The greener side of coal in AmericaECOTEC, LLC

914 WEST SIXTH STREET • LITTLE ROCK, ARKANSAS 72201sales@kingcoalusa.com • Phone: 501.372.7335

ECOTEC, LLC

Company Formation and MissionECOTEC, LLC was created as a Florida Corporation in 2005. The purpose of the company is to serve as a pass through entity for tax credits created through the refining of coal.

Refined coal is created through processing coal in such a manner as to reduce the emissions when the coal is burned. For achieving significant emission reductions, Congress grants incentives to compa-nies that refine coal in the form of Federal income tax credits. These credits, found in Section 45 Internal Revenue Code of 1986 (“IRC”) are available similar to the renewable energy credits to wind and solar projects, as well as all other renewable energy technologies which can qualify for credits.

ECOTEC is a “green” energy company initially focusing on opportunities in refuse coal whereexceptional returns are available. Using its biorefining technology, ECOTEC reclaims coal fromrefuse generated by previous mining operations and remediates the site to a better than original condition. The coal product has greatly reduced emissions when burned, which greatly reduces the emissions costs of theend user and protects the environment. None of the waste from the process is toxic, but instead is a“recharged” topsoil. When spread on the site it will change what was once a wasteland into very fertileland.

Creation of the CreditSpecifically, Sections 45(c)(7), (d)(8) and (e)(8) of the code provide definitions and rules relating to the tax credit for refined coal. The credit is allowed for qualified Refined Coal (1) produced by a taxpayer at a refined coal production facility during the ten-year period beginning on the date the facility is originally placed in service,and (2) sold by the taxpayer to an unrelated person during that ten-year period.

How ECOTEC Creates the CreditThe partners in ECOTEC serve as the taxpayer in the above definition. They purchase units of interest in the LLC, and their contributions to the partnership help to pay for the advancement of clean coal echnologies. For the units of interest they purchase, the investors are entitled to a share of the refined coal tax credits, which may be used to offset investors’ Federal income taxes. These credits can be applied dollar for dollar against the taxpayer’s income tax liabilities up to the limits provided in the IRC. Section 39 of the IRC allows for the credits to be applied to the current tax year first, then any remaining are to be applied to the immediately previous tax year, then any remaining to the 20 years succeeding or until exhausted.

The LLC contracts to a buyer for the sale of refined coal, and then pays an operator to process and refine its coal. The credits created are retained by the LLC, and issued to members of the partnership.

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The ECOTEC Process – Refuse Coal Reborn Coal refuse is low BTU value waste material that remains from a coal mining process. It is often discarded into large piles or sequestered in water in “slurry ponds.” Coal refuse, also referred to as “dirty coal” or “refuse coal” consists primarily of rock, carbon material, and heavy metals which are unable to be separated during the mining process. The bio-refining process separates the useable coal from the dirt and rock, sulfur, mercury and other harmful heavy metals contained in the refuse coal piles. These non-coal components result in SOx, NOx greenhouse gas, and other potentially environmentally sensitive emissions if the untreated coal is burned.

The ECOTEC process separates coal from the other refuse material, and improves the overall quality of the coal itself, resulting in the enhanced value of the coal, typically for steel production. The refining process converts most of the “bad” pyritic sulfur found in the refuse coal into “good” organic sulfur, reduces ash content and increases the BTU of the bulk coal as processed. During refining, heavy metals are actually bound to various special proteins, sequester-ing them and rendering them harmless. The final non-coal product of the process is a “non-toxic” recharged topsoil, which is used for reclamation of the abandoned coal mining site. The process utilizes a mix of protein enzymes specially tailored for the specific refuse coal at a particular site. This specialized formula maximizes the pollution reduction and thus maximizes the value of the product coal.

Executive Management Team The six management team members of ECOTEC are the founda-tion to expand the company to its full potential. They bring a set of skills and experience that, together, cover the breadth and depth of management needed to carry out ECOTEC’s mission. Our team is our most valuable resource and the main reason for our success.

Stephen K. Parks, CEO After studying marketing and accounting at Memphis State University from 1971-1975, Mr. Parks began his business career in the automobile business, becoming the youngest Chrysler-Plymouth dealership president-owner in the United States in 1979-1982. His involvement with Mercedes-Benz’s sales and leasing program in 1983 to 1988 won awards, becoming a member of the Mercedes-Benz Sales Guild. From there, in the period of 1988-1991, Mr. Parks went on to the Roadshow BMW Management Team, producing record sales for a BMW dealership in the Southern Region, with emphasis on new and used car financing and leasing. In 1993, Mr. Parks started S&P leasing as president and owner and personally developed the First City Bank leasing contract with the Waring Cox law firm.

Mr. Parks, in the period of 1993-1994 was associated with New York Life, becoming Rookie of the Year his first year, Million Dollar Roundtable qualified after only four months in the business as well as a member of the Million Dollar Roundtable during his entire association with NYL. He also was a member of the Chairman's Council (highest award of NYL) and made a training film used nationally for worksite sales. He went on to an association with Mutual of New York in the period of 1995-1997 as marketing manager of the Memphis Region worksite, the highest producing MONY worksite in 1997. He was a member of the MONY President's Council (highest award of MONY).

Mr. Parks established ECOTEC, in order to mine and produce refined coal from the surface and deep mines which are located in Arkansas, as well as pursuing other coal related ventures.

Executive Management Team (Continued)In 1998, Mr. Parks formed Benefit Consultants of America for the purpose of providing executive deferred compensation, insurance and other financial services primarily to govern-ment entities, non-profit institutions, school districts, and medical colleges. From that point, Mr. Parks has made another career shift into economic development, bringing to Arkansas Valley Regional Industrial Development Company three major businesses, to Arkansas with over $230 million in assets and remaining as officer in all three.

In 2007, Mr. Parks established King Coal, in order to mine and produce refined coal from the surface and deep mines which are located in Arkansas, as well as pursuing other coal related ventures.

Larry Jordan, VP MSHA Certified MinerMr Jordan brings to ECOTEC over 40 years of experience in the Utility arena. Larry holds multiple contractor licences in Mechanical, Plumbing, Pipe fitters, Class C Water & Lab Operator, Class C Lab Water Operator, Pipeline and numerous safety certificates. Mr Jordan has also owned and operated JOSCO, Oilfield and Con-struction Supply and provided the Drilling and Operation industry with equipment, pipe and supplies. In addition he is the owner and operator Jordan Mechanical Construction 1987 to present which provides plumbing, heat and air, gas pipelines, water lines, sewer lines for homes and businesses.

Owner and Operator First Natural Gas, 1992 to present. Built and developed a Natural Gas Utility in Eastern Okla-homa from 1 industrial customer to 650 customers. Sold customers to Oklahoma Natural Gas in 2000, but retained Utility Franchise. Current operator for Oil and Gas Wells, Pipeline construction, Well Site construction and cleanup. Inspector, Manager of Water Improvements for Onapa Rural Water District #1 McIntosh County OK. This $5.5 Million dollar project consisted of building new potable water plant, and upgrading water lines.

In addition, Mr. Jordan was the Inspector and Construction Manager of multiple Sewer Plant, Distribution systems and Water Improvement projects for townships throughout Oklahoma during the last 2 decades. These projects ranged from $2 Million on up to $20 Million.

Carl W. Bird, PE, Chief EngineerMr Bird has over 40 years experience in the industrial manufacturing world on projects such as pulp and paper, chemical, wood products, water and sewer. Has continued to do projects since 2000 on a limited basis, but now is focused on expanding ECOTEC’s footprint in the United States as a “green” clean coal company. Beginning 2001, has been involved in private economic development in Arkansas using state income and premium tax credits. Was a founder, CEO and CFO of Arkansas Valley Regional Industrial Development Company. Beginning 2005, has been involved in the coal refining business, first as relates to the financial and tax credit side of the business. Mr Bird was appointed CFO of King Coal in 2007 and Chief Engineer in 2009 and is responsible for engineering and construction, company wide.

3Refined coal credits are one of very few credits found in the entire tax code that offset alternative minimum tax.

Laney N. Briggs, Director of Business AffairsLaney comes to King Coal following a 19 year career in banking and finance. During this time, Mr. Briggs served 7 years as a board member of the Mortgage Bankers Associa-tion of Arkansas and served as it’s president from 2008 to 2009. He also served as it’s Director of Legislative Affairs from 2009-2012. Laney is in charge of all banking relationships. In

addition, he is spearheading our efforts on the federal and state levels to push for clean coal incentives, working closely

with marketing on contract details and supervising all of our government permitting and licensing. Laney resides in Little

Rock with his wife and daughter.

Jon D. Marbaise, Director of Laboratory OperationsJon has over 25 years experience of engineering and small business

operation. Beginning his career as a Chemical Engineer, Jon developed control logic for the US ARMY on both the demilitarization and production

side of the US Binary Chemical Weapons program. He also developed proce-dures for training, operating and lay-away of two Chemical Weapons facilities for

the US ARMY. Jon has worked on multiple power plants and chemical facilities around the world where he was responsible for designing engineering changes, developing control

logic, material handling start-up calculations and plant optimization.

More recently Jon has co-developed and sold several small businesses that specialized in high-end multimedia for Fortune 100 Companies and as well wholesale side production and sales of paper. In-depth knowledge of business operations including bringing new product to market, administrative functions, human resources, manufacturing, management of outside sales force, internet website development and company financial perfor-mance. He currently resides in Little Rock with his wife and two children.

Jason Palecek, Director of Marketing and Operations MSHA Certified Miner..... Some of his responsibilities include “Brokering” the sale and purchasing of Coal and other valuable minerals from around the world. Mr. Palecek also is a “Boots on the ground” person, for scouting and qualifying particular coal sites for potential remediation. Mr. Palecek has a degree in Communications & Market-ing form the University of Kansas and began his career in the Advertising Specialty Industry in Chicago Illinois. He currently resides in Little Rock, Arkansas with his wife and 4 children.

ECOTEC Today Over 226 ECOTEC partners have benefitted from tax credits issued them as special allocations by the partnership since it was created. These credits have been applied against personal, partnership, and corporate taxes for all of the partners.

ECOTEC has contracted with King Coal to refine the remaining coal sold under the original 2006 contract. With the current capacity of the Logan County facility and the planned construction of more processing capacity, ECOTEC credits will be substantiated by coal production well within the 10 year period allowed under the IRC.

4Refined coal credits are one of very few credits found in the entire tax code that offset alternative minimum tax.

Refined Coal Credits and the IRSThe Refined Coal Credit is a relatively new credit and therefore, neither the Department of the Treasury nor the Internal Revenue Service has issued significant guidance to taxpayers other than IRS Notice 2010-54. Please note that the credits generated by coal sale in 2006 fall under code available in 2006, and are not subject to the provi-sions of IRS notice 2010-54. The general principles of tax law applying to other types of credits, particularly those that are asset based (the rehabilitation credit and the low income housing credit, for example), do not conceptu-ally apply to the Refined Coal Credit because it is not asset based but is based on production and sale of Refined Coal. Accordingly, the concept of reducing the basis of the property producing the credit as exists in asset based credits cannot apply in a situation as is present in this investment because the refined coal is produced by a leased facility which is specifically authorized.

Since the original ECOTEC credits were claimed in 2006 and the first facility to refine the coal was in service in that year, ECOTEC is entitled to the refined coal credits generated by the production and sale of refined coal from any ECOTEC facility for a period of ten years from the date the first facility was placed in service and the credits were claimed.

The company has already contracted for the sale of 20,800,000 tons of refined coal. The credits claimed in 2006 were valued at $5.86 per ton.

ECOTEC has received legal council and a favorable opinion on the IRC tax credits for refined coal from the Law Offices of Archie Gustin, which special-izes in IRS code interpre-tation and representa-tion. In a letter dated March 12, 2012, ECOTEC is consistent with the intent of Congress as explained in footnote 344 on page 152 of publication JCX-18-10 (published March 21, 2010) of the Joint Committee on Taxation which states that “[i]f the realization of the tax benefits of a transaction are consistent with the Congressional purpose or plan that the tax benefits were designed by Congress to effectuate, it is not intended that such tax benefits be disallowed”. These credits are usable for any income tax liability, whether that liability arises from passive or active incomes.

Any Alternative Minimum Tax (AMT) liability can be offset by these credits dollar for dollar as well as any regular income tax liability.

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Earnings PotentialThe process at each biorefinery will be tailored to fit the qualities of the refuse coal at its site to produce refined coal with the highest quality and greatest value that can be obtained. The two major markets for coal in general are steam coal (burned to make steam for electric power generation) and metallurgical coal (used to make coke which is used largely in blast furnaces for production of iron for steel making).

While it is our intent to target the metallurgical coal market with as much of our coal product as possible, owing to its dramatically higher value, for these purposes we issue that the coal will go into the steam coal market. Using a rather conservative sales price of $75 per ton and a higher than expected $25 per ton production cost, the earnings projec-tions for ten years of operations are as follows:

Sales on 20 million tons of refined coal at $75 per ton $1,500,000,000

Cost of producing 20 million tons of refined coal at $25 per ton ($500,000,000)

Earnings for ten years $1,000,000,000

Biorefinery DevelopmentThe biorefinery is the implementation of a process whereby the material that is in the refuse pile or slurry pond is chemically processed with a specially tailored mixture of proteins and enzymes and then is physically processed to separate the coal from the other components that are not coal.

A pilot demonstration plant was built and operated in Fredericksburg, Pennsylvania to test the performance of the process at commercial production rates. The performance of the process, even in this pilot operation, exceeded levels that are required to qualify for the Section 45 Refined Coal Tax Credits.

Upon funding, King Coal will select and acquire the rights to refuse coal sites and will proceed to construct full scale automated biorefineries at those sites. The coal at each site will be subjected to an extensive testingprocedure which will result in a specially tailored protein / enzyme mix, which will give optimal cleaning of the coal on the site.

The process development and the preliminary engineering has been completed in cooperation with Marshall Miller & Associates. Upon funding and site selection, final engineering, equipment procurement, and on site construction will proceed quite rapidly. We expect the first facilities to be in full production not later than the thirteenth month after funding.

6Credits can be applied against personal, partnership, and corporate taxes for all of the partners.

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ECOTEC, LLC914 WEST SIXTH STREET • LITTLE ROCK, ARKANSAS 72201

sales@kingcoalusa.com • Phone: 501.372.7335