, relationships with customers or consumers could suffer.

Regulatory Oversight

The Issuer’s projects are subject to international, federal, and state laws, as well as agencies including, but not limited to, the Department of Transportation. The Issuer and operator (ACS) intend to conduct their business activities in a compliant manner and in accordance with all applicable laws but may still be subject to accidents or other unforeseen events which may compromise its performance, and which may have adverse financial implications.

Changes in Laws, Regulations and Policies

Changes in the laws, regulations and policies including the interpretation or enforcement thereof, that are germane to the Issuer’s industry, can affect its business including changes in accounting standards, tax laws, data privacy as well as anti-corruption laws. Additionally, as the operator (ACS)and issuer continue to sell and expand its business, it may be subject to laws relating to selective distribution, environmental or climate change laws, trade accords and customs regulations could adversely affect the Issuer’s distribution endeavors.

Competition

The Issuer through the operator (ACS) competes with other charging companies in the industry. Competitors include companies that may have greater financial and other resources than the Issuer. Additionally, these competitors may use pricing or other strategies to prevent the Issuer from achieving its business development objectives. This may have a material adverse impact on the financial position and prospects of the Issuer.

C. Management-Related Risks

Limited Investor Participation in Operations

The Investors will have limited ability to participate in any manner in the management of the Issuer or its day-to-day decisions. Neither the Investors nor the Issuer will have the ability to participate in any manner in the management of the Operator or its day-to-day decisions.

Reliance on Key Personnel

Due to the nature of this opportunity, the SPV, has a significant reliance on the Operator, ACS , as it has the requisite knowledge to successfully construct and implement electric vehicle charging stations.

D. Offering-Related Risks

Acceptance of Investors on a First-Come, First-Serve Basis

The Issuer reserves the right to accept or reject any proposed investment in its sole discretion. Subject to this discretion, it intends to accept investments on a “first-come, first-served” basis, with the consequence that Investors will be allocated a portion of the total Offering, based upon the amounts they have committed, in the order in which such commitments have been accepted. The Issuer is not required to accept all commitments tendered to it. There is no assurance, therefore, that your commitment will necessarily be accepted in whole or in part by it should it raise more or less funds than are needed to make its investments.

Possibility of Material Differences Between Projected and Actual Results

The financial projections contained in this Offering Summary and any supplements represent the Issuer’s estimated results of operations. The financial projections have been prepared upon the basis of assumptions and estimates which may differ from actual events and/or circumstances.

Reliance on Aspects of the Offering

Potential investors should not rely exclusively on one aspect of the security structure, such as experience of the operator (ACS) of the Issuer or the collateral value of its inventory, when making an investment decision in order to participate in this Offering.

E. Federal Income Tax Risks

Lack of Rulings and Opinions; Possibility of IRS Challenge of the Issuer’s Tax Position

The Issuer has not requested and will not request any tax ruling from the IRS regarding the tax consequences of the Issuer’s activities. Accordingly, there is no certainty as to the tax consequences of participating in the Securities. The Issuer has not sought or obtained a legal opinion with respect to the tax treatment of the offering proceeds or issuance of the Securities. Accordingly, Investors are urged to consult your own tax advisor with respect to the federal and state tax consequences arising from participation in this Offering.

Risk of Audit to Investors

There is a possibility that the IRS will audit the Issuer’s income tax returns. If the Issuer’s income tax returns are audited, your return might also be audited.

Future Federal Income Tax Legislation and Regulations

No assurance can be given that the current Congress or any future Congress will not enact federal income tax legislation that could adversely affect the tax consequences of participating in the Securities.

F. Other Risks

Unforeseen Risks

In addition to the above risks, businesses are often subject to risks not foreseen or fully appreciated by management. Prospective investors reviewing this Offering Summary should keep in mind other possible risks that could be important to the success of their investment in the Securities.

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BEST INTEREST AND OTHER DISCLOSURE

Important Disclosures

These securities have not been registered with the Securities and Exchange Commission (the “SEC” or the “Commission”), or with any state securities commission or any other regulatory authority. The securities are being offered in reliance upon an exemption from the registration requirement of federal and state securities laws and cannot be resold unless the securities are subsequently registered under such laws or unless an exemption from registration is available. Neither the SEC nor any other agency has passed on, recommended or endorsed the merits of this offering (this “Offering”) or the accuracy or adequacy of these confidential offering documents (the “Offering Package”). Any representation to the contrary is unlawful.

These securities are offered through Carofin, LLC, Member of FINRA/SIPC. Carolina Financial Securities is an affiliate of Carofin and both Broker-Dealers are affiliates of Carolina Financial Group, LLC. Documents have been prepared by Carolina Financial Securities and have been reviewed and approved by the management of the Company. The information contained herein has not been independently verified and is dependent on information provided by the Company to Carolina Financial Securities, LLC.

Our firms seek to present vital capital with meaningful investment opportunities through the fundamental analysis of the businesses we seek to finance. Such analysis is usually conducted through a First Principles approach.

When we provide you with a recommendation, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations we provide you. Here are some examples to help you understand what this means:

Proprietary Products: Our firms will often present investments that are only available through them, which may result in a higher placement fee. The Firms will receive the placement fee regardless of your investment performing as expected.

Our firms offer brokerage services to accredited investors, exclusively through the sale of private placements. the offerings we bring to market are carefully selected, and any recommendation you may receive from us will be limited to these offerings. Therefore, we may be unable to adequately compare the risks and benefits of the offerings we bring to offerings presented by other financial professionals. While our firms will often present new investments and discuss such investment’s risks and benefits with you, the ultimate authority to make such investment rests solely with you. Our firms do not hold any investor cash or securities, and securities offered by us often have no easily assessable market value, so our firms will not monitor the market value of your investment on an ongoing basis. The investments we present often require a minimum investment of $5,000 for equity offerings and $10,000 for debt offerings.

Fees and costs may reduce any amount of money you make on your investments over time. Our firms are mostly compensated through placement fees, which are payable by the issuer, meaning that the firms will be compensated by receiving a percentage of the funds raised in an offering, regardless of the investment performing as expected. Such placement fee is usually between 3% and 7% (please find the specific Placement Fee for this offering in the “Placement Agent Fees” section of the “Security Terms”. Given that different investments have different placement fees, we may often have a conflict of interest when presenting these investments to you. The Firms’ bankers are often compensated by receiving a percentage of the placement fee, and may have their own conflict of interest when presenting you with offerings they structure.

The information contained herein is for informational purposes only and is not intended for further distribution. The information does not constitute a complete description of any investment or investment performance. This document is in no way a solicitation nor is it an offer to sell securities nor is it advice or recommendation regarding any investment. The information is not directed to any person who is not believed to qualify under the definition of an Accredited Investor under the rules of Regulation D of the 1933 Securities and Exchange Act. No security listed in this document or otherwise offered through Carolina Financial Securities, LLC or Carofin, LLC may be purchased without prior receipt of a complete Private Placement Memorandum or other official offer to sell.

Due diligence materials related to this Borrower and the Offering are available to you through Carolina Financial Securities’ affiliated marketplace, Carofin. If you have not received your login information to access Carofin.com, please contact your company representative to have access granted.

The Company will not offer, sell or issue any Securities in any jurisdiction where it is unlawful to do so or where laws, rules, regulations or orders would require the Company, in its sole discretion, to incur costs, obligations or time delays disproportionate to the net proceeds the Company will realize from such offers, sales or issuances. Neither this Offering Package nor any subscription agreement shall constitute an offer to sell or a solicitation of an offer to purchase any Securities in any jurisdiction in which such transactions would be unlawful.

Private placements are high risk and illiquid investments. As with other investments, you can lose some or all of your investment. Nothing in this document should be interpreted to state or imply that past results indicate future performance, nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided in this document. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be imped if it is sold. Please see the Private Placement Memorandum (PPM), and the complete list of contents of this Offering Package for a more detailed explanation of the securities Summary of Terms, Investor Suitability Standards, Confidentiality, Securities Matters and Risk Factors.

Caution Regarding Forward-Looking Statements

Certain statements in this Summary Offering Material may be “Forward-looking” in that they do not discuss historical facts but instead note future expectations, projections, intentions, or other items relating to the future. We caution you to be aware of the speculative nature of forward-looking statements as these statements are not guarantees of performance or results.

Forward-looking statements, which are generally prefaced by the words “may,” “anticipate,” “estimate,” “could,” “should,” “would,” “expect,” “believe,” “will,” “plan,” “project,” “intend,” and similar terms, are subject to known and unknown risks, uncertainties and other facts that may cause our actual results or performance to differ materially from those contemplated by the forward-looking statements.

Although these forward-looking statements reflect our good faith belief based on current expectations, estimates and projections about, among other things, the industry and the markets in which we operate, they are not guarantees of future performance. Whether actual results will conform to our expectations and predictions is subject to several known and unknown risks and uncertainties, including risks and uncertainties discussed in this Summary Offering Material.

Consequently, all the forward-looking statements made in this Summary Offering Material are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. Risks, uncertainties, and factors that could cause actual results to differ materially from those projected are discussed in the “Risk Factors” section of this Summary Offering Material. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Considering these risks, uncertainties, and assumptions, the forward-looking events discussed in the Summary Offering Material might not occur.

Internal Rate of Return Considerations

Internal Rate of Return (IRR) is the discount rate at which the net present value of costs of the investment equals the net present value of the potential benefits of the investment. The formula for IRR is: ∑_(t=0)^T▒〖〖CF〗_t/〖(1+IRR)〗^t =0〗

Where: T = Holding Period t = Each period CFt = Cash Flow for each period IRR = Internal Rate of Return Although the Company’s projections are created from historical financial figures and expected growth, IRR projections are “forward-looking” in that they consider future expectations, projections, intentions, or other items relating to the future. We caution you to be aware of the speculative nature of forward-looking statements as these statements are not guarantees of performance or results. A higher IRR usually represents higher risk. Any IRR figure in this document shall be used solely as a contractual trigger in the Company’s operating agreement, not as a projection or guarantee of performance.

SECURITIES MATTERS State Securities Laws:

The Company will not offer, sell or issue any securities in any jurisdiction where it is unlawful to do so or where laws, rules, regulations or orders would require the Company, in its sole discretion, to incur costs, obligations or time delays disproportionate to the net proceeds the Company will realize from such offers, sales or issuances. Neither this Offering Package nor any subscription agreement shall constitute an offer to sell or a solicitation of an offer to purchase any securities in any jurisdiction in which such transactions would be unlawful.