In addition, we do not expect to have the financial resources necessary to complete the proposed Refinery projects. The Company expects to operate the
Distillation Unit through its subsidiary, Pecos Refining, and to operate the Large Refinery through another subsidiary set up for such purpose. The construction of
the Distillation Unit and the Large Refinery will require substantial equity and debt financing, far beyond the expected resources of the Company. We anticipate
that these Subsidiaries will obtain typical project development financing for the construction and development of the Distillation Unit and the Large Refinery and
that such financings will be composed of both debt and equity financings. We anticipate these Subsidiaries will be able to finance approximately 65% of the total
costs of the Distillation Unit and the Large Refinery through debt financing, and the remaining 35% of the total costs would be financed through equity
investments. The Company has had only preliminary discussions with prospective equity sources regarding the financing of these projects and it is unclear at this
time if we will be able to obtain such financing and, if so, how much equity in the Subsidiaries the equity investors will require in order to provide the financing.
Any equity financing into which a Subsidiary enters will dilute the Company’s ownership of such Subsidiary. In addition, while the Company believes that the
Refinery’s cost is financeable in large part through debt, it has not yet obtained a letter of intent or commitment for such financing.
