C O N F I D E N T I A L P R I V A T E P L A C E M E N T M E M O R A N D U M

PURSUANT TO RULE 506 OF THE SECURITIES ACT OF 1933

& JOBS ACT OF 2012

$15,000,000

7,500,000 Shares of Common Stock at $2.00 per Share

Minimum Investment: 5,000 Shares ($10,000)

FOR ACCREDITED INVESTORS ONLY

Envirepel Energy, Inc.

P.O. Box 698 Bonsall, CA 92003

(760) 644-7269

ii

(Artist’s rendition of the proposed Fallbrook Renewable Energy Facility)

Waste Conversion to

Clean Renewable Energy

A New Direction in Distributed Electricity Generation

Lessons from our past that guide us into our future;

―Creativity is just connecting things. When you ask creative people how they did something, they feel

a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them

after a while. That’s because they were able to connect experiences they’ve had and synthesize new

things. And the reason they were able to do that was that they’ve had more experiences or they have

thought more about their experiences than other people. Unfortunately, that’s too rare a commodity.

A lot of people in our industry haven’t had very diverse experiences. So they don’t have enough dots

to connect, and they end up with very linear solutions without a broad perspective on the problem.

The broader one’s understanding of the human experience, the better design we will have.‖

- Steve Jobs

―A good plan violently executed now is better than a perfect plan executed next week‖

-George S. Patton

―Never, Never, Never give up‖ -Sir Winston Churchill

iii

EXECUTIVE SUMMARY

December 1st, 2012

$15,000,000

7,500,000 Shares of Common Stock

Offering Price: $2.00 per Share

Minimum Investment: 5,000 Shares ($10,000)

FOR ACCREDITED INVESTORS ONLY

The following executive summary is qualified in its entirety by the more detailed information appearing in the exhibits to

this Executive Summary and related business information and documents regarding the Company and its management.

ISSUER: Envirepel Energy, Inc. is a California corporation (the “Company”)

formed in July 2004. The Company’s executive offices are located at 219 Rancho Bonito Road, Fallbrook, California 92028, and its telephone number is (760) 644-7269.

SECURITIES OFFERED: A maximum of 7,500,000 Shares of common stock of Envirepel Energy,

Inc. (the “Shares”) for a purchase price of $2.00 per Share. Existing shareholders can purchase Shares for $1.75 per Share. The Shares will be sold only to Accredited Investors, as that term is defined in Regulation D promulgated under the Securities Act of 1933, as amended.

SALES TERMINATION DATE: June 30th, 2013, unless extended for up to an additional 180 days.

PLAN OF DISTRIBUTION: The Shares will be offered on a “best efforts” basis by MM Dillon and

Company, a registered broker-dealer that is a member of the Financial Industry Regulatory Authority (“FINRA”), who has entered into selling

agreement with the Company, or by the officers of the Company. Best efforts selling agreements imply that the broker-dealer will not guarantee the sale of any amount of Shares. The broker-dealer will receive a 7% sales commission, and warrants totally 5%, based upon the amount of subscriptions submitted by them and accepted by the Company. The broker-dealers and officers, directors and employees of the Company may purchase Shares without incurring a sales commission or due diligence fees. The Company may indemnify participating broker-dealers with respect to disclosures made in the Memorandum. The officers, directors, and employees of the Company may also sell through referral sources, which may be paid finders’ fees, and the Shares. Members of the Company’s management will receive no compensation for their sales efforts in connection with this offering.

RISK FACTORS: Any forward-looking statements or financial projections made by the

Company’s management are estimates only. There is no assurance that the Company will actually achieve the results indicated in forward-looking statements, estimates or financial projections. See Exhibit B to this Executive Summary for additional risk factors.

ADDITIONAL INFORMATION: Additional information regarding the business, management, contracts

and financial condition of the Company is attached to this Executive Summary as Exhibits and or available upon request. Executive officers and directors of the Company are available to answer questions and provide additional information to any requesting prospective investor.

Attached to this Executive Summary are the following exhibits:

Expanded Business Summary Exhibit A Risks Exhibit B Supporting Documents Exhibit C

ONLY INFORMATION OR REPRESENTATIONS CONTAINED HEREIN MAY BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS EXECUTIVE SUMMARY AND THE EXHIBITS THERTO IN CONNECTION WITH THE OFFER BEING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. INVESTORS ARE CAUTIONED NOT TO RELY UPON ANY INFORMATION NOT EXPRESSLY SET FORTH IN THIS EXECUTIVE SUMMARY AND THE EXHIBITS THERTO. THE INFORMATION PRESENTED IS AS OF THE DATE ON THE COVER HEREOF UNLESS ANOTHER DATE IS SPECIFIED, AND NEITHER THE DELIVERY OF THIS EXECUTIVE SUMMARY AND THE EXHIBITS THERETO NOR ANY SALE HEREUNDER SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION PRESENTED SUBSEQUENT TO SUCH DATE(S).

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EXHIBIT A

EXPANDED BUSINESS SUMMARY

OF

ENVIREPEL ENERGY, INC.

Being “First” in the Market An introduction by the Founder of Envirepel Energy, Anthony J. Arand

Envirepel Energy Inc. was formed to convert waste, biomass, and coal, into clean renewable forms of energy in ways that were environmentally responsible, compliant with today’s environmental laws, and profitable. We evaluated many biomass and waste to energy project histories, which showed us very distinct success, and failure trends. It made sense to us that in going forward, that we should look at history, study the failures and successes of those who tried to do this before, and apply what we find. We should try to learn from the successes, and not repeat the failures. The Envirepel “solution” is not a replay of 1980s vintage waste-to-energy (WTE) plants, which were developed exclusively for waste reduction via incineration, with electricity generation as a byproduct. Instead, the Envirepel “solution” is directed at waste reduction to address landfill capacity, air and water pollution challenges, with a synergistic product being “clean” energy produced at high efficiency. I do believe we have designed one of the most straightforward and simple combustion processes our industry has ever seen. It certainly has proven itself in our Research and Development work to be one of the cleanest combustion designs for solid fuels ever demonstrated, from an emissions perspective. We have proven that our system can make a gas out of solid fuels, burn that gas cleanly, generate heat from the process to produce steam in a boiler, and spin a turbine generator to make electricity. The next step of converting CO2 into methane so we can produce bio-fuels is where you meet us in our story. We believe in the importance of environmental stewardship with industrial development. We believe in sustainable practices that are financially responsible yet profitable. Most people assumed that we just meant producing electricity and keeping the parking lot clean, however it is a much larger picture. Putting people back to work is just part of the effort, replacing the domestic supply of petroleum from the waste and available biomass in our country is our goal. The first phase of our Strategic plan is to build our Ultra Low Emissions Waste to Energy plants on existing landfills taking advantage of infrastructure that already exists both in daily fuel supply (trucks coming to the landfills), and fuel reserves (buried waste). The second phase of our effort will be to retrofit these first facilities with carbon dioxide scrubbers to harvest the carbon from the exhaust. Then using the power plant’s internal energy, we plan to put the thermal energy from our facility back into the carbon, and convert it back into methane or what most people would call natural gas. Once you have methane, continuing the process to produce gasoline and diesel doesn’t take long. There is enough carbon contained in the waste that is buried every day in our Nations’ landfills, stuff that we just throw away, that if it was recycled properly using our process, would provide a significant portion of our Nations liquid fuel needs. The contract forests that are grown and managed for the paper industry could deliver about the same fuel supply as the waste stream, but if you include the coal industry, and look at the amount of CO2 produced there, we could produce enough gasoline, diesel, jet fuel, and home heating oil to supply our entire Nations petroleum needs indefinitely. We have created a carbon cycle that is sustainable, profitable, and funds conservation and environmental stewardship. A single facility of ours will do more to reduce the levels of CO2 in our atmosphere than today’s combined efforts of the whole of Europe. We are different than any other start up company out there, we have done our homework, we built prototypes and we have tested them for three years. If you go on YouTube

TM and search for Envirepel Energy, you will

find videos of what we have built so far, and see our clean combustion R&D system operating on wood, waste, and coal. We have experienced painful lessons, which have delayed the execution of our plans, however, in my opinion I think we are much better off for it as they have been “very diverse experiences” as Mr. Jobs would have described them. One of those was a litigious hostile take over attempt that forced us to move our first facility during a very “down” economy. When the dust settled, our Company survived.

We are moving our first Project and its equipment from California to a site in Alabama where we can increase its output and generate enough revenue from the sales of electricity, to fund the future equity requirements of our next two projects. With the two projects running, we can then fund the construction of our next projects on landfills and coal sites without any help. That’s when the fun will really begin. Prior to the passage of the Jobs Act of 2012, a private company was limited to 500 shareholders and $10 million in assets before it was deemed a “public” company. At 370 shareholders with over $10 million in assets, we were limited to what we could do in raising funds, which is another reason we have been delayed. Now with the limits changed to 2,000 shareholders and $50 million in assets, we can move forward again with haste. We are in a perfect position to take our company forward now, and still protect our shareholders choice on weather we choose to take our company public in the near future, or keep it private. We need to raise additional capital to finish the construction of our Kittyhawk project at a rate that is beyond what our existing investors can provide, which is why you are holding a Stock Sale document. Envirepel Energy Inc. from its inception was formed to develop the next step in distributed energy generation utilizing the biomass, waste, and coal resources of our Nation. As I mentioned earlier, coal combustion is probably the largest single market for our technology. We can help the coal industry move forward by minimizing their emissions issues, and we intend to forge the necessary strategic partnerships to make that happen. In a time where our Country is absorbed in short term gains, consultants, instant rewards, and limited risk, the concept of long term operations on multiple sites, is not the norm. We intend to put a dent in the unemployment numbers as we go forward, not only by the people we hire, but also from the small army of contractors and suppliers that we need to help us construct and support our facilties during operations. It has been more than seventy years since the idea of developing combustion and refining technology to solve a country’s energy supply challenges was done by a small company, and they didn’t have the array of Agencies to contend with that we have today. What they developed in the 1930’s fueled the largest standing army the world has ever seen and it hasn’t been done since, not until now. Now, it’s our turn. In closing, I would ask you to read the entire document to ensure you understand the risks that are involved with our investment opportunity, and the rewards that can come with them. We placed quotes from Steve Jobs, General Patton, and Winston Churchill on the cover page of this document to underscore the essence of what we are doing. We are executing a good plan now, we have had a few experiences, we are walking outside the box of conventional approaches because the conventional approaches don’t work, we have shown consistently through our legal challenges that we are able and willing to protect our shareholders investment, and that we will never, ever, give up. If you choose to purchase stock in our company, you will join our family of 370 or so very unique small investors as of the printing of this document. People ask me what my exit strategy from the company is, and I tell them that I don’t have one. I didn’t start this to make a quick buck and leave it. If you have questions call me or write to me. I invite you to take the plunge with the rest of us to see if we just can’t leave Wall Street behind and make a difference in our Country’s efforts for energy independence. Sincerely, Tony

760-644-7269 direct Tony@envirepel.com

Executive Summary

Envirepel Energy, Inc. (EEI), a California corporation, was formed in July of 2004 to design, permit, and construct a

single biomass energy project in Fallbrook California under a long term Power Purchase Agreement with San Diego Gas

& Electric. The original scope of the company was to purchase combustion, emissions control, and steam turbine

electrical generation equipment from equipment suppliers and have qualified engineering companies construct the

renewable energy facility for EEI to operate for profit that would produce electrical energy from biomass supplies.

After having sought out numerous Agencies required to determine the full breath of the permitting requirements of a new

facility under today’s environmental rules and regulations, it became apparent that no current suppliers of a combustion

system could certify their equipment would actually perform to the stringent emissions requirements of today’s

environmental laws.

Instead of fighting the rule book and trying to force 1950’s technology into today’s world, in 2005 Envirepel Energy set

about designing, developing and manufacturing its own combustion and emission control systems that would be

compliant to the rules and regulations of today’s environmental health and safety codes and operated on any waste stream,

biomass supply, or even coal. In this aspect, doing the right things, for the right reasons, has allowed EEI to demonstrate

that the combustion of these feed stocks can be done cleanly, by a facility that is completely compliant to every

environmental rule in the book.

The Company has designed, constructed, and operated a completely functional full-scale combustion research and

development facility (R&D) for three years. This has been the proving ground for the combustion, and emissions control

technology developed by the company. The R&D facility produced thermal and electrical forms of energy from biomass,

coal, and post recycled waste streams, such as Municipal Solid Waste (MSW).

Gasification-Combustion Unit Fuel Feed and Scrubber Units

Operations of the R&D facility have validated the technology operating conditions, cost to construct, emissions, heat

rates, efficiencies, software designs, material science issues of high temperature materials, and the manpower required to

operate the system. These technology conditions are the basis for the company’s financial performance analysis.

The Company has also designed, developed, purchased, or manufactured, most of the equipment for its first 2.8 MW

commercial project, Project Kittyhawk, and is ready to enter into final construction of the project and then into

commercial operations.

In pursuit of the Company’s second project opportunity with a Public Utility company in Pensacola Florida, the

Company’s R&D system is being relocated to Alabama so that it can be upgraded to combust municipal city sludge in

combination with refuse derived fuels, wood, and coal. In California, sludge cannot be moved on the roads without

special permits, other than to where its permitted to be disposed of in a solid waste landfill. Alabama environmental laws

allow for the shipment and disposal of these materials with standard permitting that can be obtained in reasonable

timelines, not years as is the case in California.

A Project site in Lincoln Alabama was located, which can support the additional R&D needs of the company, has existing

buildings with more than enough space to construct the Kittyhawk project as designed at 2.8 MW of capacity, with

roughly 19 acres of land for expansion of the project to approximately 15 MW of net capacity.

This capital raise is intended to recapitalize the corporation, purchase the site in Alabama, hire the executive management

and operational team necessary to execute the business plan, and fund the construction of the project site in Alabama.

When the Alabama site is complete and operational, it will provide the Corporation with sufficient cash flow from

operations to support its business needs in moving forward.

The Company plans to develop additional sites in California, Alabama, and Florida at this time.

Competitive Advantage of the Technology

Envirepel Energy’s combustion technology converts ―wet‖ solid fuels such as wood, coal, sorted municipal solid

waste, sludge, and food wastes into clean burning hydrogen based gases that burn as clean as natural gas. The

basic idea is this, if you don’t produce the pollution in your combustion process, you don’t have to have

expensive emissions scrubbing equipment.

Facility stack emissions are below levels that impact ambient air standards and avoid the need for air emissions

offset credits – we can get permits where others can’t.

Envirepel Energy’s combustion technology meets today’s environmental health and safety code requirements –

most other combustion systems in operation today were designed in the 1950’s, and have complex post-

combustion emissions treatment systems.

The design of the plant offers the future potential to generate producer gas, as well as to harvest commercial

levels of CO2 from the combustion systems exhaust for hydro-cracking into bio-fuels such as diesel

The Facility concept was designed to make a solid fuel plant emulate a natural gas fired turbine combined cycle

facility which can be ―dispatched‖ on or off in a short time. The Facility was also designed to meet Utility

reliability requirements for replacement power, the Reliable Must Run (―RMR‖) requirements from the

California Independent System Operator (CAISO).

Equipment Cost per KW is less than half of the new biomass power plant designs inclusive of all Best Available

Control Technology (BACT) emissions controls.

A Fully Modular Design

The standard EEI module is 2.0 MW Installed Capacity delivering 1.75 MW of net grid generation

Systems are designed to meet the new low levels of environmental impact for code compliance and improved

worker safety per OSHA

Higher annual generation capacity & reliability is achieved by using multiple combustor units in parallel

Specifically designed for favorable insurance rates and OSHA considerations for day-to-day operations

Expected Revenue Streams

Electricity Sales

Bio-fuel Sales from captured CO2

Tipping Fees for receiving waste streams

Ash Sales

Project Management and Operations Service Fees

Equipment Sales

Licensing fees

Summary of Power Off-Take Agreements and Fuel Sources

EEI had its Research and Development facility in Santee, CA but is currently relocating it to Lincoln Alabama.

The new site has grid interconnect capacity to support the project.

5.6 MW of initial generation to be produced at the company’s Kittyhawk project site in Lincoln Alabama site is

scheduled to commence construction in the first quarter of 2013. Power from this facility is required to be

purchased by the local Utility, Alabama Power, under state tariff, as avoided cost power.

12 MW of additional generation is proposed to be constructed at the Kittyhawk site in Lincoln Alabama.

12 MW of additional generation is proposed to be constructed on a second site in Lincoln Alabama, adjacent to

the City’s wastewater treatment plant. Power from this facility is required to be purchased by the local Utility,

Alabama Power, under state tariff, as avoided cost power

A 15 year term disposal Agreement with the Emerald Coast Utility Authority which will allow the company to

construct a 6 MW site in Pensacola Florida, selling the available capacity to Gulf Power under Florida state

tariff, as avoided cost power.

The fourth project site in Vista California, with the balance of available power sold under California Public

Utilities Commission (CPUC) Tariff or Power Purchase Agreement to SDG&E. SDG&E has a continuing effort

of Request for Offers (RFO’s) for Renewable projects in support of its Renewable Portfolio Standard (RPS).

Currently 20% of SDG&E’s sales are mandated to come from renewable sources.

Fuel supplies for projects in San Diego County will be supplied by Republic Waste (formerly Allied Waste), as

three of the proposed project sites are located on Republic Waste owned facilities. A Letter of Intent is signed

and a land lease agreement for the first landfill site is being negotiated. Fuel supply agreements are being

negotiated and expected to be finalized in the fourth quarter of 2012.

Fuel supplies in Alabama will be supplied under long-term contract from commercial biomass suppliers, and

commercial waste haulers.

Potential Growth in Power Generation

240 MW equivalent of additional fuel can be supplied by Republic Waste in San Diego County, with additional

fuel imported from Orange County transfer stations owned by Republic Waste and Rainbow Disposal.

Envirepel Energy has a strategic partnership with Rainbow Disposal in Huntington Beach that can supply up to

15 MW of refuse-derived fuel to projects in North San Diego County.

Up to 4,000 MW equivalent of fuel is available within the State of California from post-recycled waste streams

currently being land filled.

16,000 MW equivalent of fuel is available from land filled waste streams nationally.

2,000 MW worth of wood fuel is commercially available from contract forest lands in the mid-South with

additional feed stocks available under long term contract

Business

Envirepel Energy, Inc. is a California corporation formed in July 2004 to design, develop, own, and operate renewable

energy facilities (Facilities) for the production of electricity and renewable fuels across the State of California. In

chronological order of planned construction, the Facilities proposed are:

Installed Delivered Expected to be

Facility Location Capacity Energy Operational

Alabama Lincoln, AL 17.6 MW 16.5 MW 2013 ECUA Pensacola, FL 6.0 MW 5.5 MW 2014 Vista 2 Vista, CA 6.0 MW 5.5 MW 2014 Otay Landfill Chula Vista, CA 60 MW 54 MW 2015

Fallbrook Fallbrook, CA 60 MW 54MW 2016 Navy Base San Diego San Diego, CA 30 MW 25 MW 2015 Sycamore Landfill Santee, CA 60 MW 54 MW 2017

The fuel sources for the Facilities are expected to be biomass and waste related materials that are presently going into

local landfills to be buried. The Company is negotiating fuel supply agreements with Republic Waste sufficient to

guarantee feed stocks to each project site. This arrangement will allow Republic Waste and other landfill operators to

conserve valuable landfill space while at the same time provide the Facilities with the ―fuel‖ they need to generate energy.

The equipment installed at each Facility is planned to include a series of fuel material screens and grinders to reduce the

size of feedstock to approximately two inches. Ground materials will be fed into a proprietary thermal combustion

system in which the prepared feedstock will be reduced to its mineral components. These mineral components will be

recovered and prepared for use as concrete filler. As a by-product of this process a considerable amount of thermal

energy, in the form of hot gases, will be generated. Heat recovery steam boilers are used to generate high pressure steam

to drive a turbine-generator that produces electricity for sale. A portion of the steam and electrical energy produced at

each facility will be utilized to meet each plant’s internal energy requirement. After steam is produced in the process and

most of the heat removed from the combustion gases, they will be cleaned by several pieces of equipment, including a

cyclone dust collector, a selective catalytic reactor, a scrubber and a wet electrostatic precipitator, and will be cooled to

less than 120 degrees Fahrenheit before being scrubbed for CO2, and released into the atmosphere.

When Carbon Dioxide is removed or ―scrubbed‖ out of the exhaust, it is proposed to be catalytically ―cracked‖ using high

temperature and pressure steam back into methane gas. Once the carbon is in this form, the methane can be further

processed with the addition of hydrogen into gasoline, diesel and other petroleum products to create bio-fuels for sale into

commercial markets.

A schematic of the Envirepel Energy Combustion and Emissions Control System Process is shown below:

The Company expects to benefit from multiple sources of revenue including cash flow from the sale of electricity from

the Facilities, tipping fees for accepting biomass waste that would otherwise have to be buried in landfills, and bio-fuel

sales from recovered carbon dioxide.

Source: Envirepel Energy Inc.

EXHIBIT A

EXPANDED BUSINESS SUMMARY OF

ENVIREPEL ENERGY, INC.

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TABLE OF CONTENTS

C O N F I D E N T I A L P R I V A T E P L A C E M E N T M E M O R A N D U M .................................. I

Envirepel Energy, Inc.................................................................................................................................................... i

BUSINESS ............................................................................................................................................. 1

GENERAL................................................................................................................................................................................................. 1

OPERATING COMPANY STRUCTURE ........................................................................................................................................................... 3

EXPECTED REVENUE STREAMS ................................................................................................................................................................. 4

Background ............................................................................................................................................ 6

WASTE DISPOSAL AND LANDFILLS ............................................................................................................................................................. 6

DECREASING SPACE & INCREASING COSTS................................................................................................................................................ 6

GREEN WASTE & BIOMASS RENEWABLE ENERGY OPPORTUNITY ................................................................................................................. 6 THE RENEWABLE ENERGY MARKET ........................................................................................................................................................... 7

BIOMASS OPERATIONS ............................................................................................................................................................................. 8

ELECTRIC GENERATION COMPANIES .......................................................................................................................................................... 9 THE ENVIREPEL SOLUTION........................................................................................................................................................................ 9

The Envirepel Energy Process ............................................................................................................ 12

OVERVIEW ............................................................................................................................................................................................. 12 MATERIAL HANDLING AND PROCESSING ................................................................................................................................................... 13

FUEL DISTRIBUTION ................................................................................................................................................................................ 13 GASIFICATION/COMBUSTION ................................................................................................................................................................... 13

STEAM PRODUCTION/HEAT RECOVERY STEAM GENERATION..................................................................................................................... 14

Steam Distribution ..................................................................................................................................................... 14 Steam Turbine Generators ......................................................................................................................................... 15 Cooling Water Systems .............................................................................................................................................. 15 Ash Handling Systems ................................................................................................................................................ 15 Air Pollution Control Systems .................................................................................................................................... 15

Envirepel Energy Facilities ................................................................................................................. 16

RESEARCH AND DEVELOPMENT TEST CELL SYSTEMS, TC-3, AND TC- 4 .................................................................................................... 16

IMAGES OF THE COMPANY’S R&D SYSTEM, TC-3...................................................................................................................................... 16 TC-3 HAS BEEN DISASSEMBLED AND AT THE TIME OF PUBLICATION OF THIS DOCUMENT IS PREPARED FOR SHIPMENT TO ALABAMA WHERE IT WILL

BE UPGRADED TO A SLIGHTLY MORE ROBUST CONFIGURATION AND RE-COMMISSIONED AS TC-4 PRIOR TO THE START OF THE EMISSIONS STACK

TESTING PROGRAM SLATED FOR THE FIRST QUARTER OF 2013................................................................................................................... 16

17.6 MW KITTYHAWK FACILITY, LINCOLN ALABAMA .................................................................................................................................. 17 12 MW FACILITY, CITY OF LINCOLN ALABAMA WASTE WATER TREATMENT FACILITY, .................................................................................. 18 KITTYHAWK PROJECT EXPANSION ........................................................................................................................................................... 18 6 MW FACILITY, PENSACOLA FLORIDA ..................................................................................................................................................... 19 6 MW FACILITY, VISTA CALIFORNIA ......................................................................................................................................................... 19 60 MW FALLBROOK RENEWABLE ENERGY FACILITY (FREF), FALLBROOK CALIFORNIA ............................................................................... 20 30 MW SAN DIEGO NAVY BASE, SAN DIEGO CALIFORNIA ......................................................................................................................... 20 60 MW OTAY LANDFILL, CHULA VISTA CALIFORNIA .................................................................................................................................. 20 60 MW SYCAMORE LANDFILL, SANTEE CALIFORNIA .................................................................................................................................. 21

Company Overview .............................................................................................................................. 22

Employees .................................................................................................................................................................. 22 Legal History ............................................................................................................................................................. 23 Intellectual Property .................................................................................................................................................. 24

Property ..................................................................................................................................................................... 24

Company Financials (Unaudited) ....................................................................................................... 25

BALANCE SHEET AS OF DECEMBER 2011 ................................................................................................................................................. 25

Use of Proceeds and projected spending through December 2012 .................................................... 26

Capitalization Table ............................................................................................................................. 27

Material Agreements and Strategic Relationships ............................................................................. 27

Business Partners of Note ................................................................................................................... 28

Legal and Financial Partners .................................................................................................................................... 28

Risks ...................................................................................................................................................... 30

Government Regulation ............................................................................................................................................. 31 Seasonality ................................................................................................................................................................. 32 Cautionary Statements ............................................................................................................................................... 32

1

BUSINESS

General

Envirepel Energy, Inc. is a California corporation. It was formed to design, develop, own, and operate renewable energy facilities. Our definition of Renewable Energy Facility, or “REF” for short, is a facility where carbon comes in one end, and products made from carbon leave the facility. We can produce electricity, natural gas or petroleum products, mineral ash for concrete, and recycled materials harvested from the waste stream. The Company was forced early on in its development to also undertake the design, development, and manufacturing of combustion and emissions control systems that could meet the environmental requirements of today’s regulatory landscape, as these systems were not commercially available from suppliers. The Company designed and constructed several prototypes of combustion, fuel feed, and emission control systems to refine the equipment designs so that they would not only meet the emissions requirements of today’s regulatory climate, but hold up to the wear and tear of a solid waste fueled system. The result of this work was a full scale, fully functional Research and Development power plant system, or as it is referred to internally as our “Test Cell”. The Company’s Test Cell has demonstrated that it converts biomass, waste, coal, sludge, and other organic materials into clean forms of energy with ultra-low levels of emissions. The Company’s Test Cell combustion system has shown that almost any form of carbon can be used as a feed stock to produce clean renewable energy, including coal, multiple urban wastes, and biomass. Revenues to the company will come from ownership of energy facilities selling energy products and recycling, operations of energy facilities (ours and others), Technology license royalty income from facilities built for others using our technology, and sales of equipment to these facilities that we manufacture. The Company currently has projects located in three separate geographic areas, namely, Southern California, Central Alabama, and Western Florida.

This map of San Diego County shows the proposed locations of sites to be developed for energy facilities in San Diego Gas & Electric’s (SDG&E) service district. Preliminary permitting work has started on the Vista, Fallbrook, and Otay locations.

2

This map of Talladega County shows the locations of two of the Company’s project sites in Lincoln Alabama. The Company has purchased the 411 Industrial site, and is leasing the Waste Water Treatment plant (WWTP) from the City of Lincoln. Alabama Power is the local utility that will most likely purchase power from these facilities under tariff as avoided cost power.

This map of Escambia County shows the proposed location for the Pensacola project on the WWTP facility owned by the Emerald Coast Utility Authority. It is estimated that the post recycled waste stream in the United States of approximately 160 million tons per year, which is capable of supporting the generation of approximately 16,000 MW of installed WTE capacity. If utilized with the existing infrastructure of the Paper and Pulp industry (sites and feedstock), it is possible to

3

replace the production of roughly half the liquid fuel (petroleum) needs of the United States with non-sulfur based, renewable oil products. This is the logical extension of EEI’s facility design for domestic oil production. The following maps of the United States show the locations of existing refineries, paper mills, pulp mills, and natural gas lines. With over 3,000 active landfills sites in the Country around many of these same locations, the infrastructure for moving finished liquid or gas fuel products from Renewable Energy Facilities developed on distressed mill sites along with existing landfill sites is for the most part, in place. Contract forests that can supply long term biomass are in place. Ownership of these sites is controlled by a small group of companies, which Envirepel Energy believes will be open to the positive economic impacts of Renewable Energy Facilities being developed on those sites.

Operating Company Structure

It is anticipated that a separate Limited Liability Company (LLC) will be formed for each individual project site. The Company plans to own each LLC either solely or with financing and/or Strategic partners. Envirepel Energy will permit, design, develop and operate these individual projects based on service contracts between EEI and each Project LLC. Envirepel anticipates having to manufacture some of the equipment used in the projects such as fuel storage, and conveying equipment; biomass combustion units; emissions scrubbing equipment; and electronic control systems equipment. The Company has formed a strategic alliance with Republic Services Inc. and anticipates signing long term fuel supply agreements with them. .

4

Current Business Structure

Expected Revenue Streams The Corporation is structured to produce revenue from the following activities:

1. Ownership in Project Energy Companies that produce and sell electricity & bio-fuels 2. Operation of Project Energy Companies that produce and sell electricity & bio-fuels 3. Equipment manufacturing in support of Project Energy Companies 4. License revenues from third party Technology licenses 5. Permitting or engineering services to third parties under license

The Corporate financial strategy has evolved around a long-term project debt financing strategy. With funds from this capital raise, the Company can complete all three phases of the first Lincoln project. With 17.6 MW gross electrical generation installed, the project can sell approximately 16 MW of electrical energy to the local utility, Alabama Power. The income stream resulting from this generation is sufficient revenue to refinance the site to recover its equity with a long term, low interest bond. By recovering the equity from the first project, the Company then has sufficient revenue available for use in the next project development effort and can complete the build out of the bio-fuel production capacity of the Lincoln project. With both electrical, and bio-fuel revenue from the Lincoln project, sufficient cash flow is available to the Corporation to provide the necessary equity for additional project development efforts.

Envirepel Energy, Inc.

Energy Equipment

Manufacturing, LLC

Engineering & Permitting

Services Project Management &

Operations Services (Individual service contracts)

Kittyhawk Facility

Lincoln Alabama

Vista 2 Facility

Otay Facility

Fallbrook Facility

Fuel Preparation, Storage and

Conveying Equipment

Biomass Combustion Units

Emissions Scrubbing Equipment

Heat Recovery Steam Generators

(boilers)

Electronic Equipment Control

Systems

Others

Lincoln WWTP

Facility

5

Sources of Revenue I. Envirepel Energy Inc:

a. EEM: 100% ownership (for specifics, see Section II below) b. Project LLCs: Subject to ownership percentage of each facility (for specifics, see S Section III below) c. Engineering & Permitting Fees Since the founding of the company in 2004, EEI has

developed and acquired considerable expertise in the areas of biomass power plant engineering and facilities permitting. To monetize this, Envirepel intends to offer its Engineering and Permitting experience to both Project LLCs and non-EEI entities. Individual consulting service agreements will be signed with each Project LLC, as well as with third party customers. The most likely early adopters for this consulting platform are expected to be cities and other local municipal entities, utilities, and other biomass power operations.

d. Project Management & Operations Fees As with its Engineering and Permitting expertise, Envirepel intends to generate revenue through Project Management and Operations Service Fees. Individual Project LLCs will sign long-term Management and Operations Service agreements with Envirepel Energy Inc, that covers staff training as well. The Company also intends to leverage its expertise in biomass and renewable energy power plant management and operations by offering its services to third parties. It is anticipated that public and private utilities, other biomass plants, and outside power plants will be the initial customers for these services.

II. Energy Equipment Manufacturing LLC:

a. Equipment Sales: Envirepel has formed a wholly-owned subsidiary, Energy Equipment Manufacturing, LLC (EEM). EEM anticipates manufacturing equipment such as fuel preparation, storage, and conveying equipment; biomass combustion units; emissions scrubbing equipment; heat recovery steam generators (boilers); and electronic equipment control systems. Equipment manufactured by EEM will be sold to all Project LLCs. If the opportunity presents itself, EEM will also sell equipment to any independent energy plant developers.

III. Energy Project Limited Liability Companies

a. Electricity Sales Electricity sales revenues are earned by Project LLCs under power purchase agreements with utilities such as San Diego Gas & Electric or Alabama Power. The electricity generated will be fed into the local electrical grid by a physical interconnection at each facility. The standard PPA is for a term of 15 years.

b. Tipping Fees Tipping fee revenues are received by each Project LLC from local landfill

operators, like Republic Waste Industries. Envirepel has negotiated preliminary supply agreements with local landfill operators pursuant to which the Company or Project LLCs will be paid to accept the local landfill operators’ waste. This arrangement will allow the landfill operators to conserve valuable landfill space, while at the same time providing the Facilities with the “fuel” they need to generate energy. The tipping fees are designed to at least offset fuel preparation and grinding costs.

c. Ash Sales Ground materials will be fed into the Company’s thermal combustion system in

which the waste will be reduced to its mineral components, a fine ash. This ash can be sold by the project LLCS as concrete filler. Given the current demand, it is expected to be sold to local construction companies.

d. Additional products Bio-fuel production from the capture of Carbon Dioxide is an expected

addition to the project revenue streams. Direct conversion of biomass materials into bio-fuels is also a viable revenue source which may be more advantageous to the Projects depending upon tax code incentives at the time of the project formation.

6

Background

Waste Disposal and Landfills

In the early days of waste disposal, trash was burned and the ashes buried. Problems with the settling of landfill sites did not develop, and the land under which the ashes were buried was suitable for development. This is not the case for existing landfill operations. During the decomposition of trash at a landfill, the landfill will “sink” in on itself to some degree, rendering the site useless for development. With more and more families moving to suburban locations, the development of new landfills has slowed and closures of landfills currently in use have been expedited. The “not in my back yard” cry of residents often prevents new landfills from being permitted or significantly slows the process. State governments often refuse to override citizens who adamantly fight landfill construction near their homes, even at the prospect of ever higher waste collection charges. Public opposition to landfills and transfer stations serves to push waste disposal costs higher because waste must be transported to more distant landfills.

Decreasing Space & Increasing Costs

The United States Environmental Protection Agency's Office of Solid Waste identifies by name and location Non-Hazardous Waste landfills throughout the United States and United States territories every few years. The first census was taken in 1986 when 7,683 landfills were identified. The censuses taken in 1992 and 1995 showed declines in the number of landfills to 5,386 and 3,197, respectively. This report substantiates the increasing value of a landfill permit and the increasing difficulty of obtaining a permit to dispose of municipal waste. The trend is obviously favorable for owners of landfills that

are available to accept waste. The Company believes that waste disposal rates will increase substantially during the next several years and local waste fees will skyrocket, making the Company’s approach to utilizing waste attractive to urban waste generators.

Green Waste & Biomass Renewable Energy Opportunity

Green waste is comprised of trees, grasses, and other foliage. The term “Biomass” includes green waste, garbage, municipal city sludge, refuse derived fuels, wood, plastics, tires, wood pulp, coal, coke, shale, lignite and other materials that contain carbon. Typically, green waste absorbs minerals from its surroundings and any additives introduced during the growing process. Green waste contains both organic and inorganic materials and is easily analyzed by common lab tests. The organic portion of green waste will naturally decompose over time if not processed. In the decomposition or composting process significant amounts of hydrocarbon gases are emitted. The same applies to all sources of biomass such as garbage, coal, wood products, coke, shale and lignite. They all contain both organic and inorganic materials that naturally decompose over time releasing what we call green house gases into the atmosphere. The environmental issue is, does converting these materials into renewable energy release fewer harmful emissions into the atmosphere than would normally occur through decomposition?

Waste Generation Up Waste Generation Up ––

Landfills DownLandfills Down

Waste Generation

Increasing

with Population

-------------------

4 lbs / Person / Day

Landfills Decreasing

with time:

------------------------

1990 = 6326

2002 = 1767

Source: CIWMB

7

The answer is yes. By thermally processing the biomass materials, these otherwise fugitive emissions are essentially eliminated and harnessed to produce a reliable renewable energy source. Accordingly, from an environmental standpoint, thermal conversion is a much cleaner environmental process than landfill decomposition or composting.

The Company anticipates that the organic portion of the biomass materials will be consumed in the thermal conversion process, ultimately producing electricity and bio-fuels, while the balance of the materials collected from the Company’s processing equipment, the mineral elements of the biomass materials, will be sold for use as concrete filler.

The Renewable Energy Market

To date, the focus of most renewable energy project development has been on wind turbines and solar photovoltaic (PV). The primary reasons for this focus are 1) the technology quotas specified in state renewable portfolio standards (RPS: see map below) and 2) the preference by tax credit equity purchasers for production tax credits (PTCs) from such projects

Recently the marketplace has shifted its attention to “clean” energy, which includes “conventional” renewable energy (e.g., wind and solar) but also various recoverable energy feed stocks (e.g., biomass, agricultural/feedlot byproducts, municipal waste). The “clean energy” market is projected to grow substantially over the next 10 years, from $55.4 billion in revenues in 2006 to more than $226.5 billion in 2016.

8

The shift to clean energy is attributable to numerous factors:

Transfer of pollution from one media to another (e.g. air pollution to landfill waste, a byproduct of the air pollution control technology)

Energy content (value) in byproducts that are being discarded.

Zero or negative cost fuel that can produce various energy commodities (e.g., electricity, steam, liquid fuels) consumed at the site.

Increased cost to transport wastes to landfills.

Requirement for fuel/feedstock that when converted to a marketable commodity produce a zero- or negligible air, water and solid waste discharge.

Increasing stringency of air, water and solid waste regulations, approaching zero-discharge for new facilities.

Concern about emissions of greenhouse gases such as carbon dioxide (CO2), methane (CH4), etc. that arise from the combustion of fossil fuels, and the need for “cleaner” fuel sources.

These market factors (drivers) are not temporary. Furthermore, they require an integrated solution that addresses the fuel/feedstock, technology and site/logistic aspects of producing energy simultaneously.

Envirepel recognizes the shift in market factors and is positioned to be a “solution provider.” Envirepel developed a system to produce “clean” energy using recoverable organic waste, while simultaneously helping to solve local resource, land use and environmental challenges.

Biomass Operations

Up to this point, biomass has played a small part in the California (or domestic) renewable energy market. There are a few biomass generator sites in the San Joaquin Valley operated by The AES Corporation and Covanta, but these facilities burn wood waste and agricultural waste streams that can be utilized in recycling operations (their newest competition) and are not capable of burning city sludge and other less attractive fuels like green waste. With the advent of recycling wood waste for consumer products, these older sites must compete with recycling operations for their “fuel” supply and pay a fee to get the wood and agricultural waste from the disposal companies. Envirepel Energy’s combustion technology allows the Company to implement this economic approach in reverse. We can get paid to take the waste we need for fuel.

Waste streams are typically awarded to waste disposal companies who can reliably remove the waste and dispose of it lawfully. The average tipping fee at landfills in Southern California is approximately $34/ton for green waste and trash, and $45/ton for sludge (substantially higher in other parts of the nation). The Company is negotiating preliminary agreements with local landfill operators pursuant to which the Company will be paid tipping fees to accept the local landfill operators’ waste.

9

Fluidized bed combustors typically found in Biomass operations cannot accept many of the solid waste fuel streams that the Company’s planned biomass combustors will be able to accept, including plastics, food waste, diapers, and ground tires.

Electric Generation Companies

The companies in California that produce electricity and sell it to utilities tend to be more focused on renewable energy production from anything but biomass for four main reasons. First, most of these companies are complacent and lack the internal resources to design and develop new facilities. They are used to acquiring existing facilities and running them, treating them more like leased pieces of equipment than revenue sources. Second, most of the existing biomass energy sites still operational, pay for their biomass fuel supply, and from time to time run low or out of fuel if alternative disposal sites offer better prices for their waste streams. Third, federal tax credits for wind, solar and geothermal power production are substantial and in the forefront of the political discussion while similar credits for biomass production are significantly more capital and management intensive. Finally, these companies tend to think very big (over 200 MW capacity) while most biomass facilities in California are 50 MW or smaller, due to fuel supply constraints and the incorporation of vertical fluidized bed combustors (roughly 30 MW each or smaller), which have been the industry standard for biomass for many years.

The Envirepel Solution

Simple, small, and modular, is the best solution and why we designed a waste to energy facility from scratch, to address most of the technical issues that have plagued our industry. Envirepel was founded to fill a “gap” in the clean energy market for base load power from organic waste streams. The Envirepel “solution” is not a replay of 1980s vintage waste-to-energy (WTE) plants, which were developed exclusively for waste reduction via incineration, with electricity generation as a byproduct. Instead, the Envirepel “solution” is directed at organic waste reduction to address landfill capacity and water pollution challenges, with a synergistic product being “clean” energy produced at much higher efficiencies than previously achieved. We believe that the largest single section of the conventional biomass renewable energy market is that of a waste disposal business. Furthermore, we recognize that generating energy on a large scale from waste streams requires multiple smaller facilities located where the fuel supplies can easily be collected with multiple long-term agreements for fuel supplies from many waste stream generators. We are unlike any conventional energy generator out there, because we think outside of the box. As a result, the Company believes that it will re-write the basic principals of “Distributed Generation.” Additionally, the company has the option of where and how to apply the thermal output of a facility, for electricity generation, renewable fuel production, or both. The Company’s Renewable Energy Facility design anticipates the availability of 100% of contract energy supply, 24 hours per day, 365 days a year, with reserves. This is accomplished by over-designing the capacity of each Facility, allowing the Company to provide its customers with reliable must run (“RMR”) qualifying renewable energy. The Company believes that this RMR capacity is unique to the renewable energy industry, and that its significance will become apparent when the Company’s bio-fuel operations are incorporated. This RMR design approach will make the Company’s Facilities the first renewable energy facilities designed specifically to obtain this status.

The Renewable Energy Facility design has essentially a “zero impact” environmentally, and takes advantage of current zoning and

Source: California Energy Commission

10

environmental laws in urban and agricultural settings. With the consumption of biomass fuels, certain air pollutants will be produced. Most all of these compounds are removed from the exhaust gasses. Although not formally listed as such, the largest “pollutant” produced by the Facility will be carbon dioxide. The combustion of any carbon based fuel produces significant amounts of CO2. The carbon dioxide produced from biomass, however, is not a new source of CO2, and that fact is significant. The amount of carbon dioxide consumed by the biomass materials during the growth process is simply converted back to carbon dioxide during the gasification/ combustion process. For this reason in the short term, most biomass generators are exempt from many of the regulations regarding CO2. However, that is in the process of being revised to include biomass generated CO2 as a tax base for State and Federal regulators to access and will soon become a significant expense to power plant operations world wide. Here is an example of the tax structure proposed to go into effect in the USA:

A carbon tax that compensates for the SCC varies by fuel source. The carbon dioxide production of the fuel source per

unit mass or volume is multiplied by the SCC to obtain the tax. Based on the mean peer reviewed value ($43/tC or

$12/tCO2), the table below estimates the tax:

1. The calculation is: A lb CO2/million BTU x (1 million BTU/ 1000000 BTU) x (10.3 BTU/Wh) x (1 tonne/2205

lb) x ($12/tonne CO2) = B $/kWh. See "Special topics relating to electricity" in the Energy Units document from

the American Physical Society, accessed 2010-07-16

2. Source of information, Wikipedia (http://en.wikipedia.org/wiki/Carbon_tax)

An effective tax rate of $11 /MWHR is what this means to a rate payer who’s utility company burns coal to produce electricity. In a market where the avoided cost of power is $40 /MWHR, that’s a 27.5% increase in the cost of electricity to the rate payer. With the Coal Industry producing more than 1.9 trillion KWHR (Kilo-Watt-Hours), or roughly 1,900,000,000 MWHR’s (Mega-Watt Hours) of energy, this results in an effective tax on the coal industry of something like $209,000,000,000 ($20.9 Billion) dollars per year for CO2 emissions that are essential to plant life on our planet. Where will this money go? If this is applied to the Waste to Energy and Biomass industries, one would expect to see an effective increase in the cost to produce electricity by about 20%.

In Envirepel Energy’s business model, this “pollutant” is a resource, and an income stream waiting to be harnessed.

11

Traditional Biomass and Waste to Energy companies would answer the carbon discussion like this: Alternatively, fossil fuels release new sources of carbon dioxide into the environment. The Company,

therefore, believes that the Company’s biomass fueled Renewable Energy Facilities will reduce the formation of new carbon dioxide released into the environment when compared to natural gas, coal or oil fired facilities. Additionally, replacing fossil fuels with biomass fuels will also conserve the emissions of carbon monoxide and volatile organic compounds that are often associated with the combustion of fossil fuels. Carbon discussions are political hot buttons. As discussed above, the typical discussion uses the word “reduce”. Normally, a company compares its carbon discharges to those of a fossil fuel fired plant, and the difference between what they discharge, and what a standard power plant of the same size would discharge is called a “savings” or a credit. The truth is that they are still discharging CO2, its just a question of how much. Envirepel Energy’s approach to Carbon offset argument was to remove the carbon from the exhaust entirely. It’s a resource that is being wasted if it goes up a stack into the environment. This is called Carbon Capture, and requires that the exhaust of the facility be clean enough that the CO2 can be recovered from the exhaust by simply removing the nitrogen, which is a straight forward process. This nitrogen removal process requires the exhaust to be devoid of conventional pollutants such as CO, HC, SOx, and Hazardous Air Pollutants (HAP’s). This is why Envirepel Energy had to develop a simple and clean combustion process. A process that utilizes the moisture of the fuel to produce hydrogen with oxygen in the combustion process and also form byproducts of combustion that could be efficiently removed from the exhaust, with conventional emissions scrubbing technology. The company’s radiant ceramic two stage combustion system, controls and emissions scrubbing technology was the result of this effort. Once CO2 is removed from the facility exhaust, along with water, the heat energy of the combustion system can then be harnessed to put the energy back into the carbon and hydrocrack these “emissions” back into natural gas. Once in the form of methane, additional processing by catalytic reforming similar to the Fischer Tropsch process allows for the production of higher forms of carbon, namely gasoline, diesel, kerosene and jet fuel. The Company plans to start project operations selling electricity initially, then to retrofit the projects to capture carbon and produce bio-fuels once sufficient cash flow is available to fund the development of the fuels technology.

12

The Envirepel Energy Process

Overview

Envirepel’s Management Team envisions company Facilities as waste disposal businesses that also makes electricity and renewable fuels, taking advantage of the thermal energy available from the facility and matching it to the industrial processing needs of the facility in context with the Company’s business plan. The waste disposal business cycle is typically continuous, and it is expected that the renewable energy market for electricity and renewable fuels to be the same.

The equipment installed at each Facility is planned to include a series of material grinders and screens to reduce the size of green waste to approximately two inches. Ground materials will be fed into the Company’s thermal combustion system in which the prepared waste feed stocks will be reduced to their mineral components. These mineral components will be recovered in the form of mineral ash. As a by-product of this process a considerable amount of thermal energy in the form of hot gases will be released. This heat energy will be recovered to heat water and produce steam, which will then be used to drive turbines to convert further thermal energy into electrical energy. A portion of this steam energy and electrical energy will be used to operate each Facility. The exhaust gases exiting the heat recovery steam generators will be cleaned by several pieces of equipment, including a cyclone dust collector, a selective catalytic reactor, a scrubber and a wet electrostatic precipitator, and will be cooled to less than 120 degrees Fahrenheit before being released into the atmosphere.

13

Gasification

Air (0.3)

O2 (0.3)

Steam

Heat

Producer Gas

(mol%)

CO 24

H2 13

CH4 3

CO2 8

N2 52

(tars &

particulate)

Synthesis Gas

(mol%)

CO 39

H2 20

CH4 17

C2H2 6

CO2 18

N2 0

(tars &

particulate)

Fuel Gases

Material Handling and Processing

The fuel sources for the first Facilities the Company plans to construct are expected to be biomass-related materials that are presently going into nearby landfills to be buried. Biomass will be delivered to a Facility by transfer trucks. These trucks will empty their loads onto a conveying system that will allow for inspection and removal of objects not suitable for processing, with recyclable materials removed for sale as additional revenue to the project. The balance of the biomass materials are now referred to as refuse derived fuels, and will then be dumped into primary grinding units for sizing.

The recovered material will then be delivered to intermediate storage bunkers. At this time all the feed stock waste is considered “fuel”, or “refuse derived fuel” by regulators. The “fuel” bunkers will be sized to contain the output from the primary processing grinder. The bunkers will contain at least two lines of fuel processing equipment to assure that the failure of a single piece of equipment will not interrupt the truck unloading or combustor fuel supply operations.

The primary fuel storage system will have reclaim units to take the material and deliver it to a bank of secondary processing lines. Each of these lines will consist of a screen, a final sizing grinder, and a fines collection system. The material from the second stage grinding will be delivered to a series of fuel storage bunkers. Oversized material will be sent back to the primary grinding units and the fines from the screens will be moved to a fines recovery area. The fines will be used as an organic fill for agricultural use, or pelletized for use as fuel in the facility. Acceptable fuel material will then be delivered to one of a series of storage bunkers.

Fuel Distribution

Each fuel bunker will be equipped with an automatic fuel reclaim unit. Reclaimed fuel will be dumped into a screw feed auger and belt combination that is capable of sending fuel to up to the combustion units. Reclaimed fuel will be fed into a metering bin at each of the combustion systems. The fuel will be accumulated in the metering bins to assure a continuous supply of fuel for the combustion units. The entire fuel reclaim system will be automated.

Gasification/Combustion

From the individual metering bins fuel will be introduced into the gasification/combustion units. The combustion process will take place in a series of two chambered ceramic-lined combustion units specifically designed to provide for the gasification/combustion of the waste materials of varying size and moisture content. These units are capable of 99% conversion efficiencies, generating 1,800°F of heat from almost any biomass source, including green waste, sludge, plastics, municipal solid waste (“MSW”), wood and other organics.

Fuel will be fed into the lower chamber of the combustion unit onto a fuel grate. As the fuel is gasified, it rises up into the upper chamber where it ignites and burns to produce heat.

Combustion air and flu gas re-circulated from the exhaust, is introduced into three distinct regions of the combustion unit. Envirepel Energy’s combustion system is self sustaining on very high moisture content fuels and does not require co-firing of fossil fuels, such as natural gas, which is common place in the industry. Re-circulated flue gas is introduced under the fuel pile up into the lower combustion chamber. This gas stream supply will be adjusted to provide the proper amount of air flow and conditions to achieve a gasification process within the fuel pile. The fuel pile is continuously radiated from above and the sides by the ceramic lining in the combustion chambers, which is driven by the combustion process that is occurring in the upper chamber, which is the thermal engine that drives the gasification process.

14

The second level of combustion air will be introduced just above the top of the fuel pile in a passage way that connects the lower and upper chambers of the combustion unit referred to as the throat. This air stream will provide sufficient oxygen to the gasification process to assure complete combustion of the biomass gases generated in the gasification process. This combustion takes place well above the fuel pile having given the hydrogen, oxygen, hydrocarbons and carbon monoxide produced by the gasification process time to mix prior to combustion. The resulting combustion gases rise into the upper chamber are too hot for introduction into a steam generator unit, so a third level of air introduction will be used.

This third stream of air will be used to reduce the hot gas temperature to approximately 1,950°F, a temperature consistent with the design of most heat recovery steam generator units. This also provides the added benefit of blanketing the combustion process with hot gases that are cooler than those usually associated with the production of thermal nitrogen oxide. This combustion process will make a first cut at reducing the production of thermal nitrogen oxide to an acceptable level.

Once the combustion gases are cooled to the 1,950°F level, they will then be passed through an extended ceramic lined combustion chamber, or dwell chamber. This chamber will be held above 1,800°F and will act as an afterburner for the combustion gases. Carbon monoxide and volatile organic compounds often associated with the incomplete combustion of organic materials are eliminated in this part of the combustion unit. Dioxins, furans, and other Hazardous Air Pollutants are oxidized into carbon dioxide and water. This dwell chamber design is what sets Envirepel Energy’s combustion system apart from all others offered in the market place, and in the world of solid fuel combustion is revolutionary. It is this ceramic lined combustion unit design which has demonstrated that virtually any biomass material, including coal, can be combusted as cleanly as natural gas in the Company’s Research and Development efforts. Once the combustion gases pass through the extended combustion chamber they will exit the combustion unit and enter into a special type of boiler system called a heat recovery steam generator (HRSG). True to its name, the HRSG makes steam that powers up the steam turbine generators to produce electricity.

Each combustion unit will be provided with a fully automatic control system with an integral programmable logic controller and variable frequency drives for controlling the combustion process.

Steam Production/Heat Recovery Steam Generation

Steam Distribution

The hot gases that leave the combustion units enter a water tube design HRSG rated at 600 psig. From the heat recovery boilers the hot combustion gases (700°F) will then be passed through economizers (lower temperature HRSG units) to preheat the boiler feed-water. This is desirable since the feed-water reclaimed from the steam turbine condenser system is approximately 120°F. Water passing through the Economizer exits at close to 240F prior to going to the HRSG units. This provides a significant increase in efficiency for the entire system. The steam from the boilers will then be provided to a common header & piping system. This common steam header will collect the steam generated from the HRSG units and make it available for the steam turbine generators. These HRSG units will be coupled to the combustion units. The combustion process is approximately 99% efficient and the boiler units are

―The energy boomlet is part of a broader

rebound that is benefitting all kinds of

start-ups, including plenty that are

focused on the Web. But for many in

Silicon Valley, high tech has given way

to ―clean tech,‖ the shorthand term for

innovations that are energy-efficient and

environmentally friendly. Less

fashionable is ―green,‖ a word that

suggests a greater interest in the

environment than in profit.‖

―This time around, entrepreneurs say

they are not expecting such quick

returns. In the Internet boom, the mantra

was to change the world and get rich

quick. This time, given the size and

scope of the energy market, the idea is

to change the world and get even richer

– but somewhat more slowly.‖

―Those drawn to the alternative-energy

industry say that they need time to

understand the energy technology, and

to turn ideas into solid companies. After

all, in contrast to the Internet boom, this

time the companies will need actual

manufactured products and services.‖

―There are real business models and real

products to be sold — established

markets and growing economics.‖

―Apart from the profit motive, many

here say they are driven by more

unselfish concerns: cleaning up the

atmosphere and creating energy

independence for the United States.‖

Source: ―Start-up fervor shifts to energy

in Silicon Valley,‖ New York Times

(March 14, 2007)

15

approximately 78% efficient. As a result, the Company believes that the overall conversion efficiency will approach 77% for the conversion of fuel into thermal energy in the form of steam.

Steam Turbine Generators

Steam will be delivered to steam turbine generators from the HRSG systems. The electricity that is produced will be delivered to the local Utility substation, which is connected to the local electrical distribution system. Once the steam has passed through the steam turbines and delivered the necessary energy to turn the generators, the exhaust will still be in the form of steam. This exhaust steam will be at 115°F and 1.5 psia or the equivalent of approximately 4” HgA vacuum. To reclaim this steam, the steam must be condensed. This condensation process will be achieved with the aid of cool water from a closed circulation system at each Facility.

During the production of electricity from steam it is not possible to recover all of the energy contained in the steam in the form of electricity. According to the Company’s estimates, 28%-32% of the available energy will be recovered in the form of electricity. The remaining energy will be released in the form of exhaust steam from the steam turbine generator units.

Cooling Water Systems

As mentioned above, a considerable amount of cooling water will be required. From a storage tank, water will be pumped to the steam turbine generator condenser units to cool the exhaust steam and condense it back to water. From the condenser units, this cooling water will be pumped to a water storage tank and this warmed water will be available for various agricultural or industrial needs and after the heat is removed, it can be returned back to a cold water storage tank for reuse.

Ash Handling Systems

With the gasification/combustion process taking place in the primary combustion chamber in a fuel pile, the fly ash that is generally associated with the biomass combustion process is expected to be greatly reduced. The majority of the ash material will be left in the bottom of the combustion chamber. The combustion chamber will be equipped with a bottom ash screw transport system to move the ash out of the primary combustion chamber eliminating the need to routinely shut down the system to remove ash from the unit. The ash will be automatically removed from the unit and deposited in containers for transport to facilities that will process the ash materials into organic fertilizer or concrete filler.

The ash from each combustion unit will be augured to a common collection conveying system into twenty cubic yard capacity ash hoppers. The ash hoppers will be transportable for moving the ash to a processing operation, if necessary.

Air Pollution Control Systems

The combustion gases will be cleaned and emissions will be significantly reduced with control devices that are well proven for such combustion technologies. A combination of emission control devices will be used. First, all combustion gases will pass through mechanical dust collectors. These dust collectors are designed to remove all particulates in the size range of 10 microns and larger. Then, a wet electrostatic precipitator will be used to provide a further level of particulate matter control. The wet electrostatic precipitators are designed to bring the total particulate emissions to less than 18 tons per year. The Company anticipates that NOx emissions will be significantly reduced through the use of a flue gas re-circulation system and the addition of urea in the fuel supply.

16

Envirepel Energy Facilities

Research and Development Test Cell Systems, TC-3, and TC- 4

There have been three Research and Development systems constructed. The original Test Cell was operated from March until October 2007 in Vista California, and was a sub-scale unit. The operational lessons learned and data gathered from that very successful initial prototype led to the design and construction of the second-generation unit, dubbed “Test Cell 2” (TC2) which was full scale. This unit’s upgrades in materials, geometry, fuel delivery, emissions and control software continue to be a resounding success. It was so successful that a major national defense contractor leased time on TC2 for their own feedstock emissions study. Envirepel Energy continued its TC2 R&D efforts to validate its ultra-low emissions profiles on various fuel streams. A third-party, EPA-certified laboratory began independent emissions testing in February 2008. Independent verification of Envirepel’s ultra-low emissions profile, on a variety of fuel streams, was a key component in the Company’s emissions evaluation program. When the Company moved from its original facility in Vista to Santee, a third Research and Development system, TC-3 was constructed with provisions for electrical power production in addition to emissions controls developed with the TC-2 system. Collectively, the Company has over 7000 hours run time on the R&D systems, demonstrating clean emissions from a variety of feed stocks, including high sulfur coal with approximately 1500 hours of those tests producing electrical power.

Images of the Company’s R&D system, TC-3

TC-3 has been disassembled and at the time of publication of this document is prepared for shipment to Alabama where it will be upgraded to a slightly more robust configuration and re-commissioned as TC-4 prior to the start of the emissions stack testing program slated for the first quarter of 2013.

17

17.6 MW Kittyhawk Facility, Lincoln Alabama

Kittyhawk is the company’s first commercial project which was designed and manufactured in Vista California, and is now being shipped to Lincoln Alabama for the start of its final construction effort. Initially intended to be a 2.8 MW system, via its modular design, is being expanded to a 17.6 MW facility in Lincoln. Three phases are proposed to complete the build out of the project. Phase one consists of the construction of the original 2.8 MW system, consisting of two combustion units driving heat recovery steam generators, which in turn provide steam to a single 2.8 MW turbine-generator system.

The Kittyhawk Project Site in Lincoln Alabama

Phase 2 consists of the addition of a combustion unit/boiler system tied into the Phase 1 steam system, with an additional 2.8 MW steam turbine generator to bring the collective installed capacity of the project to 5.6 MW. Phase 3 is the addition of the first “production” system the company plans to replicate for its following projects. It consists of a 12 MW General Electric Steam Turbine Generator system driven by six (6) combustion/HRSG units with full emissions scrubbing systems. Full commercial operation of the first phase of this project is scheduled to begin in early spring of 2013. Phase 2 is scheduled for completion in the summer of 2013, with the final phase scheduled for completion in the last quarter of 2013. The Kittyhawk Facility is planned to process approximately 250 tons per week of biomass and waste and produce approximately 4 tons of mineral ash materials per week. The mineral ash materials will be comprised primarily of calcium, silicon, magnesium, phosphorus and potassium oxides.

The Company anticipates that the electricity produced will be used to operate some of the ceramic curing ovens and other manufacturing equipment, with the surplus sold to the Utility on an “as available” basis. Phase 1 and 2 of the Kittyhawk project will be constructed in one half of the Company’s 50,000 square foot industrial location in Lincoln Alabama, adjacent to the Research and Development system. The photos below show the first combustion system fit check prior to shipment along with a fuel storage box, and other system components.

18

All fuel for Kittyhawk is expected to come from a radius of less than 60 miles by road, or less than 200 miles by rail (Atlanta). The Company believes that approximately 300,000 tons of suitable biomass fuel material will be available for the Facility each year. The fuel material can be delivered to the Facility as opposed to the surrounding landfills, allowing existing landfill space to be utilized for materials that are truly not recyclable, thereby extending the life of the landfills. The Kittyhawk project site in Lincoln Alabama will be the first commercial deployment of the Company’s proprietary CO2 to fuels technology, and the first functional bio-refinery of its type in our Country. In short, the CO2 in the exhaust of the combustion systems will be harvested so that it can be catalytically converted back into natural gas. Once in this state, natural gas can be converted to many other hydrocarbon products such as gasoline, diesel and jet fuel using a Fischer Tropsch type process.

12 MW Facility, City of Lincoln Alabama Waste Water Treatment Facility,

Kittyhawk Project Expansion

The Company has negotiated a lease for a 4 acre site adjacent to the City’s waste water treatment plant (WWTP). It is proposed that in parallel to Phase 3 of the Kittyhawk Project, this WWTP site be developed during 2013 and brought on line in the first quarter of 2014.

City of Lincoln Waste Water Treatment Facility Project Location in relationship to the Kittyhawk Project

Housed in a 100,000 sq ft building, this facility will generate electricity and bio-fuels from waste wood supplied from forestry management companies, and using water from the WWTP facility. The facility will also consume the municipal sludge produced by the WWTP facility, in exchange for the lease cost of the site, saving the City of Lincoln significant disposal costs they currently pay. Engineering for the facility is scheduled to start in early 2013, with a project construction start date in the fourth quarter of 2013. This facility is planned to be identical to the 12 MW expansion of the project at the 411 Industrial Drive location bringing the total generation capacity for the Kittyhawk Project between the two locations to 29.6 MW. The Project will utilize eight combustion systems with high-pressure HRSG units to produce electricity that will be sold to Alabama Power under a Standard tariff. This WWTP site will also be equipped with the Company’s CO2 to fuels technology.

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6 MW Facility, Pensacola Florida

The Company anticipates that the Pensacola Renewable Energy Facility will be constructed on the Emerald Coast Utility Authority Waste Water Treatment Plant (WWTP) in Pensacola, Florida. The project will consume approximately 100 tons per day of sludge from the WWTP along with roughly 300 tons per day of refuse derived fuel from municipal waste.

The Company is working with Arcadis Engineering on behalf of the Utility Authority to refine the Project specifics, permitting requirements, and operational characteristics. Permitting for this project is expected to commence in the first quarter of 2013, with construction starting by the fourth quarter of 2013.

6 MW Facility, Vista California

The Company anticipates that the Vista II Renewable Energy Facility will be a joint venture between Envirepel Energy Inc., and the City of Vista. This facility, Vista

II, is proposed to be located in the light industrial

business park near the southern boundary of the City. Proposed to be housed in a 120,000 sq ft building, this facility will generate electricity, bio-fuels and expand the equipment manufacturing capacity of the company. Engineering for the facility is scheduled to start in early 2013, for a project construction start date in the fourth quarter of 2013.

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The Project will utilize three combustion systems with high pressure steam boilers to produce electricity which will be sold to the City of Vista, and to SDG&E under a Renewable Portfolio Standard tariff. Rainbow Disposal is negotiating long term fuel supply agreements for the project as part of its ongoing efforts to support Envirepel Energy Inc.’s project development efforts. The Vista project site will be the first commercial deployment of the Company’s proprietary CO2 to fuels technology in California.

60 MW Fallbrook Renewable Energy Facility (FREF), Fallbrook California

The Company anticipates that the FREF Facility will be equipped with twelve steam generator units with construction expected to commence in 2014. FREF is the template facility for projects of this size that the Company anticipates developing, as they will all be similar to the Fallbrook facility.

The FREF Facility is planned to have 24 individual combustion units. Twenty two will be active with two units for maintenance rotation and reliability purposes. The combined rating for the boilers is approximately 55,000 lbs per hour of 600 psig steam.

Each steam boiler package consists of the following components:

1. Heat Recovery Steam Generator 2. Boiler Feedwater Makeup System, including chemical treatment 3. Boiler Feedwater De-aerator System 4. Boiler Feedwater Pumps 5. Feedwater Economizer to reclaim heat in

the hot gas exhaust from the boilers

Steam will be delivered to two identical steam turbine generator skids rated for 30 MW output each at 12.47 KV. A total cooling water flow of approximately 35,000 gpm will be required, which will be passed through pipes to greenhouses adjacent to the FREF Facility that will use the heat from the water to aid in the growing of organic crops. The electricity produced by the two 30 MW steam turbine generators will be brought to a single substation. This substation will be connected to the electric utility power grid through a step up transformer unit. The power needed to operate the biomass energy facility will be subtracted from the generator output. Under normal operating conditions the FREF Facility will be expected to produce approximately 60 MW of electricity with approximately 4 MW being used internally by the FREF Facility for its internal needs, and 56 MW being supplied to the utility power grid. Water will be pumped to a 1,000,000 gallon warmed water storage tank and sent out to the greenhouse complex or it can be returned back to a cold water storage tank for reuse. At full plant capacity approximately 30 tons per day of mineral oxides will be produced.

30 MW San Diego Navy Base, San Diego California

The Company anticipates that following the Fallbrook project the company will be able to permit and construct a facility next to the Waste Water Treatment Facility at Navy Base San Diego that will be equipped with twelve (12) steam generator units and three steam turbine generators, with construction expected to commence in early 2015. One 2.5 MW combustion system will provide hot gases to each boiler.

60 MW Otay Landfill, Chula Vista California

The Company anticipates that the Otay Renewable Energy Facility will be a joint venture between Envirepel Energy Inc., and the City of Chula Vista. It is proposed to have the energy facility constructed on City owned

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property adjacent to the Otay landfill which is owned by Republic Waste with Republic providing fuel to the project from the landfill. Engineering and permitting is expected to start mid 2013 with construction expected to start in early 2014. Operations are expected to start in early 2015.

60 MW Sycamore Landfill, Santee California

The Sycamore Renewable Energy Facility is identical to the Otay Facility. The site is owned by Republic Services, with the proposed REF to be located on the site, near the last proposed fill area of the landfill. Engineering and permitting are planned to start in 2014, with construction planned to start in early 2016. Operations are expected by mid-2017.

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Company Overview

Employees

When the first facilities commence operations in Alabama, the Company expects to employ 15 - 30 people on a full-time basis for each Facility, including on site Facilities Managers. When the first projects proposed in this placement document are completed, the Company would expect to employ approximately 300 staff at the project level, and approximately 25 at the Corporate level. Funds from this capital raise will allow the Company to modify its existing CEO and President role into separate roles so that Board Member Hering can step into the role of CEO of the Corporation once the Kittyhawk Project is operational. Mr. Hering is uniquely qualified to locate, recruit and manage the corporate team necessary to implement the Company’s business plans for operating multiple facilities in multiple states. As one of the contributing authors of the Navy’s renewable energy policy, he is also very experienced in the public arena of politics, government agencies, and environmental action groups. In addition to the full time corporate staff, the Company expects to utilize the services of several consultants and part-time employees on a regular basis.

CEO and President:

Anthony J Arand. Mr. Arand directs and allocates the company’s resources to most efficiently accomplish Envirepel’s long- and short-term goals. As the founder and original investor, he is the chief architect of the company’s technology, facility designs and permitting strategies. He leads the company’s efforts on technology and engineering issues. Mr. Arand has continuous work experience in engineering, chemical manufacturing, production, sales, field applications, university and private contractor research, and regulatory actions including product registrations, lobbying and regulations. Prior to Envirepel, he founded Cal Crop USA and Pac Rim Products, Inc. He also worked as a Mechanical Engineer for Hughes Aircraft and Eidetics. Mr. Arand is a graduate of California Polytechnic University – San Luis Obispo, with a Bachelor of Science in Mechanical Engineering.

CFO:

Teri Mathes. Ms. Mathes oversees all financial activities of the corporation including preparation of current financial reports as well as summaries and forecasts for future business growth and general economic outlook. She directs the preparation of all financial reports, including income statements, balance sheets, reports to shareholders, tax returns, and reports for government regulatory agencies. She also oversees the accounting department, budget preparation, and audit functions. She reviews budgeted expenses against final totals, and suggests methods of improving the planning process as appropriate. Other duties include estimating requirements for capital, land, buildings, and increases in the work force, as well as working with banks and investment bankers to raise additional capital as required for expansion. Prior to working for Envirepel, Ms. Mathes was Assistant Controller for Mimi’s Café, and brings 16 years of experience in the accounting field.

Board Members:

Anthony J Arand

Len Hering, RADM USN (ret). Mr. Hering recently retired from the US Navy after 30 years of

service. His last command was in San Diego as Commander, Navy Region Southwest, where he was

responsible for Naval facilities in the Pacific and 8 western States. Widely recognized for work in the

areas of sustainability and the environment, Mr. Hering helped to create the Federal Sustainability

Network in the Pacific Northwest and Southern California and started the San Diego Regional

Sustainability Partnership. He was directly responsible for building a Navy team recognized

throughout the Department of Defense as the best in environmental protection and sustainable

innovation. Milestones in the environmental community: Within three years reduced facility energy

consumption by nearly 42%, diverted 75% of Navy waste from landfills and reduced water

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consumption by more than one billion gallons. He has experience in wind, thermal, photovoltaic and

conversion technology at all levels. White House recognition for efforts reducing oil spills and for

recycling. 2005 Presidential Award for Leadership in Federal Energy Management. 2008 and 2009

City of San Diego Recycler of the Year. 2006 Community Sustainability Award winner presented by

California Manufactures & Technology Association and Industrial Environmental Association.

Responsible for the development of the Navy’s first Regional Shore Installation Strategic Plan which

ultimately became the prototype for the Navy’s enterprise approach to facilities modeling and service

delivery. Instituted a methodology of risk-based integrated priorities supported by complex business

plans and enterprise-driven metrics across 32 product lines in a six-state region. These mature plans

and systems now serve as the basis for the Chief of Naval Operations Shore Vision 2035.

Peter Ullrich. Mr. Ullrich has been on the Board of Envirepel Energy since the summer of 2009. Mr.

Ullrich also serves on the Board of EAU Technologies Inc. since April 2007. Mr. Ullrich is currently

EAU's largest shareholder and single largest customer. Mr. Ullrich is the owner of Water Science, LLC

("WS"), Latin America's exclusive licensee of EAU's Empowered Water™ technologies. Mr. Ullrich is

also the owner and Chairman of the Board of Esmeralda Farms, an innovative leader in the international

floral industry. Mr. Ullrich has been involved in all aspects of the international floral industry for over

35 years. He is a pioneer in developing and adopting cutting edge technologies that not only assist in

building better business in the floral industry but creating cleaner safer working environments for his

over 5,000 employees. Esmeralda Farms are certified by various international "green" organizations,

such as Florverde, Flower Label Program and Veriflora. Mr. Ullrich was the recipient of the 2006 SAF

Gold Medal Achievement Award. Mr. Ullrich was born and educated in Germany

Dr. Sylvia Boltz Tucker. Dr. Tucker is currently Dean Emeritus and Professor Emeritus at Oregon

State University, and a member of the Board of Trustees of Bonsall Union School District. She has

extensive background in education and has held professorships with various tertiary education

institutions, such as the University of Cincinnati, Oregon State University and United States

International University – San Diego. Dr. Tucker has served in diverse roles and offices in the

education industry, including as faculty representative to the National University Board of Trustees, and

as an officer of Association of Land Grant Colleges and Universities. She has also been the recipient of

several awards in connection with her work in this industry, including the first ever Sylvia Boltz Tucker

Award for Excellence, Energy and Humanity from the University of Cincinnati; the University of

Northern Iowa Achievement Award; and the National University President’s Distinguished Teaching

Award for Exemplary Teaching and Commitment to Excellence. Dr. Tucker holds a B.A. in Business

Education and Physical Education from the University of Northern Iowa, and a Doctor of Education

from the University of California – Los Angeles.

Advisors to the Board:

Vic Pankey – Pankey Farms, LLC

George Rogers – RQ Construction

Bruce Shuman – CEO Rainbow Disposal

Senior Technical Advisor to the Board

William David Gamble, Sr. (PE) Mr. Gamble is an engineer with 30 years working experience with

solid fueled biomass energy systems ranging in size from 20-250 MMBTU/Hr and 100 KW to 60 MW. He

works with clients to develop energy solutions based on biomass related fuel materials. His areas of

experience include studies, economic evaluations, scope development, preliminary engineering, design

engineering, equipment specifications, control systems design, facilities layout, construction monitoring,

startup support, operator training, and system commissioning. In addition, he works with clients to optimize

existing solid fueled biomass energy systems. Mr. Gamble is a graduate of the University Alabama,

Birmingham with a Bachelor of Science in Engineering.

Legal History

Envirepel Energy Inc. was incorporated in 2004 and had no legal activity other than normal business operations and stock sales under private placement until 2009. In January of 2009, a hostile take over attempt by the principles of the Company’s placement agent, Nexcore Capital, sought to force the company into

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bankruptcy so that the Company’s assets, namely the Kittyhawk project, could be acquired and sold to another investment group. This act spawned a total of 21 lawsuits being filed against, or by, the Company including stockholders, vendors, landlords, and financing partners. In the prosecution of the litigations, the Company served subpoenas on the Financial Industry Regulatory Authority (FINRA) to obtain financial records of Nexcore Capital as it had been under audit by FINRA for improprieties in its business operations. FINRA determined that Nexcore Capital and one of its affiliates committed securities fraud during the time Nexcore was the placement agent for the company. FINRA also determined that during the entire time Nexcore was the placement agent for the Company, that Nexcore was not in compliance with FIRNA requirements to be in business, fined the firm accordingly, and shut it down in 2009. As the company has resolved all of the lawsuits filed, we have worked very closely with our vendor base to maintain our working relationships and our vendor base has been wonderful in working with us. Some of the proceeds from this capital raise are earmarked to pay past due bills with our vendor base that the company has negotiated and settled. At the time of the publishing of this private placement, Envirepel Energy Inc. has no active litigation that it has filed, or been filed against.

Intellectual Property

Since its inception, Envirepel Energy, Inc. has developed proprietary designs and processes that can be protected by patents. The envisioned IP platform of machine design and process patent applications covering the Company’s proprietary processes is designed to protect to the maximum extent possible, the Company’s assets and help to create an even higher barrier to entry for current and future competitors. Two principle patent applications, one covering the combustion facility design, and one covering the processing of carbon into bio-fuels are supported by up to 15 additional patent applications stemming from the company’s Research and Development work.

Intellectual Property Strategy The Company intends to retain the services of an outside IP specialist to assist in a three-phased approach to the identification, definition and protection of inventions. Phase one is development of an Intellectual Property Strategy Document that covers the following: General Portfolio Claims Strategy Patent Cost Cost Saving Measures and Rationale Risks to Patent Strategy Overview of Patent Portfolio

Method and Use Patents

Equipment Design Patents

Software Logic Patent, Method and Use NOT design. Phase two will include the development of a clear understanding by EEI’s staff regarding public disclosures and intellectual property positioning strategy including implementation of a formal IP policy and guidelines. The third phase is the patent strategy implementation, which will be determined as the Company is awarded protections by the US PTO.

Property

The Company has a 30-year lease on approximately 15 acres at 3262 Shearer Crossing (the FREF site) for a base rental rate of approximately $10,000 per month. The Company leases 24,000 square feet of industrial office at 9484 Mission Park Place, Santee, California 92071 at a base rental rate of approximately $22,000 per month pursuant to a three-year lease which commenced on July 1, 2010.

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Company Financials (Unaudited)

Balance Sheet as of December 2011

ASSETS

Current Assets

Checking - Envirepel Energy 106,636

Project Account 4,078

Accounts Receivable 50,000

Loan – Stockholder 57,450

Deposits 375,965

Due from Kittyhawk Energy LLC 1,223,625

Prepaid Expenses 35,400

Total Current Assets 1,853,156

Property and Equipment

Assets in Process 3,964,866

Assets in Process – Labor 1,693,714

Assets in Process – Steel 568,575

Equipment 95,276

Automobiles 5,359

Leasehold Improvements 98,899

Building 98,562

Accumulated depreciation (89,741)

Total Property and Equipment 6,450,094

Other Assets

Development Cost 7,384,113

Total Other Assets 7,384,113

Total Assets 15,687,365

LIABILITIES AND CAPITAL

Current Liabilities

Accounts Payable

1,440,806

Notes Payable – Other 3,991,290

Loan Payable - Arand & Arand 0

Other Current Liabilities -0-

Total Current Liabilities 5,432,096

Capital

Common Stock 17,547,293

Retained Earnings

(7,261,369)

Net Income (30,655)

Total Capital 10,255,268

Total Liabilities & Capital 15,687,365

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Use of Proceeds and projected spending through December 2012 (The projected use of proceeds against the anticipated development activities listed below is dependent upon the timely infusion of capital into EEI by individual and institutional investors. It is also dependent upon the ability of the company to obtain construction financing that would reduce the amount of capital needed at the project level).

Total Jan - Mar '13 Total April - June '13 Total July - Dec '13

Staff

Corporate Management $ 50,400 $ 50,400 $ 100,800

Project Management & G&A $ 43,500 $ 43,500 $ 87,000

Legal $ 50,000 $ 50,000 $ 50,000

$ - $ - $ -

Project Costs

Lincoln Alabama

Equipment costs $ 1,555,900 $ - $ -

Engineering/Drawings $ 171,000 $ 105,000 $ 190,000

Contractor costs $ 441,500 $ - $ 1,385,000

Permits, Air, Water, Land $ 50,000 $ 50,000 $ 5,000

TC 4 R&D operation $ 50,000 $ 50,000 $ 50,000

Lincoln WWTP, Alabama

Equipment costs $ - $ - $ -

Engineering/Drawings $ - $ - $ 50,000

Contractor costs $ - $ - $ 25,000

Permits, Air, Water, Land $ - $ 50,000 $ 5,000

Pensacola, Florida

Equipment costs $ 750,000 $ - $ -

Engineering/Drawings $ - $ 50,000 $ 50,000

Contractor costs $ - $ 25,000 $ 25,000

Permits, Air, Water, Land $ - $ 50,000 $ 5,000

Intellectual Property Protection $ - $ 50,000 $ 15,000

Vista 2, California

Equipment costs $ 450,000 $ - $ -

Engineering/Drawings $ - $ - $ 50,000

Contractor costs $ - $ - $ 25,000

Permits, Air, Water, Land $ - $ 50,000 $ 5,000

$ - $ - $ -

Intellectual Property Protection $ 5,000 $ 25,000 $ 50,000

Shareholder Loan Repayment $ - $ 1,950,000 $ 4,000,000

Accounts Payable $ 447,702 $ 447,702 $ 665,597

TOTAL COSTS $ 4,065,002 $ 3,046,602 $ 6,838,396

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Summary

Total Funds Required $ 13,950,000

Placement fee $ 1,050,000

Total Capital Raise $ 15,000,000

Capitalization Table The following table sets forth the capitalization of the Company, and lists the security ownership of management and stockholders who beneficially own 5% or more of the outstanding stock of Envirepel Energy, Inc. as of December 31, 2011. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and generally includes voting or investment power with respect to securities, subject to community property laws, where applicable.

Pre-Offer Post-Offer

Shareholders Number of

Shares Owned Percentage

of Ownership Number of

Shares Owned Percentage

of Ownership

Founders* 3,873,596 15.54% 3,873,596 11.95%

Directors & Officers * 910,000 3.65% 910,000 2.81%

Employee Pool (unissued) 700,000 2.81% 700,000 2.16%

Common Shareholders*

19,446,553 78.00% 19,446,553 59.98%

New Shares Issued 7,500,000 23.10%

Total Issued Shares 24,920,509 100.0% 32,420,509 100.0%

Total Warrants Issued 5,750,000 6,125,000

Total Shares if Warrants Convert 30,670,509 38,545,509

*All Stock is Common Stock. No Preferred Shares have been issued

Material Agreements and Strategic Relationships The Company has negotiated preliminary supply agreements in the San Diego County area with Republic Waste and Rainbow Disposal pursuant to which the Company will be paid to accept wood waste streams and pre-sorted municipal waste that is referred to as Refuse Derived Fuels.

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Business Partners of Note Republic Services, Inc. Republic Services, Inc. is the second largest non-hazardous solid waste management company in the United States, with annual revenues of over $5 billion and assets of nearly $14 billion. Headquartered in Phoenix, AZ, we serve approximately 10 million residential, commercial and industrial customers in 128 major markets within 37 states and Puerto Rico. Republic Services owns and operates 168 active landfills across the country, with an average remaining life of 40 years. Our professional landfill experts employ state-of-the art methods to maintain our landfills and protect our environment, while meeting or exceeding all federal, state and local regulations. We also provide customized consulting services for handling and disposing special non-hazardous wastes and keep our customers abreast of changing environmental and regulatory requirements. Our nationwide team of 24,000 employees shares our commitment to exemplary customer service and efficient, innovative solutions that respect and safeguard our nation's public health and natural resources.

Legal and Financial Partners

Milbank, Tweed, Hadley & McCloy LLP

Milbank, Tweed, Hadley & McCloy is one of the world's preeminent global law firms, with approximately 550 lawyers

who provide a full range of financial and business legal services to many of the world’s leading financial, industrial and

commercial enterprises, as well as governments, institutions and individuals. Milbank provides transactional documents

for project financings.

Novian & Novian LLP Novian & Novian LLP ("Novian") is a full-service law firm based in Century City/ Los Angeles that provides litigation,

transactional/corporate, intellectual property, real estate and employment law representation. Novian is the Company’s

Corporate counsel. M.M. Dillon & Co

M.M. Dillon & Co.’s private placement capabilities include raising a broad range of equity and debt financing across a

company’s full life cycle. Their expertise is supported by deep investor relationships and significant transaction successes

across this full spectrum.

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EXHIBIT B

RISK DISCLOSURES OF

ENVIREPEL ENERGY, INC.

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Risks

Being first in the Market

In funding a business effort into unknown territory, nobody really wants to be first. On Wall Street, they don’t want to be left out, but they don’t want to be in a position of being first and taking risk either. The question is what is the risk? Technology, financial, regulatory or environmental risk, those are the issues. Wall Street only invests in projects where someone, typically an engineering company, guarantees the project will work as specified, and that the investment firm will make a profit. The other requirement is that the engineering company needs to have a large enough balance sheet to be able to write a check for damages if the project doesn’t work out as planned. This is called a process guarantee, and the company that provides it is taking the technology risk. Without it, you don’t get your project built with institutional investors, banks, or government loans. That is why the private investor has the opportunity to invest in Companies like Envirepel Energy Inc. It is the ultimate “Catch 22” of the Renewable Energy Market place. Until we have at least two facilities operating we will not meet the definition of “commercial” technology, which makes us eligible for Dept. of Energy loan guarantees for project construction. Until that occurs, we must raise the capital to construct our own projects, and build them. Once we have those facilities operating, we are confident that we will have enough profit from our operations that we won’t need Wall Street investment firms, which historically only invest in projects that they can own completely. That is why our business model revolves around low cost debt financing of projects, namely, build them on a construction loan, operate them, and own them with a simple mortgage. Envirepel Energy Inc. from its inception was formed to develop the next step in distributed energy generation utilizing the biomass, waste, and coal resources of our Nation. In a time where our Country is absorbed in short term gains, consultants, and limited risk, the concept of long term operations in multiple sites, is not the norm. There are approximately 16,000 MW worth of waste buried in our Nation’s landfills every year that could be turned into renewable energy and bio-fuels. That’s roughly $48 billion in construction costs, 213 million man-hours of work to complete, with the capacity to produce enough domestic petroleum from recovered CO2 to fuel our Nation. It has been almost seventy years since the idea of developing combustion and refining technology to solve social challenges was done the last time, and they didn’t have the array of Agencies to contend with that we have today. Envirepel Energy Inc. went the extra mile to develop a business model, and a technology set, that would meet every existing and expected environmental law we have in our Nation, starting out in one of the hardest air basins in the world, San Diego County. In that light, securities laws require us to disclose as many issues as we can think of, or find, in the market place that could adversely impact our business efforts. Envirepel Energy Inc. has over time evaluated several hundred biomass and waste to energy project histories that showed success, and failure. We have attempted to consolidate those lessons learned into our business efforts, and explain them in this stock-offering document. This is to ensure accredited investors have the information needed to evaluate the potential risks that are associated with this investment opportunity.

Competition The Renewable Portfolio Standard (“RPS”) energy market in which the Company has chosen to compete does not contain the same market and regulatory forces that exist elsewhere in the wholesale electricity market. Because the State of California, and other States, have mandated that energy sellers purchase at least twenty percent (20%) of their supply from RPS compliant power plants, such as wind, biomass, solar, hydro, or geothermal, management does not believe that the Company will face competition with respect to selling its energy supply. The Company may encounter stiff competition for the waste supply in certain geographic areas. In many cases, these competitors have the advantage of long-standing relationships with customers, longer operating histories, and better capital resources than the Company. As a result, it may not be profitable for the Company to enter into some markets where access to feed stock supplies is limited. Nevertheless, the Company cannot assure that it will be able to compete successfully in the renewable energy business or that

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future competition or technology advances will not have a material adverse effect on the business, operating results, and financial condition of the Company.

Government Regulation

Although the Company’s operations will not be regulated by the Federal Energy Regulatory Commission (“FERC”) with respect to the rates the Company can charge for electricity transmission, the Company’s business will be subject to regulation by various other federal, state, and local regulatory agencies. In addition, if the costs incurred by the Company in operating the Facilities exceed the allowed amounts for costs included in the approved rates, the Company’s financial results will be adversely affected.

The Company will be subject to various government regulations, including regulations covering air quality, and discharge water quality. These regulations are mandated by the United States Environmental Protection Agency (“EPA”) and various state and local governments and are usually implemented through a permitting process, with ongoing compliance requirements. In addition, the Company’s activities will fall under a number of health and safety Agencies. Compliance with the Agencies regulations and permitting requirements could delay the development of the Facilities using older technologies, and could be costly and harm the Company’s financial condition. However, the Company designed its entire business model and technology to comply with the full extent of regulatory oversight in today’s market place, and still be cost competitive, something that older technology companies did not do. Furthermore, there are from time to time various legislative proposals that would amend or comprehensively restructure the Public Utilities Regulatory Policies Act (PURPA) and the electric utility industry. If PURPA is amended or repealed, the statutory requirement that electric utilities purchase electricity from qualifying facilities at full-avoided cost could be repealed or modified. Typically these avoided cost contracts are short term, and at lower price structures than long term negotiated Power Purchase Agreements. The Company expects to have both long term Power Purchase Agreements with Utilities that are not impacted by changes to PURPA, it also expects to have some contracts that are governed by PURPA. Should there be changes in statutory purchase requirements under PURPA, these “avoided cost” contracts would be at risk of not being continued, or modified. There is much speculation in the industry that these structures have been used successfully by utilities to suppress the ability of renewable energy companies to be cost competitive with conventional power generation, so changes in the structure of how avoided cost is calculated may be beneficial to the Company in selected markets. Some of the Company’s proposed energy producing Facilities may produce power for sale to the local electrical grid on a day-to-day spot market, in addition to the production of bio-fuels. The sale of this day-to-day power may come under the regulations of various state public utility commissions. These commissions set the price tariffs under which energy can be sold or purchased. If the Company determines to sell electricity to the grid as an independent power producer, the energy sales from such Facilities may come under regulation by these commissions. In California the Independent Service Operator (CAISO) acts as a broker and controller for energy generation and sales throughout California’s electrical grid, managing production schedules, sales and purchases of energy on the grid to match the daily needs of California. The Company will be required to comply with numerous environmental laws and regulations, including those related to air emissions, wastewater discharge, and the handling, transportation, storage, disposal, release and cleanup of, or exposure to, hazardous substances and wastes. The Company will also have to obtain numerous state and local governmental permits to operate Facilities. New environmental laws and regulations, or new interpretations of existing laws and regulations, could impose more stringent limitations on the Company’s planned operations or require the Company to incur significant additional costs. The Company’s compliance strategy has been designed to exceed all existing environmental laws in force currently by setting new standards for ultra low emissions, however, it may not successfully address relevant standards and interpretations of the future. For example, CO2 emissions may be taxed in the future with required physical changes to facilties to comply with the regulatory changes for monitoring and measuring CO2 emissions. Much like the mercury and HCL acid emissions changes retroactively applied to the coal industry, taxation of CO2 emissions could be very detrimental to the profitability of a facility. Even though the Company plans to harvest CO2 from the exhaust of the facilities for conversion into bio-fuels, it really depends on how the legislation is written before the Company would understand what is involved in compliance. The Company may not be able to obtain or maintain all required environmental regulatory approvals depending on

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how they are defined. If there is a delay in obtaining any required approval or if the Company fails to obtain, maintain or comply with the terms of any such approvals or to comply with any such laws or regulations, the Company could be subject to civil or criminal penalties, including but not limited to fines, and Facility operations could be stopped or become subject to additional costs. Further, it may be uneconomical for the Company to comply with any such laws or regulations, which may cause the Company to shut down Facility operations and suffer a loss in generating capacity. In addition, the Company may be responsible for any on-site liabilities associated with the environmental condition of Facilities, regardless of when the liabilities arose and whether they are known or unknown and, at times, regardless of who caused such condition. The occurrence of any of these events could have an adverse effect on the Company’s business. These conditions are regulatory and environmental risks associated with being in the energy business.

Seasonality

The Company’s business may be affected by seasonal changes. Utility companies typically pay higher prices during summer month peak demand periods, and lower prices in winter months when hydroelectric power is the least expensive. Long term contracts help to mitigate this issue, but even they may be written such that the project site has incentives to operate during limited times of the year, and other incentives to operate at reduced levels in off season periods. Weather patterns and natural disasters could also have a material impact on the Company’s operating performance at any given project site. Acts of God are written into utility contracts as allowed interruptions in a long-term contract, as it is beyond anyone’s reasonable control. Consistent with this legal precedence, if the Company has a facility, or facilities, that are removed from service because of acts of God, it is reasonable to expect an impact on the Company’s ability to earn income. Accordingly, the Company’s annual results may be influenced on its performance during limited parts of the year, or upon events outside of the Company’s control. These disclosures are to inform the investor that even though the Company’s business strategy is to have multiple sites, therefore reducing the overall impact of any one site going off line, there are events that even the best business strategy just cannot predict.

Cautionary Statements

Cautionary Statements: The discussions and information in this Memorandum may contain both historical and forward-looking statements. To the extent that the Memorandum contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of the Company, please be advised that the Company’s actual financial condition, operating results and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The differences may be caused by a variety of factors, including but not limited to; adverse economic conditions, intense competition, including entry of new competitors, adverse international, federal, state, and local government regulation, inadequate capital, unexpected costs, lower revenues and greater costs than forecast, inability to obtain new permits for Facilities or the loss of existing permits, potential dilution caused by future offerings of securities in the Company, cost overruns incurred in developing and operating Facilities, price increases for labor, and supplies, the risk of litigation and administrative proceedings involving the Company and its employees, the inability of the Company to complete construction of its planned Facilities or to secure alternate locations for its planned Facilities. The capital from this offering is only sufficient to develop the first two commercial Facilities and there is no assurance that the Company will obtain the additional capital or financing that it needs for the rest of the proposed Facilities. Additionally, factors adversely potentially impacting the company’s efforts would the inability of the Company’s projects to sell electricity, the inability of the Company to secure agreements with landfill operators to provide the waste and other refuse-derived waste streams necessary for the Company to produce electricity, equipment failures, unexpected maintenance and repair costs, unexpected downtime, construction delays, declines in tipping fees which would reduce the Company’s revenue, the possible fluctuation and volatility of the Company's operating results and financial condition, adverse publicity and news coverage, the Company’s inability to carry out marketing and sales plans, changes in interest rates, inflationary factors, and other specific risks that may be alluded to in this Memorandum or in other reports issued by the Company.

Limited Operating History - New Business. The Company was formed to develop, construct, own and operate renewable energy qualified facilities for the production of electricity and bio-fuels from captured carbon. The Company has limited operations, earnings, and gross revenues to date as its primary effort has

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been in the development of the proprietary technology and first operating systems. Although the officers of the Company, and members of the Board of Directors, have experience in the renewable energy industry, the Company cannot assure at this time that it will operate profitably or that it will have adequate working capital to meet its obligations as they become due. The Company believes that its success will depend in large part on the acceptance of the Company’s planned Facilities by landfill owners as mechanisms for eliminating waste and producing electricity. The Company intends to invest heavily in constructing its own Facilities. As a result, the Company expects to incur operating losses in the initial stages of its business.

No Assurance of Profit: The Company’s business approach to the renewable energy and waste management industry may not produce results as anticipated, be profitable, or be readily accepted by the marketplace. The Company cannot estimate whether demand for the Company’s planned renewable energy will materialize at anticipated prices, or whether satisfactory profit margins will be achieved. If such pricing levels are not achieved or sustained, or if the Company’s business approach to the renewable energy and waste management markets does not achieve or sustain broad acceptance, the Company’s business, operating results and financial condition could be materially and negatively impacted.

Lack of Waste Resources: The performance of the Company’s planned renewable energy Facilities may be influenced by the availability of waste, biomass, and other refuse-derived waste streams for energy production that people pay to dispose in landfills. Lack of these waste resources, changes in regulations on waste disposal, or adverse changes in the nature or quality of such waste resources would seriously affect the Company’s ability to operate efficiently and generate income. As a result, the Company’s revenue and financial condition could be materially or negatively affected. The Company’s cannot assure that waste resources will be available in the future with associated revenue (i.e. tipping fees), for free, or at a price that makes them affordable for the Company’s waste-to-energy technologies. Historically, the waste supply has been consistent, however, the economics for the waste hauler, and land fill operator were the areas that previous waste to energy efforts have encountered difficulties. Earlier waste to energy facilities were designed to reduce the volume of waste, and recover energy for sale as electricity. The revenue from tipping fees is an essential part of the success of those waste to energy projects. The Company’s approach to this historical issue in waste to energy was the addition of bio-fuel production from recovered green house gases. The revenue from bio-fuels allows the company to be reasonably insensitive to the issue of tipping fees, and able to purchase fuel (biomass, waste, coal etc.) at a price and still have robust economics in a project. The Company has a long term relationship with Republic Services, Inc. (“Republic”), one of the largest MSW waste disposal companies in the United States, and is in discussions for Republic to supply waste to the Facilities for which the Company would also be expected to receive tipping fees. While the terms have been agreed to, in principle, there can be no assurance that the contracts will be executed for project sites, or that if executed, the contracts will be assigned to the Company for the Facilities. Negative Publicity and Litigation: The energy sector has been the subject of highly-publicized allegations of misconduct in recent years. Several high profile start-ups in the renewable energy markets of solar and bio-fuels have gone under with very high profile investment firms involved, and many State and Federal funds lost. In addition, many utility companies have been publicly criticized for their performance during recent natural disasters and weather related incidents. Power outages, such as those that affected the Northeast and Midwest regions of the United States and Canada in August 2003, could exacerbate negative sentiment regarding the energy industry. Negative publicity of this nature may make legislatures, regulatory authorities and tribunals less likely to view energy companies favorably, which could cause them to make decisions or take actions that are adverse to the Company. It is the Company’s belief that the topic of waste conversion for domestic fuel production is a safer position to support, as it is clearly demonstrable to show that the conversion of waste has less environmental impact than leaving it in landfills. The Company has only used shareholder equity for its efforts, and has not taken any public funds of any kind.

Equipment Failure: The generation and transmission of electricity require the use of expensive and complex equipment. While the Company plans to have a maintenance program in place at each Facility, generating plants are subject to unplanned outages because of equipment failure or natural disasters. This factor is largely beyond the Company’s control, but may have a material adverse effect on the Company’s earnings, cash flows and financial position. To minimize the impact of these events at any one project, the Company plans to have critical item spares on hand at each project site. External Threats: The threat of or actual acts of terrorism may affect the Company’s planned operations in unpredictable ways and may cause changes in the insurance markets, force the Company to increase security measures and cause disruptions of power markets. If any of the Facilities were to be a direct target, or an

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indirect casualty, of an act of terrorism, the Company’s operations could be adversely affected. Instability in the financial markets as a result of terrorism also could affect the Company’s ability to raise needed capital. Change in Economic Conditions: Periods of slowed economic activity generally result in decreased demand for power, particularly by industrial and large commercial customers. As a consequence, recessions or other downturns in the economy may result in decreased revenues and cash flows for the Company. To minimize the impact of these events, the Company plans to have long term, fixed price, renewable energy contracts with credit worthy utilities. Intellectual Property Rights: Neither the Company nor its affiliates have filed any patent applications on the intellectual property the Company plans to use. It is currently a Trade Secret. The company’s business plan of owning and operating facilities, does not require intellectual property protection as those facilities will not infringe on the patent rights of third parties, or provide a vehicle for third parties to block the Company’s business efforts. If the company decides to license or sell its facility concepts, and its technology, to third parties, then intellectual property rights becomes material under US Law. Should the Company or its affiliates decide to file patent applications to protect these license or sale transactions, the Company cannot assure that any patent applications relating to the technologies the Company plans to utilize at the Facilities will result in patents being issued, that any issued patents will afford adequate protection to the Company, or that such patents will not be challenged, invalidated, infringed or circumvented. Furthermore in regards to the third party licenses and sales, the Company cannot assure that others have not developed, or will not develop, similar technologies that will compete with the Company’s intellectual property rights without infringing upon, or which do not infringe upon, the intellectual property rights of the Company or its affiliates. Third parties, including potential competitors, may already have filed patent applications relating to the subject matter of the technologies the Company plans to utilize at these licensed Facility sites. In the event that any such patents are issued to such parties, such patents may hinder or prevent the Company from commercializing its products and could require the Company to enter into licenses with such parties. The Company cannot assure that any required licenses would be available to the Company on acceptable terms, or at all. Determination of Consideration to Management: The Common Stock, stock options, and cash consideration being paid by the Company to its management have not been determined based on arms- length negotiation. The Company may grant additional stock options and other equity incentives to its executive officers and directors that are consistent with the conservative nature of the energy industry. While management believes that the consideration is fair for the work being performed, there is no assurance that the consideration to management reflects the true market value of its services. Reliance on Management: Under applicable state corporation laws and the Bylaws of the Company, the officers and directors of the Company have the power and authority to manage all aspects of the Company’s business. Shareholders must be willing to entrust all aspects of the Company’s business to its directors and executive officers. Conflicts of Interest: The relationship of management and its affiliates to the Company could create conflicts of interest. While management has a fiduciary duty to the Company, it also determines its compensation from the Company. While management believes that the consideration is fair for the work being performed, there is no assurance that the consideration to management reflects the true market value of its services. Management believes that it will have the resources necessary to fulfill its management obligations to all entities for which it is responsible. Management’s compensation from the Company has not been determined pursuant to arm’s-length negotiation. See “MANAGEMENT.” Indemnification of Management: The Company’s Bylaws provide that the Company will indemnify and hold harmless its officers and directors against claims arising from Company activities, to the maximum extent permitted by California law. If the Company were called upon to perform under its indemnification agreement, then the portion of its assets expended for such purpose would reduce the amount otherwise available for the Company’s business. Influence by Existing Stockholders: As of December 31, 2011, Envirepel Energy’s founding shareholders beneficially own in excess of 35% of its outstanding Common Stock. By virtue of such stock ownership, the founding shareholders are able to greatly influence the election of the members of Envirepel Energy's Board of Directors who exercise control over the affairs of Envirepel Energy. There can be no assurance that conflicts

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of interest will not arise with respect to such directors or that such conflicts will be resolved in a manner favorable to Envirepel Energy. Financial Projections: Financial projections concerning the estimated operating results of Envirepel Energy may be included with the Memorandum. If such projections are provided, only those in writing and authorized by Envirepel Energy may be relied upon by prospective purchasers of Shares. Any projections would be based on certain assumptions which could prove to be inaccurate and which would be subject to future conditions which may be beyond the control of the Company, such as general industry conditions. Envirepel Energy may experience unanticipated costs, or anticipated revenues may not materialize, resulting in lower revenues than forecasted. There is no assurance that the results illustrated in any financial projections will in fact be realized by Envirepel Energy. Any financial projections would be prepared by management of Envirepel Energy and would not be examined or compiled by independent certified public accountants. Counsel to the Company has had no participation in the preparation or review of any financial projections prepared by the Company. Accordingly, neither the independent certified public accountants nor counsel to the Company would be able to provide any level of assurance on them. Financial statements are unaudited: The company’s financial statements have been prepared by management and have not been reviewed or examined by any independent certified public accounting firm. It is likely that an auditing firm would include a “going concern” qualification in its audit report of the company. The Company needs substantial additional capital to continue its business. Management is not certain when the company will engage an independent certified public accounting firm. Uninsured Losses: The Company plans to maintain insurance coverage for the Facilities and its operations in amounts and with deductibles that the Company considers appropriate. The Company cannot assure that such insurance coverage is or will be available on commercially reasonable terms. In addition, some risks, such as weather related casualties, may not be insurable. In the case of loss or damage to property, plant or equipment, the Company cannot assure that the insurance proceeds, if any, received will be sufficient to cover the entire cost of replacement or repair. Potential for Indebtedness: There is no assurance that the Company will not incur debt in the future, that it will have sufficient funds to repay its indebtedness or that the Company will not default on its debt, jeopardizing its business viability. However, as each future project is financed independent of each other project, and the Corporation, the risk for this is mitigate to the maximum extend possible once the first commercial project is operating cash flow positive. Furthermore, the Company may not be able to borrow or raise additional capital in the future to meet the Company’s needs or to otherwise provide the capital necessary to expand its business. Risk of Dilution of Ownership in Company: The Company has the right to raise additional capital or incur borrowings from third parties to finance its business. The Company may also implement public or private mergers, business combinations, business acquisitions and similar transactions pursuant to which it would issue substantial additional capital stock to outside parties, causing substantial dilution in the ownership of the Company by its existing shareholders. The Board of Directors has the authority, without the consent of any of the shareholders, to cause the Company to issue more shares of common and preferred stock at such price and on such terms and conditions as are determined by the Board in its sole discretion. The Company may also issue net profits interests in the Company. The issuance of additional shares of capital stock or net profits interests by the Company would dilute the shareholders' ownership in the Company. Future Financing May Not Be Available – Increased Risk from Turmoil in Credit Markets: The Company expects its capital and operating expenditures to increase in the future. Management believes that the existing capital resources together with the net proceeds of the offering will only be adequate to satisfy its cash requirements in the short term. Additional funding will be necessary. The risk of the unavailability of necessary capital or financing is increased by the recent turmoil in domestic and international credit markets. In response to rising default rates and illiquidity, investors and lenders have significantly reduced their willingness to incur risk and make loans and investments. There can be no assurance that the additional capital or financing will be available to the Company on acceptable terms, if at all. If additional funds are raised by issuing equity securities, further dilution to existing shareholders will result. If adequate funds are not available, the Company's business, financial condition and results of operations would be materially adversely affected.

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Liabilities and Past Due Accounts: The Company has liabilities, including accounts payable to third party vendors and related parties, as more fully disclosed in the Company's financial statements and notes to financial statements. The total amount of liabilities including accounts payable varies with time as funds become available. There is no assurance that the Company will be able to pay all or any of its liabilities. Furthermore, the Company is always subject to the risk of litigation from customers, vendors, suppliers, employees, government agencies and others because of the nature of its business. Litigation can cause the Company to incur substantial expenses, and if cases are lost, judgments and awards that add to the Company's costs. Risk of Cost Overruns: Envirepel Energy may incur substantial cost overruns in the development and marketing of its Facilities. There is no assurance that Envirepel Energy will be able to obtain sufficient capital to successfully implement its business plan. If a greater investment is required in the business because of cost overruns, the probability of earning a profit or a return of the Shareholders’ investment in the Company is diminished. Operations – Possible Liens: If Envirepel Energy fails to pay for materials and services for its business on a timely basis, its assets could be subject to materialmen’s and workmen’s liens. The Company may also be subject to bank liens in the event that it defaults on loans from banks, if any. No Assurance That Dividends Will Be Paid: Although the Company plans to pay dividends to its common stockholders after the Test Facility has reached positive cash flow, the Company cannot predict when or assure that it will ever have sufficient earnings to declare and pay dividends to its common stockholders. In the short term, the Company intends to apply net earnings, if any, to increasing its capital base and marketing, and in any event, a decision to declare and pay dividends is at the sole discretion of the Company’s Board of Directors. Prospective investors seeking or needing short term dividend income or liquidity should therefore not purchase the Shares. No Minimum Capitalization From Offering – Inadequate Capital: There is no minimum capitalization required in this offering. There is no assurance that all or a significant number of Shares will be sold in this offering. Investors’ subscription funds will be used by the Company as soon as they are received, and no refunds will be given if an inadequate amount of money is raised from this offering to enable the Company to conduct its business. If the Company raises less than the entire amount that the Company is seeking in the offering, then the Company may not have sufficient capital to meet its operating requirements. There is no assurance that the Company could obtain additional financing or capital from any source, or that such financing or capital would be available to the Company on terms acceptable to it. Under such circumstances, investors in the Shares would likely lose their entire investment in the Company. Investors who subscribe for Shares in the earlier stages of the offering will assume a greater risk than investors who subscribe for Shares later in the offering as subscriptions approach the maximum amount. No Market for the Securities - Lack of Liquidity: The Common Stock is not registered under the Securities Act of 1933, as amended, and may not be sold or otherwise transferred except pursuant to registration or qualification under applicable federal and state securities laws or evidence satisfactory to the Company (which may require an opinion of counsel to be provided at the investor’s expense) that such registration or qualification is not required. There are no registration rights associated with the Common Stock. Consequently, the investors may not be able to liquidate their investment in the Company if such liquidation should become necessary or desired. The Shares are being offered pursuant to Rule 506 promulgated under Section 4(2) of the Securities Act of 1933, as amended. There is no assurance that any public market for the Shares will develop. There is no assurance that the Company’s stock will eventually be accepted for trading on the pink sheets, the OTC Bulletin Board, a NASDAQ market or on any other stock exchange. The Company will not initially be a public reporting company under the Securities Exchange Act of 1934, as amended, and there is no assurance as to if or when it will become a public reporting company. In order to become a public reporting company, the Company must have audited financial statements and must file a Form 10 with the Securities Exchange Commission. The Company must become a public reporting company in order to be listed for trading on the OTC Bulletin Board, and must satisfy additional financial standards to be listed on the NASDAQ Small Capital Market. The Company may eventually attempt to have its stock traded on the “pink sheets.” Nevertheless, shareholders may not be able to liquidate their investments in the event of emergency or for any other reason. The Shares may not be acceptable as collateral for a loan. A purchase of Shares should be considered only as a long-term investment.

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Arbitrarily Determined Share Price: The offering price of the Shares has been determined by management, and bears no relationship to the Company’s assets, book value, potential earnings, net worth or any other recognized criteria of value. The Company established the price of the Shares and the value of the Company without an independent appraisal. There is no assurance that price of the Shares is the fair market value of the Shares or that investors will earn any profit on them. The price has no relationship to book value per share, current earnings or other generally accepted measurement of value. The investor should invest only if he or she agrees that the price that the Company has set is reasonable based upon the Company’s prospects. Penny Stock Regulation: Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $3.00 (other than securities registered on certain national securities exchanges or quoted on NASDAQ provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The rules require that a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in connection with the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the rules generally require that prior to a transaction in a penny stock, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the liquidity of penny stocks. The Company’s securities may from time to time become subject to the penny stock rules in which case investors in the offering may find it more difficult to sell their securities. Prospective investors should carefully consider all of the information contained in this Memorandum and, in particular, the following factors which could adversely affect the operations and prospects of the Company, before making a decision to purchase the Shares.

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EXHIBIT C

SUPPORTING DOCUMENTS

Supporting Document Page

1

Excerpts from PUC Sunrise Powerlink Enviromental Impact Report 2 - 3

Allied Waste – Letter of Intent for FREF and Kittyhawk 7

Tax Exempt Bond Allocation from the California Pollution Control Authority 8

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5

Excerpts from the PUC’s Sunrise Powerlink Report

The California Public Utilities Commission (PUC) released their 7,000+ page Environmental Impact Study on the Sunrise Powerlink project in January 2008. The PUC’s report concluded that the Sunrise Powerlink (a new 150-mile inbound transmission line for San Diego County) made little environmental sense, and that the preferred alternative was building additional generation in the county. The first two alternatives proposed:

Source: http://www.cpuc.ca.gov/Environment/info/aspen/sunrise/toc-deir.htm - Executive Summary, Section ES-2

Source: http://www.cpuc.ca.gov/Environment/info/aspen/sunrise/toc-deir.htm - Executive Summary, Section ES-2

This chart from the same report shows the differences between Nameplate (or Installed) Capacity and On-Peak Capacity for the renewable energy alternatives evaluated.

Source: http://www.cpuc.ca.gov/Environment/info/aspen/sunrise/toc-deir.htm - New In-Area Generation, Section E5.1

From this chart, the following observation is apparent:

Solar Thermal’s on-peak capacity is 80% of nameplate capacity

Solar PV’s on-peak capacity is 50% of nameplate capacity

Wind’s on-peak capacity is 24 % of nameplate capacity

Biomass/Biogas’s on-peak capacity is 100% of nameplate capacity

6

Envirepel’s Fallbrook Renewable Energy Facility (FREF) and Miramar REF were identified in the report as possible biomass components for the “New In-Area Renewable Generation Alternative”.

Source: http://www.cpuc.ca.gov/Environment/info/aspen/sunrise/toc-deir.htm - Figure E.5.1-2

Source: http://www.cpuc.ca.gov/Environment/info/aspen/sunrise/toc-deir.htm - Figure E.5.1-2

The PUC report even included a very familiar artist’s rendition of the proposed Fallbrook facility:

Source: http://www.cpuc.ca.gov/Environment/info/aspen/sunrise/toc-deir.htm - Figure E.5.1-3a

7

Allied Waste – Letter of Intent for FREF and Kittyhawk

8

Bond Allocation Letter

9

10

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