# EDGAR Filing Document

**Accession Number:** 0001739997
**File Stem:** 0001104659-23-018902
**Filing Date:** 2023-2
**Character Count:** 267622
**Document Hash:** ca801f44dcaa5fd60fd612df69e72b55
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-018902.hdr.sgml**: 20230213

**ACCESSION NUMBER**: 0001104659-23-018902

**CONFORMED SUBMISSION TYPE**: 1-A/A

**PUBLIC DOCUMENT COUNT**: 19

**FILED AS OF DATE**: 20230213

**DATE AS OF CHANGE**: 20230213

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Flower Turbines, Inc.
- **CENTRAL INDEX KEY:** 0001739997
- **STANDARD INDUSTRIAL CLASSIFICATION:** ENGINES & TURBINES [3510]
- **IRS NUMBER:** 463784856
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 1-A/A
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 024-12083
- **FILM NUMBER:** 23614446

**BUSINESS ADDRESS:**
- **STREET 1:** 670 LONG BEACH BLVD
- **STREET 2:** SUITE 201
- **CITY:** LONG BEACH
- **STATE:** NY
- **ZIP:** 11561
- **BUSINESS PHONE:** 806-318-1116

**MAIL ADDRESS:**
- **STREET 1:** 670 LONG BEACH BLVD SUITE 201
- **STREET 2:** SUITE 201
- **CITY:** LONG BEACH
- **STATE:** NY
- **ZIP:** 11561

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Flower Turbines LLC
- **DATE OF NAME CHANGE:** 20180509

## Part

**AN OFFERING CIRCULAR PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING CIRCULAR FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING CIRCULAR IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.**

**OFFERING CIRCULAR**

 **DATED: February 13, 2023**

![](tm2229852d2_ptiiandiiiimg01.jpg)

**Flower Turbines, Inc.**

670 Long Beach Blvd., Suite 201

Long Beach, NY 11561

<u>www.flowerturbines.com</u>

**UP TO 1,000,000 SHARES OF COMMON STOCK PLUS**

**UP TO 250,000 BONUS SHARES**<sup>(1)</sup>

**Minimum Investment: $600.00 (50 shares)**

**SEE "SECURITIES BEING OFFERED"**

**AT PAGE 31**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Price to Public |  | Underwriting discount <br> and commissions (2) | Proceeds to issuer before expenses (5)  |
| Price per share | $12.00 | (3) | $0.42 | $11.58 |
| StartEngine processing fee per share (4) | $0.42 |  | $- | $- |
| Price Per share plus processing fee | $12.42 |  | $- | $- |
| Total Maximum with processing fee | $12420000 |  | $420000 | $11580000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The company is offering
 up to 1,000,000 shares of common stock, plus up to 250,000 additional shares of common stock eligible to be issued as bonus shares
 (the "**Bonus Shares**") to investors based upon an investor's investment level and whether an investor is a
 prior investor, as described in this Offering Circular. No additional consideration will be received by the company for the issuance
 of Bonus Shares and the company will absorb the cost of the issuance of the Bonus Shares. See "Plan of Distribution"
 for further details.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The company has engaged
 StartEngine Primary, LLC ()"**StartEngine Primary**") to act as an underwriter of this offering as set forth in "Plan
 of Distribution" and its affiliate StartEngine Crowdfunding, Inc. to perform administrative and technology-related functions
 in connection with this offering. The company will pay a cash commission of 3.5% to StartEngine Primary on sales of the common stock,
 and the company will issue StartEngine Primary a number of shares of common stock equal to 2% of the common stock sold through StartEngine
 Primary (excluding Bonus Shares). The company will also pay a $15,000 advance fee for reasonable accountable out of pocket expenses
 actually anticipated to be incurred by StartEngine Primary. Any unused portion of this fee not actually incurred by StartEngine Primary
 will be returned to the company. FINRA fees will be paid by the company. This does not include processing fees paid directly to StartEngine
 Primary by investors as discussed in footnote 4 below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Does not include effective
 discount that would result from the issuance of Bonus Shares. See "Plan of Distribution" for further details.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) Investors will be required
 to pay directly to StartEngine Primary a processing fee equal to 3.5% of the investment amount at the time of the investors'
 subscription (excluding Bonus Shares). The processing fee shall not exceed $700 for any investor. See "Plan of Distribution"
 for additional discussion of this processing fee. Assuming the offering is fully subscribed (excluding Bonus Shares), investors would
 pay StartEngine Primary total processing fees of $420,000. This amount is included in the Total Maximum offering amount since it
 counts towards the rolling 12-month maximum offering amount that the company is permitted to raise under Regulation A. However, it
 is not included in the gross proceeds received by the company.

(5) Offering expenses include only platform fees and commissions, and exclude, among other things,
 legal, accounting, marketing and cdgar expenses.

The company expects that the amount of expenses of the offering that it will pay will be approximately $60,000, not including commissions, state filing fees or marketing expenses.

**The offering will terminate at the earlier of: (i) the date at which the maximum offering amount has been sold (ii) the date at which the offering is earlier terminated by the company in its sole discretion or (iii) the date that is three years from this offering being qualified by the United States Securities and Exchange Commission (the "Commission").**

**The company has engaged Bryn Mawr Trust Company of Delaware as agent to hold any funds that are tendered by investors. The offering is being conducted on a best-efforts basis. The company may undertake one or more closings on a rolling basis. After each closing, funds tendered by investors will be made available to the company. After the initial closing of this offering, we expect to hold closings on at least a monthly basis.**

***THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OR GIVE ITS APPROVAL OF ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.***

**GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO <u>www.investor.</u>g<u>ov</u>.**

**There is currently no trading market for our common stock.**

**The holders of common stock issued in this offering will grant an irrevocable voting proxy to our chief executive officer that will limit their ability to vote their common stock until the occurrence of certain events specified in the proxy, none of which may ever occur. *See "SUMMARY – Rights and Preferences of Common Stock."***

**These are speculative securities. Investing in our common stock involves significant risks. You should purchase these securities only if you can afford a complete loss of your investment. See "Risk Factors" beginning on page 5.**

**Sales of these securities will commence within two (2) days of the qualification of this offering.**

**We shall file periodic reports as required pursuant to Rule 257(b).**

**We are following the "Offering Circular" format of disclosure under Regulation A.**

**In the event that the company becomes a reporting company under the Securities Exchange Act of 1934, the company intends to take advantage of the provisions that relate to "Emerging Growth Companies" under the JOBS Act of 2012. See "Summary -- Implications of Being an Emerging Growth Company."**

---

| | |
|:---|:---|
| **TABLE OF CONTENTS** |  |
|  | **Page** |
| [**SUMMARY**](#a_001) | [**2**](#a_001) |
| [**RISK FACTORS**](#a_002) | [**5**](#a_002) |
| [**DILUTION**](#a_003) | [**11**](#a_003) |
| [**PLAN OF DISTRIBUTION**](#a_004) | [**13**](#a_004) |
| [**USE OF PROCEEDS**](#a_005) | [**17**](#a_005) |
| [**OUR BUSINESS**](#a_006) | [**18**](#a_006) |
| [**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**](#a_007) | [**25**](#a_007) |
| [**DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES**](#a_008) | [**28**](#a_008) |
| [**COMPENSATION OF DIRECTORS AND OFFICERS**](#a_009) | [**28**](#a_009) |
| [**SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS**](#a_010) | [**29**](#a_010) |
| [**INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS**](#a_011) | [**30**](#a_011) |
| [**SECURITIES BEING OFFERED**](#a_012) | [**31**](#a_012) |
| [**FINANCIAL STATEMENTS**](#a_013) | [**F-1**](#a_013) |

---

In this offering circular (this "Offering Circular"), the terms "Company," "us" and "we," refer to Flower Turbines, Inc.

THIS OFFERING CIRCULAR MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO OUR MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. WE DO NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

**SUMMARY**

This Summary highlights information contained elsewhere in this Offering Circular, and does not contain all the information that you should consider in making your investment decision. Before investing in the common stock, you should carefully read this entire Offering Circular, including our financial statements and related notes. You should consider among other information, the matters described under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

**The Company**

We design, manufacture, and sell small vertical axis wind turbines, which, compared with current small drag-type wind turbines, are more aerodynamically efficient, emit less noise and vibrations, and are aesthetically designed. We have solved the aerodynamic blade design issues that plague many of our competitors' wind turbines. Our goal is to make our sleek, innovative, and efficient small wind turbines the foundation of a large global renewable energy company. We currently offer, one, three, and six-meter high versions of our wind turbines, that can produce power ranging from tens of watts up to 5,000 watts.

**The Current Offering**

---

| | |
|:---|:---|
| &nbsp;&nbsp; Securities offered | &nbsp;&nbsp; Maximum of 1,000,000 shares of common stock ($12000000), plus up to 250,000 shares of common stock eligible to be issued as Bonus Shares for no additional consideration. |
| &nbsp;&nbsp; Minimum investment | &nbsp;&nbsp; $600.00 (50 shares of common stock) |
| &nbsp;&nbsp; Common stock outstanding before the offering (fully diluted and including unissued option pool) | &nbsp;&nbsp; 11,081,780 shares |
| &nbsp;&nbsp; Common stock outstanding after the offering (fully diluted and including unissued option pool) | &nbsp;&nbsp; 12,351,780 shares assuming issuance of all Bonus Shares available to investors in this offering. |
| &nbsp;&nbsp; Use or Proceeds | &nbsp;&nbsp; The net proceeds of this offering will be primarily used for research and development, working capital needs, <br> employment related needs and marketing. See "Use of Proceeds."  |
| &nbsp;&nbsp; Risk Factors | &nbsp;&nbsp; Investing in our securities involves risks. See "Risk Factors" and other information included in this Offering Circular for a discussion of factors you should carefully consider before deciding to invest. |

---

**Rights and Preferences of Common Stock**

The holders of common stock will be entitled to receive pro rata dividends, if any, declared by our board of directors out of legally available funds, subject to any preferential right of the holders of any preferred stock that may be authorized and issued in the future. Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution, subject to any preferential right of the holders of any preferred stock that may be authorized and issued in the future.

The holders of our common stock are entitled to one vote per share, however, the holders of common stock issued in this offering will grant an irrevocable voting proxy to our chief executive officer (the "**Proxy**"), that will limit their ability to vote their common stock until the occurrence of certain events specified in the proxy, none of which may ever occur. The proxy is set out in Section 6 of the Subscription Agreement which appears as Exhibit 4.1 to the Offering Statement of which this Offering Circular forms a part (the "**Subscription Agreement**"). There exists uncertainty as to whether a court would enforce the irrevocability of the proxy. In addition, the inability of the holders of common stock issued in this offering to vote their common stock, and the provision of a voting proxy to our chief executive officer, could have an anti-takeover effect as a potential acquirer may wish to call a special meeting of stockholders for the purpose of considering the removal of directors or an acquisition offer, in which case the investors would not have the right to vote in favor of the same. See "Securities Being Offered – Voting Proxy" and "Risk Factors - Investors in our common stock will have to assign their voting rights."

Pursuant to the Subscription Agreement, other than with respect to the gross negligence or willful misconduct of the Proxy, the Proxy will not be liable for any actions he/she takes or fails to take, in his/her capacity as the Proxy, while acting in good faith. Therefore, if the Proxy takes actions or omits to take actions which investors deem to be not in their best interests, as long as such actions do not constitute gross negligence or willful misconduct, and the Proxy is acting in good faith, the investors would not have any recourse against the Proxy. In addition, under the Subscription Agreement, except to the extent prohibited by applicable federal and state securities laws, each investor agrees to indemnify the Proxy from all losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses arising out of or in connection with any act done or omitted in the Proxy's capacity as representative of such investor, in each case as such losses are suffered or incurred. While it is uncertain whether a court would enforce such provision, if it did, investors in this offering could have indemnification obligations to the Proxy. See "Risk Factors - Our Subscription Agreement limits the liability of the proxy and provides the proxy with certain indemnification rights against the investors."

As of August 1, 2022, Dr. Mark Daniel Farb, our sole director, and our CEO, held over 70% of our outstanding common stock, and via voting proxies, holds substantially all voting power. See "Risk Factors – Our chief executive officer and sole director has voting control."

**Implications of Being an Emerging Growth Company**

We are not subject to the ongoing reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") because we are not registering our securities under the Exchange Act. Rather, we will be subject to the more limited reporting requirements under Regulation A, including the obligation to electronically file:

● annual reports (including disclosure relating to our business operations for the preceding two fiscal years, or, if in existence for less than two years, since inception, related party transactions, beneficial ownership of the issuer's securities, executive officers and directors and certain executive compensation information, management's discussion and analysis ("MD&A") of the issuer's liquidity, capital resources, and results of operations, and two years of audited financial statements),

● semiannual reports (including disclosure primarily relating to the issuer's interim financial statements and MD&A) and

● current reports for certain material events.

In addition, at any time after completing reporting for the fiscal year in which our offering statement was qualified, if the securities of each class to which this offering statement relates are held of record by fewer than 300 persons and offers or sales are not ongoing, we may immediately suspend our ongoing reporting obligations under Regulation A.

If and when we become subject to the ongoing reporting requirements of the Exchange Act, as an issuer with less than $1.07 billion in total annual gross revenues during our last fiscal year, we will qualify as an "emerging growth company" under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") and this status will be significant. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

● will not be required to obtain an auditor attestation on our internal controls over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

● will not be required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as "compensation discussion and analysis");

● will not be required to obtain a non-binding advisory vote from our shareholders on executive compensation or golden parachute arrangements (commonly referred to as the "say-on-pay," "say-on-frequency" and "say-on-golden-parachute" votes);

● will be exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

● may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A; and

● will be eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards.

**Selected Risks Associated with Our Business**

Our business expects to be subject to a number of risks and uncertainties, including those highlighted in the section titled "Risk Factors" immediately following this summary. These risks include, but are not limited to, the following:

● Our financial statements include a going concern note.

● We depend on certain key personnel and must attract and retain additional talent.

● The success of our business is highly correlated to general economic conditions.

● Natural disasters and other events beyond our control could materially adversely affect us.

● Developing new products and technologies entails significant risks and uncertainties.

● The growth of our business depends on our ability to finance new products.

● We face intense competition, and many of our competitors have substantially greater resources than we do.

● If our products fail to perform as expected, we may have to recall them and our ability to develop, market and sell our products could be harmed.

● We are exposed to risks associated with product liability claims in the event that the use or installation of our products results in injury or damage.

● We could incur substantial costs to comply with environmental, health and safety ("EHS") laws and regulations and to address violations of or liabilities under these requirements.

● Our ability to comply with regulatory requirements is critical to our future success, and there can be no guarantee that our businesses are in full compliance with all such requirements.

● The U.S. wind energy industry is significantly impacted by tax and other economic incentives. A significant change in these incentives could significantly impact our results of operations and growth.

● Changes to trade regulation, quotas, duties or tariffs, and sanctions caused by changing U.S. and geopolitical policies, may impact our competitive position or adversely impact our margins.

● Risks of borrowing and restrictions on our ability to borrow.

● Our intellectual property could be unenforceable or ineffective.

● We rely on third parties to provide services essential to the success of our business.

● If we are unable to adequately control the costs associated with operating our business, our business, financial condition, operating results and prospects will suffer.

● We do not own all of our intellectual property.

● This offering is being conducted on a "best efforts" basis and does not require a minimum amount to be raised. As a result, we may not be able to raise enough funds to fully implement our business plan and our investors may lose their entire investment.

● Terms of subsequent financings may adversely impact your investment.

● Because no public trading market for our common stock currently exists, it will be difficult for you to sell the common stock and, if you are able to sell the common stock, you may have to sell them at a substantial discount to the price you paid for the common stock.

● Investors in our common stock will have to assign their voting rights.

● Our Subscription Agreement limits the liability of the proxy.

● Our Subscription Agreement provides the proxy with certain indemnification rights against the investors

● Our sole director and chief executive officer has voting control.

● Management discretion as to use of proceeds.

● The subscription agreement has a forum selection provision that requires disputes be resolved in state or federal courts in the State of New York, regardless of convenience or cost to you, the investor.

● Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes to the plaintiff(s) in any action under the agreement.

● We are not likely to pay cash dividends in the foreseeable future.

● Using a credit card to purchase shares may impact the return on your investment.

● You must keep records of your investment for tax purposes.

**RISK FACTORS**

**Investing in our common stock involves risk. In evaluating us and an investment in the common stock, careful consideration should be given to the following risk factors, in addition to the other information included in this offering circular. Each of these risk factors could materially adversely affect our business, operating results, or financial condition, as well as adversely affect the value of an investment in the common stock. The following is a summary of the risk factors that we currently believe make this offering speculative or substantially risky. We are still subject to all the same risks faced by all companies in our industry, and to which all such companies in the economy are exposed. These include risks relating to economic downturns, political and economic events, and technological developments (such as cyber-security). Additionally, early-stage companies are inherently riskier than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.**

**<u>Risks Related to Our Business</u>**.

***Our financial statements include a going concern note.***

Our ability to continue as a going concern for the next twelve months is dependent upon our ability to generate sufficient cash flows from operations to meet our obligations, and/or to obtain additional capital financing from investors and/or third parties. No assurance can be given that we will be successful in these efforts. These factors, among others, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time. Our entry into the US market in 2022 is expected to decrease that risk.

***We depend on certain key personnel and must attract and retain additional talent.***

Our future success depends on the efforts of key personnel and consultants, especially our sole officer and director, Dr. Mark Daniel Farb. As we grow, we will need to attract and hire additional employees in sales, marketing, design, development, operations, finance, legal, human resources, and other areas. Depending on the economic environment and our performance, we may not be able to locate or attract qualified individuals for such positions when we need them. We may also make hiring mistakes, which can be costly in terms of resources spent in recruiting, hiring, and investing in the incorrect individual and in the time delay in locating the right employee fit. If we are unable to attract, hire, and retain the right talent or make too many hiring mistakes, it is likely that our business will suffer from not having the right employees in the right positions at the right time. This would likely adversely impact the value of your investment.

***The success of our business is highly correlated to general economic conditions.***

Demand for our products is highly correlated with general economic conditions, as a substantial portion of our revenue is derived from discretionary spending, which typically declines during times of economic instability. Declines in economic conditions in the United States or in other countries in which we operate and may operate in the future may adversely impact our financial results. Because such declines in demand are difficult to predict, we or our industry may have increased excess capacity as a result. An increase in excess capacity may result in declines in prices for our products. Our ability to grow or maintain our business may be adversely affected by sustained economic weakness and uncertainty, including the effect of wavering consumer confidence, high unemployment, and other factors. The inability to grow or maintain our business would adversely affect our business, financial conditions, and results of operations, and thereby an investment in our common stock.

***Natural disasters and other events beyond our control could materially adversely affect us.***

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could have a strong negative effect on us. Our business operations are subject to interruption by natural disasters, fire, power shortages, pandemics and other events beyond our control. Although we maintain crisis management and disaster response plans, such events could make it difficult or impossible for us to deliver our products to our customers and could decrease demand for our products.

In addition, if the intensity and frequency of hurricanes, tornados, and other adverse weather conditions results from global warming, or otherwise, the same could affect the viability of our turbines to withstand such adverse weather in certain markets, which could adversely effect our business.

***Developing new products and technologies entails significant risks and uncertainties.***

The failure of our products to meet our performance estimates may be caused by, among other things, unanticipated technological hurdles, difficulties in manufacturing, changes to design and regulatory hurdles. Any of these events could materially and adversely affect our operating performance and results of operations.

***The growth of our business depends on our ability to finance new products.***

We operate in a rapidly changing industry. Technological advances, the introduction of new products and new design and manufacturing techniques could adversely affect our business unless we are able to adapt to the changing conditions. To remain competitive, we must continue to incur significant costs in product development, equipment, facilities and invest in working capital. These costs may increase, resulting in greater fixed costs and operating expenses.

***We face intense competition, and many of our competitors have substantially greater resources than we do.***

We compete with major international and domestic renewable energy companies, including, GE, Siemens, and Enercon. Some of our current and potential competitors have greater market recognition and customer bases, longer operating histories and substantially greater financial, technical, marketing, distribution, purchasing, manufacturing, personnel, and other resources than we do. As a result, they may be able to respond more quickly to changing customer demands or to devote greater resources to the development, promotion, and sales of alternative energy products than we can. In addition, many of our competitors are developing and are currently producing products based on new solar energy technologies that may ultimately have costs similar to, or lower than, our projected costs.

***If our products fail to perform as expected, we may have to recall them and our ability to develop, market and sell our products could be harmed.***

Our products may contain defects in design and manufacture that may cause them not to perform as expected or that may require repair. There can be no assurance that we will not be required to recall any products in the future. There can be no assurance that we will be able to detect and fix any defects in our products prior to their sale. Any product defects or any other failure of our products to perform as expected could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product recalls, product liability claims, harm to our brand and reputation, and significant warranty and other expenses, and could have a material adverse impact on our business, financial condition, operating results and prospects.

***We are exposed to risks associated with product liability claims in the event that the use or installation of our products results in injury or damage.***

Since our products are electricity-delivering devices and our turbines have fast moving blades, it is possible that users or services providers, could be injured or killed by our products, whether by product malfunctions, defects, improper installation or other causes. As a manufacturer of products that are used by consumers, we face an inherent risk of exposure to product liability claims or class action suits in the event that the use of the products we sell or install results in injury or damage. Moreover, to the extent that a claim is brought against us we may not have adequate resources in the event of a successful claim against us. The successful assertion of product liability claims against us could result in potentially significant monetary damages and, if our insurance protection is inadequate, to the extent we hold applicable insurance coverage, could require us to make significant payments.

***We could incur substantial costs to comply with environmental, health and safety ("EHS") laws and regulations and to address violations of or liabilities under these requirements.***

Our operations are subject to a variety of EHS laws and regulations in the jurisdictions in which we operate and sell products governing, among other things, health, safety, pollution and protection of the environment and natural resources, including the use, handling, transportation and disposal of non-hazardous and hazardous materials and wastes, as well as emissions and discharges into the environment, including discharges to air, surface water, groundwater and soil, product content, performance and packaging. We cannot guarantee that we have been, or will at all times be, in compliance with such laws and regulations. Changes in existing EHS laws and regulations, or their application, could cause us to incur additional or unexpected costs to achieve or maintain compliance. Failure to comply with these laws and regulations, obtain the necessary permits to operate our business, or comply with the terms and conditions of such permits may subject us to a variety of administrative, civil and criminal enforcement measures, including the imposition of civil and criminal sanctions, monetary fines and penalties, remedial obligations, and the issuance of compliance requirements limiting or preventing some or all of our operations. The assertion of claims relating to regulatory compliance, on or off site contamination, natural resource damage, the discovery of previously unknown environmental liabilities, the imposition of criminal or civil fines or penalties and/or other sanctions, or the obligation to undertake investigation, remediation or monitoring activities could result in potentially significant costs and expenditures to address contamination or resolve claims or liabilities. Such costs and expenditures could have a material adverse effect on our business, financial condition or results of operations. Under certain circumstances, violation of such EHS laws and regulations could result in us being disqualified from eligibility to receive federal government contracts or subcontracts under the federal government's debarment and suspension system.

We also are subject to laws and regulations that impose liability and cleanup responsibility for releases of hazardous substances into the environment. Under certain of these laws and regulations, such liabilities can be imposed for cleanup of currently and formerly owned, leased or operated properties, or properties to which hazardous substances or wastes were sent by current or former operators at our current or former facilities, regardless of whether we directly caused the contamination or violated any law at the time of discharge or disposal. The presence of contamination from hazardous substances or wastes could interfere with ongoing operations or adversely affect our ability to sell, lease or use our properties as collateral for financing. We also could be held liable under third-party claims for property damage, natural resource damage or personal injury and for penalties and other damages under such environmental laws and regulations, which could have a material adverse effect on our business, financial condition and results of operations.

***Our ability to comply with regulatory requirements is critical to our future success, and there can be no guarantee that our businesses are in full compliance with all such requirements.***

As a manufacturer and distributor of wind and other energy industry products we are subject to the requirements of federal, state, local, and foreign regulatory authorities. In addition, we are subject to several authorities setting industry standards. Changes in the standards and requirements imposed by such authorities could have a material adverse effect on us. In the event we are unable to meet any such standards when adopted, our businesses could be adversely affected. We may not be able to obtain all regulatory approvals, licenses, and permits that may be required in the future, or any necessary modifications to existing regulatory approvals, licenses and permits, or maintain all required regulatory approvals, licenses and permits. There can be no guarantee that our businesses are fully compliant with such standards and requirements.

***The U.S. wind energy industry is significantly impacted by tax and other economic incentives. A significant change in these incentives could significantly impact our results of operations and growth***.

The U.S. wind energy industry is significantly impacted by federal tax incentives and state Renewable Portfolio Standards ("**RPSs**"), which have provided material incentives to develop wind energy generation facilities and thereby impact the demand for our products. One such federal government program is the production tax credit ("**PTC**"), which provides economic incentives to the owners of wind energy facilities in the form of a tax credit. Despite recent reductions in the cost of wind energy, due to variability in wind quality and consistency, and other regional differences, wind energy may not be economically viable in certain parts of the country absent such incentives. The increased demand for our products that generally results from the credits and incentives could be impacted by the expiration or curtailment of these programs. A new set of incentives under the Inflation Reduction Act of 2022 have just been released and could affect our finances positively because we sell and manufacture in the US for North America.

***Changes to trade regulation, quotas, duties or tariffs, and sanctions caused by changing U.S. and geopolitical policies, may impact our competitive position or adversely impact our margins.***

New tariffs have resulted in increased prices, including with respect to certain steel products, and could adversely affect our consolidated results of operations, financial position, and cash flows. These tariffs, along with any additional tariffs or trade restrictions that may be implemented by the U.S. or other countries, could result in further increased prices and a decreased available supply of steel and other imported components and inputs. We may not be able to pass price increases on to our customers and may not be able to secure adequate alternative sources of steel on a timely basis.

***Risks of borrowing and restrictions on our ability to borrow.***

We currently have an outstanding loans and may have to seek loans in the future from financial institutions. Typical loan agreements might contain restrictive covenants which may impair our operating flexibility. A default under any loan agreement could result in a charging order that would have a material adverse effect on our business, results of operations or financial condition.

***Our intellectual property could be unenforceable or ineffective.***

One of our most valuable assets is our intellectual property. We own or license from Dr. Farb, various patents issued by various jurisdictions, which cover various aspects of our technology. We also license from Dr. Farb various domain names and trademarks, and we hold various trade secrets related to the manufacturing and construction of our turbines. In addition, we plan to explore other opportunities to patent parts of our core technology; however, such patents may never be issued or certain claims may be rejected or may need to be narrowed, which may limit the protection we are attempting to obtain. In addition, companies, organizations, or individuals, including competitors, may hold or obtain patents, trademarks, or other proprietary rights that would prevent, limit, or interfere with our ability to make, use, develop, sell, or market our products, which would make it more difficult for us to operate our business. These third parties may have applied for, been granted, or obtained patents that relate to intellectual property, which competes with our intellectual property or technology. This may require us to develop or obtain alternative technology, or obtain appropriate licenses under these patents, which may not be available on acceptable terms or at all. Such a circumstance may result in us having to significantly increase development efforts and resources to redesign our technology in order to safeguard our competitive edge against competitors. There is a risk that our means of protecting our intellectual property rights may not be adequate, and weaknesses or failures in this area could adversely affect our business or reputation, financial condition, and/or operating results.

From time to time, we may receive communications from holders of patents or trademarks regarding their proprietary rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights and urge us to take licenses. In addition, if we are determined to have infringed upon a third party's intellectual property rights, we may be required to cease deploying our products, pay substantial damages, seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all, and/or establish and maintain alternative branding for our business. We may also need to file lawsuits to protect our intellectual property rights from infringement from third parties, which could be expensive, time consuming, and distract management's attention from our core operations.

***We rely on third parties to provide services essential to the success of our business.***

We rely on third parties to provide a variety of essential business functions for us, including research and development, engineering, manufacturing, shipping, advertising, retailing, and distribution. It is possible that some of these third parties will fail to perform their services or will perform them in an unacceptable manner. Any significant delays or other complications in maintaining our research and development partners, third party manufacturers, or manufacturing our products, including, but not limited to, complications associated with production or supply chain, or regulatory approvals, or any disruptions or failures to maintain our relationships, could materially damage our brand, business, prospects, financial condition, and operating results. There is currently a risk that the coronavirus outbreak in countries around the world may disrupt parts supply. We intend to mitigate this risk through inventory and supply chain management practices.

***If we are unable to adequately control the costs associated with operating our business, our business, financial condition, operating results and prospects will suffer.***

If we are unable to maintain a sufficiently low level of costs for manufacturing, marketing, selling, and distributing our products relative to their selling prices, our operating results, gross margins, business, and prospects could be materially and adversely impacted. Many of the factors that impact our operating costs are beyond our control. If we are unable to keep our operating costs aligned with the level of revenues we generate, our operating results, business and prospects will be harmed.

***We do not own all of our intellectual property.***

We have a royalty free license to use certain patents, trademarks, copyrights and other intellectual property rights from Dr. Farb, all of them pursuant to a 20 year, royalty free, world-wide, exclusive license, and an assignment to Leviathan Energy Wind Lotus, Ltd. Therefore, our investors will not receive any benefits associated with the ownership of such intellectual property rights. Although our license has a term of 20 years, if we were to default under the license agreement and lose our ability to use these patents, trademarks and other intellectual property, it would have a material adverse impact on our business, financial condition, operating results and prospects, and you could lose your investment.

**<u>Risks Related to the Offering of our Common Stock</u>**.

***This offering is being conducted on a "best efforts" basis and does not require a minimum amount to be raised. As a result, we may not be able to raise enough funds to fully implement our business plan and our investors may lose their entire investment.***

We are offering common stock in the amount of up to $12,000,000 in this offering (plus a processing fee of $0.42 per share which each investor shall pay directly to StartEngine Primary), but may sell much less. The Offering is being conducted on a "best efforts" basis and does not require a minimum amount to be raised. If we are not able to raise sufficient funds, we may not be able to fund our operations as planned, and our growth opportunities may be materially adversely affected. Even if we raise the maximum amount we are seeking in this offering, we may need additional funds in the future in order to grow, and if we cannot raise those funds for whatever reason, including reasons outside our control, such as another significant downturn in the economy, we may not survive.

***Terms of subsequent financings may adversely impact your investment.***

Even if we are successful in this offering, we may need to engage in common equity, debt, or preferred stock financings in the future. Your rights and the value of your investment in the common stock could be reduced. Interest on debt securities could increase costs and negatively impact operating results. Preferred stock could be issued in series from time to time with such designations, rights, preferences, and limitations as needed to raise capital. The terms of preferred stock could be more advantageous to those investors than to the holders of common stock, including, but not limited to, having dividend and liquidation preferences. In addition, if we need to raise more equity capital from the sale of equity securities, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment.

***Because no public trading market for our common stock currently exists, it will be difficult for you to sell the common stock and, if you are able to sell the common stock, you may have to sell them at a substantial discount to the price you paid for the common stock.***

While our common stock has registered to be listed on StartEngine Secondary, we have not yet commenced such listing, and therefore, there is no public trading market. In addition, we may never commence such listing, and if we do, we may terminate such listing at any time. Even if we commence such listing, an active public trading market may never develop. Until the common stock is listed on an exchange on which there is an active trading market, if ever, you may not be able to sell your common stock, unless through a private sale in which the buyer meets the applicable suitability and minimum purchase standards. Therefore, it will be difficult for you to sell your common stock promptly or at all. If you can sell your common stock, you may have to sell them at a substantial discount to the price you paid for the common stock.

***Investors in our common stock will have to assign their voting rights.***

The holders of common stock issued in this offering will grant an irrevocable voting proxy to our chief executive officer (the "**Proxy**"), that will limit their ability to vote their common stock until the occurrence of certain events specified in the proxy, which may never occur. The inability of the holders of common stock issued in this offering to vote their common stock, and the provision of a voting proxy to our chief executive officer, could have an anti-takeover effect as a potential acquirer may wish to call a special meeting of stockholders for the purpose of considering the removal of directors or an acquisition offer, in which case the investors would not have the right to vote in favor of the same.

***Our Subscription Agreement limits the liability of the proxy.***

Pursuant to the Subscription Agreement, other than with respect to the gross negligence or willful misconduct of the Proxy, the Proxy will not be liable for any actions he/she takes or fails to take, in his/her capacity as the Proxy, while acting in good faith. Therefore, if the Proxy takes actions or omits to take actions which investors deem to be not in their best interests, as long as such actions do not constitute gross negligence or willful misconduct, and the Proxy is acting in good faith, the investors would not have any recourse against the Proxy.

***Our Subscription Agreement provides the proxy with certain indemnification rights against the investors***

Under the Subscription Agreement, except to the extent prohibited by applicable federal and state securities laws, each investor agrees to indemnify the Proxy from all losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses arising out of or in connection with any act done or omitted in the Proxy's capacity as representative of such investor, in each case as such losses are suffered or incurred. While it is the opinion of the Securities and Exchange Commission, that such indemnification is against public policy and is therefore unenforceable, and it is uncertain whether a court would enforce such provision, if it did, investors in this offering could have indemnification obligations to the Proxy.

***Our sole director and chief executive officer has voting control.***

As of the date of this Offering Circular, Dr. Mark Daniel Farb our sole executive officer and director, holds over 70% of our common stock, and via voting proxies, holds substantially all voting power. As a result, Dr. Farb is able to control our management and affairs and most matters requiring stockholder approval, including, but not limited to, the election of directors and approval of significant corporate transactions. This concentration of ownership and voting power could have an anti-takeover effect as a potential acquirer may wish to call a special meeting of stockholders for the purpose of considering the removal of directors or an acquisition offer, in which case the investors would not have the right to vote in favor of the same.

***Management discretion as to use of proceeds.***

Our success will be substantially dependent upon the discretion and judgment of our management team with respect to the application and allocation of the proceeds of this offering. The use of proceeds described herein is an estimate based on our current business plan. We, however, may find it necessary or advisable to re-allocate portions of the net proceeds reserved for one category to another, and we will have broad discretion in doing so.

***The subscription agreement has a forum selection provision that requires disputes be resolved in state or federal courts in the State of New York, regardless of convenience or cost to you, the investor.***

***Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes to the plaintiff(s) in any action under the agreement.***

Investors in this offering will be bound by the subscription agreement, which includes a provision under which investors waive the right to a jury trial of any claim they may have against the company arising out of or relating to the agreement, including any claims made under the federal securities laws. By signing the agreement, the investor warrants that the investor has reviewed this waiver with his or her legal counsel, and knowingly and voluntarily waives the investor's jury trial rights following consultation with the investor's legal counsel.

If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by a federal court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which governs the agreement, by a federal or state court in the State of New York. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the subscription agreement. You should consult legal counsel regarding the jury waiver provision before entering into the subscription agreement.

***We are not likely to pay cash dividends in the foreseeable future.***

We currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate.

***Using a credit card to purchase shares may impact the return on your investment.***

Investors in this offering have the option of paying for their investment with a credit card. Transaction fees charged by your credit card company (which can reach 5% of transaction value if considered a cash advance) and interest charged on unpaid card balances (which can reach almost 25% in some states) add to the effective purchase price of the shares you buy and would be in addition to the StartEngine Primary processing fee. See "Plan of Distribution." The cost of using a credit card may also increase if you do not make the minimum monthly card payments and incur late fees. These increased costs may reduce the return on your investment.

The SEC's Office of Investor Education and Advocacy issued an Investor Alert dated February 14, 2018 entitled: Credit Cards and Investments – A Risky Combination, which explains these and other risks you may want to consider before using a credit card to pay for your investment.

***You must keep records of your investment for tax purposes.***

As with all investments in securities, if you sell the common stock, you will probably need to pay tax on the long- or short-term capital gains that you realize if you make a profit, and record any loss to apply it to other taxable income. If you do not have a regular brokerage account, or your regular broker will not hold the common stock for you (and many brokers refuse to hold Regulation A securities for their customers) there will be nobody keeping records for you for tax purposes and you will have to keep your own records, and calculate the gain on any sales of the stock you sell. If you fail to keep accurate records or accurately calculate any gain on any sales of the stock, you may be subject to tax audits and penalties.

**DILUTION**

Dilution means a reduction in value, control, or earnings of the common stock an investor owns.

*Immediate dilution*

An early-stage company typically sells its shares (or grants options over its shares) to its founders and early employees at a very low cash cost, because they are, in effect, putting their "sweat equity" into the company. Occasionally, strategic partners are also interested in investing at an early stage. When the company seeks cash investments from outside investors, like you, the new investors typically pay a much larger sum for their shares than the founders, early employees, or investors from prior financings, which means that the cash value of your stake is diluted because each share of the same type is worth the same amount, and you paid more for your shares than earlier investors did for theirs. Dilution may also be caused by pricing securities at a value higher than book value or expenses incurred in the offering.

The following table demonstrates the price that new investors are paying for their common stock with the effective cash price paid by existing stockholders. The table presents shares and pricing as issued and reflects all transactions since inception, which gives investors a better picture of what they will pay for their investment compared to our insiders than just including such transactions for the last 12 months, which is what the Commission requires.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | <br>Dates Issued |<br>Issued Shares |  |<br>Potential Shares |  | Total Issued and<br>Potential Shares |  | Effective Cash Price<br>Per Share |  |
| Common Stock (Founders) | 2018 | 7577500 |  |  |  | 7577500 |  | $0.0000 |  |
| Common Stock (Regulation CF) | 2018-2019 | 1060220 | (1) |  |  | 1060220 |  | $0.9966 |  |
| Common Stock (Regulation CF) | 2020 | 334620 | (2) |  |  | 334620 |  | $2.7209 |  |
| Common Stock (Regulation A+) | 2021-2022 | 1409440 | (3) |  |  | 1409440 |  | $6.0665 |  |
| Stock Options | 2021-2022 |  |  | 700000 | (4) | 700000 |  | $7.0000 | (5) |
| **Total Common Stock and Common Stock Equivalents** |  | 10381780 |  | 700000 |  | 11081780 | (6) | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.39 |  |
| Investors in this Offering, assuming fully subscribed with maximum Bonus Shares, and StartEngine's equity commission. |  | 1270000 | (7) |  |  | 1270000 |  | $12.00 |  |
| **Total after including of this offering** |  | 11651780 |  | 700000 |  | 12351780 |  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.06 |  |

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(1) Includes 2,770 bonus shares issued in the offering, and 850 shares issued to StartEngine Primary as a commission.

(2) Includes 16,140 bonus shares issued in the offering, and 6,190 shares issued to StartEngine Primary as a commission..

(3) Includes 147,690 bonus shares issued in the offering, and 16,740 shares issued to StartEngine Primary as a commission.

(4) Assumes conversion at exercise price of all outstanding options, however, excludes any unissued options remaining in the option pool.

(5) Represents exercise price per share of all outstanding options.

(6) Excludes options to purchase 100,000 shares of common stock available for future issuance under the Company's 2020 Omnibus Incentive Plan.

(7) Assumes this offering is fully-subscribed, and with maximum Bonus Shares issued.

*Future dilution*

Another important way of looking at dilution is the dilution that happens due to future actions by the company. The investor's stake in a company could be diluted due to the company issuing additional shares of common stock or securities convertible into shares of common stock. In other words, when the company issues more securities, the percentage of the company that you own will go down, even though the value of the company may go up. You will own a smaller piece of a larger company. This increase in number of shares outstanding could result from a stock offering (such as an initial public offering, another crowdfunding round, a venture capital round, or angel investment), employees exercising stock options, or by conversion of certain instruments (e.g. convertible bonds, preferred shares or warrants) into stock.

If we decide to issue more shares, an investor could experience value dilution, with each share being worth less than before, and control dilution, with the total percentage an investor owns being less than before. There may also be earnings dilution, with a reduction in the amount earned per share (though this typically occurs only if the company offers dividends, and most early stage companies are unlikely to offer dividends, preferring to invest any earnings into the company).

The type of dilution that hurts early-stage investors mostly occurs when the company sells more shares, or other equity securities in a "down round," meaning at a lower valuation than in earlier offerings. An example of how this might occur is as follows (numbers are for illustrative purposes only):

● In May 2019, Ben invests $20,000 in shares that represent 2% of a company valued at $1 million.

● In December, the company is doing very well and sells $5 million in shares to venture capitalists on a valuation (before the new investment) of $10 million. Ben now owns only 1.3% of the company but his stake is worth $200,000.

● In May 2020, the company has run into serious problems and, in order to stay afloat, it raises $1 million at a valuation of only $2 million (the "down round"). Ben now owns only 0.89% of the company and his stake is worth only $26,660.

This type of dilution might also happen upon conversion of convertible notes, stock options or warrants into shares. Typically, the terms of convertible notes issued by early-stage companies provide that in the event of another round of financing, the holders of the convertible notes get to convert their notes into equity at a "discount" to the price paid by the new investors, i.e., they get more shares than the new investors would for the same price. Additionally, convertible notes may have a "price cap" on the conversion price, which effectively acts as a share price ceiling. Either way, the holders of the convertible notes get more shares for their money than new investors. In the event that the financing is a "down round," the holders of the convertible notes will dilute existing equity holders, and even more than the new investors do because they get more shares for their money.

If you are making an investment expecting to own a certain percentage of our capital stock or expecting each share of common stock to hold a certain amount of value, it's important to realize how the value of the common stock can decrease by actions taken by us. Dilution can make drastic changes to the value of each share, ownership percentage, voting control, and earnings per share.

**PLAN OF DISTRIBUTION**

**Plan of Distribution**

The company is offering up to 1,000,000 shares of common stock, plus up to 250,000 additional shares of common stock eligible to be issued as Bonus Shares to investors based upon an investor's investment level and whether an investor is an existing investor, as described in this Offering Circular. No additional consideration will be received by the company for the issuance of Bonus Shares and the company will absorb the cost of the issuance of the Bonus Shares. The maximum offering amount is $12,000,000. The cash price per share of common stock is $12.00 and the minimum investment is $600.00 (50 shares).

The company intends to market the shares in this offering both through online and offline means. Online marketing may take the form of soliciting potential investors through various channels of online and electronic media whereby the Offering Circular may be delivered contemporaneously and posting "testing the waters" materials or the Offering Circular on an online investment platform.

The company's Offering Circular will be furnished to prospective investors in this offering via download 24 hours a day, 7 days a week on the website operated by StartEngine Crowdfunding, Inc.

The offering will terminate at the earliest of: (1) the date at which the maximum offering amount has been sold, (2) the date which is three years from this offering being qualified by the Commission, and (3) the date at which the offering is earlier terminated by the company in its sole discretion. At least every 12 months after this offering has been qualified by the United States Securities and Exchange Commission, the company will file a post-qualification amendment to include the company's recent financial statements.

The company may undertake one or more closings on an ongoing basis. After each closing, funds tendered by investors will be available to the company. After the initial closing of this offering, the company expects to hold closings on at least a monthly basis.

The company is offering its securities in all states.

**Commissions, Discounts, Expenses and Fees**

The following table shows the total discounts, commissions and fees payable to StartEngine Primary in connection with this offering, assuming this offering is fully subscribed:

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| | |
|:---|:---|
| StartEngine processing fee paid by investors to StartEngine (1) | $420000 |
| StartEngine commission paid by the company to StartEngine (2) | $420000 |
| Value of Shares issued to StartEngine (3) | $240000 |
| StartEngine out of pocket expenses paid by the company (4) | $15000 |
| Total: | $1095000 |

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(1) Investors will be required to pay directly to StartEngine Primary a processing fee equal to 3.5% of the investment amount at the time of the investors' subscription.

(2) StartEngine Primary will receive commissions paid by the company of 3.5% of the offering proceeds.

(3) StartEngine Primary will be issued the number of shares of common stock equal to 2% of the gross proceeds raised in this offering (excluding Bonus Shares), rounded to the nearest whole share. Assuming the company raises the maximum amount in this offering, it would issue 20,000 shares of common stock to StartEngine Primary, valued at $240,000.

(4) The company will also pay $15,000 to StartEngine Primary for out-of-pocket accountable expenses paid prior to commencing. This fee will be used for the purpose of coordinating filings with regulators and conducting a compliance review of the company's offering. Any portion of this amount not expended and accounted for will be returned to the company.

Assuming the full amount of the offering is raised, the company estimates that the total value of the commissions, discounts, expense and fees of the offering payable or owed by the company and the investors to StartEngine Primary will be approximately $915,000. No fees or commissions will be paid with respect to the issuance of Bonus Shares in this offering.

The company will pay a cash commission of 3.5% to StartEngine Primary on sales of the common stock, and the company will issue StartEngine Primary a number of shares of common stock equal to 2% of the common stock sold through StartEngine Primary (excluding Bonus Shares). The company will also pay a $15,000 advance fee for reasonable accountable out of pocket expenses actually anticipated to be incurred by StartEngine Primary. Any unused portion of this fee not actually incurred by StartEngine Primary will be returned to the company. FINRA fees will be paid by the company. This does not include processing fees paid directly to StartEngine Primary by investors. StartEngine Primary will charge you a non-refundable processing fee equal to 3.5% of the amount you invest at the time you subscribe for our securities. The processing fee shall not exceed $700 for any investor.

StartEngine Primary, LLC will comply with Lock-Up Restriction required by FINRA Rule 5110(e)(1), not selling, transferring, assigning, pledging, or hypothecating or subjecting such to any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities commission for a period of 180 days beginning on the date of commencement of sales of the public equity offering with respect to the Securities Commission, unless FINRA Rule 5110(e)(2) applies. Pursuant to FINRA Rule 5110(g), StartEngine Primary will not accept a securities commission in options, warrants or convertibles which violates 5110(g) including but not limited to (a) is exercisable or convertible more than five years from the commencement of sales of the public offering; (b) has more than one demand registration right at the issuer's expense; (c) has a demand registration right with a duration of more than five years from the commencement of sales of the public offering; (d) has a piggyback registration right with a duration of more than seven years from the commencement of sales of the public offering; (e) has anti-dilution terms that allow the participating members to receive more shares or to exercise at a lower price than originally agreed upon at the time of the public offering, when the public shareholders have not been proportionally affected by a stock split, stock dividend, or other similar event; or (f) has anti-dilution terms that allow the participating members to receive or accrue cash dividends prior to the exercise or conversion of the security.

**Escrow Agent**

We have entered into an Escrow Services Agreement with Bryn Mar Trust Company of Delaware LLC (the "**Escrow Agent**"), which can be found in Exhibit 8.1 to the Offering Statement of which this Offering Circular is a part. Investor funds will be held by the Escrow Agent pending closing or termination of the offering. All subscribers will be instructed by us or our agents to transfer funds by wire, credit or debit card, or ACH transfer directly to the escrow account established for this offering. We may terminate the offering at any time for any reason at our sole discretion. Investors should understand that acceptance of their funds into escrow does not necessarily result in their receiving shares; escrowed funds may be returned.

The Escrow Agent is not participating as an underwriter, placement agent or sales agent of this offering and will not solicit any investments, recommend our securities, distribute this Offering Circular or other offering materials to investors or provide investment advice to any prospective investor, and no communication through any medium, including any website, should be construed as such. The use of the Escrow Agent's technology should not be interpreted and is not intended as an endorsement or recommendation by it of us or this offering. All inquiries regarding this offering or escrow should be made directly to us.

For its services, the Escrow Agent will receive an escrow cash management fee in the amount of $100.00 for each disbursement after the first four, plus an annual fee of $750.00.

**No Minimum Offering Amount**

The shares being offered will be issued in one or more closings. No minimum number of shares must be sold before a closing can occur. Potential investors should be aware that there can be no assurance that any other funds will be invested in this offering other than their own funds. See "Risk Factors - This offering is being conducted on a "best efforts" basis and does not require a minimum amount to be raised."

**Investors' Tender of Funds**

After the Offering Statement has been qualified by the Commission, we will accept tenders of funds to purchase whole shares. We will conduct multiple closings on investments (so not all investors will receive their shares on the same date). Each time we accept funds transferred from the Escrow Agent is defined as a "Closing." The funds tendered by potential investors will be held by the Escrow Agent and will be transferred to us at each Closing.

**Subscription Procedures**

Investors may subscribe by tendering funds via wire, credit or debit card, or ACH only, checks will not be accepted, to the escrow account to be setup by the Escrow Agent. Tendered funds will remain in escrow until a closing has occurred. StartEngine Crowdfunding will assist with the facilitation of credit and debit card payments through the Online Platform. The company estimates that processing fees for credit card subscriptions will be approximately 4% of total funds invested per transaction, although credit card processing fees may fluctuate. The company intends to pay these fees and will reimburse StartEngine Crowdfunding for transaction fees and return fees that it incurs for returns and chargebacks. The company estimates that approximately 100% of the gross proceeds raised in this offering will be paid via credit card. This assumption was used in estimating the payment processing fees included in the total offering expenses set forth in "Use of Proceeds." Upon a closing, funds tendered by investors will be made available to the company for its use.

In order to invest you will be required to subscribe to the offering via the Online Platform and agree to the terms of the offering, Subscription Agreement, and any other relevant exhibit attached thereto. Investors will be required to complete a subscription agreement in order to invest. The subscription agreement includes a representation by the investor to the effect that, if the investor is not an "accredited investor" as defined under securities law, the investor is investing an amount, including the StartEngine processing fee, that does not exceed the greater of 10% of his or her annual income or 10% of their net worth (excluding the investor's principal residence).

Investor funds will be held by the Escrow Agent pending closing or termination of the offering. All subscribers will be instructed by the company or its agents to transfer funds by wire, credit or debit card, or ACH transfer directly to the escrow account established for this offering. The company may terminate the offering at any time for any reason at its sole discretion. Investors should understand that acceptance of their funds into escrow does not necessarily result in their receiving shares; escrowed funds may be returned.

The Escrow Agent is not participating as an underwriter or placement agent or sales agent of this offering and will not solicit any investment in the company, recommend the company's securities or provide investment advice to any prospective investor, and no communication through any medium, including any website, should be construed as such, or distribute this Offering Circular or other offering materials to investors. The use of the Escrow Agent's technology should not be interpreted and is not intended as an endorsement or recommendation by it of the company or this offering. All inquiries regarding this offering or escrow should be made directly to the company. In the event that the company terminates the offering while investor funds are held in escrow, those funds will promptly be refunded to each investor without deduction or interest and in accordance with Rule 10b-9 under the Exchange Act.

Pursuant to the company's agreement with StartEngine Primary, the company agrees that 6% of the total funds received into escrow will be held back as a deposit hold in case of any ACH refunds or credit card chargebacks. The hold will remain in effect for 180 days following the close of the offering. 60 days after the close of the offering, 4% of the deposit hold will be released to the company. The remaining 2% will be held for the final 120 days of the deposit hold. After such further 120 days, the remaining 2% will be released to the company.

In the event that it takes some time for the company to raise funds in this offering, the company will rely on income from sales and funds raised in any offerings from accredited investors.

**No Selling Shareholders**

No securities are being sold for the account of security holders; all net proceeds of this offering will go to the company.

**Investor Perks and Additional Bonus Shares**

To encourage participation in the offering, we are providing specific perks for investors who invest a minimum of $1,000 in this offering or are prior investors. We are of the opinion that these perks do not have any cash value and do not alter the sales price or cost basis of the securities in this offering. Instead, the perks are a "thank you" to investors that help us achieve our mission. However, it is recommended that investors consult with a tax professional to fully understand any tax implications of receiving any perks before investing. The table below presents the investment level to receive the stated perk:

<u>Loyalty Bonus</u>

Investors who have previously invested in the company receive 5% Bonus Shares.

<u>Amount-Based Bonus</u>

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| | |
|:---|:---|
| **Investment Amount** | **Rewards** |
| $1080-$2399 | 5% bonus shares |
| $2400 - $4799 | 10% bonus shares |
| $4800 - $14399 | 15% bonus shares |
| $14,400+ | 20% bonus shares |

---

**Transfer Agent**

We have engaged StartEngine Secure, LLC, a registered transfer agent with the SEC, who will serve as transfer agent to maintain shareholder information on a book-entry basis.

**Provisions of Note in Our subscription agreement**

*Exclusive Venue*

Our subscription agreement includes a forum selection provision that requires any claim against us based on the subscription agreement not arising under the federal securities laws to be brought in a court of competent jurisdiction in the State of New York. This forum selection provisions may limit investors' ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. We have adopted this provision to limit the time and expense incurred by our management to challenge any such claims. As a company with a small management team, this provision allows our officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on our operations. See "Risk Factors - The subscription agreement has a forum selection provision that requires disputes be resolved in state or federal courts in the State of New York, regardless of convenience or cost to you, the investor

*Jury Trial Waiver*

The subscription agreement provides that subscribers waive the right to a jury trial of any claim they may have against us arising out of or relating to the subscription agreement, including any claim under federal securities laws. If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable given the facts and circumstances of that case in accordance with applicable case law. See "Risk Factors - Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes to the plaintiff(s) in any action under the agreement."

**USE OF PROCEEDS**

The table below sets forth the manner in which we intend to use the net proceeds we receive from this offering, assuming the sale of 25%, 50%, 75% and 100% of the common stock we are offering. All amounts listed below are estimates.

---

| | | | | |
|:---|:---|:---|:---|:---|
| Gross Proceeds | $3000000.00 | $6000000.00 | $9000000.00 | $12000000.00 |
| Offering Expenses (1) | $614000.00 | $1139000.00 | $1664000.00 | $2189000.00 |
| Total Proceeds Available for Use | $2386000.00 | $4861000.00 | $7336000.00 | $9811000.00 |
| Estiamted Expenses |  |  |  |  |
| Engineering, R&D, Manufacturing | $596500.00 | $1215250.00 | $1834000.00 | $2452750.00 |
| Marketing and Sales | $119300.00 | $243050.00 | $366800.00 | $490550.00 |
| Public Relations | $238600.00 | $486100.00 | $733600.00 | $981100.00 |
| Patents & IP | $238600.00 | $486100.00 | $733600.00 | $981100.00 |
| Certifications | $238600.00 | $486100.00 | $733600.00 | $981100.00 |
| Working Capital (2) | $954400.00 | $1944400.00 | $2934400.00 | $3924400.00 |
| TOTAL | $2386000.00 | $4861000.00 | $7336000.00 | $9811000.00 |

---

(1) Includes commissions to StartEngine, and estimated legal, accounting, and investor acquisition marketing expenses related to this offering.

(2) Includes payment of salaries to officers of the Company and other operating expenses.

During the course of the offering, the company may issue Bonus Shares as described under "Plan of Distribution." The issuance of Bonus Shares does not affect the potential proceeds that may be received by the company.

**We reserve the right to change the above use of proceeds if management believes it is in our best interests.**

The allocation of the net proceeds of this offering set forth above represents our estimates based upon our current plans, assumptions we have made regarding the industry, general economic conditions and our future revenues (if any) and expenditures.

Investors are cautioned that expenditures may vary substantially from the estimates above. Investors will be relying on the judgment of our management, who will have broad discretion regarding the application of the proceeds from this offering. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations (if any), business developments and the rate of our growth. We may find it necessary or advisable to use portions of the proceeds from this offering for other purposes.

In the event that we do not raise the entire amount we are seeking, then we may attempt to raise additional funds through private offerings of our securities or by borrowing funds. We do not have any committed sources of financing.

**OUR BUSINESS**

*This discussion should be read in conjunction with the other sections of this Offering Circular, including "**Risk Factors**," "**Use of Proceeds**," **"Management's Discussion and Analysis of Financial Condition and Results of Operations,"** and the Financial Statements attached and the related exhibits. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Offering Circular.*

**Introduction**

We design, manufacture, and sell small vertical axis wind turbines, which, compared with current small drag-type wind turbines, are more aerodynamically efficient, emit less noise and vibrations, and are aesthetically designed. We have solved the aerodynamic blade design issues that plague many of our competitors' wind turbines. Our goal is to make our sleek, innovative, and efficient small wind turbines the foundation of a large global renewable energy company. We currently offer, one, three, and six-meter high versions of our wind turbines, that can produce power ranging from tens of watts to up to 5,000 watts. We are starting to develop our own wind turbine electronics for both our turbines and eventually others.

![](tm2229852d2_ptiiandiiiimg02.jpg)

In the EU, we are actively selling charging systems in the electric mobility vertical which include stationary poles, outdoor benches, and workstations, which can charge electric bicycles and scooters and other products such as mobile phones. The charging poles are on-grid and off-grid with solar alone or our wind turbines and solar together.

![](tm2229852d2_ptiiandiiiimg03.jpg)

**<u>The Current Problem</u>**

Producing clean energy in or near cities is challenging. Solar energy can be inefficient and expensive in areas without a good solar resource. As a result of the size, weight, vibrational and noise output, and aesthetic appearance of most current wind energy producing devices on the market, their installation and operation in urban and suburban settings, including parking lots and on building rooftops, is impractical or prohibited by zoning laws. In addition, in largely populated areas, the high-speed rotation of windmill blades poses safety and environmental concerns for both humans and wildlife. Where solar is more efficient, adding wind helps to balance the grid, with power at different times of the day and may lead to the need for fewer batteries.

**<u>Our Solution</u>**

We have designed small and efficient wind turbines that overcome many of these barriers, making the operation, production, and use of wind energy in urban and suburban settings viable. Our turbines offer the following advantages over many of the competing products on the market:

● Small design

● Significantly higher efficiency

● Ability to cluster to reduce cost per unit installation through efficiencies of scale and obtain more energy per square meter

● Low starting speed

● Different sizes for different environments and spaces

● Lower noise and vibration

● Lower maintenance due to lower vibration

● Beautiful and kinetic tulip design

● Significantly lower rotational speed making them safer for humans and animals

We are currently working on various wind turbine innovations that could substantially reduce the cost of turbines, particularly in electronics and installations. We have begun to file patents in this area and it is an additional potential growth area for the company.

![](tm2229852d2_ptiiandiiiimg04.jpg)

**The turbines come in different sizes. The red and white turbines in the illustration are a total of 3 meters high. The turbines are also available in heights of 1 and 6 meters. The black turbine depicted above has blades that are 1 meter high, and the pole height is adjustable.**

**<u>Our Technology</u>**

The efficiency and size of our turbines primarily results from aerodynamic science that increases the efficiency of vertical axis drag-type turbines. Our designs and technology, are the subject of various US and international patents, cover the following art:

● Through segmenting parts of the blade's trailing edge according to a specific formula, our design reduces aerodynamic interference on the trailing edge of the turbine after the wind strikes the blade, resulting in an increase in efficiency.

● Through our tapered design of different degrees of cupping at different heights, which is different from the typical semicircular cup turbine, wind can enter the cups at more angles, making it easier for the turbine to begin spinning from many different wind directions.

● Our drag vertical axis design has a cluster effect, whereby one turbine creates a wind tunnel at a specific distance from the blades that increases the velocity of the wind entering the adjacent turbine if placed within that stream, which, according to preliminary tests, increases power output by 20-50% when two turbines are properly positioned.

![](tm2229852d2_ptiiandiiiimg05.jpg)

● Fluid dynamics in our designs combines internal air space, blade overlap, blade extension, blade diameter, and tip speed ratios, in a manner that we believe makes our turbines more efficient than other small wind turbines on the market. The blades and shaft have optimized air space ratios for greater efficiency so the wind is accelerated internally after it hits the first blade and before it recirculates and hits the second blade.

● Our patent pending process for adding an aerodynamic spoiler to rooftops on which our wind turbines are installed ameliorates the problem of the building's vertical surface which has the effect of scattering the wind force.

In addition, our turbines can reduce transmission cost, through balancing the energy grid load at times when solar systems are not generating power, thereby decreasing the operational cost while increasing power production.

**<u>Our Products</u>**

---

| | |
|:---|:---|
| &nbsp;&nbsp;&nbsp;<br> **Wind & Sun Charging (Type ZW)**<br>This model is a stand-alone charging station that produces its own electricity with the help of a solar panel and a small version (1 meter) of our Flower Turbine. The energy is then stored within the unit, ready to charge your bicycle, scooter, or mobility scooter. This model is equipped with two power sockets that provide one hour of electricity for each user. Due to its height (4.15 meters) and design, it is very easy to find.<br>| ![](tm2229852d2_ptiiandiiiimg06.jpg) |
| &nbsp;&nbsp;&nbsp;<br> **Charging pole (SL)**<br>Thanks to its sturdy design, the charging pole is ideal for cities. The standard version comes with 2 child-proof and water-proof power sockets. Because it is connected to the grid, it is very simple to use; just plug in and charge. This model is also available with 4 power sockets and USB ports to charge all your devices while you are on the move.<br>| ![](tm2229852d2_ptiiandiiiimg07.jpg) |
| &nbsp;&nbsp;&nbsp;<br> **Wall and drive-in Charging (Type WL)**<br>This simple and discrete model comes with 3 charging sockets and can be placed on the wall or integrated into a bicycle rack. These models are ideal for companies and clubs that want to facilitate the mobility of their customers and employees.<br>| ![](tm2229852d2_ptiiandiiiimg08.jpg) |
| &nbsp;&nbsp;&nbsp;<br> **Charging Bench**<br>This solid bench is ideal for public spaces. We are currently redesigning this product for wind and solar input.<br>| ![](tm2229852d2_ptiiandiiiimg09.jpg) |
| &nbsp;&nbsp;&nbsp;<br> **Sun Charging (Type Z)**<br>The small brother of the ZW model is a great alternative for those who want a simpler version and have lower energy requirements. This is a stand-alone charging station, meaning that it does not need to be connected to the grid. The energy is produced by a solar panel and then stored within the unit, available at the push of a button.<br>| ![](tm2229852d2_ptiiandiiiimg10.jpg) |
| &nbsp;&nbsp;&nbsp;<br> **Flower Power**<br>Flower Power is a luxury brand of Flower Turbines featuring artwork on its blades with the turbine electricity to be used for off-grid outdoor illumination and for people to make a statement about climate change. Flower Turbines has already signed one celebrity and artist as a brand ambassador and is developing its own line of artistic turbines. See <u>www.flowerpower.vip</u> for details.<br>| ![](tm2229852d2_ptiiandiiiimg11.jpg) |

---

**<u>Research and Development</u>**

We have been through several cycles of research and development, including computer simulation, patent development, and engineering. Our research and development activities are conducted mostly in the US, and some in Israel and the Netherlands, both internally and with the assistance of high-level external engineers, an academic institution, and engineering agencies to assure our products comply with applicable regulations. Research and development is an important ongoing activity as we are now developing new electronics and rooftop installation products.

**<u>The Market</u>**

The global Small Wind Turbines market size is expected to gain market growth in the forecast period of 2020 to 2025, with a CAGR of 17.4% in the forecast period of 2020 to 2025 and is expected to reach USD $316.7 million by 2025, from USD $166.6 million in 2019. <u>https://www.marketwatch.com/press-release/small-wind-turbines-market-size-growing-at-174-cagr-to-hit-usd-3167-million-by-2025-2020-08-18</u>. Flower Turbines is clearly in a high growth market and has the opportunity to increase the size of that market and its growth rate by specifically targeting the underserved markets of location close to people and close to or on buildings because of the combination of quiet and efficiency. Small wind turbines comprise a wide range of wind turbines ranging from micro turbines, to residential turbines and mini turbines. The wind turbines used in these end use applications have power ratings ranging from a few watts to 1,000 watts. Small wind turbines include wind turbines up to 15 meters in diameter. Although vertical axis wind turbines have witnessed rapid growth in the <u>global small wind power market</u>, most of the small wind turbines currently on the market, are conventional horizontal axis wind turbines.

With its innovative technology, Flower Turbines aims to change the growth trajectory of the market.

The market for renewable energy is rapidly growing. Small turbines are projected to hit a compound annual growth rate of almost 10% over the next five years, and annual revenue from the small turbine sector is projected to reach $400M in 2024, growing 42.5% in just five years. Bloomberg predicts (<u>https://www.renewableenergyworld.com/2019/06/20/bloomberg-predicts-wind-and-solar-will-power-half-the-world-and-bag-9-trillion-investment/</u>) that wind and solar will power half the world's grid by 2050 and receive $9 trillion of investment.

The passage of the Green Deal in Europe and legislation in the US are opportunities for the company to grow even faster.

The microgrid market is growing and project managers often want wind to supplement the solar they are using as a base because wind is often available when solar is not.

The charging station market depends on sales of electric bicycles and scooters. A recent report from Deloitte estimates that 300 million electric bikes will be on the world's roads by 2023, which is 50% more than today. See <u>https://www2.deloitte.com/content/dam/insights/us/articles/722835_tmt-predictions-2020/DI_TMT-Prediction-2020.pdf</u>.

![](tm2229852d2_ptiiandiiiimg12.jpg)

Wind is very available in many parts of the world. We advocate using a combination of both wind and solar in order to provide better coverage over 24 hours. In areas such as Texas where wind is more frequent at night, the proportion of solar to wind might be higher for a particular building. The following is a conceptual illustration of how solar and wind could work together:

![](tm2229852d2_ptiiandiiiimg13.jpg)

**<u>Competition</u>**

We compete with other manufacturers of wind turbines, and other alternative energy providers such as solar technology. We believe that our turbines provide more than economic value for the customers—something that was often missing with other small turbines. Because we created so many innovative technologies, we believe that we compete more with the grid than with other small turbines. Large turbines are more cost-effective but what counts for a consumer is the cost by the time it reaches them, and that is where we compete.

**<u>Marketing and Sales</u>**

We have built an in-house sales and marketing team to sell our turbines and charging stations directly and are seeking partnerships with resellers. We are exploring developing a leasing program similar to those commonly used in the solar industry.

We intend to focus marketing our wind turbines in selected markets in the United States and abroad characterized by high winds and high electricity prices, such as the east and west coasts of the United States, the Midwest, Hawaii and the North Sea and Baltic Sea adjacent countries in Europe. We intend to focus marketing our power stations in flat areas of Europe, such as the Netherlands, Belgium, Germany, and Denmark, and in other cities worldwide.

**<u>Manufacturing</u>**

We have begun manufacturing certain components and assembling certain products in our facility in Lubbock, Texas. We are starting to produce some of our own wind turbine electronics starting with charge controllers. We plan to develop this into a related business in which we sell our electronics to other wind turbine companies. We also outsource manufacturing and assembly to various manufacturers located in the Netherlands.

**<u>Employees</u>**

We currently have eight full time and three part-time employees, and various contractors in the United States. Flower Turbines B.V., our Netherlands subsidiary, has two full-time employees and three part-time employees. We also use various independent contractors for engineering, project management, marketing, sales, and administrative services.

**<u>Government Regulation</u>**

We are subject to various federal, state, and foreign governmental regulations related to manufacturing, marketing and sale of our products, such as health and safety codes, environmental laws and zoning laws.

*Occupational Safety and Health Administration*

Our operations are subject to regulation of health and safety matters by the U.S. Occupational Safety and Health Administration. We believe that we take appropriate precautions to protect our employees and third parties from workplace injuries and harmful exposure to materials handled and managed at our facilities. However, claims asserted in the future against the Company for work-related injury or illnesses could increase our costs.

*Environmental*

Our operations are subject to numerous federal, state and local environmental laws and regulations. Although it is our objective to maintain compliance with these laws and regulations, it may not be possible to quantify with certainty the potential impact of actions regarding environmental matters, particularly remediation and other compliance efforts that we may undertake in the future.

*Tax Incentives*

The U.S. wind energy industry is significantly impacted by federal tax incentives, which have provided material incentives to develop wind energy generation facilities and thereby impact the demand for our products. One such federal government program is the production tax credit ("**PTC**"), which provides economic incentives to the owners of wind energy facilities in the form of a tax credit. Wind energy may not be economically viable in certain parts of the country absent such incentives. The increased demand for our products that generally results from the credits and incentives could be impacted by the expiration or curtailment of these programs.

*Certifications*

Certain tax credits available to purchasers of our products, depend on having third party certification of the turbines' power curve over a 6-month period by certain accredited organizations. We are tentatively planning to seek such certification. The inverter, which allows the electricity to be synchronized with the grid, usually requires UL certification for on-grid uses. Off the shelf products with UL certification are available. One of our charging products has already received CE certification and we believe others will shortly follow.

Certain countries offer benefits for certification of turbines. An independent body measures the turbine's output at different wind speeds for 6 months and creates a power curve of wind speed versus power output. While there are significant expenses in obtaining such certifications, the benefits include access to government subsidies or tax deductions for the turbines. These regulations can change every year.

**<u>Intellectual Property</u>**

We hold or license an aggregate of 41 patents, patent applications and provisional patent applications, issued by various jurisdictions, 18 of which are issued patents. We also own or license various domain names and trademarks or trademark applications, in various jurisdictions, which include "Flower Turbines", "Flower Power", "Tulip Power," "Wind Tulip," "Charge To Go," "Bitulip," "Tritulip". We also hold various copyrights, as well as trade secrets related to the manufacturing and construction of our turbines. See "Risk Factors - Our intellectual property could be unenforceable or ineffective."

**<u>Property</u>**

We lease approximately 6,289 square feet of office space at 2601 SE Loop 289, in Lubbock Texas, pursuant to a 36 month lease which commenced on March 1, 2022. Our base rent is $2,955 per month for the first 12 months, $3,014 per month for the second 12 months and $3,076 for the third twelve months. We also have a three-year lease for an approximately 170 square foot office at a shared office space located at 670 Long Beach Blvd., Suite 201, in Long Beach, New York. We also lease warehouse space at RDM, Scheepsbouwweg 8, C4, Innovation Dock, 3089JW Rotterdam, Netherlands, in exchange for approximately $4,000 per month. We also lease a 625 square foot office space in Lawrence, New York for $788 per month. The lease term commenced November 1, 2019 and expires on October 31, 2023

**<u>Legal Proceedings</u>**

In March 2022, we filed a lawsuit against Universal Energy Inc. and Ventana Tek, LLC in the United States District Court for the Eastern District of New York, alleging infringement on one of our patents.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

The following is a discussion of our financial condition and results of operations for (a) the twelve-month period ended December 31, 2021 (the "**2021 Annual Period**"), and the twelve-month period ended December 31, 2020 (the "**2020 Annual Period**"), and (b) the six-month period ended June 30, 2022 (the "**2022 Interim Period**"), and the six-month period ended June 30, 20120 (the "**2021 Interim Period**"). This discussion should be read in conjunction with our audited consolidated financial statements and the related notes included in this report.

**Overview**

Our predecessor-in-interest, Flower Turbines, LLC, was formed as a New York limited liability company on September 15, 2013, and merged into Flower Turbines, Inc., a Delaware corporation, on December 27, 2019. Our headquarters are in Lawrence, New York. We develop and manufacture wind turbines.

On March 27, 2019, we formed Flower Turbines B.V., a Netherlands company, to sell, install, and develop sustainable energy solutions in the European Union. In January 2020, we extended our business into the electric mobility vertical through Flower Turbines B.V.'s acquisition of a product line of charging stations, which include stationary poles, outdoor benches, and workstations, which can charge electric vehicles and other products such as mobile phones. The charging stations generate power through wind, solar, and grid energy. We outfit some of these charging stations with our wind turbines.

**Results of Operation**

***2021 Annual Period Compared to 2020 Annual Period***

*Revenues*

For the 2021 Annual Period we had revenues of $338,643, compared to $147,038 for the 2020 Annual Period. The increase in revenues during the 2021 Annual Period is primarily, as a result of the sale of turbines by Flower Turbines B.V. The first sales from US production began in June 2022.

*Cost of Goods Sold*

For the 2021 Annual Period our costs of goods sold was $477,995, compared to $370,968 for the 2020 Annual Period. The increase in the cost of goods sold during the 2021 Annual Period is primarily a result of the sale of turbines by Flower Turbines B.V.

*Gross Loss*

For the 2021 Annual Period our gross loss was $139,352, compared to $223,930 for the 2020 Annual Period.

*Operating Expenses*

For the 2021 Annual Period, our total operating expenses were $2,998,210, consisting of $330,537 for research and development expenses, $12,754 for sales and marketing expenses, and $2,654,919 for general and administrative costs. For the 2020 Annual Period, our operating expenses were $889,363, consisting of $9,882 for sales and marketing expenses, $241,660 for research and development, and $637,821 for general and administrative costs. The increase in operating expenses during the 2021 Annual Period, primarily the result of increased general and administrative expenses as we expanded our operations.

*Loss from Operations*

For the 2021 Annual Period we had an operating loss of $3,137,562, compared to an operating loss of $1,113,293 for the 2020 Annual Period. The increase in operating loss during the 2021 Annual Period is primarily the result of increased general and administrative expenses as we expanded our operations.

*Other Income/Expenses*

For the 2021 Annual Period, we had total other income and expenses of -$4,104, compared to other income and expense of -$4,950 for the 2020 Annual Period.

*Net Loss*

For the 2021 Annual Period we had a net loss of $3,141,666, compared to a net loss of $1,118,243 for the 2020 Annual Period. The increase in net loss during 2020, is primarily a result of increased general and administrative expenses during 2021 as we expanded our operations.

***2022 Interim Period Compared to 2021 Interim Period***

*Revenues*

For the 2022 Interim Period, we had revenues of $268,317, compared to net revenues of $254,559 for the 2021 Interim Period.

*Cost of Goods Sold*

For the 2022 Interim Period, our costs of goods sold was $311,899, compared to $142,570 for the 2021 Interim Period. The increase in cost of goods sold was primarily attributable to increased sales.

*Gross Loss*

For the 2022 Interim Period, our gross loss was $43,582, compared to a gross profit of $111,989 for the 2021 Interim Period.

*Operating Expenses*

For the 2022 Interim Period, our total operating expenses were $1,347,324, consisting of $9,036 for sales and marketing expenses, and $1,338,288 for general and administrative costs. For the 2021 Interim Period, our operating expenses were $1,086,607, consisting of $7,632 for sales and marketing expenses, $138,998 for research and development, and $939,977 for general and administrative costs. The increase in operating expenses during the 2022 Interim Period, primarily the result of increased general and administrative expenses related to expansion of staff and research and development.

*Loss from Operations*

For the 2022 Interim Period, we had an operating loss of $1,390,906, compared to an operating loss of $974,618 for the 2021 Interim Period.

*Other Income/Expenses*

For the 2022 Interim Period, we had total other income and expenses of -47,080, consisting of -$1,985 in interest expense, -$1,324 in other expenses, and -$46,163 in investment losses, compared to other income and expenses of -$2,241 for the 2021 Interim Period. The -$46,163 in investment losses is the result of changes in value of holdings during that period.

*Net Loss*

For the 2022 Interim Period, we had a net loss of $1,437,986, compared to a net loss of $976,859 for the 2021 Interim Period. The increase in net loss for the 2022 Interim Period, is primarily a result of increased operating expenses during the 2022 Interim Period related to the expansion of our operations.

**Liquidity and Capital Resources**

Since our inception, we have raised over $11,000,000 through various securities offerings, which we have used for operations, including, approximately $2,100,000 from Regulation CF Campaigns, and approximately $8,900,000 through our Regulation A+ offering. As of June 30, 2022, we had total current assets in the amount of $3,933,035 consisting of $220,673 in cash, $27,862 in prepaid expenses, $191,243 in accounts receivables, $155,499 in other assets, $597,407 in inventory and $2,428,392 in investments. As of December 31, 2021, we had total current assets in the amount of $5,164,702 consisting of $2,350,678 in cash, $78,224 in prepaid expenses, $133,151 in accounts receivables, $131,097 in other assets, and $139,230 in inventory. The $2,428,392 in investments represent money market accounts. The substantial decrease in cash as of June 30, 2022, compared to December 31, 2021, is primarily the result of investment in the business and operating expenses while not fund raising.

As of June 30, 2022, and excluding any future proceeds raised in our current Regulation A+ offering, we had sufficient operating capital to fund our operations through April 2023.

As of June 30, 2022, we had total liabilities in the amount of $427,306 compared to $549,737 in total liabilities as of December 31, 2021.

We will incur significant additional costs in commercializing our products, including, but not limited to, in production, marketing, sales and customer service, and intend to continue to fund our operations through funds received from this Offering. We may also engage in additional debt and/or equity financings as determined to be necessary. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. Accordingly, our independent auditors report includes a paragraph regarding substantial doubt about our ability to continue as a going concern.

**Liquidity and Capital Resources**

Since our inception, we have raised over $11,000,000 through various securities offerings, which we have used for operations, including, approximately $2,100,000 from Regulation CF Campaigns, and approximately $8,900,000 through our Regulation A+ offering. As of December 31, 2021, we had $2,350,678 in cash, compared to $50,251 as of December 31, 2020. We are currently generating operating losses and require the continued infusion of new capital to continue business operations. We anticipate we can operate our business for 6-12 months without any additional infusions of capital, and intend to raise additional capital under crowdfunding offerings, equity or debt issuances, or any other method available to us.

As of December 31, 2021, we had total liabilities in the amount of $549,737, compared to $275,417 in total liabilities as of December 31, 2020. The increase in total liabilities, primarily resulted from an increase in our accounts payables and accrued expenses.

We will incur significant additional costs in commercializing our products, including, but not limited to, in production, marketing, sales and customer service, and intend to continue to fund our operations through funds received from this Offering. We may also engage in additional debt and/or equity financings as determined to be necessary. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. Accordingly, our independent auditors report includes a paragraph regarding substantial doubt about our ability to continue as a going concern

**Debt**

In November 2019, Flower Turbines B.V., our subsidiary, entered into an unsecured loan agreement with Rabobank, pursuant to which two installments were advanced having in the aggregate principal amount of $56,135, and which matures in 84 months. This first advance was in the amount of $28,068, bears interest at 7.5% per annum, and requires monthly interest payments for 84 months with a final balloon payment on the maturity date. The second advance was in the amount of $28,067, bears interest at 7.5% per annum, requires interest only payments for the first 24 months, principal and interest payments of $468 for the next 60 months, with a final balloon payment on maturity date. The total unpaid principal balances on the loans were $55,934 as of December 31, 2021.

**Plan of Operations**

We are investing in the continued growth of our brand and are seeking to hit the following milestones during 2022:

● Launch of small, medium, and large sized wind turbines in the United States.

● EU$500,000 in revenue from sales by Flower Turbines B.V., in the European Union.

● US$500,000 in revenue from sales of small turbines in the United States.

● US$1,000,000 in revenue from exports of turbines outside of the United States.

● Increase concentration of sales in the EU time by adding salespeople and their support and outsourcing all production with drop shipping

● Developing projects to sell electricity as well as turbines.

The extent to which we will be able to complete the milestones outlined above is dependent upon the success of our marketing efforts and our utilization of cash.

**DIRECTORS, EXECUTIVE OFFICERS, AND ADVISORS**

The following table sets forth information about our executive officers and directors.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Position** | **Age** | **Term of Office** | **Approximate Hours per week<br> for part-time employees** |
| Dr. Mark Daniel Farb | Chief Executive Office, Chief Financial Officer, Secretary & Director | 67 | December 2019 – Present | Full Time |
| Warren Stoll | Chief Operating Officer | 66 | January 2022 - Present | Full Time |

---

**There are no arrangements or understandings between our executive officers and directors and any other persons pursuant to which the executive officer or director was selected to act as such.**

***Dr. Mark Daniel Farb***, has served as our chief executive officer, chief financial officer, secretary and sole director, since our inception in December 2019. Prior thereto, Dr. Farb served as the Manager of our predecessor-in-interest, Flower Turbines LLC, since its founding in September 2014. In 2006, Dr. Farb founded Leviathan Energy, a group of renewable energy companies in Israel and the U.S. and has been serving as its sole officer and director since its founding. Both Leviathan Energy Hydroelectric and Leviathan Energy Wind Lotus, a predecessor of Flower Turbines, won the prestigious Eurogia label for their work. A strong believer in the importance of ecology and an avid hiker, Dr. Farb is a thought leader in the area of renewable energy. He has filed over 60 patents, written over 100 books, and his small wind invention, the Wind Tulip, a predecessor of our existing products, was featured at Bloomfield Science Museum in Jerusalem as one of Israel's top 45 technologies in 2011. Flower Turbines Inc. was chosen by Pepperdine University Business School as among 30 finalists for the Most Fundable US Companies for 2020 out of 4500 companies researched.

***Warren Stoll***, has served as our Chief Operating Officer since May 2021. Prior to joining Flower Turbines, between June 2017 and May 2021, he served as Chief Executive Officer of Loan Time, a fintech platform for medical loans, and between September 2009 and June 2017, he served as an independent consultant assisting clients navigate the real estate market and the risks related to real estate investments. Throughout his career, Mr. Stoll has led a series of technology and real estate businesses. Beginning in 1979, Mr. Stoll raised venture capital for four start-ups, and led each company from inception to growth to a successful sale. In 1982, he founded Einstein software, which developed the Einstein word processor, which he subsequently sold to Microsoft. He has also located, analyzed, appraised, and negotiated the purchase and sale of numerous commercial properties. Mr. Stoll has a BA from CSUN and a JD from Southwestern School of Law. He is an avid fisherman, a devoted grandfather, and a champion chess player.

**<u>Compensation</u>**

The table below reflects the annual compensation of each of the three highest paid persons who were executive officers or directors, during the fiscal year ended December 31, 2022:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name** | **Capacities in which <br> compensation received** | **Cash Compensation** |  | **Other <br> Compensation** | **Total <br> Compensation** |
| Mark Daniel Farb<br> 670 Long Beach Blvd., Suite 201 <br> Long Beach, NY 11561 | Chief Executive Officer, Chief Financial Officer, Secretary and Director | $183000 |  | $0 | $183000 |
| Roy Osinga<br> Marconistraat 16, 12<sup>th</sup> Fl. 3029 AK Rotterdam, Netherlands | Regional Director EU | $69825 | (1) | $0 | $69825 |
| Warren Stoll | COO | $147000 |  | 0 | $147000 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Paid in Euros, and includes EU$24,000 in severance payments.

The directors do not receive any compensation for their service as directors.

Flower Turbines B.V. was a party to an Employment Agreement with Mr. Osinga, which was extended on November 9, 2020. The term of the agreement commenced January 1, 2020, and provided for a monthly base salary of €8,000. In January 2021, Mr. Osinga received options to purchase 100,000 shares of common stock having an exercise price of $7.00 per share. Mr. Osinga ceased his employment in May 2022, and all of his options expired in August 2022.

On January 1, 2021, we entered into an Employment Agreement with Mark Daniel Farb. Pursuant to the Employment Agreement, we have agreed to pay Dr. Farb $15,000 per month, which amount was increased to $16,000 per month in October 2022. In January 2021, Mr. Farb received a grant of options to purchase 500,000 shares of common stock having an exercise price of $7.00 per share. The Employment Agreement is at will, and may be terminated by either party, by providing 30 days advanced written notice of termination.

In November 2021, we entered into an Employment Agreement with Warren Stoll, which became effective on January 1, 2022. The Employment Agreement has a term of four years, provides for a salary of $12,000 per month, and a bonus equal to 2% of the gross sales generated by Flower Power through the end of 2025. In November 2021, we issued Mr. Stoll an option to purchase 200,000 shares of common stock, having an exercise price of $7.00 per share. The Employment Agreement is at will, and may be terminated by either party, by providing 30 days advanced written notice of termination.

The Employment Agreement may be terminated for any reason by us or Mr. Stoll, by providing 30 days advanced written notice.

**SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS**

Set forth below is information regarding the beneficial ownership of our outstanding common stock (which are our only voting securities) as of August 31, 2022, by (i) each person whom we know owned, beneficially, more than 10% of the outstanding common stock, and (ii) all of the current officers and directors as a group. We believe that, except as noted below, each named beneficial owner has sole voting and investment power with respect to the shares listed. Unless otherwise indicated herein, beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to shares beneficially owned.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Title of class** | **Name and address of<br> beneficial owner** | **Amount and<br> nature of<br> Beneficial<br> ownership** | **Amount and nature<br> of beneficial<br> ownership<br> acquirable** |  | **Percent of class** |
| Common Stock | Dr. Mark Daniel Farb<br> 670 Long Beach Blvd., Ste 201 <br>Long Beach, NY 11561 | 7311000 | 125000 | (1) | 70.77% |
| Common Stock | All directors and officers as a group (1 person) | 7311000 | 125000 | (1) | 70.77% |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes 125,000 options held by Dr. Farb,
 which are immediately exercisable.

**INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS**

We paid Dr. Farb $50,000 for consulting services for the year ended December 31, 2020. In addition, during 2019, we paid $2,171 to Dr. Farb for housing expenses in Rotterdam.

On February 19, 2019, Flower Turbines B.V., our wholly owned subsidiary, and Dr. Farb, entered into a Participation Agreement with PortXL Netherlands, B.V., pursuant to which Flower Turbines B.V., was admitted to a startup accelerator program operated by PortXL. Pursuant to the agreement, Flower Turbines, B.V., agreed that Dr. Farb, and no less than one other designee of Flower Turbines, B.V., would actively participate in the accelerator program for a minimum of three (3) months.

In connection therewith, on May 1, 2019, we and Flower Turbines B.V., entered into a Shareholders Agreement with Dr. Farb, Roy Osinga and PortXL, pursuant to which (1) we agreed to issue PortXL, eight percent (8%) of the capital stock of Flower Turbines, B.V., in exchange for €15,000 in cash and 85,000 in services. In addition, Dr. Farb and Flower Turbines LLC, granted Flower Turbines B.V., a royalty free, irrevocable, unconditional, exclusive and perpetual license to use, in connection with the sale, installation and development of sustainable energy solutions in France, Belgium, Netherlands, Germany, and Denmark, any intellectual property previously or thereafter developed by Dr. Farb or Flower Turbines LLC. Flower Turbines, B.V., also granted PortXL certain anti-dilution rights in connection with the issuance of additional shares of Flower Turbines B.V.'s capital stock at a pre-money valuation of less than €4,000,000. The agreement also includes a drag along right and tag along right, and the right of Flower Turbines, B.V., to repurchase the capital stock issued to PortXL, in exchange for €320,000. On April 10, 2020, Flower Turbines B.V., initiated a repurchase of all its shares of capital stock owned by PortXL Netherlands B.V., in exchange for €45,000, all of which was paid January 1, 2021.

Upon formation of Flower Turbines, B.V., Roy Osinga, our Regional Director EU, was issued 4% of the capital stock of Flower Turbines B.V. In June 2022, Flower Turbines Inc. purchased those shares for $50,000 as part of a departure agreement. Flower Turbines BV is now 100% owned by Flower Turbines Inc.

In January 2020, Leviathan Energy Wind Lotus, Ltd., an Israeli company, wholly owned and controlled by Dr. Farb, assigned certain patents to us in exchange for $1.00.

In January 2020, Dr. Farb granted us an exclusive, worldwide, royalty free license to use and commercialize various patents, trademarks, copyrights, and domain names related to our business. The term of the license is 20 years.

In exchange for six (6) loans we made to Flower Turbines B.V., between September 2019 and May 2020, Flower Turbines B.V. issued us six Promissory Notes in the aggregate principal amount of $191,850. Each of the Notes accrues interest at a rate of 5% per annum and are due and payable on the earlier of 5 years and the date Flower Turbines B.V. has sufficient capital to repay the loans. Interest only payments are due on each Note on December 31<sup>st</sup> of each year. In March 2020, Flower Turbines B.V., paid $10,866 in partial satisfaction of the initial note.

On February 12, 2020, we entered into an agreement with Flower Turbines B.V., pursuant to which we agreed to transfer to Flower Turbines B.V., our intellectual property related specifically to the European Union, including, but not limited to, patents, trademarks and domain names. Flower Turbines B.V. agreed to pay all costs incurred with respect to such intellectual property. Both parties also agreed that each shall have a royalty free right to use each other's intellectual property. We also agreed to share certain costs and expenses related to the development of intellectual property in the future.

On April 20, 2020, we entered into an agreement with Flower Turbines B.V., pursuant to which we agreed to sell to Flower Turbines B.V., any of our products or components it desires to purchase in exchange for our manufacturing costs plus 7.5%. In addition, Flower Turbines B.V. agreed to sell us any of our products or components it desires to purchase in exchange for its manufacturing costs plus 7.5%. The agreement also provides that Flower Turbines B.V. shall have the exclusive right to sell its products and our products within the European Union, unless otherwise approved by us, and that we have the exclusive right to sell Flower Turbines B.V.'s products anywhere in the world outside of the European Union.

In January 2021, we issued Mr. Osinga and Dr. Farb, respectively, options to purchase 100,000 shares and 500,000 shares of common stock, having exercise prices of $7.00 per share. Mr. Osinga's options have expired.

In November 2021, we issued Mr. Stoll an option to purchase 200,000 shares of common stock, having an exercise price of $7.00 per share.

**SECURITIES BEING OFFERED**

In this offering, we are offering shares of common stock to investors.

Our authorized capital stock consists of 20,000,000 shares of common stock, $0.0001 par value per share. In December 2021, we engaged in a 1-for-10 forward stock split. As of August 31, 2022, we had 10,381,780 shares of common stock outstanding. In September 2020, we adopted a 2020 Omnibus Incentive Plan. Up to 800,000 shares may be subject to awards under the Plan. As of August 31, 2022, we had outstanding options to purchase 700,000 shares of common stock which have exercise prices of $7.00 per share.

We have a warrant to purchase up to $250,000 in shares of common stock, based on a valuation equal to the greater of either (i) a twenty percent (20%) discount to the price per share of securities sold in the next round of equity financing in the minimum amount of $100,000, or (ii) 1.5 times the highest discount offered to investors in such financing.

The rights of investors in the common stock are governed by our Certificate of Incorporation and the Subscription Agreement, and are described below.

**<u>Certificate of Incorporation</u>**

Our Certificate of Incorporation may be amended by our Board of Directors and by the vote of the holders of a majority of the outstanding shares, to increase the number of authorized shares, and there is no limit on the number of shares that may be authorized and issued. The Board of Directors, with the approval of the holders of our common stock, by a majority vote, may also amend the Certificate of Incorporation to create one or more series of preferred stock that have rights, preferences and privileges senior to the rights, preferences and privileges of the common stock.

*Dividends*

The holders of our common stock will be entitled to receive pro rata dividends, if any, declared by our Board of Directors out of legally available funds, however, subject to any preferential right of the holders of any preferred stock that may be authorized and issued in the future.

*Liquidation*

Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all assets that are legally available for distribution, however, subject to any preferential right of the holders of any preferred stock that may be authorized and issued in the future.

*Voting Rights*

The holders of our common stock are entitled to one vote per share, however, the holders of common stock issued in this offering shall grant a voting proxy to our chief executive officer, that will limit investors' ability to vote their common stock until the occurrence of events specified in the proxy. See "Securities Being Offered - Voting Proxy".

*Other Rights*

The holders of our common stock have no preemptive, subscription, redemption or conversion rights.

**<u>Voting Proxy</u>**

Pursuant to the Subscription Agreement, the holders of common stock issued in this offering shall grant a voting proxy to our chief executive officer, that will limit investors' ability to vote their common stock until the occurrence of events specified in the proxy, which include our initial public offering, our acquisition by another entity or a liquidation event, none of which may never happen. Such events include (a) the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offer and sale of common stock or the effectiveness of a registration statement under the Securities Exchange Act of 1934 covering the common stock, (b) a transaction or series of related transactions in which common stock representing more than 50% of our outstanding voting power are acquired from our stockholders, (c) an acquisition by another entity, in which the holders of our voting securities outstanding immediately prior to such transaction, do not retain at least a majority of the total voting power represented by our outstanding voting securities or the voting securities of the other surviving or resulting entity, after such transaction, (d) a sale, exclusive license, transfer, lease or other disposition of all or substantially all of our assets, or (e) our liquidation, dissolution or winding up.

The voting rights granted via the proxy are not limited and, include, among other things, the right to vote on the election of our directors, amendments to our organizational documents, and major corporate transactions. So long as the holder is an individual, the proxy will survive the death, incompetency and disability of the holder and, so long as the holder is an entity, the proxy will survive the merger or reorganization of the holder or any other entity holding the common stock. The proxy will also survive transfers of the common stock and shall be binding on any transferee. The proxy is granted to the person holding the title of chief executive officer, in his capacity as an officer of the company, and not in his personal capacity, and so would survive his death or removal. The chief executive officer, in his sole discretion, may assign the voting proxy to any of our future officers. The proxy is set out in Section 5 of the Subscription Agreement which appears as Exhibit 4.1 to the Offering Statement of which this Offering Circular forms a part. *See "Summary – Rights and Preferences of Common Stock," "Risk Factors - Investors in our common stock will have to assign their voting rights," and "Risk Factors - Our Subscription Agreement limits the liability of the proxy and provides the proxy with certain indemnification rights against the investors."*

**<u>Exclusive Venue</u>**

Our Subscription Agreement includes a forum selection provision that requires any claim against us based on the Subscription Agreement not arising under the federal securities laws, to be brought in a court of competent jurisdiction in the State of New York. This forum selection provisions may limit investors' ability to bring claims in judicial forums that they find favorable to such disputes and may discourage lawsuits with respect to such claims. We have adopted this provision to limit the time and expense incurred by management to challenge any such claims. As a company with a small management team, this provision allows our officers to not lose a significant amount of time travelling to any particular forum so they may continue to focus on our operations. See "Risk Factors - The subscription agreement has a forum selection provision that requires disputes be resolved in state or federal courts in the State of New York, regardless of convenience or cost to you, the investor."

**<u>Jury Trial Waiver</u>**

The subscription agreement provides that subscribers waive the right to a jury trial of any claim they may have against us arising out of or relating to the subscription agreement, including any claim under federal securities laws. If we opposed a jury trial demand based on the waiver, a court would determine whether the waiver was enforceable given the facts and circumstances of that case in accordance with applicable case law. See "Risk Factors - Investors in this offering may not be entitled to a jury trial with respect to claims arising under the subscription agreement, which could result in less favorable outcomes to the plaintiff(s) in any action under the agreement."

**Flower Turbines, Inc.**

**A Delaware Corporation**

Consolidated Financial Statements

June 30, 2022 and 2021

**Flower Turbines, Inc.**

**TABLE OF CONTENTS**

**Page**

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| | |
|:---|:---|
|  Consolidated Financial Statements as of as of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited) then ended: | Consolidated Financial Statements as of as of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited) then ended: |
| &nbsp;&nbsp;&nbsp; [Consolidated Balance Sheets](#m1) | [F-3](#m1) |
| &nbsp;&nbsp;&nbsp; [Consolidated Statements of Operations and Comprehensive Income/(Loss)](#m2) | [F-4](#m2) |
| &nbsp;&nbsp;&nbsp; [Consolidated Statements of Changes in Stockholders' Equity](#m3) | [F-5](#m3) |
| &nbsp;&nbsp;&nbsp; [Consolidated Statements of Cash Flows](#m4) | [F-6](#m4) |
| &nbsp;&nbsp;&nbsp; [Notes to Consolidated Financial Statements](#m5) | [F-7 – F-14](#m5) |

---

**FLOWER TURBINES, INC.**

**CONSOLIDATED BALANCE SHEETS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited)**

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| | | |
|:---|:---|:---|
|  | **6/30/2022** | **12/31/2021** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $220673 | $2350678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 27862 | 78224 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 191243 | 133151 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 155499 | 131097 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | 597407 | 139230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments | 2428392 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due from officer - related party |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds held in escrow | 311959 | 2332322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets | 3933035 | 5164702 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets, net | 156112 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 159167 | 40580 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Non-Current Assets | 315279 | 40580 |
| TOTAL ASSETS | $4248314 | $5205282 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Current Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $139368 | $281651 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 17065 | 146912 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 216786 | 64240 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable - current | 3962 | 3676 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Liabilities | 377181 | 496479 |
| &nbsp;&nbsp;&nbsp;&nbsp;Long-Term Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable - net of current | 50125 | 53258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Long-Term Liabilities | 50125 | 53258 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities | 427306 | 549737 |
| Stockholders' Equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.0001 par, 2,500,000 shares authorized,<br> 10,381,780 and 9,971,680 shares issued and outstanding as of<br> June 30, 2022 and December 31, 2021, respectively. | 1039 | 998 |
| &nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 10728446 | 10223395 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (6927388) | (5489402) |
| &nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive gain/(loss) | 42673 | (55684) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stockholders' equity before noncontrolling interest | 3844770 | 4679307 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity attributable to noncontrolling interest | (23762) | (23762) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Stockholders' Equity | 3821008 | 4655545 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $4248314 | $5205282 |

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See accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)**

**For the six-month periods ended June 30, 2022 (unaudited) and 2021 (unaudited)**

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| | | |
|:---|:---|:---|
|  | **6/30/2022** | **6/30/2021** |
| Net revenues | $268317 | $254559 |
| Cost of net revenues | (311899) | (142570) |
| Gross profit/(loss) | (43582) | 111989 |
| Operating Expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General & administrative | 1338288 | 939977 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales & marketing | 9036 | 7632 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | - | 138998 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Operating Expenses | 1347324 | 1086607 |
| Loss from operations | (1390906) | (974618) |
| Other Income/(Expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (1985) | (2386) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 2392 | 145 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expense | (1324) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment loss | (46163) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Other Income/(Expense) | (47080) | (2241) |
| Provision for income taxes | - | - |
| Net loss | (1437986) | (976859) |
| Less: net loss attributable to noncontrolling interest |  | 9211 |
| Net loss attributable to Flower Turbines, Inc. | (1437986) | (967648) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency translation gain | 98357 | 3455 |
| Other comprehensive loss | $(1339629) | $(964193) |
| Basic and diluted net loss per share | $(0.14) | $(0.10) |
| Weighted average shares outstanding - basic and diluted | 10176730 | 9364110 |

---

See accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

**For the six-month periods ended June 30, 2022 (unaudited) and 2021 (unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Common Stock | Common Stock | | | | |
|  | Number of Shares | Amount |<br>Additional Paid-In Capital |<br>Accumulated Deficit |<br>Accumulated Other Comprehensive Gain/(Loss) |<br>Total Stockholders' Equity |
| Balance at July 1, 2021 | 9364110 | $940 | $5045156 | $(3327622) | $(12096) | $1706378 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of stock - Regulation CF | 487810 | 50 | 5176475 |  |  | 5176525 |
| &nbsp;&nbsp;&nbsp;&nbsp;Offering costs |  |  | (524841) |  |  | (524841) |
| &nbsp;&nbsp;&nbsp;&nbsp;Shares issued in exchange for cash | 119760 | 8 | 526605 |  |  | 526613 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | - | - | - | (2161780) | (43588) | (2205368) |
| Balance at December 31, 2021 | 9971680 | 998 | 10223395 | (5489402) | (55684) | 4679307 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of stock - Regulation A | 410100 | 41 | 511171 |  |  | 511212 |
| &nbsp;&nbsp;&nbsp;&nbsp;Offering costs |  |  | (6120) |  |  | (6120) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | - | - | - | (1437986) | 98357 | (1339629) |
| Balance at June 30, 2022 | 10381780 | $1039 | $10728446 | $(6927388) | $42673 | $3844770 |

---

See accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the six-months period ended June 30, 2022 (unaudited) and 2021 (unaudited)**

---

| | | |
|:---|:---|:---|
|  | **6/30/2022** | **6/30/2021** |
| **Cash Flows From Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(1437986) | $(967648) |
| &nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization | 10455 | 1704 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock option expense |  | 45708 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Loss attributable to noncontrolling interest |  | (9211) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase)/Decrease in prepaid expenses | 50362 | 18897 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase)/Decrease in other assets | (24402) | (61054) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase)/Decrease in inventory | (458177) | (109838) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Increase)/Decrease in accounts receivable | (58092) | (154053) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase/(Decrease) in accounts payable | (142283) | 16201 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase/(Decrease) in accrued expenses | 152546 | 26573 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase/(Decrease) in deferred revenue | (129847) | (50620) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Cash Used In Operating Activities | (2037424) | (1243341) |
| **Cash Flows From Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of investments | (2428392) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangible assets | (162712) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchase of property of equipment | (122442) | (10161) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Cash Used In Investing Activities | (2713546) | (10161) |
| **Cash Flows From Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Repurchase of treasury stock |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from/(payments to) notes payable | (3857) | (2901) |
| &nbsp;&nbsp;&nbsp;&nbsp;Advances to related party |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from SBA Loan | 1000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of stock | 2531585 | 2702201 |
| &nbsp;&nbsp;&nbsp;&nbsp;Offering costs | (6120) | (338250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net Cash Provided By Financing Activities | 2522608 | 2361050 |
| Cash effects of foreign currency translation loss | 98357 | 3455 |
| Net Change In Cash | (2130005) | 1111003 |
| Cash at Beginning of Period | 2350678 | 50251 |
| Cash at End of Period | $220673 | $1161254 |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $1985 | $2386 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes | $- | $- |

---

See accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

**NOTE 1: NATURE OF OPERATIONS** 

Flower Turbines, Inc. and subsidiary (collectively the "Company"), is a corporation formed under the laws of Delaware. The Company was originally incorporated as a New York limited liability company on September 25, 2013 under the name Flower Turbines, LLC. The LLC converted to a Delaware corporation on December 26, 2019. The Company develops unique designs for wind turbines. On March 27, 2019 Flower Turbines B.V. (the "Subsidiary") was formed in the Netherlands. Flower Turbines B.V. is a majority owned subsidiary (96%) of the Company and was formed for the sale, installation, and development of sustainable energy solutions inside and outside of the Netherlands and the northern region of Europe. During 2022, the Company purchased the remaining 4% interest in the subsidiary and is now the sole owner.

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

<u>Basis of Presentation and Basis for Consolidation</u>

The Company prepares consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP). These consolidated financial statements include all accounts of Flower Turbines, Inc., along with its majority owned subsidiary, Flower Turbines B.V. All transactions and balances between and among the aforementioned companies have been eliminated in consolidating the accounts for consolidated financial statement presentation. The accounting and reporting policies of the Company conform to GAAP. The Company adopted the calendar year as its basis of reporting.

<u>Basis of Presentation</u>

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company has adopted the calendar year as its basis of reporting.

<u>Use of Estimates</u>

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

<u>Noncontrolling Interests</u> 

Noncontrolling interests represents minority owners' share of net income or losses and equity in the Company's majority-owned consolidated subsidiary.

<u>Cash Equivalents</u>

For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

<u>Accounts Receivable and Allowance for Doubtful Accounts</u>

Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on past credit history with clients and other factors. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance, and current economic conditions. As of June 30, 2022 and December 31, 2021, the Company carried receivables of $191,243 and $133,151, respectively and no allowances against such.

<u>Inventory & Shipping and Handling Costs</u>

Inventory is stated at the lower of cost or market and accounted for using the specific identification method. The inventory balances as of June 30, 2022, and December 31, 2021 consist of finished goods held for sale.

<u>Property and Equipment</u>

The Company has a policy to capitalize expenditures with useful lives in excess of one year and costs exceeding $1,000 as property and equipment and depreciates such assets on a straight-line basis over estimated useful lives (5 years). The Company's property and equipment is assessed annually for indications of impairment. The Company's property and equipment are recorded at costs of $170,731 and $48,289 and are presented net of accumulated depreciation of $11,564 and $7,709 as of June 30, 2022 and December 31, 2021, respectively. Depreciation expense of $3,855 and $1,704 were recorded for the six-month periods ended June 30, 2022 and 2021, respectively.

<u>Deferred Offering Costs</u>

The Company complies with the requirement of FASB ASC 340-10-S99-1. Prior to the completion of the offering these costs are capitalized as deferred offering costs on the balance sheet. The deferred offering costs are charged to stockholders' equity upon the completion of the offering. There were no deferred offerings costs capitalized to the balance sheet as of June 30, 2022 and December 31, 2021, respectively.

<u>Fair Value of Financial Instruments</u> 

Financial Accounting Standards Board ("FASB") guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the balance sheets approximate their fair value.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Total | Level 1 | Level 2 | Level 3 |
| Fixed Income | $1710000 | $1710000 | $- | $- |
| Equities | 718392 | 718392 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | $2428392 | $2428392 | $- | $- |

---

<u>Concentrations of Credit Risk</u>

The Company's financial instruments that are exposed to concentrations of credit risk consist of its cash. The Company will place its cash and cash equivalents with financial institutions of high credit- worthiness and has a policy to not carry a balance in excess of FDIC insurance limits.

<u>Basic Income/(Loss) per Common Share</u>

Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

<u>Revenue Recognition</u>

ASC Topic 606, "Revenue from Contracts with Customers" establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Each product sold to a customer typically represents a distinct performance obligation. The Company satisfies its performance obligation and revenue is recorded at the point in time when products are installed as the Company has determined that this is the point that control transfers to the customer. The Company invoices customers upon delivery of the products, and payments from such customers are due upon invoicing. Revenues are recognized on these arrangements after the units are produced and fulfilled to the customers, and all other revenue recognition criteria are achieved.

<u>Research and Development</u>

The Company expenses research and development costs when incurred.

<u>Advertising Costs</u>

The Company's policy regarding advertising is to expense advertising when incurred.

<u>Income Taxes</u>

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, *Income Taxes*. Under the liability method, deferred taxes are determined based on the temporary differences between the consolidated financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will be realized.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the consolidated financial statements. The Company has determined that there are no material uncertain tax positions.

The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

From its inception until December 26, 2019, at which time the LLC was converted to a corporation, the Company was subject to taxation as a limited liability company, and therefore was treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the members. As such, no recognition of federal or state income taxes for the Company have been provided for in the accompanying consolidated financial statements during that period.

For the period after the December 26, 2019 conversion to a corporation, the Company was taxed as a corporation. The Company estimates it will have a net operating loss carryforward of $2,460,012 as of June 30, 2022. The Company pays federal and New York income taxes at a combined effective rate of approximately 26% and has used this effective rate to derive a net deferred tax asset of $639,603 as of June 30, 2022, resulting from its net operating loss carryforward. Due to uncertainty as to the Company's ability to generate sufficient taxable income in the future to utilize the net operating loss carryforwards, the Company has recorded a full valuation allowance to reduce the net deferred tax asset to zero. The 2021 tax returns have not yet been filed as of the issuance of these consolidated financial statements. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject.

<u>Foreign Currency</u>

The consolidated financial statements are presented in United States Dollars, ("USD"), which is the reporting currency and the functional currency of the Company's U.S. operations. The functional currency for the Subsidiary is its local currency. In accordance with ASC 830, *Foreign Currency Matters*, foreign denominated monetary assets and liabilities are translated to their USD equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rate prevailing at the transaction date. Revenue and expenses were translated at the prevailing rate of exchange at the date of the transaction. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. At June 30, 2022 and December 31, 2021, the foreign currency translation gain and loss was $98,357 and ($43,588), respectively.

**NOTE 3: GOING CONCERN**

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generate profits since inception, has sustained losses of $1,339,629 and $964,193 for the six-month periods ended June 30, 2022 and June 30, 2021, respectively, and has negative cash flows from operations for the six-month period ended June 30, 2022 and 2021, respectively and the Company is reliant on continual financing.

The Company's ability to continue as a going concern in the next twelve months is dependent upon its ability to obtain capital financing from investors sufficient to meet current and future obligations and deploy such capital to produce profitable operating results. Management has evaluated these conditions and plans to raise capital as needed to satisfy it liquidity needs through its Regulation Crowdfunding offering in 2022 and increasing its sales. No assurance can be given that the Company will be successful in these efforts. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The balance sheet does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

**NOTE 4: MEMBERS'/STOCKHOLDERS' EQUITY**

<u>Capital Structure</u>

The Company was originally incorporated as a New York limited liability company. The membership interests in such and associated members' equity were applied to stockholders' equity and the members were issued common stock in the corporation in exchange for their membership interests in the LLC. Upon conversion to a Delaware corporation in December 2019, the Company authorized 2,500,000 shares of common stock at $0.0001 par value. As of June 30, 2022 and December 31, 2021, 10,381,780 and 9,971,680 shares of common stock were issued and outstanding, respectively.

<u>Stock and Membership Units</u>

In 2022, the Company had raised $511,212 through issuance of its common stock pursuant to an offering under Regulation Crowdfunding, where 410,100 shares were issued at $1.25 per share.

In 2021, the Company had raised $8,065,297 through issuance of its common stock pursuant to an offering under Regulation Crowdfunding, where 903,960 shares were issued at $8.92 per share. In 2021, the Company had raised $556,613 through issuance of its common stock, where 119,760 shares were issued at $4.65 per share. As of June 30, 2022 and December 31, 2021, there was $311,959 and $2,332,322 of funds held in escrow, respectively, related to these issuances. Direct offering costs related to its financing activities totaled $6,120 and $338,250 for the periods ended June 30, 2022 and June 30, 2021 , respectively.

Flower Turbines B.V. was a party to an Employment Agreement with Mr. Osinga. The employment agreement has a term of one year, which commenced January 1, 2020, and provides for a monthly base salary of €6,000. The Company also agreed that Mr. Osinga shall receive a commission equal to 5% of the total revenue generated in Europe, above €150,000. The Company agreed that if they were able to generate €500,000 or more in revenue in Europe during 2020, the Company shall issue Mr. Osinga an additional number of shares of Flower Turbines B.V. equal to 3% of the outstanding share capital. The employment agreement was terminated in June 2022 and his shares were purchased by the Company.

On April 10, 2020, Flower Turbines B.V., initiated a repurchase of all its shares of capital stock owned by PortXL Netherlands B.V., in exchange for €45,000, of which €11,250 was paid prior to the closing, and the remaining balance of €33,750 was paid in three equal installments of €11,250 in 2020.

At the time of the repurchase, Mr. Osinga, the Regional Director EU served as a laison for PortXL Netherlands B.V.

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

<u>Options</u>

During the year ended December 31, 2021, the Company issued 800,000 options that had no intrinsic value, and as such, no expense was recorded. 100,000 of those were for Mr. Osinga, who is no longer entitled to them as of June 2022 by leaving the Company.

**NOTE 5: OPERATING LEASES**

Effective July 2017, the Company entered into a lease agreement for a car. The lease term commenced July 2017 and is scheduled to expire after 60 months, in June 2022. Monthly lease obligations under the lease are $271 per month. The lease was paid off in 2021.

**NOTE 6: LOANS PAYABLE**

On November 4, 2019 the Subsidiary entered into a loan agreement with a bank for total principal of $56,134. Loan A is for principal of $28,068 and bears interest at 7.5%. The loan requires monthly interest payments for 84 months with a final balloon payment on the maturity date. Loan B is for principal of $28,067, bears interest at a 7.5% fixed rate. The loan requires interest only payments for the first 24 months, followed by principal and interest payments of $468 for the next 60 months, followed by a balloon payment on the last day of the loans. Loans A and B are unsecured. Interest expense for these loans totaled $1,985 and $2,271 for the six-months ended June 30, 2022 and 2021, respectively. Accrued interest payable totaled $0 and $0 for the six-months ended June 30, 2022 and 2021, respectively. Total unpaid principal balance was $54,087 and $56,934 as of June 30, 2022 and 2021, respectively.

Future minimum principal payments under the loans are as follows as of June 30:

---

| | |
|:---|:---|
| 2023 | 3962 |
| 2024 | 4269 |
| 2025 | 4601 |
| 2026 | 4905 |
| 2027 | 5285 |
| Therafter | 31065 |
| Total | $54087 |

---

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of June 30, 2022 (unaudited) and December 31, 2021 (audited) and for the six-month periods ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)** 

**NOTE 7: RECENT ACCOUNTING PRONOUNCEMENTS**

In February 2016, the FASB issued ASU 2016-02, *Leases* (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet. The ASU is effective for annual and interim periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are continuing to evaluate the impact of this new standard on our financial reporting and disclosures.

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated balance sheet. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

**NOTE 8: COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS**

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations. The Company also has unknown impacts from the ongoing COVID-19 pandemic.

**NOTE 9: SUBSEQUENT EVENTS**

<u>Management's Evaluation</u>

The Company has evaluated subsequent events through November 21, 2022, the date the consolidated financial statements were available to be issued. Based on the evaluation, no additional material events were identified which require adjustment or disclosure.

**Flower Turbines, Inc.**

**A Delaware Corporation**

Consolidated Financial Statements and Independent Auditor's Report

December 31, 2021 and 2020

**Flower Turbines, Inc.**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  | **Page** |
| [Independent Auditor's Report](#aa_001) | [F-17 – F-18](#aa_001) |
| Consolidated Financial Statements as of December 31, 2021 and 2020 and for the years then ended: |  |
| &nbsp;&nbsp;&nbsp;[Consolidated Balance Sheets](#aa_002) | [F-19](#aa_002) |
| &nbsp;&nbsp;&nbsp;[Consolidated Statements of Operations and Comprehensive Income/(Loss)](#aa_003) | [F-20](#aa_003) |
| &nbsp;&nbsp;&nbsp;[Consolidated Statements of Changes in Stockholders' Equity](#aa_004) | [F-21](#aa_004) |
| &nbsp;&nbsp;&nbsp;[Consolidated Statements of Cash Flows](#aa_005) | [F-22](#aa_005) |
| &nbsp;&nbsp;&nbsp;[Notes to Consolidated Financial Statements](#aa_006) | [F-23 – F-31](#aa_006) |

---

![](tm2229852d2_partii-iiiimg01.jpg)

**INDEPENDENT AUDITORS' REPORT**

---

| | |
|:---|:---|
| <br> ![](tm2229852d2_partii-iiiimg02.jpg)<br>**Members of:**<br> **WSCPA**<br> **AICPA**<br> **PCPS**<br>**802 N. Washington**<br> **PO Box 2163**<br> **Spokane, Washington**<br> **99210-2163**<br>**P 509-624-9223**<br> **TF 1-877-264-0485**<br> **mail@fruci.com**<br> **www.fruci.com** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br> To the Board of Directors and Management of<br> Flower Turbines, Inc.<br>**Opinion**<br>We have audited the consolidated financial statements of Flower Turbines, Inc. ("the Company") (a Delaware corporation), which comprise the consolidated balance sheets as of December 31, 2021 and 2020 and the related consolidated statements of operations and comprehensive income/(loss), changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.<br>In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Flower Turbines, Inc. as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America<br>**Basis for Opinion**<br>We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of Flower Turbines, Inc. and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.<br>**Responsibilities of Management for the Financial Statements**<br>Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.<br>In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Flower Turbines, Inc.'s ability to continue as a going concern within one year after the date that the financial statements are available to be issued.<br>|

---

**Auditors' Responsibilities for the Audit of the Financial Statements**

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards, we:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Exercise professional judgment and maintain professional
skepticism throughout the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Identify and assess the risks of material misstatement
of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of Flower Turbines, Inc. 's internal control. Accordingly, no such opinion is expressed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Evaluate the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Conclude, whether, in our judgment, there are
conditions or events, considered in the aggregate, that raise substantial doubt about Flower Turbines, Inc.'s ability to continue
as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

![](tm2229852d2_partii-iiiimg03.jpg)

Spokane, Washington

July 20, 2022

**FLOWER TURBINES, INC.**

**CONSOLIDATED BALANCE SHEETS** 

**As of December 31, 2021 and 2020**

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| **ASSETS** |  |  |
| &nbsp;&nbsp;&nbsp;Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $2350678 | $50251 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | 78224 | 35284 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 133151 | 8560 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | 131097 | 21147 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | 139230 | 40980 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Funds held in escrow | 2332322 | 186590 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Assets | 5164702 | 342812 |
| &nbsp;&nbsp;&nbsp;Non-Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net | 40580 | 11130 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Non-Current Assets | 40580 | 11130 |
| TOTAL ASSETS | $5205282 | $353942 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Current Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | $281651 | $98982 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 146912 | 94707 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses | 64240 | 19587 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable - current | 3676 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Current Liabilities | 496479 | 213276 |
| &nbsp;&nbsp;&nbsp;Long-Term Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable - net of current | 53258 | 62141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Long-Term Liabilities | 53258 | 62141 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Liabilities | 549737 | 275417 |
| Stockholders' Equity: |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.0001 par, 20,000,000 shares authorized, 9,971,680 and 8,947,960 shares issued and outstanding as of December 31, 2021 and 2020, respectively. | 998 | 900 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 10223395 | 2464674 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (5489402) | (2364442) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (55684) | (15551) |
| &nbsp;&nbsp;&nbsp;Stockholders' equity before noncontrolling interest | 4679307 | 85581 |
| &nbsp;&nbsp;&nbsp;Equity attributable to noncontrolling interest | (23762) | (7056) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Stockholders' Equity | 4655545 | 78525 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $5205282 | $353942 |

---

See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)**

**For the years ended December 31, 2021 and 2020**

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| Net revenues | $338643 | $147038 |
| Cost of net revenues | (477995) | (370968) |
| Gross profit/(loss) | (139352) | (223930) |
| Operating Expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General & administrative | 2654919 | 637821 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales & marketing | 12754 | 9882 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 330537 | 241660 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Operating Expenses | 2998210 | 889363 |
| Loss from operations | (3137562) | (1113293) |
| Other Income/(Expense): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | (4469) | (4945) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | 423 | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other expense | (58) | (8) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Other Income/(Expense) | (4104) | (4950) |
| Benefit/(Provision) for income taxes | - | - |
| Net loss | (3141666) | (1118243) |
| Less: net loss attributable to noncontrolling interest | (16706) | (7056) |
| Net loss attributable to Flower Turbines, Inc. | (3124960) | (1111187) |
| &nbsp;&nbsp;&nbsp;Foreign currency translation loss | (40133) | (14629) |
| Other comprehensive loss | $(3165093) | $(1125816) |
| Basic and diluted net loss per share | $(0.33) | $(0.13) |
| Weighted average shares outstanding - basic and diluted | 9464027 | 8760990 |

---

See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

**For the years ended December 31, 2021 and 2020**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Common Stock | Common Stock | | | | |
|  | Number of<br> Shares | Amount |<br>Additional<br> Paid-In Capital |<br>Accumulated<br> Deficit |<br>Accumulated<br> Other<br> Comprehensive<br> Loss |<br>Total<br> Stockholders'<br> Equity |
| Balance at January 1, 2020 | 8575360 | $860 | $1552830 | $(1253255) | $(922) | $299513 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of shares - Regulation CF | 371600 | 40 | 910428 |  |  | 910468 |
| &nbsp;&nbsp;&nbsp;&nbsp;Amounts in escrow |  |  | 167349 |  |  | 167349 |
| &nbsp;&nbsp;&nbsp;&nbsp;Offering costs |  |  | (168933) |  |  | (168933) |
| &nbsp;&nbsp;&nbsp;&nbsp;Shares issued in exchange for cash | 1000 |  | 3000 |  |  | 3000 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | - | - | - | (1111187) | (14629) | $(1125816) |
| Balance at December 31, 2020 | 8947960 | 900 | 2464674 | (2364442) | (15551) | 85581 |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuance of shares - Regulation CF | 903960 | 90 | 8065207 |  |  | 8065297 |
| &nbsp;&nbsp;&nbsp;&nbsp;Shares issued in exchange for cash | 119760 | 8 | 556605 |  |  | 556613 |
| &nbsp;&nbsp;&nbsp;&nbsp;Offering costs |  |  | (863091) |  |  | (863091) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | - | - | - | (3124960) | (40133) | (3165093) |
| Balance at December 31, 2021 | 9971680 | $998 | $10223395 | $(5489402) | $(55684) | $4679307 |

---

See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**For the years ended December 31, 2021 and 2020**

---

| | | |
|:---|:---|:---|
|  | **2021** | **2020** |
| **Cash Flows From Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(3124960) | $(1111187) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss attributable to noncontrolling interest | (16706) | (7056) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation | 11322 | 5363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)/Decrease in accounts receivable | (124591) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)/Decrease in prepaid expenses | (42940) | (13457) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)/Decrease in other assets | (78630) | (18453) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)/Decrease in inventory | (98250) | (40980) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase/(Decrease) in accounts payable | 182668 | 69037 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase/(Decrease) in accrued expenses | 44653 | 17862 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase/(Decrease) in deferred revenue | 52205 | 87333 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Cash Used In Operating Activities | (3195229) | (1011538) |
| **Cash Flows From Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Patent costs | (31320) |  |
| &nbsp;&nbsp;&nbsp;Purchase of property of equipment | (40772) | (14339) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Cash Used In Investing Activities | (72092) | (14339) |
| **Cash Flows From Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;Payments on notes payable | (5207) | 6006 |
| &nbsp;&nbsp;&nbsp;Advances to related party |  | 2171 |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of stock | 6476179 | 984917 |
| &nbsp;&nbsp;&nbsp;Offering costs | (863091) | (168933) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Cash Provided By Financing Activities | 5607881 | 824161 |
| Cash effects of foreign currency translation loss | (40133) | (14629) |
| Net Change In Cash | 2300427 | (216345) |
| Cash at Beginning of Period | 50251 | 266596 |
| Cash at End of Period | $2350678 | $50251 |
| **Supplemental Disclosure of Cash Flow Information** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for interest | $4469 | $4945 |
| &nbsp;&nbsp;&nbsp;Cash paid for income taxes | $- | $- |

---

See Independent Auditor's Report and accompanying notes, which are an integral part of these consolidated financial statements.

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

**NOTE 1: NATURE OF OPERATIONS**

Flower Turbines, Inc. and subsidiary (collectively the "Company"), is a corporation formed under the laws of Delaware. The Company was originally incorporated as a New York limited liability company on September 25, 2013 under the name Flower Turbines, LLC. The LLC converted to a Delaware corporation on December 26, 2019. The Company develops unique designs for wind turbines. On March 27, 2019 Flower Turbines B.V. (the "Subsidiary") was formed in the Netherlands. Flower Turbines B.V. is a 96% owned subsidiary of the Company and was formed for the sale, installation, and development of sustainable energy solutions inside Europe.

**NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

<u>Basis of Presentation and Basis for Consolidation</u>

The Company prepares consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (GAAP). These consolidated financial statements include all accounts of Flower Turbines, Inc., along with its wholly owned subsidiary, Flower Turbines B.V. All transactions and balances between and among the aforementioned companies have been eliminated in consolidating the accounts for consolidated financial statement presentation. The accounting and reporting policies of the Company conform to GAAP. The Company adopted the calendar year as its basis of reporting.

<u>Basis of Presentation</u>

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (GAAP). The Company has adopted the calendar year as its basis of reporting.

<u>Use of Estimates</u>

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

<u>Noncontrolling Interests</u>

Noncontrolling interests represents minority owners' share of net income or losses and equity in the Company's majority-owned consolidated subsidiary. During 2019, the Company owned 88% of the subsidiary, in 2020, the Company acquired an additional 8% of the subsidiary, and in June 2022 acquired an additional 4% of the subsidiary, at which time it became a wholly owned subsidiary of the Company.

<u>Cash Equivalents</u>

For the purpose of the statement of cash flows, cash equivalents include time deposits, certificate of deposits, and all highly liquid debt instruments with original maturities of three months or less.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

<u>Accounts Receivable and Allowance for Doubtful Accounts</u>

Accounts receivable are carried at their estimated collectible amounts. Accounts receivable are periodically evaluated for collectability based on past credit history with clients and other factors. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance, and current economic conditions. As of December 31, 2021 and 2020, the Company carried receivables of $133,151 and $8,560, respectively and no allowances against such.

<u>Inventory & Shipping and Handling Costs</u>

Inventory is stated at the lower of cost or market and accounted for using the specific identification method. As of December 31, 2021, the Company had $64,448 of inventory in transit and the remainder consisted of finished goods held for sale. The inventory balance as of December 31, 2020 consisted entirely of finished goods held for sale.

<u>Property and Equipment</u>

The Company has a policy to capitalize expenditures with useful lives in excess of one year and costs exceeding $1,000 as property and equipment and depreciates such assets on a straight-line basis over estimated useful lives (5 years). The Company's property and equipment is assessed annually for indications of impairment. The Company's property and equipment are recorded at costs of $48,289 and $12,492 and are presented net of accumulated depreciation of $7,709 and $1,362 as of December 31, 2021 and 2020, respectively. Depreciation expense of $11,322 and $5,363 were recorded for the years ended December 31, 2021 and 2020, respectively.

<u>Deferred Offering Costs</u>

The Company complies with the requirement of FASB ASC 340-10-S99-1. Prior to the completion of the offering these costs are capitalized as deferred offering costs on the balance sheet. The deferred offering costs are charged to stockholders' equity upon the completion of the offering. There were no deferred offerings costs capitalized to the balance sheet as of December 31, 2021 and 2020, respectively.

<u>Fair Value of Financial Instruments</u>

Financial Accounting Standards Board ("FASB") guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

Level 3 - Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

The carrying amounts reported in the balance sheets approximate their fair value.

<u>Concentrations of Credit Risk</u>

The Company's financial instruments that are exposed to concentrations of credit risk consist of its cash. The Company will place its cash and cash equivalents with financial institutions of high credit- worthiness and has a policy to not carry a balance in excess of FDIC insurance limits.

<u>Basic Income/(Loss) per Common Share</u>

Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

Company's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited. As of December 31, 2021, the Company held funds in excess of FDIC insurance limits.

<u>Revenue Recognition</u>

ASC Topic 606, "Revenue from Contracts with Customers" establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers.

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements: 1) identify the contract with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to performance obligations in the contract; and 5) recognize revenue as the performance obligation is satisfied.

Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

Each product sold to a customer typically represents a distinct performance obligation. The Company satisfies its performance obligation and revenue is recorded at the point in time when products are installed as the Company has determined that this is the point that control transfers to the customer. The Company invoices customers upon delivery of the products, and payments from such customers are due upon invoicing.

46% and 32% of revenue came from 2 customers during the year ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, $146,912 and $94,707 of deferred revenue were recorded, respectively. The $94,707 of deferred revenue was recognized as revenue in the year ended December 31, 2021. Revenues are recognized on these arrangements after the units are produced and fulfilled to the customers, and all other revenue recognition criteria are achieved. Substantially, all revenue recorded for the years ended December 31, 2021 and 2020 were for sales through the subsidiary.

<u>Research and Development</u>

The Company expenses research and development costs when incurred.

<u>Advertising Costs</u>

The Company's policy regarding advertising is to expense advertising when incurred.

<u>Income Taxes</u>

The Company uses the liability method of accounting for income taxes as set forth in ASC 740, *Income Taxes*. Under the liability method, deferred taxes are determined based on the temporary differences between the consolidated financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is unlikely that the deferred tax assets will be realized.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon its evaluation of the facts, circumstances and information available at the reporting date. In accordance with ASC 740-10, for those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, our policy is to record the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit will be recognized in the consolidated financial statements. The Company has determined that there are no material uncertain tax positions.

The Company accounts for income taxes with the recognition of estimated income taxes payable or refundable on income tax returns for the current period and for the estimated future tax effect attributable to temporary differences and carryforwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized in the immediate future.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**As of December 31, 2021 and 2020 and for the years then ended**

From its inception until December 26, 2019, at which time the LLC was converted to a corporation, the Company was subject to taxation as a limited liability company, and therefore was treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the members. As such, no recognition of federal or state income taxes for the Company have been provided for in the accompanying consolidated financial statements during that period.

For the period after the December 26, 2019 conversion to a corporation, the Company was taxed as a corporation. The Company estimates it will have a net operating loss carryforward of $1,022,025 as of December 31, 2021. The Company pays federal and New York income taxes at a combined effective rate of approximately 26% and has used this effective rate to derive a net deferred tax asset of $265,727 as of December 31, 2021, resulting from its net operating loss carryforward. Due to uncertainty as to the Company's ability to generate sufficient taxable income in the future to utilize the net operating loss carryforwards, the Company has recorded a full valuation allowance to reduce the net deferred tax asset to zero, there was no net operating loss recorded for December 31, 2021. The 2021 tax returns have not yet been filed as of the issuance of these consolidated financial statements. All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject.

<u>Foreign Currency</u>

The consolidated financial statements are presented in United States Dollars, ("USD"), which is the reporting currency and the functional currency of the Company's U.S. operations. The functional currency for the Subsidiary is its local currency. In accordance with ASC 830, *Foreign Currency Matters*, foreign denominated monetary assets and liabilities are translated to their USD equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at exchange rate prevailing at the transaction date. Revenue and expenses were translated at the prevailing rate of exchange at the date of the transaction. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations. At December 31, 2021 and 2020, the foreign currency translation loss was $40,133 and $14,629, respectively.

**NOTE 3: GOING CONCERN**

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a business that has not yet generated profits since inception, has sustained losses of $3,141,666 and $1,118,243 for the years ended December 31, 2021 and 2020, respectively, and has negative cash flows from operations for the years ended December 31, 2021 and 2020, respectively and the Company is reliant on continual financing.

The Company's ability to continue as a going concern in the next twelve months is dependent upon its ability to utilize existing fundraising capital to increase sales and obtain capital financing from investors sufficient to meet current and future obligations and deploy such capital to produce profitable operating results. Management has evaluated these conditions and plans to raise capital as needed to satisfy it liquidity needs through its Regulation Crowdfunding offering in 2022 and increasing its sales. No assurance can be given that the Company will be successful in these efforts. Due to the conclusion of the 2021 crowdfunding, the Company has sufficient capital to maintain operations without sales for 12 months from the balance sheet date, but the ability to turn this runway into a going concern raises some doubt. As of the report date, the Company has raised $4 million and expects it can function for 12 months without funding or profits from sales. The BV is currently making sales although operating at a loss and the US company plans on commencing sales in July 2022. The balance sheet does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

**NOTE 4: STOCKHOLDERS' EQUITY**

<u>Capital Structure</u>

The Company was originally incorporated as a New York limited liability company. The membership interests in such and associated members' equity were applied to stockholders' equity and the members were issued common stock in the corporation in exchange for their membership interests in the LLC. Upon conversion to a Delaware corporation in December 2019, the Company authorized 2,500,000 shares of common stock at $0.0001 par value. During 2021, the Company executed a 10-1 stock split and amended it's Articles of Incorporation increasing its authorized shares to 20,000,000. As of December 31, 2021 and 2020, 9,971,680 and 8,947,960 shares of common stock were issued and outstanding, respectively.

<u>Stock and Membership Units</u>

In 2021, the Company had raised $8,065,297 through issuance of its common stock pursuant to an offering under Regulation Crowdfunding, where 903,960 shares were issued at $8.92 per share. In 2021, the Company had raised $556,613 through issuance of its common stock, where 119,760 shares were issued at $4.65 per share. In 2020, the Company had raised $13,198 through issuance of its common stock pursuant to an offering under Regulation Crowdfunding, where 1,320 shares were issued at $10.00 per share. In 2020, the Company had raised $1,064,619 through issuance of its common stock pursuant to an offering under Regulation Crowdfunding, where 35,840 shares were issued at $30.00 per share. As of December 31, 2021 and 2020, there was $2,332,322 and $186,590 of funds held in escrow, respectively, related to these issuances. Direct offering costs related to its financing activities totaled $863,091 and $168,933 for the years ended December 31, 2021 and 2020, respectively.

Flower Turbines B.V. was a party to an Employment Agreement with Mr. Osinga. The employment agreement has a term of one year, which commenced January 1, 2020, and provides for a monthly base salary of €6,000. The Company also agreed that Mr. Osinga shall receive a commission equal to 5% of the total revenue generated in Europe, above €150,000. The Company agreed that if they were able to generate €500,000 or more in revenue in Europe during 2020, the Company shall issue Mr. Osinga an additional number of shares of Flower Turbines B.V. equal to 3% of the outstanding share capital. The employment agreement was terminated in June 2022 and his shares were purchased by the Company.

On April 10, 2020, Flower Turbines B.V., initiated a repurchase of all its shares of capital stock owned by PortXL Netherlands B.V., in exchange for €45,000, of which €11,250 was paid prior to the closing, and the remaining balance of €33,750 was paid in three equal installments of €11,250 in 2020.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

At the time of the repurchase, Mr. Osinga, the Regional Director EU served as a laison for PortXL Netherlands B.V.

<u>Options</u>

During the year ended December 31, 2021, the Company issued 800,000 options that had no intrinsic value, and as such, no expense was recorded. 100,000 of those were for Mr. Osinga, who is no longer entitled to them as of June 2022 by leaving the Company.

**NOTE 5: OPERATING LEASES**

Effective July 2017, the Company entered into a lease agreement for a car. The lease term commenced July 2017 and is scheduled to expire after 60 months, in June 2022. Monthly lease obligations under the lease are $271 per month. The lease was paid off in 2021.

The Company entered into a lease agreement for office space. The lease term commenced November 1, 2019 and expired on October 31, 2020. Monthly lease obligations under the lease are $1,039 per month. Lease expense for the years ended December 31, 2021 and 2020 totaled $80,797 and $18,565, respectively.

Future minimum lease payments under the Company's outstanding leases are as follows as of December 31, 2021:

---

| | |
|:---|:---|
| 2022 | $1626 |
| Total | $1626 |

---

**NOTE 6: RELATED PARTY TRANSACTIONS**

During 2019, the Company advanced funds to the founder of the Company, these funds were paid back in 2020. As of December 31, 2021 and 2020, the balance due from the stockholder under the arrangement was $0 and $0, respectively. The advance bore no interest and had no maturity date, but was fully returned. The founder of the Company was paid $10,000 and $15,000 for consultant services for the year ended December 31, 2021 and 2020, respectively.

**NOTE 7: LOANS PAYABLE**

On November 4, 2019 the Subsidiary entered into a loan agreement with a bank for total principal of $56,134. Loan A is for principal of $28,068 and bears interest at 7.5%. The loan requires monthly interest payments for 84 months with a final balloon payment on the maturity date. Loan B is for principal of $28,067, bears interest at a 7.5% fixed rate. The loan requires interest only payments for the first 24 months, followed by principal and interest payments of $468 for the next 60 months, followed by a balloon payment on the last day of the loans. Loans A and B are unsecured. Interest expense for these loans totaled $4,469 and $4,284 the years ending December 31, 2021 and 2020, respectively. Accrued interest payable totaled $0 and $472 for the years ended December 31, 2021 and 2020, respectively. Total unpaid principal balance was $55,934 and $62,141 as of December 31, 2021 and 2020, respectively.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

Future minimum principal payments under the loans are as follows as of December 31:

---

| | |
|:---|:---|
| 2022 | 3676 |
| 2023 | 3962 |
| 2024 | 4269 |
| 2025 | 4601 |
| Therafter | 39426 |
| Total | $55934 |

---

**NOTE 8: RECENT ACCOUNTING PRONOUNCEMENTS**

In February 2016, the FASB issued ASU 2016-02, *Leases* (Topic 842). This ASU requires a lessee to recognize a right-of-use asset and a lease liability under most operating leases in its balance sheet.

The ASU is effective for annual and interim periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. We are continuing to evaluate the impact of this new standard on our financial reporting and disclosures.

Management does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying consolidated balance sheet. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

**NOTE 9: COMMITMENTS, CONTINGENCIES, AND CONCENTRATIONS**

The Company may be subject to pending legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot be predicted with certainty, but the Company does not anticipate that the final outcome, if any, arising out of any such matter will have a material adverse effect on its business, financial condition or results of operations. The Company also has unknown impacts from the ongoing COVID-19 pandemic.

**NOTE 10: RECLASSIFICATION**

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

**NOTE 11: SUBSEQUENT EVENTS**

<u>Management's Evaluation</u>

The Company has evaluated subsequent events through July 20, 2022, the date the consolidated financial statements were available to be issued. Based on the evaluation, no additional material events were identified which require adjustment or disclosure other than those below.

See accompanying Independent Auditor's Report

**FLOWER TURBINES, INC.** 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** 

**As of December 31, 2021 and 2020 and for the years then ended**

In 2021, the Company initiated a Regulation A crowdfunding campaign. As of July 20, 2022, $8,426,950 has been raised and 1,349,530 of common stock were issued. In 2022, 445,570 of common shares were issued for proceeds of $2,761,430. $2,332,322 was held in escrow as of December 31, 2021.

During 2022, the Company purchased the remaining 4% interest in the subsidiary and the Company is now the sole owner.

On March 1, 2022, the Company entered into a 36-month lease agreement for office space. The lease requires escalating monthly lease payments ranging from $2,955 to $3,076.

See accompanying Independent Auditor's Report

**Part III**

**EXHIBITS**

---

| | |
|:---|:---|
| [1.0](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex1-0.htm) | [Posting Agreement with StartEngine Primary LLC (1)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex1-0.htm) |
| [2.1](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-1.htm) | [Certificate of Incorporation (2)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-1.htm) |
| [2.2](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-2.htm) | [First Amendment to Certificate of Incorporation (3)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-2.htm) |
| [2.3](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-3.htm) | [Bylaws (4)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-3.htm) |
| [4.1](tm2229852d4_ex4-1.htm) | [Form of Subscription Agreement (5)](tm2229852d4_ex4-1.htm) |
| [6.1](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-1.htm) | [License Agreement with Dr. Mark Daniel Farb (6)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-1.htm) |
| [6.2](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-2.htm) | [Stock Option Plan (7)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-2.htm) |
| [6.3](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-3.htm) | [Employment Agreement with Dr. Mark Daniel Farb (8)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-3.htm) |
| [6.4](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-4.htm) | [Employment Agreement with Warren Stoll. (9)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-4.htm) |
| [6.5](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-5.htm) | [Quotation Agreement (10)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-5.htm) |
| [8](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex8.htm) | [Escrow Services Agreement (11)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex8.htm) |
| [11](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex11.htm) | [Consent of Fruci & Associates II (12)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex11.htm) |
| [12](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex12.htm) | [Opinion of Alliance Legal Partners, Inc. (13)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex12.htm) |
| [13](https://www.sec.gov/Archives/edgar/data/1739997/000110465923009376/tm2229852d3_ex13.htm) | [Test the Waters Material (14)](https://www.sec.gov/Archives/edgar/data/1739997/000110465923009376/tm2229852d3_ex13.htm) |

---

1. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement
 on Form 1-A (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex1-0.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex1-0.htm) .

2. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A (Commission
 File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-1.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-1.htm) .

3. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A (Commission
 File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-2.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-2.htm) .

4. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A (Commission
 File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-3.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex2-3.htm) .

5. Filed herewith .

6. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A (Commission
 File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-1.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-1.htm) .

7. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-2.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-2.htm) .

8. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-3.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-3.htm) .

9. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-4.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-4.htm) .

10. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-5.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex6-5.htm) .

11. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex8.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex8.htm) .

12. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex11.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex11.htm) .

13. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex12.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923007524/tm2229852d2_ex12.htm) .

14. Filed as an exhibit to the Flower Turbines, Inc. Regulation A Offering Statement on Form 1-A
 (Commission File No. 024-11330) and incorporated herein by reference. Available at, [https://www.sec.gov/Archives/edgar/data/1739997/000110465923009376/tm2229852d3_ex13.htm](https://www.sec.gov/Archives/edgar/data/1739997/000110465923009376/tm2229852d3_ex13.htm) .

**SIGNATURES**

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this Offering Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Long Beach, State of New York, on February 13, 2023.

**FLOWER TURBINES, INC.**

---

| | | |
|:---|:---|:---|
| By | /s/ Mark Daniel Farb | /s/ Mark Daniel Farb |
|  | Title: | Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director |
|  | Dated: | February 13, 2023 |

---

## Ex1A-4

**Exhibit 4.1**

**FORM OF SUBSCRIPTION AGREEMENT**

**THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK.** THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN BEAR THE ECONOMIC RISK FOR AN INDEFINITE PERIOD OF TIME AND WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. FURTHERMORE, INVESTORS MUST UNDERSTAND THAT SUCH INVESTMENT IS ILLIQUID AND IS EXPECTED TO CONTINUE TO BE ILLIQUID FOR AN INDEFINITE PERIOD OF TIME. NO PUBLIC MARKET EXISTS FOR THE SECURITIES, AND NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOLLOWING THIS OFFERING.

**THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND STATE SECURITIES OR BLUE SKY LAWS.** ALTHOUGH AN OFFERING STATEMENT HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), THAT OFFERING STATEMENT DOES NOT INCLUDE THE SAME INFORMATION THAT WOULD BE INCLUDED IN A REGISTRATION STATEMENT UNDER THE ACT. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON THE MERITS OF THIS OFFERING OR THE ADEQUACY OR ACCURACY OF THE SUBSCRIPTION AGREEMENT OR ANY OTHER MATERIALS OR INFORMATION MADE AVAILABLE TO SUBSCRIBER IN CONNECTION WITH THIS OFFERING OVER THE WEB-BASED PLATFORM MAINTAINED BY STARTENGINE, INC. (THE "PLATFORM"). ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

**INVESTORS WHO ARE NOT "ACCREDITED INVESTORS" (AS THAT TERM IS DEFINED IN SECTION 501 OF REGULATION D PROMULGATED UNDER THE ACT) ARE SUBJECT TO LIMITATIONS ON THE AMOUNT THEY MAY INVEST, AS SET OUT IN SECTION 4.** THE COMPANY IS RELYING ON THE REPRESENTATIONS AND WARRANTIES SET FORTH BY EACH SUBSCRIBER IN THIS SUBSCRIPTION AGREEMENT AND THE OTHER INFORMATION PROVIDED BY SUBSCRIBER IN CONNECTION WITH THIS OFFERING TO DETERMINE THE APPLICABILITY TO THIS OFFERING OF EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT.

**THE SUBSCRIPTION AGREEMENT, THE OFFERING CIRCULAR OR ANY OF THE OTHER MATERIALS AVAILABLE ON THE PLATFORM (COLLECTIVELY, THE "OFFERING MATERIALS")** **MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO, AMONG OTHER THINGS, THE COMPANY, ITS BUSINESS PLAN AND STRATEGY, AND ITS INDUSTRY.** THESE FORWARD-LOOKING STATEMENTS ARE BASED ON THE BELIEFS OF, ASSUMPTIONS MADE BY, AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY'S MANAGEMENT. WHEN USED IN THE OFFERING MATERIALS, THE WORDS "ESTIMATE," "PROJECT," "BELIEVE," "ANTICIPATE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS, WHICH CONSTITUTE FORWARD LOOKING STATEMENTS. THESE STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE. THE COMPANY DOES NOT UNDERTAKE ANY OBLIGATION TO REVISE OR UPDATE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER SUCH DATE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

**THE COMPANY MAY NOT BE OFFERING THE SECURITIES IN EVERY STATE.** THE OFFERING MATERIALS DO NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR JURISDICTION IN WHICH THE SECURITIES ARE NOT BEING OFFERED.

**THE COMPANY RESERVES THE RIGHT IN ITS SOLE DISCRETION AND FOR ANY REASON WHATSOEVER TO MODIFY, AMEND AND/OR WITHDRAW ALL OR A PORTION OF THE OFFERING AND/OR ACCEPT OR REJECT IN WHOLE OR IN PART ANY PROSPECTIVE INVESTMENT IN THE SECURITIES OR TO ALLOT TO ANY PROSPECTIVE INVESTOR LESS THAN THE AMOUNT OF SECURITIES SUCH INVESTOR DESIRES TO PURCHASE.** EXCEPT AS OTHERWISE INDICATED, THE OFFERING MATERIALS SPEAK AS OF THEIR DATE. NEITHER THE DELIVERY NOR THE PURCHASE OF THE SECURITIES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THAT DATE.

TO: Flower Turbines, Inc. 670 Long Beach BLVD, Suite 201 Long Beach, NY 11561 <br>

Ladies and Gentlemen:

<u>1. Subscription</u>.

(a) The undersigned ("**Subscriber**") hereby subscribes for and agrees to purchase shares of Class B Common Stock (the "**Securities**"), of Flower Turbines, Inc. a Delaware corporation (the "**Company**"), at a purchase price of $12.00 per share (the "**Per Security Price**"), upon the terms and conditions set forth herein. The minimum subscription is $600.00. The rights and preferences of the common stock are as set forth in the Company's Amended and Restated Certificate of Incorporation, the amendments thereto, and the Company's Bylaws, found as Exhibits 2.1 – 2.3 to the Offering Statement of the Company filed with the SEC (the "**Offering Statement**").

(b) Subscriber understands that the Securities are being offered pursuant to an offering circular dated [DATE] (the "Offering Circular") filed with the SEC as part of the Offering Statement. By executing this Subscription Agreement, Subscriber acknowledges that Subscriber has received this Subscription Agreement, copies of the Offering Circular and Offering Statement including exhibits thereto and any other information required by the Subscriber to make an investment decision.

(c) The Subscriber's subscription may be accepted or rejected in whole or in part, at any time prior to a Closing Date (as hereinafter defined), by the Company at its sole discretion. Upon the expiration of the period specified in Subscriber's state for notice filings before sales may be made in such state, if any, the subscription may no longer be revoked at the option of the Subscriber. In addition, the Company, at its sole discretion, may allocate to Subscriber only a portion of the number of Securities Subscriber has subscribed for. The Company will notify Subscriber whether this subscription is accepted (whether in whole or in part) or rejected. If Subscriber's subscription is rejected, Subscriber's payment (or portion thereof if partially rejected) will be returned to Subscriber without interest and all of Subscriber's obligations hereunder shall terminate.

(d) The aggregate number of Securities sold shall not exceed 1,000,000 (the "**Maximum Offering**"), plus certain bonus shares that may be issued to certain investors as set forth in the Offering Statement. The Company may accept subscriptions on a continuous basis, unless otherwise extended by the Company in its sole discretion in accordance with applicable SEC regulations for such other period required to sell the Maximum Offering (the "**Termination Date**"). The Company may elect at any time to close all or any portion of this offering, on various dates at or prior to the Termination Date (each a "**Closing Date**").

(e) In the event of rejection of this subscription in its entirety, or in the event the sale of the Securities (or any portion thereof) is not consummated for any reason, this Subscription Agreement shall have no force or effect, except for Section 5 hereof, which shall remain in force and effect.

(f) The terms of this Subscription Agreement shall be binding upon Subscriber and its transferees, heirs, successors and assigns (collectively, "**Transferees**"); provided that for any such transfer to be deemed effective, the Transferee shall have executed and delivered to the Company in advance an instrument in a form acceptable to the Company in its sole discretion, pursuant to which the proposed Transferee shall be acknowledge, agree, and be bound by the representations and warranties of Subscriber, terms of this Subscription Agreement.

<u>2. Purchase Procedure</u>.

(a) <u>Payment.</u> The purchase price for the Securities shall be paid simultaneously with the execution and delivery to the Company of the signature page of this Subscription Agreement. Subscriber shall deliver a signed copy of this Subscription Agreement, along with payment for the aggregate purchase price of the Securities by cash, ACH electronic transfer or wire transfer to an account designated by the Company, or by any combination of such methods.

(b) <u>Escrow arrangements.</u> Payment for the Securities shall be received by Bryn Mawr Trust Company of Delaware (the "**Escrow Agent**") from the undersigned by transfer of immediately available funds, check or other means approved by the Company at least two days prior to the applicable Closing Date, in the amount as set forth in Appendix A on the signature page hereto. Upon such Closing Date, the Escrow Agent shall release such funds to the Company. The undersigned shall receive notice and evidence of the digital entry of the number of the Securities owned by undersigned reflected on the books and records of the Company and verified by StartEngine Secure, LLC (the "**Transfer Agent**"), which books and records shall bear a notation that the Securities were sold in reliance upon Regulation A.

<u>3. Representations and Warranties of the Company</u>.

The Company represents and warrants to Subscriber that the following representations and warranties are true and complete in all material respects as of the date of each Closing Date, except as otherwise indicated. For purposes of this Agreement, an individual shall be deemed to have "knowledge" of a particular fact or other matter if such individual is actually aware of such fact. The Company will be deemed to have "knowledge" of a particular fact or other matter if one of the Company's current officers has, or at any time had, actual knowledge of such fact or other matter.

(a) <u>Organization and Standing.</u> The Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business.

(b) <u>Issuance of the Securities</u>. The issuance, sale and delivery of the Securities in accordance with this Subscription Agreement has been duly authorized by all necessary corporate action on the part of the Company. The Securities, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable.

(c) <u>Authority for Agreement</u>. The execution and delivery by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby (including the issuance, sale and delivery of the Securities) are within the Company's powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon full execution hereof, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies and (iii) with respect to provisions relating to indemnification and contribution, as limited by considerations of public policy and by federal or state securities laws.

(d) <u>No filings.</u> Assuming the accuracy of the Subscriber's representations and warranties set forth in Section 4 hereof, no order, license, consent, authorization or approval of, or exemption by, or action by or in respect of, or notice to, or filing or registration with, any governmental body, agency or official is required by or with respect to the Company in connection with the execution, delivery and performance by the Company of this Subscription Agreement except (i) for such filings as may be required under Regulation A or under any applicable state securities laws, (ii) for such other filings and approvals as have been made or obtained, or (iii) where the failure to obtain any such order, license, consent, authorization, approval or exemption or give any such notice or make any filing or registration would not have a material adverse effect on the ability of the Company to perform its obligations hereunder.

(e) <u>Capitalization</u>. The authorized and outstanding securities of the Company immediately prior to the initial investment in the Securities is as set forth "Securities Being Offered" in the Offering Circular. Except as set forth in the Offering Circular, there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), or agreements of any kind (oral or written) for the purchase or acquisition from the Company of any of its securities.

(f) <u>Financial statements.</u> Complete copies of the Company's financial statements required to be filed with the Offering Circular (the "**Financial Statements**") have been made available to the Subscriber and appear in the Offering Circular. The Financial Statements are based on the books and records of the Company and fairly present in all material respects the financial condition of the Company as of the respective dates they were prepared and the results of the operations and cash flows of the Company for the periods indicated. The Company's independent auditor which has audited the Financial Statements, is an independent accounting firm within the rules and regulations adopted by the SEC.

(g) <u>Proceeds</u>. The Company shall use the proceeds from the issuance and sale of the Securities as set forth in "Use of Proceeds to issuer" in the Offering Circular.

(h) <u>Litigation</u>. Except as set forth in the Offering Circular, there is no pending action, suit, proceeding, arbitration, mediation, complaint, claim, charge or investigation before any court, arbitrator, mediator or governmental body, or to the Company's knowledge, currently threatened in writing (a) against the Company or (b) against any consultant, officer, manager, director or key employee of the Company arising out of his or her consulting, employment or board relationship with the Company or that could otherwise materially impact the Company.

<u>4. Representations and Warranties of Subscriber</u>. By executing this Subscription Agreement, Subscriber (and, if Subscriber is purchasing the Securities subscribed for hereby in a fiduciary capacity, the person or persons for whom Subscriber is so purchasing) represents and warrants, which representations and warranties are true and complete in all material respects as of such Subscriber's respective Closing Date(s):

(a) <u>Requisite Power and Authority</u>. Such Subscriber has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement, and other agreements required hereunder and to carry out their provisions. All action on Subscriber's part required for the lawful execution and delivery of this Subscription Agreement and other agreements required hereunder have been or will be effectively taken prior to the Closing Date. Upon their execution and delivery, this Subscription Agreement and other agreements required hereunder will be valid and binding obligations of Subscriber, enforceable in accordance with their terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights and (b) as limited by general principles of equity that restrict the availability of equitable remedies.

(b) <u>Investment Representations</u>. Subscriber understands that the Securities have not been registered under the Securities Act of 1933, as amended (the "Securities Act"). Subscriber also understands that the Securities are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon Subscriber's representations contained in this Subscription Agreement.

(c) <u>Illiquidity and Continued Economic Risk</u>. Subscriber acknowledges and agrees that there is no ready public market for the Securities and that there is no guarantee that a market for their resale will ever exist. Subscriber must bear the economic risk of this investment indefinitely and the Company has no obligation to list the Securities on any market or take any steps (including registration under the Securities Act or the Securities Exchange Act of 1934, as amended) with respect to facilitating trading or resale of the Securities. Subscriber acknowledges that Subscriber is able to bear the economic risk of losing Subscriber's entire investment in the Securities. Subscriber also understands that an investment in the Company involves significant risks and has taken full cognizance of and understands all of the risk factors relating to the purchase of Securities.

(d) <u>Accredited Investor Status or Investment Limits</u>. Subscriber represents that either:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Subscriber is an "accredited investor" within the meaning of Rule 501 of Regulation D under the Securities Act. Subscriber represents and warrants that the information set forth in response to question (c) on the signature page hereto concerning Subscriber is true and correct; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) The purchase price set out in paragraph (b) of the signature page to this Subscription Agreement, together with any other amounts previously used to purchase Securities in this offering, does not exceed 10% of the greater of the Subscriber's annual income or net worth.

Subscriber represents that to the extent it has any questions with respect to its status as an accredited investor, or the application of the investment limits, it has sought professional advice.

(e) <u>Shareholder information.</u> Within five days after receipt of a request from the Company, the Subscriber hereby agrees to provide such information with respect to its status as a shareholder (or potential shareholder) and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is or may become subject. **Subscriber further agrees that in the event it transfers any Securities, it will require the transferee of such Securities to agree to provide such information to the Company as a condition of such transfer.**

(f) <u>Company Information</u>. Subscriber understands that the Company is subject to all the risks that apply to early-stage companies, whether or not those risks are explicitly set out in the Offering Circular. Subscriber has had such opportunity as it deems necessary (which opportunity may have presented through online chat or commentary functions) to discuss the Company's business, management and financial affairs with managers, officers and management of the Company and has had the opportunity to review the Company's operations and facilities. Subscriber has also had the opportunity to ask questions of and receive answers from the Company and its management regarding the terms and conditions of this investment. Subscriber acknowledges that except as set forth herein, no representations or warranties have been made to Subscriber, or to Subscriber's advisors or representative, by the Company or others with respect to the business or prospects of the Company or its financial condition.

(g) <u>Valuation.</u> The Subscriber acknowledges that the price of the Securities was set by the Company on the basis of the Company's internal valuation and no warranties are made as to value. The Subscriber further acknowledges that future offerings of Securities may be made at lower valuations, with the result that the Subscriber's investment will bear a lower valuation.

(h) <u>Domicile</u>. Subscriber maintains Subscriber's domicile (and is not a transient or temporary resident) at the address shown on the signature page.

(i) <u>No Brokerage Fees</u>. There are no claims for brokerage commission, finders' fees or similar compensation in connection with the transactions contemplated by this Subscription Agreement or related documents based on any arrangement or agreement binding upon Subscriber.

(j) <u>Foreign Investors</u>. If Subscriber is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Subscriber hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Securities or any use of this Subscription Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. Subscriber's subscription and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of the Subscriber's jurisdiction.

5. <u>Survival of Representations and Indemnity</u>. The representations, warranties and covenants made by the Subscriber herein shall survive the Termination Date of this Agreement. The Subscriber agrees to indemnify and hold harmless the Company and its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys' fees, including attorneys' fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.

<u>Proxy.</u>

(a) The Subscriber hereby appoints the Chief Executive Officer of the Company (the "**Chief Executive Officer**"), or his or her successor as Chief Executive Officer, as the Subscriber's true and lawful proxy and attorney, with the power to act alone and with full power of substitution to assign this proxy to any officer or director, to, consistent with this instrument and on behalf of the Subscriber, (i) vote all Securities, (ii) give and receive notices and communications, (iii) execute any instrument or document that the Chief Executive Officer determines is necessary or appropriate in the exercise of its authority under this instrument, and (iv) take all actions necessary or appropriate in the judgment of the Chief Executive Officer for the accomplishment of the foregoing. The proxy and power granted by the Subscriber pursuant to this Section are coupled with an interest. Such proxy and power will be irrevocable. The proxy and power, so long as the Subscriber is an individual, will survive the death, incompetency and disability of the Subscriber and, so long as the Subscriber is an entity, will survive the merger or reorganization of the Subscriber or any other entity holding the Securities. The Proxy will terminate upon the closing of a "Change of Control" transaction. The Chief Executive Officer is an intended third-party beneficiary of this Section and has the right, power and authority to enforce the provisions hereof as though he or she was a party hereto. For the purposes of this paragraph, Change of Control shall mean (i) the closing of a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 covering the offer and sale of Common Stock or the effectiveness of a registration statement under the Securities Exchange Act of 1934 covering the Common Stock; (ii) a "Sale of the Company"; or (iii) a "Deemed Liquidation Event". A Sale of the Company shall mean either: (a) a transaction or series of related transactions in which a person, or a group of related persons, acquires from stockholders of the Company shares representing more than 50% of the outstanding voting power of the Company (a "**Stock Sale**") or (b) a transaction that qualifies as a Deemed Liquidation Event, as determined by the Company's board of directors. A "Deemed Liquidation Event" shall be deemed to be occasioned by, or to include, (i) the acquisition of the Company by another entity by means of any transaction or series of related transactions to which the Company is party (including, without limitation, any stock acquisition, reorganization, merger or consolidation but excluding any sale of stock for capital raising purposes) other than a transaction or series of transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction retain, immediately after such transaction or series of transactions, as a result of shares in the Company held by such holders prior to such transaction, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity (or if the Company or such other surviving or resulting entity is a wholly-owned subsidiary immediately following such acquisition, its parent); (ii) a sale, exclusive license, transfer, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole by means of any transaction or series of related transactions, except where such sale, exclusive license, transfer, lease other disposition is to a wholly-owned subsidiary of the Company; or (iii) any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary.

(b) Other than with respect to the gross negligence or willful misconduct of the Chief Executive Officer, in his or her capacity as the Subscriber's true and lawful proxy and attorney pursuant to this Section (collectively, the "**Proxy**"), the Proxy will not be liable for any act done or omitted in his, her or its capacity as representative of the Subscriber pursuant to this instrument while acting in good faith, and any act done or omitted pursuant to the written advice of outside counsel will be conclusive evidence of such good faith. The Proxy has no duties or responsibilities except those expressly set forth in this instrument, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on behalf of the Subscriber otherwise exist against the Proxy. The Subscriber shall indemnify, defend and hold harmless the Proxy from and against any and all losses, liabilities, damages, claims, penalties, fines, forfeitures, actions, fees, costs and expenses (including the fees and expenses of counsel and experts and their staffs and all expense of document location, duplication and shipment) (collectively, "**Proxy Losses**") arising out of or in connection with any act done or omitted in the Proxy's capacity as representative of the Subscriber pursuant to this instrument, in each case as such Proxy Losses are suffered or incurred; provided, that in the event that any such Proxy Losses are finally adjudicated to have been directly caused by the gross negligence or willful misconduct of the Proxy, the Company shall reimburse the Subscriber the amount of such indemnified Proxy Losses to the extent attributable to such gross negligence or willful misconduct (provided that the Proxy's aggregate liability hereunder shall in no event exceed the Purchase Price). In no event will the Proxy be required to advance his, her or its own funds on behalf of the Subscriber or otherwise. The Subscriber acknowledges and agrees that the foregoing indemnities will survive the resignation or removal of the Proxy or the termination of this instrument.

(c) A decision, act, consent or instruction of the Proxy constitutes a decision of the Subscriber and is final, binding and conclusive upon the Subscriber. The Company, shareholders of the Company and any other third party June rely upon any decision, act, consent or instruction of the Proxy as being the decision, act, consent or instruction of the Subscriber. The Company, shareholders of the Company and any other third party are hereby relieved from any liability to any person for any acts done by them in accordance with such decision, act, consent or instruction of the Proxy.

(d) The Subscriber hereby agrees to take any and all actions determined by the Company's board of directors in good faith to be advisable to reorganize this instrument and any Securities held by the Subscriber into a special-purpose vehicle or other entity designed to aggregate the interests of holders of Securities issued in this Offering.

7. <u>Governing Law; Jurisdiction</u>. This Subscription Agreement shall be governed and construed in accordance with the laws of the State of Delaware.

EACH OF THE SUBSCRIBER AND THE COMPANY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED WITHIN THE STATE OF NEW YORK AND NO OTHER PLACE AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS SUBSCRIPTION AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH OF SUBSCRIBER AND THE COMPANY ACCEPTS FOR ITSELF AND HIMSELF AND IN CONNECTION WITH ITS AND HIS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS SUBSCRIPTION AGREEMENT. EACH OF SUBSCRIBER AND THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN THE MANNER AND IN THE ADDRESS SPECIFIED IN SECTION 7 AND THE SIGNATURE PAGE OF THIS SUBSCRIPTION AGREEMENT. HOWEVER, NOTHING IN THIS PARAGRAPH SHALL BE CONSTRUED TO BE APPLICABLE TO ANY ACTION ARISING UNDER THE FEDERAL SECURITIES LAWS.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE ACTIONS OF EITHER PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF, EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SUCH PARTY. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT. IN THE EVENT OF LITIGATION, THIS SUBSCRIPTION AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BY AGREEING TO THIS PROVISION, EACH SUBSCRIBER WILL NOT BE DEEMED TO HAVE WAIVED THE COMPANY'S COMPLIANCE WITH U.S. FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

8. <u>Notices</u>. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) emailed, telecopied or cabled, on the date of such delivery to the address of the respective parties as follows:

If to the Company, to: 670 Long Beach BLVD, Suite 201 Long Beach, NY 11561

If to a Subscriber, to Subscriber's address as shown on the signature page hereto or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by telecopy or cable shall be confirmed by letter given in accordance with (a) or (b) above.

The Subscriber hereby agrees that the Company may deliver all notices, financial statements, valuations, reports, reviews, analyses or other materials, and any and all other documents, information and communications concerning the affairs of the Company and its investments, including, without limitation, information about the investment, required or permitted to be provided to the Subscriber under the Offering Circular or hereunder by means e-mail or by posting on an electronic message board or by other means of electronic communication. The Subscriber hereby consents to receive electronically all documents, communications, notices, contracts, and agreements arising from or relating in any way to your or our rights, obligations or services hereunder or pursuant to your ownership of the Securities.

<u>9. Miscellaneous</u>.

(a) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require.

(b) This Subscription Agreement is not transferable or assignable by Subscriber.

(c) The representations, warranties and agreements contained herein shall be deemed to be made by and be binding upon Subscriber and its heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns.

(d) None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Subscriber.

(e) In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never the subject of agreement.

(f) The invalidity, illegality or unenforceability of one or more of the provisions of this Subscription Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Subscription Agreement in such jurisdiction or the validity, legality or enforceability of this Subscription Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

(g) This Subscription Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof.

(h) The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person.

(i) The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

(j) This Subscription Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

(k) If any recapitalization or other transaction affecting the stock of the Company is effected, then any new, substituted or additional securities or other property which is distributed with respect to the Securities shall be immediately subject to this Subscription Agreement, to the same extent that the Securities, immediately prior thereto, shall have been covered by this Subscription Agreement.

(l) No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

**Flower Turbines, Inc.**

**SUBSCRIPTION AGREEMENT SIGNATURE PAGE**

I, the undersigned, desiring to purchase shares of Common Stock of Flower Turbines, Inc. by executing this signature page, hereby executes, adopts and agrees to all terms, conditions, and representations of the Subscription Agreement.

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| | |
|:---|:---|
| <br> (a) The number of shares of Common Stock that I hereby irrevocably subscribe for is: | %%EQUITY_SHARE_COUNT%%<br> (print number of Securities) |
| (b) The aggregate purchase price (based on a purchase price of $12.00 per Security) for the Common Stock that I hereby irrevocably subscribe for is: | $%%VESTING_AMOUNT%%<br> (print aggregate purchase price) |
| (c) I have read Appendix A of this Subscription Agreement, and I am either an accredited investor (as that term is defined in Regulation D under the Securities Act because I meet at least one of the criteria set forth in Appendix A).<br> OR<br> I am not an accredited investor (as that term is defined in Regulation D under the Securities Act).<br>| <br> %%ACCREDITATION_STATEMENT%%<br>|
| The aggregate purchase price (based on a purchase price of $12.00 per Security) for the Common Stock that I am subscribing for under this agreement (together with any previous investments in the Securities pursuant to this offering) does not exceed 10% of the greater of my net worth or annual income. | %%INVESTOR_SIGNATURES%% |
| (d) The Securities being subscribed for will be owned by, and should be recorded on the Company's books as held in the name of: |  |
| **%%INVESTOR_TITLE%%**<br> (print name of owner) | **%%INVESTOR_TITLE%%**<br> (print name of owner) |

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%%INVESTOR_SIGNATURES%%<br> *Signature*%%VESTING_AS%%<br> %%VESTING_AS_EMAIL%%<br> %%NOW%%<br> Date<br>

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| |
|:---|
| Flower Turbines, Inc. |
| By |
| %%ISSUER_SIGNATURE%% |

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\* \* \* \* \*

This Subscription is accepted<br> on %%NOW%%.<br>

**APPENDIX A**

An accredited investor includes the following categories of investor. Please initial next to the number or numbers below that describe Subscriber. Additional verification may be required:

(1) Subscriber is a natural person whose individual net worth (or combined net worth with Subscriber's spouse if Subscriber is married) as of the date hereof exceeds $1,000,000. Except as set forth below, in calculating a person's net worth, (i) a person's primary residence shall not be included as an asset; (ii) indebtedness that is secured by the person's primary residence, up to the estimated fair market value of the primary residence at the time of the sale of the Shares, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of the Shares exceeds the amount outstanding sixty (60) days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and (iii) indebtedness that is secured by the person's primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of the Shares shall be included as a liability.

(2) Subscriber is a natural person who had an individual "income" exceeding $200,000 during both of the two most recently completed calendar years (or a joint income with Subscriber's spouse in excess of $300,000 in each of those years) and who has a reasonable expectation of reaching the same income level in the current calendar year.

(3) Subscriber is a natural person who holds any of the following licenses from the Financial Industry Regulatory Authority (FINRA): a General Securities Representative license (Series 7), a Private Securities Offerings Representative license (Series 82), or a Licensed Investment Adviser Representative license (Series 65).

(4) Subscriber is a natural person who is a "knowledgeable employee" of the Company, if the Company were an "investment company" within the meaning of the Investment Company Act of 1940 (the "**ICA**") but for Section 33(c)(1) or Section 3(c)(7) of the ICA.

(5) Subscriber is a "business development company," as defined in Section 2(a)(48) of the ICA.

(6) Subscriber is an investment adviser registered under the Investment Advisers Act of 1940 (the "**Advisers Act**") or the laws of any state.

(7) Subscriber is an investment adviser described in section 203(l) (venture capital fund advisers) or section 203(m) (exempt reporting advisers) of the Advisers Act.\

(8) Subscriber is a trust with total assets in excess of $5,000,000 that was not formed for the specific purpose of acquiring the securities offered hereby, and the investment decisions for which are made by a sophisticated person capable of evaluating the merits and risks of the proposed investment.

(9) Subscriber is a revocable trust that may be amended or revoked at any time by the grantors thereof, and all of the grantors are accredited investors.

(10) Subscriber is a Small Business Investment Company licensed by the United States Small Business Administration under Section 301(c) or Section 301(d) of the Small Business Investment Act of 1958.

(11) Subscriber is a "private business development company" as defined in Section 202(a)(22) of the Advisers Act.

(12) Subscriber is a bank, insurance company, registered investment company, business development company, small business investment company, or rural business development company.

(13) Subscriber is a "family office," as defined in rule 202(a)(11)(G)-1 under the Advisers Act, if the family office (i) has assets under management in excess of $5,000,000, (ii) was not formed for the specific purpose of acquiring the securities offered, and (iii) is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment.

(14) Subscriber is a "family client," as defined in rule 202(a)(11)(G)-1 under the Advisers Act, of a family office meeting the requirements above, whose investment in the Company is directed by such family office.

(15) Subscriber is a corporation, a limited liability company, a Massachusetts or similar business trust, a partnership, or a non-profit organization of the type described in Internal Revenue Code section 501(c)(3), in each case not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

(16) Subscriber is an "employee benefit plan" (within the meaning of Title I of ERISA) and either (i) the decision to invest in the Company was made by a plan fiduciary that is a bank, savings and loan association, insurance company, or registered investment adviser; (ii) the plan has total assets exceeding $5,000,000; or (iii) if a self-directed plan, investment decisions are made solely by persons who, if executing this document, would qualify as an accredited investor under one or more of the numbered paragraphs above.

(17) Subscriber is a plan established and maintained by a State, its political subdivisions, or an agency or instrumentality of a State or its political subdivisions, for the benefit of its employees, and the plan has assets in excess of $5,000,000.

(18) Subscriber is an entity, including Indian tribes, governmental bodies, funds, and entities organized under the laws of foreign countries, that was not formed to invest in the securities offered and own investment assets in excess of $5 million.

(19) Subscriber is an entity. Each of Subscriber's equity investors, if executing this document, would qualify as an accredited investor under one or more of the numbered paragraphs above.

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM 1-A

### REGULATION A OFFERING STATEMENT
### UNDER THE SECURITIES ACT OF 1933

### Item 1. Issuer Information

**Exact name of issuer:** Flower Turbines, Inc.

**Jurisdiction of Incorporation/Organization:** DE

**Year of Incorporation:** 2019

**CIK:** 0001739997

**I.R.S. Employer Identification Number:** 46-3784856

**Primary Standard Industrial Classification Code:** 3511

**Total number of full-time employees:** 10

**Total number of part-time employees:** 6

**Address of Principal Executive Offices:** 670 Long Beach BLVD, Suite 20, Long Beach, NY 11561

**Company Phone:** 806-318-1116

**Person to contact:** Jeffrey S. Marks

### Financial Statements

**Balance Sheet Information**

| Metric                                   | Amount      |
|:---|:---|
| Cash and Cash Equivalents                | $2350678.00 |
| Investment Securities                    | $0.00       |
| Accounts and Notes Receivable            | $133151.00  |
| Property, Plant and Equipment (PP&E)     | $40850.00   |
| Total Assets                             | $5205282.00 |
| Accounts Payable and Accrued Liabilities | $496479.00  |
| Long-Term Debt                           | $53258.00   |
| Total Liabilities                        | $549737.00  |
| Total Stockholders' Equity               | $4655545.00 |
| Total Liabilities and Equity             | $5205282.00 |

**Statement of Comprehensive Income Information**

| Metric                                    | Amount       |
|:---|:---|
| Total Revenues                            | $338643.00   |
| Costs and Expenses Applicable to Revenues | $477995.00   |
| Depreciation and Amortization             | $0.00        |
| Net Income                                | $-3141666.00 |
| Earnings Per Share - Basic                | -0.33        |
| Earnings Per Share - Diluted              | -0.33        |

**Auditor Information**

| Metric          | Amount                      |
|:---|:---|
| Name of Auditor | Fruci & Associates II, PLLC |

### Outstanding Securities

| Class        |   Outstanding | CUSIP     | Publicly Traded   |
|:---|---:|:---|:---|
| Common Stock |      10381780 | 000000N/A | N/A               |
| N/A          |             0 | 000000N/A | N/A               |
| N/A          |             0 | 000000N/A | N/A               |

### Item 2. Issuer Eligibility
- [x] The issuer certifies that all of the statements in this part are true.

### Item 3. Application of Rule 262
- [x] The issuer certifies that it is not disqualified and has not been involved in any disqualifying event.

### Item 4. Summary Information Regarding the Offering

**Tier:** Tier2

**Financial Statement Status:** Audited

**Type of Securities Offered:** Equity (common or preferred stock)

**Is this a delayed or continuous offering?** Yes

**Was or is the offering to take place within one year after qualification?** Yes

**Was or is the offering to commence within two days after qualification?** No

**Is this a best efforts offering?** Yes

**Was there any solicitation of interest?** No

**Are there any resale securities by affiliates of the issuer?** No

**Offering Amounts**

| Description                                                     | Amount       |
|:---|:---|
| Number of securities offered                                    | 1000000      |
| Number of securities outstanding                                | 10381780     |
| Price per security                                              | $12.00       |
| Issuer's aggregate offering price                               | $12000000.00 |
| Aggregate offering price of securities held by security holders | $0.00        |
| Aggregate price of securities offered concurrently              | $0.00        |
| Total aggregate offering price                                  | $12000000.00 |

**Anticipated Fees**

| Service Provider   | Name                          | Fees      |
|:---|:---|:---|
| Auditor            | Fruci & Associates II, PLLC   | $10000.00 |
| Legal              | Alliance Legal Partners, Inc. | $40000.00 |
| Promoters          |  |  |

**Estimated Net Proceeds to the Issuer:** $9811000.00

### Item 5. Jurisdictions in Which Securities are to be Offered

AL, AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY, DC, PR

### Item 6. Unregistered Securities Issued or Sold Within One Year

**Name of Such Issuer:** Flower Turbines, Inc.

**Title of Securities Issued:** Common Stock

**Total Amount of Securities Issued:** 1409440

**Amount of such securities sold by principal security holders:** 0

**Aggregate consideration:** 1,409,440 shares at $70.00 per share, plus 147,690 bonus shares.

**Basis for aggregate consideration:** —

**Securities Act Exemption:** Regulation A+