business model &

As a core business FRX is a low-capex, low-risk real estate developer. The Company acquires target property, subdivides, makes improvements, leases, and resells at a premium. The firm’s strategy is to sell or syndicate the properties as “multi-unit commercial” to passive investors. The FRX subdivision map overlays the existing physical subdivision of acquired jails – the jail cells. Converting the cells to separately titled Units are an opportunity for individual ownership of a bitcoin-linked commercial real estate product.

FRX Properties seeks to maximize the return on capital through technology. The FRX tenants are exclusively data centers, a well-understood asset class. Cap rates have improved to reflect the high growth in the segment. The valuation of the $115 billion publicly traded data center REITs is thirty times (30x) free cash flow, a 60% premium to other REIT sectors. FRX intends to publicly list a closed end feeder fund.

REAL ESTATE PRODUCT:

The FRX facilities will be offered as individually titled Units. The commercial condos will be turn-key crypto mining properties.

There is minimal structural construction risk in the plan because the existing cells are used as the subdivision. Each Unit will own corresponding percentage of the adjacent solar plant. Bitcoin mining hardware and software will be fully installed and a long-term lease will be delivered with each condo Unit.

Standard projected pricing and terms are USD$1 million per Unit housing 100 mining servers with a $30,000 per year in Base Rent income ($300/server/year).

Some Units will be offered with Base Rent plus Participating Rent, similar to many commercial leases. Participating Rent will be bitcoin indexed.

REAL ESTATE DISTRIBUTION:

FRX distribution has three primary channels, International, Financed, and Digital. The international channel uses US federal government incentives to sell Units to non-institutional investors by bundling benefits – specifically immigration benefits conferred to international investors that invest in eligible LIC- designated areas.

In 2019 Congress amended the green card legislation (“EB5”) to make it more stringent and avoid prior abuses. Immigration amendments included substantive changes that benefit FRX and FRX communities, including harder area eligibility qualification, higher required minimum investment ($1,800,000), and a 50% discount for LIC eligible areas like FRX’s ($900,000 minimum).

Marketing commercial real estate to the EB5 buyer lowers the overall cost of capital and maximizes the value of the inventory in sales to investors that are less price sensitive (EB5s average 1.5% return).

To expand distribution beyond the International channel to Digital channel, FRXS will “digitally subdivide” each Unit by tokenizing the real estate. The Company has developed CellBlock, a blockchain based platform to syndicate each Unit and its associated solar cell power installation.

CellBlock property management technology – its Proptech – immutably records the titleholder on the digital ledger for each legal Unit at each location. The Units on the ledger may be placed in a pool open to outside investors. Tokenized equity interests may be purchased on a rolling basis in a JOBS Act-compliant crowd funding offering.

CellBlock will facilitate an active secondary market for exchanging title interests in the FRX properties. FRX Software will earn fees for title transfers and by offering other incentives over time, including leverage, hedging, and structured products.

CellBlock will publish TimeMachine, its proprietary digital clock. TimeMachine tracks the man-hours in jail saved; time citizens are with their families or time working paying taxes. The ‘machine’ is inspired by the iconic National Debt Clock in Manhattan and the Smoking Lung Cancer Clock campaign designed to create awareness. The TimeMachine is an engagement tool that makes the human impact of jail real. App-delivered data are published showing cumulative days saved and other milestones, as well as a personalized TimeMachine number of days saved by the Member’s actual investment amount.

The billionaire creator of the National Debt Clock famously said, “if it makes you uncomfortable, it’s working.” The TimeMachine will provoke reaction and serve to remind.

 SoMi System is organized around an FRX Owners Association that is a Colorado cooperative. The Owners Association is comprised of owners of the Units with participation required by the Bylaws.

There are projected to be 375 Units at Site No. 1 and 500 Units at Site No. 2, so there should be a minimum of 875 members in the cooperative, plus all Members that become fractional owners through the Digital sales channel.

The cooperative structure extends the FRX government financing without benefits strategy further. A primary mission of the SoMi Owners Association will be to serve as an electric cooperative for the solar plant. There are over 900 electric cooperatives in the US, which have been prominent since the New Deal sought electrification of rural America. Congress continues to fully appropriate programs that support rural electrification. There are loan programs, as well as institutions like quasi-government Colorado-based CoBank, the $130 billion bank chartered to serve US cooperatives.