Regulation Best Interest Disclosure

This disclosure provides information about the business practices, compensation and conflicts of interest related to the brokerage business of FavorPoint Capital, LLC (FPC, our, we, us, or Firm) offers brokerage services to you and our customers. This guide summarizes important information concerning the scope and terms of those brokerage services that are offered by us and details the material conflicts of interest that arise through our delivery of brokerage services to you. We encourage you to review this information carefully, along with any disclosure documentation you may receive or have received from us.

As you review this information, we would like to remind you that we are registered with the U.S. Securities and Exchange Commission (SEC) as a broker-dealer providing brokerage services, and a member firm of the Financial Industry Regulatory Authority (FINRA). Our brokerage services are the primary focus of this guide. As a broker-dealer, FPC transacts business in private placements to clients located domestically. Additional information about FPC and its financial professionals is available on FINRA's website at www.brokercheck.finra.org, (800) 289-999, or via the SEC's website at www.sec.gov.

Brokerage Services

Through our investment professionals and our online platform, we provide our clients with access to offerings of unregistered debt or equity securities (private placements, private placement investments or alternative investments). Our services include the determination of investor suitability for investment in private placements, making investment recommendations consistent with your investment strategy, and facilitating the execution and settlement of your private placement securities transactions.

As your relationship with us is primarily via our online platform, our relationship with you is based upon information provided to us electronically about your investing profile such as financial situation, investment experience, and investment objectives. Therefore, it is important that you advise us of any changes in your financial situation or investment objectives.

Additionally, our services are provided on a non-discretionary basis. Therefore, while we may recommend private placement investments for you, the ultimate investment decision regarding the purchase of private placement investments will be yours. Finally, our recommendations are made in a brokerage capacity, and as such, we do not agree to enter into a fiduciary relationship with you. For more information on our services, contact your investment professional at Favor Point Capital (Registered Representative), or you can contact the Firm at (623) 663-3737, or by email at [email protected].

Recommendations

Our services include the determination of suitability for investment in private placement securities, making investment recommendations consistent with your investment strategy, and facilitating the execution and settlement of your private placement investment transactions. We provide recommendations regarding the private placements we market. Those recommendations are based upon our due diligence regarding the sponsor or issuer of the private placement, and the proposed business activities related to the offering. It is important for you to understand that when your Registered Representative makes a recommendation to you, we are obligated to ensure the recommendation is in your best interest, based on your stated investment objective, risk tolerance, liquidity needs, time horizon / age, financial needs, and other financial information you provide us with. As previously noted, due to the online nature of our platform, our relationship with you is based upon information provided to us electronically about your investment profile, therefore, it is important that you advise us of any changes in your financial situation or investment objectives. You may accept or reject any recommendation.

Account Monitoring, and Incidental Brokerage Services

We do not commit to, nor do we provide for the on-going monitoring of your investments. It is your responsibility to monitor the investments, and we encourage you to do so regularly. Additionally, from time to time we may provide you with additional information and resources to assist you with understanding investment in private placements. These activities are not designed to monitor specific investment holdings, they do not contain specific investment recommendations about investment holdings, and you should not consider them a recommendation to buy or hold any particular investment you may have. The issuer will deliver updates on their scheduled dates. Upon your request, we will review such information and reports with you, and may provide you with investment recommendations, but we are not under a specific obligation to do so.

Minimum Investment Requirements

Each sponsor or issuer sets the minimum investment and suitability requirements for prospective investors in each respective offering of a private placement. While we require retail investors to be "accredited investors" to purchase private placements through us, the sponsor of such private placement investments generally sets that requirement. The actual investor investment requirements are detailed in the respective private placement memorandum, private offering memorandum or disclosure prepared by the sponsor or issuer, as well as in the subscription agreement you will be required to execute to acquire an interest in a private placement investment (collectively the Offering Documents).

Understanding Risk

It is important for you to understand that all investments involve risk, including the risk that you may lose your entire principal. Further, some investments involve more risk than other investments. Higher-risk investments may have the potential for higher returns but also for greater losses. The higher your "risk tolerance," meaning the amount of risk or loss you are willing and able to accept in order to achieve your investment goals, the more you may decide to invest in higher-risk investments offering the potential for greater returns.

Any investment or investment strategy involves risk of loss you should be prepared to bear. We encourage you to carefully consider your investment objectives and risk tolerance before investing.

Examples of risks you could face are:

• Interest rate Risk: Fluctuations in interest rates generally cause investment values to fluctuate. For example, market values of bonds typically decline when interest rates rise, because the rising rate makes the existing bond yields less attractive.
• Market Risk: External factors independent of a security's particular underlying circumstances will impact its value. The value of a security, bond or mutual fund can drop in reaction to tangible and intangible events and conditions, such as a political or social event or an economic condition.
• Inflation Risk: Inflation means a dollar today buys more than a dollar next year. When inflation is present, your purchasing power typically decreases at the rate of inflation.
• Currency Risk: Overseas investments are subject to fluctuations in the value of the dollar against the currency of the investment's originating country. Also known as exchange rate risk, these risks are present in international mutual funds for example.
• Reinvestment Risk: The risk that future proceeds from investments may be reinvested at a potentially lower rate of return is reinvestment risk. This risk primarily relates to fixed income securities.
• Business Risk: Risks associated with a particular industry, or a specific company impact the value of investments. For example, oil-drilling companies typically have more business risk than electric companies since they depend on finding oil and then refining it efficiently before they generate a profit.
• Liquidity Risk: Liquidity means the ability to readily convert an investment into cash. Assets with many purchasers are generally more liquid. For example, Treasury Bills are highly liquid, while real estate properties are less so.
• Financial Risk: A company with excessive borrowing or that takes significant business risks to generate profit is typically at a greater risk of financial difficulty or failure.

Brokerage Fees and Our Compensation

Transaction-Based Fees

When you invest through us, your net invested amount is not generally impacted by transaction-based fees. We do not charge you directly for our services. Instead, we are typically compensated either by the private placement itself or its parent company. This compensation is generally an upfront placement fee based on the amount you invest. In some cases, the fee is paid by the issuer's parent company and does not affect your investment amount or net asset value (NAV). In other cases, the placement fee is paid by the private placement (or a mix of the private placement and the investment sponsor) for assisting with marketing and due diligence. This may reduce the private placement's available capital or lower its net asset value NAV, which means your investment returns may be indirectly impacted by our fees.

Transaction-based fees are generally referred to as a commission, or a private placement fee, and our fees are all inclusive and in addition to commissions, include digital marketing fees and administrative service fees. Our transaction-based fees to the sponsor or issuer Transaction-based fees are based on a host of factors, including, but not limited to:

• Specific terms and conditions set forth by the sponsor or issuers in the Offering Documents
• Amount of your investment in the private placement investment
• Available discounts and/or waivers described in the Offering Documents

Administrative and Service Fees

We do not charge clients additional administrative, or service fees related to their private placement investments.

How We Are Compensated

General

We receive direct compensation in connection with your investment in a private placement investment. Direct compensation for a private placement is generally the transaction-based compensation discussed above in Transaction-Based Fees. Indirect compensation is compensation that is earned in ways other than through your initial investment in a private placement and may impact the value of the associated private placement investment. The section below describes the compensation that we receive in connection with private placement investments that we may make available to you.

Private Placement Compensation

Our compensation is based on a percentage of your invested capital in the private placement. The percentage payable to us is set out and disclosed in the Offering Documents provided to you. The compensation payable to us is non-negotiable, as it is negotiated between the sponsor or issuer of the private placement and us, prior to the offering of the private placement securities to potential investors. As noted above in Transaction-Based Fees, our compensation is generally paid either by the private placement itself or its parent company. See the Offering Documents for a complete discussion of the compensation arrangements with the sponsor and or issuers and FavorPoint Capital.

Your Registered Representative may receive a portion of the compensation, asarah determined by the Registered Representative and us. Your Registered Representative can provide you with the most recent Offering Documents, which in addition to disclosing our compensation arrangements, also discloses additional fees and costs imposed on the private placement investment by the issuer and its affiliates, risks related to investing in that private placement, the minimum investments accepted, the suitability requirements of investors, and other information critical to an investors decision to invest in any such private placement investment. It should be noted that private placement securities are illiquid, there is no public market for the securities, and no such public market is expected to develop in the future.

Revenue Sharing

We do not participate in any revenue sharing arrangements with the sponsors or issuers of private placement investments.

Conflicts of Interest

Like all financial service providers, Favor Point Capital and its Registered Representatives have conflicts of interest when we provide brokerage services to you. A conflict of interest is a situation in which we engage in a transaction or activity where our interest is materially adverse to your interest. The mere presence of a conflict of interest does not imply that harm to your interests will occur, but it is important that we acknowledge the presence of conflicts. Moreover, our regulatory obligations require that we establish, maintain, and enforce written policies and procedures reasonably designed to address conflicts of interest associated with our recommendations to you.

Our conflicts of interest are typically the result of compensation structures and other financial arrangements between us, our Registered Representatives, our clients and third parties. We receive various forms of compensation from sponsors and issuers as described above. Securities rules allow us, our Registered Representatives, and our affiliates to earn compensation when we provide services to you. However, the compensation that we and our Registered Representatives receive from you varies based upon the private placement investment purchase, which creates a financial incentive to recommend private placement investments that generate greater compensation for us.

We are committed to taking appropriate steps to identify, mitigate and avoid conflicts of interest to ensure we act in your best interest when providing recommendations to you. Below you will find additional information related to our conflicts of interest. This information is not intended to be an all-inclusive list of our conflicts but generally describes those conflicts that are material to your brokerage relationship.

Compensation We Receive from Clients

Transaction-Based Conflicts

We receive compensation in connection with the purchase of investment in a private placement, which is paid either by the private placement itself or its parent company. To the extent it is paid by the Issuer, this may reduce the fund's available capital or lower its NAV, which means your investment returns may be indirectly impacted by it. Additionally, as our transaction-based compensation is tied to the amount of your investment, the more transactions you enter into, the more compensation that we and your Registered Representative receive. This compensation creates an incentive for us to recommend that you buy these investments.

Compensation Related to Proprietary Products

We do not offer proprietary products.

Compensation We Receive from Third Parties

General

Other than the transaction-based compensation described above, we generally receive no additional compensation from sponsors, issuers or other third parties; however, we may receive the compensation and benefits described herein.

Additional Compensation and Benefits from Product Sponsors and Other Third Parties

We and our Registered Representatives, associates, employees, and agents may receive additional compensation from sponsors, issuers and other third parties including:

• Payment or reimbursement for the costs associated with education, training or marketing events that are attended by our employees, agents, and Registered Representatives.
• An occasional dinner or ticket to a sporting event, or reimbursement in connection with business development activities.
• Payment or reimbursement for the costs associated with education, training, marketing, or advertising initiatives, including marketing to prospective investors, which are attended by our employees, agents, and Registered Representatives.

The amount of these payments or benefits is not dependent on or related to the level of assets you or any other of our clients invest in through us or with the product sponsor.

Compensation Related to Our Affiliates

We earn no compensation related to our private placement activities from the activities of affiliates.

Compensation Received by Registered Representatives

General

Our Registered Representatives are compensated both as independent contractors and as salaried employees. Registered Representatives receive base salary or draw, and are also compensated based on the percentage of revenue generated from the sales of private placement investment products acquired by clients. This compensation may vary based upon the private placement investment associated with our brokerage recommendation. Thus, Registered Representatives are incentivized to recommend private placement investments that have higher fees as well as those with on-going payments. We have established controls to identify and mitigate this risk.

Typically, a Registered Representative's payout schedule (periodically adjusted by us at our discretion) increases with production and asset levels. The same payout schedule is reduced when Registered Representatives discount certain client fees and commissions, or client relationship asset levels are below minimums established by us. Registered Representatives also may be eligible for annual or ongoing bonus awards based upon a variety of factors that include, achieving production targets, as well as compliance with our policies and procedures and meeting best business practices. As a result, Registered Representatives have an incentive to provide recommendations that result in selling more private placement investment products. Notwithstanding that conflict, we have controls established to identify and mitigate this risk.

The Firm may receive General Partner or Limited Partner shares, or other forms of equity in projects based on the amount of capital it raises for the Issuer.

Non-Cash Compensation

Non-cash compensation is provided to Registered Representatives in the form of credits toward business expense accounts and certain titles. Registered Representatives may also be compensated in the form of education meetings. Portions of these programs may be subsidized by external vendors and affiliates, such as sponsors and issuers. Consequently, product providers that sponsor and / or participate in education meetings gain opportunities to build relations with Registered Representatives, which could lead to sales of such product provider's products.

Additional Resources