HPT

 

12.0 Financing Construction and On-going Maintenance - Franchised Operators:

12.1Funding:

Although it is expected that initial design and testing costs may be funded by the U.S. Government, it is likely that private capital will be needed at all subsequent phases of Grid development. Various Government grant programs are available which might seed alternative transportation studies and testing. The Company expects to apply for Federal and State funding grants during the first Quarter of 2012.

12.2Sale of Equity:

The Company intends to actively seek additional capital through the sale of a portion of the Company=s equity. By the last quarter of 2015, the Company expects to sell equity shares through an initial public offering on the New York or NASDAQ Stock Exchange.

12.3Users Fees, Franchise Revenue:

The majority of capital necessary for broad implementation of the HPR System will be derived from user fees and independent franchisees or AOperators@. Operators will purchase the right to own and operate a specific portion of the Grid System. An Operator might purchase the rights to one (1) mile or ten-thousand (10,000) miles of the Grid System or perhaps rights to an entire country.

12.4Construction Revenues:

In order to insure conformity with Grid design parameters, the Company expects to construct every mile of the Grid System, including Operator owned portions, through the use of its own equipment or through the efforts of certified contractors. The Company expects that a large number of Grid Trains and certified Grid contractors will be operational within one (1) year from final design approval.

12.5Royalties from Vehicle Production:

The Company expects to receive royalties on each Grid compliant vehicle produced and an ongoing royalty on each mile of Grid travel. At a point which cannot be determined at this time, the entire Grid System should be come self-funded with user and other fees. Notwithstanding that such fees will exceed HPR operational costs; the user cost per mile will be greatly less than current personal vehicle operational costs.

12.6Stand Alone Operators:

Each Grid Operator will be a separate, stand-alone, organization and required to pay all costs associated with construction of its Grid infrastructure as well as for a proportionate cost for the Grid >s central facility or facilities. The Company estimates the cost per mile for one, two lane Grid segment is, in 2011 dollars, Seven-Million Dollars ($7,000,000.00). One mile of HPR Grid construction can accommodate the same number of HPR vehicles as 3 lanes of ordinary highway over the same distance. In November of 2003, the United States General Accounting Office reported that one mile of a typical Interstate Highway, consisting of 3 lanes in each direction can cost as much as fifty million, seven hundred-sixty six thousand dollars ($50,766,000) per mile (highest estimate for New York State. GAO-04-113R, States Highway Construction Costs, Peter Guerrero, Director, Physical Infrastructure Issues). Accordingly, the Company believes that construction costs to provide similar vehicle capacity may be as little as fifteen percent (15%) of (then) current highway construction costs.

12.7Operator Return on Investment:

An Operator who invests in a portion of the Grid System, will be expected to receive a strong return on its investment. An Operator may expect to receive a predetermined fee for each vehicle which travels over its portion of the HPR System. The cost of Grid construction will vary depending on whether or not the underlying land must be purchased or is provided by local, State or Federal Government air right grants. Accordingly, some Grid tolls will be more, per mile, than others.

12.8Common Cars at Hybrid PT Stations:

Section 3.2 contains information on ACommon Cars@ which have been deployed at various locations in urban areas. The HPR System may license third parties to make available Common HPR compliant vehicles at Grid stations around the world. The effect of Common HPR vehicles would be to allow a person who has not purchased an HPR compliant vehicle to arrive at a special HPR station area and use a Common Car to access the Grid. After exiting the Grid the same vehicle could be used to reach a final destination via standard roadways.