ConfidentialJuly 17, 2015 Wind Opportunities in US & Mexico

Confidential July 17, 2015

Wind Opportunities in US & Mexico

Who is xFlashpoint?

• Exclusive distributor• We sell everything that Hi-Energy

makes• US, Canada, Mexico• Many contacts in South America &

Caribbean (next markets)

Value Proposition

• US Wind Energy will double in next 5 years• Hi-Energy Turbines are more efficient• Protected by 14 patents in 20 countries• xFlashpoint has exclusive rights• xFlashpoint has partnered with Blue Earth• xFlashpoint needs small investment to

capitalize on opportunity• Can quickly realize significant growth• A distribute vehicle for other Korean

products

Hi-Energy Products

• Turbines– Single

Hi-Energy Products

• Turbines– Single– Towers– Tower Clusters

Hi-Energy Products

• Turbines– Single– Towers– Tower Clusters

• Streetlights

Hi-Energy Products

• Turbines– Single– Towers– Tower Clusters

• Streetlights• Surveillance

Hi-Energy Products

• Turbines– Single– Towers– Tower Clusters

• Streetlights• Surveillance• HVAC

US & Canadian Market

• Average Cost of Electricity

US & Canadian Market

• Average Cost of Electricity• Average Wind Speed

US & Canadian Market

• Average Cost of Electricity• Average Wind Speed• Green Penetration (Particularly Solar)

Mexican Market

• Average Cost of Electricity ($0.21/kWh)– One utility company (production &

distribution)– Regulations changing quickly

• Average Wind Speed

Market Verticals

• Direct Sales• Indirect Sales• HVAC• Surveillance• Streetlighting• Telecommunications• Government/Military• Agriculture

Subsidies and Incentives

• 30% Federal Tax Credit• 25% State Agricultural Grants• Regional “Energy Trust” Grants

New Product Development

• Integrate Hi-Energy Turbines into new Products specific for our region– Cold Storage Warehouses

New Product Development

• Integrate Hi-Energy Turbines into new Products specific for our region– Cold Storage Warehouses– Intel

Main Competitors

Company Technology Main Products Location

Bergey WindPower HAWT 1 - 10 kW USA

Urban Green Energy VAWT 200 W to 3.2 kW

USA

Helix Wind VAWT 2 - 3.5 kW USA

Southwest Wind - Xzeres

HAWT 500 W to 1 kW USA

Ventera Wind HAWT 10 kW USA

Dyo Tech HAWT 400 W USA

Kliux Energies VAWT 1.8 kW Spain

Turbina Energy VAWT 500 W to 4 kW Germany

Eoltec HAWT 6.1 kW France

Gaia Wind HAWT 11 kW Scotland

Montanari Energy HAWT 1 - 2.5 kW Italy

Evance HAWT 5 - 15 kW UK

Solar/Wind Parity

• Do we consider Solar a Competitor?

No!

Solar/Wind Parity

• Do we consider Solar a Competitor?• Complementary Technologies• Solar Panel– 250W (on the surface of the sun)– 15-20% efficiency– Effective Output: 50W

• Wind Turbine– 300W (in a hurricane)– 40% efficiency (5-6 m/s)– Effective Output: 120W

Similar Rating, Twice the Output

Solar vs. Wind Price

4.5 m/s 5 m/s 5.5 m/s 6.0 m/s$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

xF Wind TurbinesBE Solar ($4/W)BE Solar

Wind Speed (1 m/s = 2.2 mph)

Cost

per

Watt

Solar vs. Wind Footprint

• Wind requires 10% of the space of solar

• Hybrid Wind/Solar is best

Footprint Parity Solar Wind (1 tower)Rated Output (W) 20,000 W 20,000 parity WNumber of panels 80Footprint of panels 160 m^2 16.65 m^2Percentage 100% 10%

Marketing & Brand Management

• Active Social & Web presence• Advertising (narrowly targeted

industry segments)• Budget for promotion to raise brand

awareness• Industry trade shows

Unique Distribution Opportunities

• Amazon– Channel for product promotion– Fulfillment potential

• Don’t need a warehouse• Don’t need warehouse and shipping

staff• Don’t need invoicing and payment

process tools and staff• Don’t need inventory control and

delivery systems and staffSaves Us Money

Risks

Completely Risk Free!

Risks

• Just Kidding!• Currency Risk• Competition could invent something

new• ROI’s are 5-7 years (a lot can happen

in technology in that time)• Regulations changing (reduced

subsidies, changing laws)

Financial Projections

• Main components of the projections– Compounded Annual Growth Rate

(CAGR)–Main Driver is Experienced Personnel

(reflected as % of revenue)– Invest in Marketing and Brand

Recognition– Conservative Promotional Expenses– Cash flow and breakeven (Month 23)

Financial Projections

Month 1

Month 3

Month 5

Month 7

Month 9

Month 11

Month 13

Month 15

Month 17

Month 19

Month 21

Month 23

Month 25

Month 27

Month 29

Month 31

Month 33

Month 35

Month 37

Month 39

Month 41

Month 43

Month 45

Month 47

Month 49

Month 51

Month 53

Month 55

Month 57

Month 59 $-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Cash Balance

Financial Projections

Month 1

Month 3

Month 5

Month 7

Month 9

Month 11

Month 13

Month 15

Month 17

Month 19

Month 21

Month 23

Month 25

Month 27

Month 29

Month 31

Month 33

Month 35

Month 37

Month 39

Month 41

Month 43

Month 45

Month 47

Month 49

Month 51

Month 53

Month 55

Month 57

Month 59

$(1,000,000)

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

5 Yr Revenue and EBIT

Revenue COGS SG&A

EBIT

Financial Projections

$ 000s

Revenue 3,115$ 16,243$ 32,136$ 41,552$ 49,309$ COGS 2,460$ 79% 12,669$ 78% 24,423$ 76% 31,164$ 75% 36,489$ 74%Gross Profit 654$ 21% 3,573$ 22% 7,713$ 24% 10,388$ 25% 12,820$ 26%

Operating ExpensesTOTAL OPEX 1,295$ 42% 3,628$ 22% 6,476$ 20% 8,859$ 21% 11,028$ 22%

Salaries and Compensation 676$ 22% 1,256$ 8% 1,980$ 6% 3,148$ 8% 4,342$ 9%Others 619$ 20% 2,372$ 15% 4,495$ 14% 5,711$ 14% 6,686$ 14%

EBIT (641)$ -21% (54)$ 0% 1,237$ 4% 1,529$ 4% 1,792$ 4%

Accumulated Cash Flow Generation(641)$ (695)$ 541$ 2,071$ 3,863$

Total Headcount 5 11 17 24 33

Year 1 Year 2 Year 3 Year 4 Year 5

Summary

• Great Opportunity!• Expanding Market• Well Positioned to Capture Significant

Market Share• Lean Management and Expense

Approach• Perfect Timing for Renewable Energy

Investment

Thank You