Transcript Document

Chimacum School District
Interview for Underwriting Services
June 11, 2014
MAURA LENTINI
VICE PRESIDENT, ANALYST
(206) 903-8687
[email protected]
JON GORES
MANAGING DIRECTOR
(206) 389-4043
[email protected]
1

OVERVIEW OF D.A. DAVIDSON

DEVELOP & IMPLEMENT A RATING STRATEGY

PREPARE FOR 2015 BOND ELECTION
2
D.A. Davidson by the Numbers
118 + 78 + 1,370 + 37 + 68 + 175 = 1
“Not everything that can be counted, counts.
And not everything that counts can be counted.”
--Albert Einstein
3
D.A. Davidson by the Numbers
118
78
1,370
37
68
175
1
Combined years of Washington State school finance experience
D.A. Davidson celebrates its 78th anniversary in 2014
D.A. Davidson employees in 86 locations
Years of uninterrupted service to school districts
Institutional sales professionals
Firm’s capital base exceeds $175,000,000
D.A. Davidson’s position as the leading underwriter of
Washington school district bond issues
4
Underwriting Rankings – Washington State
Number 1 underwriter of Washington school district bonds
for the seventh straight year
Washington Schools 2007-2013
Negotiated
Senior Manager
Totals
D.A. Davidson & Co.
190
Seattle-Northwest
88
Piper Jaffray
31
Martin Nelson
7
Source: Thomson Municipal Market Data.
5
School District Experience
Washington State
June 2013 - Present
Par
Amount
$9,300,000
$15,000,000
$3,590,000
$7,600,000
$50,350,000
$4,355,000
$6,710,000
$2,500,000
$5,280,000
$9,530,000
$150,000,000
$5,195,000
$66,500,000
$21,550,000
$93,930,000
$4,000,000
$4,800,000
$33,500,000
Dated Date
In Proces s
In Proces s
In Proces s
In Proces s
In Proces s
In Proces s
In Proces s
In Proces s
In Proces s
06/28/14
06/28/14
06/26/14
06/03/14
06/03/14
06/02/14
05/21/14
05/14/14
05/06/14
Name of Issuer
Ri vervi ew School Di s tri ct
Gra ni te Fa l l s School Di s tri ct
Col umbi a School Di s tri ct
Kel s o School Di s tri ct
North Thurs ton School Di s tri ct
Wi l l a pa Va l l ey School Di s tri ct
Ra i ni er School Di s tri ct
Ol ympi c Educa tiona l Servi ce Di s tri ct
Uni on Ga p School Di s tri ct
Freema n School Di s tri ct
Edmonds School Di s tri ct
Qui ncy School Di s tri ct
Bethel School Di s tri ct
Na ches School Di s tri ct
North Thurs ton School Di s tri ct
Li nd School Di s tri ct
Ca s hmere School Di s tri ct
Tumwa ter School Di s tri ct
Type of
Financing
UTGO Ref
UTGO Ref
UTGO Ref
UTGO Ref
UTGO
UTGO Ref
UTGO Ref
UTGO Ref
UTGO Ref
UTGO Ref
UTGO
UTGO Ref
UTGO Ref
UTGO
UTGO Ref
UTGO
UTGO Ref
UTGO
Par
Amount
Dated Date
Name of Issuer
Type of
Financing
$69,190,000
04/28/14
Everett School Dis trict
UTGO Ref
$9,565,000
04/17/14
Wes t Va lley School Dis trict
UTGO Ref
$6,700,000
$10,000,000
$44,310,000
$7,000,000
$50,000,000
$780,000
$1,700,000
$5,120,000
$12,240,000
$5,600,000
$15,700,000
59,890,000
$4,500,000
$60,770,000
$850,000
04/09/14
02/13/14
02/07/14
01/08/14
10/30/13
10/10/13
07/27/13
07/17/13
07/16/13
06/27/13
06/25/13
06/18/13
06/11/13
06/04/13
06/04/13
Ba inbridge Is la nd School Dis trict
La ke Stevens School Dis trict
Auburn School Dis trict
Ba inbridge Is la nd School Dis trict
Everett School Dis trict
Northport School Dis trict
Na pa vine School Dis trict
Roya l School Dis trict
Gra peview School Dis trict
Colton School Dis trict
Arlington School Dis trict
Ma rys ville School Dis trict
Conwa y School Dis trict
Richla nd School Dis trict
Pa ters on School Dis trict
UTGO Ref
UTGO Ref
UTGO&R
UTGO
UTGO Ref
UTGO Ref
UTGO Ref
UTGO
UTGO
UTGO
UTGO Ref
UTGO Ref
UTGO
UTGO
UTGO Ref
6
Why is D.A. Davidson Number 1?

People & Experience

Bond Distribution

Capital & Employee ownership

References
Most importantly, we provide sleep insurance...
7
Education Finance Team Assigned to
Chimacum School District
Banker
JON GORES
Managing Director
28 Yrs Experience
Backup Banker
DAVID TRAGESER
Managing Director
28 Yrs Experience
Backup Banker
JIM NELSON
Sr. Vice President
27 Yrs Experience
Financial and
Quantitative Analysis
SUZANNE EIDE
Vice President
13 Yrs Experience
Municipal Credit
MAURA LENTINI
Vice President
14 Yrs Experience
Disclosure
KELSEY THOMAS
Assoc. Vice President
7 Yrs Experience
Research Support
MARY KIM
Administrative Assistant
1 Yr Experience
Underwriting
MARK FROIO, CFA
Vice President
27 Yrs Experience
Marketing
JOE BRADY
Sr. Vice President/
Managing Director
28 Yrs Experience
Marketing
RICK TURNAGE
Sr. Vice President/
Sales Manager
20 Yrs Experience
8
Bond Distribution – Marketing Advantage

We operate 4 regional trading desks staffed with 68 institutional sales people. In addition, we
operate 86 branch offices with 582 registered sales professionals.

D.A. Davidson is the only regional firm equipped to market bonds to both market segments:
institutional and retail.

Our unique distribution system will ensure the broadest distribution of the District’s bonds, ensuring
the lowest possible borrowing cost.
Bond Distribution -- Who Buys Your Bonds
(Bank Qualified Issues)
Bond Distribution -- Who Buys Your Bonds
(Non-Bank Qualified Issues)
2013
2013
Bank Trust
15%
Broker-Dealer
3%
Bank Portfolio
50%
Bank Trust
10%
Retail
7%
Municipalities
5%
Money Manager
25%
Bond Fund
10%
Money
Manager
25%
Source: D.A. Davidson Fixed Income Capital Markets
Broker-Dealer
3%
Retail
7%
Bank Portfolio
5%
Insurance
35%
9
Capital
2012 - Present
Davidson can demonstrate our willingness to put our capital to work to ensure successful
pricings for our clients in volatile market conditions.
Date
01/17/12
01/18/12
02/21/12
02/27/12
03/06/12
03/15/12
03/15/12
03/22/12
03/27/12
03/28/12
04/19/12
04/23/12
04/30/12
05/02/12
05/07/12
05/16/12
06/12/12
06/26/12
06/26/12
06/27/12
08/14/12
08/15/12
09/12/12
Issuer
Aberdeen SD
Hood Canal SD
Wahluke SD
Omak SD
Cashmere SD
Okanogan SD
Okanogan SD
Lake Stevens SD
Dieringer SD
Cheney SD
Bainbridge Island SD
Auburn SD
Mead SD
Zillah SD
Richland SD
Cosmopolis SD
College Place SD
Lake Washington SD
Lake Washington SD
Yakima SD
West Valley (Yakima) SD
Orting SD
Tumwater SD
State
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
WA
Par Amount
8,955,000
5,305,000
6,130,000
7,155,000
6,875,000
5,695,000
5,695,000
10,000,000
4,515,000
9,330,000
9,995,000
9,290,000
9,360,000
4,155,000
14,050,000
1,385,000
36,010,000
23,025,000
31,195,000
34,145,000
9,330,000
9,740,000
5,840,000
Inventory
585,000
3,265,000
1,620,000
145,000
140,000
305,000
305,000
200,000
130,000
2,360,000
300,000
255,000
610,000
185,000
775,000
305,000
1,290,000
1,425,000
2,090,000
3,215,000
585,000
545,000
765,000
%
6.53%
61.55%
26.43%
2.03%
2.04%
5.36%
5.36%
2.00%
2.88%
25.29%
3.00%
2.74%
6.52%
4.45%
5.52%
22.02%
3.58%
6.19%
6.70%
9.42%
6.27%
5.60%
13.10%
Date
Issuer
11/14/12 Clover Park SD
State
WA
Par Amount
44,695,000
Inventory
1,150,000
%
2.57%
11/13/12 Lake Stevens SD
WA
10,000,000
1,460,000
14.60%
12/05/12 Eatonville SD
WA
9,700,000
290,000
2.99%
12/03/12 Sumner SD
WA
10,000,000
225,000
2.25%
12/06/12 West Valley (Yakima) SD
WA
9,225,000
360,000
3.90%
12/10/12 Deer Park SD
WA
10,000,000
400,000
4.00%
01/07/13 Bainbridge Island SD
WA
9,010,000
1,645,000
18.26%
01/14/13 Mead SD
WA
3,615,000
480,000
13.28%
05/06/13 Sumner SD
WA
10,000,000
235,000
2.35%
05/09/13 Pullman SD
WA
49,930,000
1,275,000
2.55%
05/23/13 Conway SD
WA
9,030,000
410,000
4.54%
06/12/13 Colton SD
WA
5,565,000
315,000
5.66%
06/25/13 Grapeview SD
WA
10,000,000
340,000
3.40%
09/09/13 Napavine SD
WA
168,000
15,000
8.93%
12/02/13 Bainbridge Island SD
WA
675,000
150,000
22.22%
01/27/14 Lake Stevens SD
WA
999,000
250,000
25.03%
03/17/14 Bainbridge Island SD
WA
6,625,000
1,580,000
23.85%
04/07/14 West Valley (Yakima) SD
WA
93,000
2,820
3.03%
05/26/14 Edmonds SD
WA
150,000
35,000
23.33%
06/02/14 Oak Harbor SD
WA
3,265,000
1,640,000
50.23%
06/09/14 Quincy SD
WA
5,195,000
635,000
12.22%
06/11/14 Freeman SD
WA
9,995,000
975,000
9.75%
10
Bond Rating



Moody’s last reviewed the District’s credit in 2007, assigned an A3
The rating was adjusted to A1 in 2010 with Moody’s change to its Global Scale
A1 is the third most common rating (shared by 29 districts) among the 121
Washington school districts that have a Moody’s rating.
11
Credit Strengths
Moody’s cited these strengths:

Absolute size and diversity of tax base

New residential development due to influx of retirees

Consistent maintenance of fund balances above the Board target of 5%

Low debt burden

Above-average wealth indicators

Strong voter support
12
Credit Pressures
Moody’s cited these credit pressure sources:

Declining enrollment

Limited local economy/dependence on timber and tourism
We believe Moody’s would note these credit pressure sources today:

Drop in AV over the past 5 years

Low fund balances compared to the peer group in Washington and nationally
13
Credit Comparisons
Number of Rated Issuers
Finances
Total General Fund Revenues ($000)
General Fund Balance as % of Revenues
Unreserved General Fund Balance as % of Revenues
Unrestricted, Spendable Fund Balance as % of Revenues
Tax Base
Total Full Value ($000)
Full Value Per Capita ($)
Average Annual Increase in Full Value (%)
Top Ten Taxpayers as % of Total
Debt
Direct Net Debt as % of Full Value*
Payout, 10 Years, General Obligation Debt (%)
Demographics
Actual/Estimated Population, Annual Value
Per Capita Income as % of U.S. (2000 Census)
Median Family Income as % of U.S. (2000 Census)
WA Aa2
Medians
32
WA Aa3
Medians
37
119,169
9.8
7.8
9
48,776
11.2
7.7
9.9
7,626,401
108,014
1.1
6
Chimacum
School
District
2013
WA A1
Medians
32
WA A2
Medians
13
10,637
9
7.2
7.2
20,607
11.6
9.3
11.2
7,776
10.7
7.7
9.8
3,132,129
94,880
3.3
5.7
1,657,794
144,735
-5.0
4.9
1,239,022
84,415
4.4
8.4
520,393
99,393
4.8
8.3
1.5
76.2
1.2
100
1.8
n/a
1.4
100
1.3
100
66,875
108
117
34,565
95
97
11,454
98
85
13,456
84
92
4,992
88
89
Source: Moody's Investors Service, January 2014 and Davidson's calculations
* Direct debt figure for Chimacum SD is pro forma, assuming the full $30 million new debt. 10-year payout will depend on the issue structure.
14
Rating Considerations
 We believe the District would be rated A1 by Moody’s or an equivalent
A+ by Standard & Poor’s
 If the District were planning to increase fund balances above 15%, S&P
might be more inclined to upgrade in the future.
 Allow us to be your advocates
15
What Districts are saying about Davidson
Jon Gores and his team worked closely with us through the bond rating process. We successfully
maintained our bond rating despite a declining fund balance. Jon & Maura’s work on developing a
rating strategy, rating presentation, preparing us for the call and facilitating and moderating the call
were invaluable.
--RYAN STOKES
Dir. of Business, Snoqualmie Valley SD
Our bond rating call went exceedingly well due to the preparation and planning of D.A. Davidson.
We were able to maintain our rating and develop a strategy to improve our rating.
--WAYNE LEONARD
Assistant Superintendent, Mead SD
I have worked with Jon Gores on a number of bond issues and have found him and his team to be a
great asset in developing a strategy and navigating the challenges of the bond rating process.
--MIKE NEWMAN
Deputy Superintendent, Auburn SD
16
2015 Bond Election

OVERALL TAX RATE PLANNING

FUTURE BORROWING NEEDS

CONSTRUCTION CASHFLOW

COMMUNICATING THE TAX IMPACT
17
Level Debt: Results in level annual payments for the life of the bonds.
$0.55
1,600,000
Debt Service
1,200,000
$0.45
1,000,000
800,000
$0.40
600,000
$0.35
400,000
Tax Rate
$0.50
1,400,000
$0.30
200,000
-
$0.25
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
New Debt
Tax Rate
Level Tax Rate: Attempts to result in a level annual tax rate over the life for the bonds
*
$0.55
1,600,000
$0.50
1,200,000
$0.45
1,000,000
800,000
$0.40
600,000
$0.35
Tax Rate
Debt Service
1,400,000
400,000
$0.30
200,000
-
$0.25
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
New Debt
Tax Rate
* Based on assessed value projections.
Stepped Level Tax Rate: Allows for the issuance of future bonds
1,400,000
$1.00
$0.90
$0.80
1,000,000
$0.70
800,000
$0.60
$0.50
600,000
$0.40
400,000
$0.30
$0.20
200,000
$0.10
-
$0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
New Debt
Tax Rate
Tax Rate
Debt Service
1,200,000
18
Bond Tax Rate Planning
Assumptions:
Issue Size:
$30,000,000
Interest Rates:
Future bond sales current plus 150 basis points
Bond Rating:
Aa1/State Guarantee
District Rating:
A1 (Pending)
Assessed Value Growth:
Final 2014: 0.45% growth;
R&P:
2015-2036: .50% annual growth
TAV:
2015-2036: 0% annual growth
Bond Structure:
Combined Level Tax Rate
Summary
15 Year Term: $1.25 increase over 2014 total rate
20 Year Term: $0.96 increase over 2014 total rate
Goal
Produce an overall financing plan that meets the District’s short and long term goals
19
Tax Impact Analysis
Chimacum School District No. 49
TAX IMPACT ANALYSIS
Total Project Cost:
State Funding Assistance:
Bond Authorization Amount:
$
$
$ 30,000,000.00
Estimated 2016 Tax Rate Increase over
2014 Tax Rate
(per $1,000 assessed value):
$
0.96
Assessed
Value of
Gross Property
Tax Increase
Monthly
Gross
Property
for Bonds
Increase
$75,000
85,000
100,000
125,000
150,000
$72.00
81.60
96.00
120.00
144.00
$6.00
6.80
8.00
10.00
12.00
NOTE:
Net Tax Increase from
Bonds After Allowing for
Income Tax Deduction
Federal Income Tax Bracket
25%
28%
33%
35%
$54.00
61.20
72.00
90.00
108.00
$51.84
58.75
69.12
86.40
103.68
$48.24
54.67
64.32
80.40
96.48
$46.80
53.04
62.40
78.00
93.60
Qualified homeowners may apply for a senior exemption. Please contact Jefferson
County Assessor for details.
50
20
Property Taxes 101
Increases in Home Values Will Not Increase School District
Tax Collections

Changes in home values don’t change the amount of taxes authorized.

Local school taxes can only be increased by a vote of the people.

Changing property values will change tax rates, but not tax collections.

Tax collection impact
51
21
Property Taxes 101
$1,000 Levy
$250
$250
$250
$250
52
22
Property Taxes 101
$1,000 Levy
$250
$250
$200,000
$200,000
$250
$200,000
$250
$200,000
53
23
Property Taxes 101
$1,000 Levy
$250
$250
$250
$250
54
24
Property Taxes 101
$1,000 Levy
$187.50
$150,000
$250
$200,000
$250
$200,000
$312.50
$250,000
55
25
Property Taxes 101
$1,000 Levy
$200
$100,000
*Spokane County Assessor
$200
$100,000
$200
$200
$100,000
$100,000
$200
$100,000
56
26
Increases in Property Values Will Not Increase
School District Tax Collections

Changes in property values don’t change the amount of taxes authorized

Local school taxes can only be increased by a vote of the people

Changing property values will change tax rates, but not tax collections
Year
XYZ School District Home Value
Home Value
Tax Rate
Tax Bill
2013
$100,000
$5.00/$1,000
$500
#1: 20% increase
2014
$120,000
$4.17/$1,000
$500
#2: 10% increase
2014
$110,000
$4.17/$1,000
$459
#3: 30% increase
2014
$130,000
$4.17/$1,000
$542
Assume a 20% increase in Assessed
Value for XYZ School District
56
27
Decreases in Property Values Will Not Decrease
School District Tax Collections

Changes in property values don’t change the amount of taxes authorized

Local school taxes can only be increased by a vote of the people

Changing property values will change tax rates, but not tax collections
Year
XYZ School District Home Value
Home Value
Tax Rate
Tax Bill
2013
$100,000
$5.00/$1,000
$500
#1: 10% decrease
2014
$90,000
$5.55/$1,000
$500
#2: 5% decrease
2014
$95,000
$5.55/$1,000
$528
#3: 20% decrease
2014
$80,000
$5.55/$1,000
$444
Assume a 10% increase in Assessed
Value for XYZ School District
28
Property Taxes 101
Summary
 If your property value increases at a lower rate than the average
increase for the school district, the amount of taxes you pay will
decrease.
 If your property value increases at a higher rate than the average
increase for the school district, the amount of taxes you pay will
increase.
29
What Districts Are saying about Davidson
Mr. Gores continues to provide on-going support and bond information. He is exceedingly
knowledgeable and has the ability to explain bond, tax and financing information in simple terms. He
has distinguished himself by consistently providing exceptionally well researched and well
documented information and guidance.
--ANGELA WATTS
Asst. Superintendent, West Valley SD
Three areas that I appreciate most about working with Jon and his team are their incredible
preparation, quick, yet thorough, responses to questions, as well as the short and long range
planning they developed for new and updated schools through the capital levy and bond.
--MIKE NEWMAN
Deputy Superintendent, Auburn SD
30
Fee Proposal
Davidson is compensated entirely from the underwriting spread. The District would make
no payments to Davidson, nor enter into any financial obligation prior to the completion of
the bond sale.
The underwriting spread has three main components:
1)
2)
3)
Management fee—salaries, personnel costs
Expenses—overhead costs, i.e., travel, telephone, printing, etc.
Takedown—sales commission paid to sales people to market the bonds
Underwriter's Discount $/1,000
Management Fee
Expenses*
Takedown
Total
*Assuming $30 million par amount
$/1,000
0.75
0.12
2.75
$ 3.62
31
Why is Davidson the best fit for
Chimacum School District?

We’ve worked with 20 out of 33 of the school districts with 1,000-1,999 FTE

We’ve worked on 14 out of 15 school districts receiving initial bond ratings
of A3/A- or better

We’ve worked with 4 out of 6 school districts that received bond rating
upgrades

We’ve successfully closed 100% of our transactions on time
32
D.A. Davidson’s Vision & Mission
Vision: Continue to be the leader in school finance in Washington State
Mission: To allocate all available human, intellectual and financial
resources to each and every transaction and client, thereby ensuring the
lowest cost of capital while providing exceptional service. Going the extra
mile and doing whatever it takes to go above and beyond our clients’
expectations.
Thank You
33
Services
Pre-Election

Provide bond/levy planning

Develop long range financing plan

Attend community meetings and facility meetings

Election Finance Workshops

Brief County Assessor and Treasurer

Provide Voter Profile
34
Services
Post-Election - Issue

Develop District Bond Sale Schedule and Distribution List

Provide input for Delegation and State Guarantee Resolution

Draft State Guarantee application

Prepare Preliminary and Final Official Statements

Review and comment on all necessary documents

Prepare credit evaluation and rating presentation

Organize local sales effort with local firms

Price and market bonds and report to the Board

Notify County Assessor, Treasurer and ESD of final pricing results and debt service
requirements

Disclosure compliance update
35
Services
Post Sale – Ongoing

Annual debt service fund cash flow

Continuing disclosure assistance

M&O levy tax rate projections

Arbitrage rebate assistance

Refunding monitoring

Evaluate alternative financings (LGO borrowing for energy grants, etc.)

Budget revision assistance & notes to financial statement

Briefings on legislation that may potentially impact bonds and elections

Annual Board updates

Guest lecturer for High School
36
References
Monroe School District No. 103
Dr. Ken Hoover, Superintendent
Phone: (360) 804-2501
[email protected]
Marysville School District No. 25
Dr. Becky Berg, Superintendent
Phone: (360) 653-0800
[email protected].
Sequim School District No. 323
Mr. Kelly Shea, Superintendent
Phone: (360) 582-3262
[email protected]
Ms. Brenda Hunt, Ex. Director, Fiscal Services
Phone: (360) 804-2510
[email protected]
Mr. Jim Baker, Ex. Director of Finance
Phone: (360) 653-0803
[email protected]
Mr. Brian Lewis, Business Manager
Phone: (360- 582-3266
[email protected]
Auburn School District No. 408
Dr. Kip Herren, Superintendent
Phone: (253) 931-4914
[email protected]
Mead School District No. 354
Dr. Thomas Rockefeller, Superintendent
Phone: (509) 465-6019
[email protected]
Quillayute Valley School District No. 402
Ms. Diana Reaume, Superintendent
Phone: (360) 374-6262
[email protected]
Mr. Wayne Leonard, Ex. Director, Business Services
Phone: (509) 465-6017
[email protected]
Ms. Jan Haugen, Director of Finance
Phone: (360) 374-6262 ext. 102
[email protected]
Shelton School District No. 309
Mr. Wayne Massie, Superintendent
Superintendent
Phone: (360) 426-1687 ext. 10010
[email protected]
Port Angeles School District No. 121
Ms. Jane S. Pryne, Superintendent
Phone: (360) 565- 3700
[email protected]
Mr. Mike Newman, Associate Supt.,
Business/Operations
Phone: (253) 931-4930
[email protected]
Olympia School District No. 111
Mr. DIck Cvitanich, Superintendent
Phone: (360) 596-6100
[email protected]
Ms. Jennifer Priddy, Assistant Superintendent
Phone: (360) 596-6117
[email protected]
Olympic Educational Service District No. 114
Mr. Steve McIntire, Fiscal Officer
Phone: (360) 782-5001
[email protected]
Ms. Brenda Trogstad, Ex. Director of Finance
Phone: (360) 426-1687 ext. 10020
[email protected]
Sumner School District No. 320
Ms. Debbie Campbell, Ex. Director, Business Services
Phone: (253) 891-6010
[email protected]
Ms. Kelly Pearson, Dir. of Finance and Operations
Phone: (360) 565.3755
[email protected]
Nooksack Valley School District No. 506
Mr. Mark Johnson, Superintendent
Phone: (360) 988-4754
[email protected]
37
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necessarily indicative of future results. Davidson Companies does not assume any liability for any loss which may result from the reliance by any person
upon such material. We make no representations regarding the legal, tax, regulatory, or accounting implications of entering into a Transaction.
Required Disclosure Pursuant to MSRB Rule G-23: An underwriter’s primary role will be to purchase as principal, or arrange for the placement of the
securities in a commercial arm’s length transaction with the issuer, and may have financial and other interests that differ from those of the issuer. In its
capacity as underwriter and not as financial advisor, an underwriter may provide incidental financial advisory services at the issuer’s request, including
advice regarding the structure, timing, terms and other similar matters concerning the issuance. However, an underwriter does not assume any financial
advisory or fiduciary responsibilities with respect to the issuer.