ASPIRITY HOLDINGS LLC - FORM S-1/A

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EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - ASPIRITY HOLDINGS LLC	aspirity_ex2301.htm

As filed with the Securities and Exchange Commission on November 4, 2015

Reg. No. 333-203994

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 2

FORM S-1

REGISTRATION STATEMENT

UNDER THE

SECURITIES ACT OF 1933

Aspirity Holdings LLC (formerly known as Twin Cities Power Holdings, LLC)

(Exact name of registrant as specified in its charter)

Minnesota
(State or other jurisdiction of incorporation or organization)

27-1658449
(I.R.S. Employer Identification Number)

16233 Kenyon Avenue, Suite 210

Lakeville, Minnesota 55044

(952) 241-3103

Fax (952) 898-3571

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Timothy S. Krieger

Chief Executive Officer

16233 Kenyon Avenue, Suite 210

Lakeville, Minnesota 55044

(952) 241-3103

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:

Mark S. Weitz, Esq.

Stinson Leonard Street LLP

150 South 5^th Street, Suite 2300

Minneapolis, Minnesota 55402

Telephone: (612) 335-1500

Fax: (612) 335-1657

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☒

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to Be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Note	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Renewable Unsecured Subordinated Notes (1)	$75,000,000	(3)	$75,000,000	$6,918.09(2)

(1)

Pursuant to Rule 415(a)(6), $6,300,000 of Renewable Unsecured Subordinated Notes that were registered on file number 333-179460 (the “Prior Registration Statement”) but were unsold, will be included in this replacement registration statement. The registration fee paid for these unsold notes totaled $721.98 and will continue to be applied to these unsold notes.

(2)

The registration fee for the $68,700,000 of new Renewable Unsecured Subordinated Notes being registered is $6,918.09, of which $7,611.10 was previously paid.

(3)

The Renewable Unsecured Subordinated Notes will be issued in denominations selected by the purchasers in any amount equal to or exceeding $1,000.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

This prospectus includes a description of the restructuring of Aspirity Holdings LLC, which includes the distribution of the outstanding equity of Krieger Enterprises, LLC to Timothy Krieger and Summer Enterprises, LLC, referred to as the “Distribution” and described below. The closing of the Distribution is conditioned on the effectiveness of this registration statement.

SUBJECT TO COMPLETION, DATED NOVEMBER 4, 2015

$75,000,000

Aspirity Holdings LLC

(formerly known as Twin Cities Power Holdings, LLC)

Three Month, Six Month and One, Two, Three, Four, Five, and Ten Year

Renewable Unsecured Subordinated Notes

We are offering an aggregate principal amount of up to $75 million of our renewable unsecured subordinated notes. Notes with certain terms may not always be available. We intend to commence the offering promptly. The offering will be made on a continuous basis, and is expected to continue for a period in excess of 30 days. We will establish interest rates on the securities offered in this prospectus in prospectus supplements. Once you purchase a note, changes in interest rates will not affect the interest rate you receive up to maturity. The notes are unsecured obligations and your right to payment is subordinated in right of payment to all of our existing or future senior, secured, unsecured and subordinate indebtedness and other of our financial obligations. Upon maturity, the notes will be automatically renewed for the same term as your maturing note at an interest rate that we are offering at that time to other investors with similar note portfolios for notes of the same term, unless we or you elect not to have them renewed. If notes of the same term are not then being offered, the interest rate upon renewal will be the rate specified by us on or before maturity, or the rate of the existing note if no such rate is specified. The interest rate on your renewed note may be different than the interest rate on your original note.

After giving you 30 days advance notice, we may redeem all or a portion of the notes for their original principal amount plus accrued but unpaid interest. You or your representative also may request us to repurchase your notes prior to maturity; however, unless the request is due to your death or total permanent disability, we may, in our sole discretion, decline to repurchase your notes. If we do elect to repurchase your notes, we will charge you a penalty of up to three months of simple interest on notes with three month maturities and up to six months of interest on all other notes. Our obligation to repurchase notes prior to maturity for any reason in a single calendar quarter is limited to the greater of $500,000 or 1% of the aggregate principal amount of all notes outstanding at the end of the previous quarter. See “Description of the Notes - Redemption or Repurchase Prior to Stated Maturity - Repurchase at Request of Holder.”

We will market and sell the notes directly to the public. The notes will not be listed on any securities exchange or quoted on Nasdaq or any over-the-counter market. We do not intend to make a market in the notes and we do not anticipate that a market in the notes will develop. There will be significant restrictions on your ability to transfer or resell the notes. We have not requested a rating for the notes; however, third parties may independently rate them. We file periodic reports, primarily annual and quarterly reports, with the Securities and Exchange Commission. This registration statement replaces our Original Registration Statement for renewable unsecured subordinated notes which was granted effectiveness with the Securities and Exchange Commission on May 10, 2012. As of October 31, 2015, notes in a total principal amount of $23,470,079 issued under the Original Registration Statement remain outstanding.

The notes are not certificates of deposit or similar obligations of, and are not guaranteed or insured by, any depository institution, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or any other governmental or private fund or entity. Investing in the notes involves risks, including those which are described in “Risk Factors” beginning on page 16 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Note	Total
Public offering price	100.00%	$75,000,000
Underwriting discounts and commissions (1)	none	none
Proceeds to Aspirity, before expenses	100.00%	$75,000,000

(1)

The notes are not being offered or sold pursuant to any underwriting or similar agreement, and no commissions or other remuneration will be paid in connection with their sale. The notes will be sold at face value.

See “Plan of Distribution” for a description of anticipated expenses to be incurred in connection with our offering and selling the notes. We are not required to sell any specific number or dollar amount of notes in order to accept subscriptions.

We are currently offering these notes only to investors in the following states: California, Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico, New York, South Dakota, Texas, Vermont, and Wisconsin. No offer is made by this Prospectus to residents of any other state.

We will issue the notes in book-entry or uncertificated form. Subject to certain limited exceptions, you will not receive a certificated security or a negotiable instrument that evidences your notes. We will deliver written confirmations to purchasers of the notes. BOKF, NA dba Bank of Oklahoma will act as trustee for the notes.

The date of this Prospectus is November __, 2015

Table of Contents

INTRODUCTORY NOTE	iii
NOTICES TO INVESTORS OF CERTAIN STATES AND SUITABILITY STANDARDS	iiii
FORWARD-LOOKING STATEMENTS	v
DEFINITIONS	vi
PROSPECTUS SUMMARY	1
Our Company	1
Recent Restructuring	1
Business Plans	7
Risks Related to the Offering and the Notes	8
Certain Related Party Transactions	8
Principal Executive Office	8
THE OFFERING	9
SUMMARY PRO FORMA FINANCIAL INFORMATION	12
RISK FACTORS	16
Risks Related to an Investment in the Notes	16
Risks Related to Our Business	20
Risks Related to the Industry	21
USE OF PROCEEDS	25
DISTRIBUTION POLICY	26
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
Important Note Regarding Recent Restructuring	27
Operations Prior to the Restructuring	27
Results of Operations	31
Six Months Ended June 30, 2015 and 2014	31
Years Ended December 31, 2014 and 2013	35
Liquidity, Capital Resources, and Cash Flow	39
Financing	42
Non-GAAP Financial Measures	42
Critical Accounting Policies and Estimates	43
Quantitative and Qualitative Disclosures about Market Risk	44
BUSINESS	48
Industry Background	48
Retail Energy Services	52
Retail Electric Bills	54
Purchase of Receivables	56
Sales & Marketing	57
Energy Supply	57
Competition	59
Financial Services	60
Seasonality	60
Intellectual Property	60
Personnel	60
Regulatory Matters	60
Facilities	60

Legal Proceedings	60
MANAGEMENT	61
EXECUTIVE COMPENSATION	64
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	67
CERTAIN RELATIONSHIPS, RELATED PARTY TRANSACTIONS, AND GOVERNOR INDEPENDENCE	68
DESCRIPTION OF THE NOTES	70
MATERIAL FEDERAL INCOME TAX CONSEQUENCES	83
PLAN OF DISTRIBUTION	85
LEGAL MATTERS	86
EXPERTS	86
WHERE YOU CAN FIND ADDITIONAL INFORMATION	86
INDEX TO FINANCIAL STATEMENTS	87

You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered to you. We have not authorized anyone to provide you with additional or different information. We are offering to sell, and seeking offers to buy, the notes only in jurisdictions where offers and sales are permitted. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the notes.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See “Risk Factors” beginning on page 16 and “Forward-Looking Statements” on page v.

INTRODUCTORY NOTE

On May 10, 2012, the U.S. Securities and Exchange Commission declared effective the Company’s Registration Statement on Form S-1 (which we refer to as the “Original Registration Statement”) covering the sale of up to $50,000,000 of Renewable Unsecured Subordinated Notes which we refer to as the “Existing Notes”. As of October 31, 2015, there were $23,470,079 principal amount of Existing Notes outstanding. Pursuant to Rule 415(a)(6) under the Securities Act of 1933, unsold securities previously registered on the Original Registration Statement are being carried forward to this Registration Statement.

NOTICES TO INVESTORS OF CERTAIN STATES AND SUITABILITY STANDARDS

Notice to California Investors

We have established suitability standards for California investors, which require such investors to have either a net worth not including home, furnishings, and personal automobiles of at least $70,000 and an annual gross income of at least $70,000 or a net worth not including home, furnishings, and personal automobiles of at least $250,000. The investor suitability requirements stated above represent minimum suitability requirements we establish for prospective note holders. However, satisfaction of these requirements will not necessarily mean that the notes are a suitable investment for a prospective investor, or that we will accept the prospective investor’s subscription agreement.

Notice to Kansas Investors

We have established suitability standards for Kansas investors, which require such persons to have either a net worth not including home, furnishings, and personal automobiles of at least $70,000 and an annual gross income of at least $70,000, or a net worth not including home, furnishings, and personal automobiles of at least $250,000. Additionally, the Office of the Kansas Securities Commissioner has required that Kansas investors limit their aggregate investment in the Notes and other similar programs to not more than 10% of their liquid net worth. For this purpose, liquid net worth is defined as that portion of total net worth (total assets minus total liabilities) comprised of cash, cash equivalents, and readily marketable securities, as determined in conformity with Generally Acceptable Accounting Principles.

Notice to Michigan Investors

We have established suitability standards for Michigan investors, which require such investors to have either a net worth not including home, furnishings, and personal automobiles of at least $70,000 and an annual gross income of at least $70,000 or a net worth not including home, furnishings, and personal automobiles of at least $250,000. Additionally, a Michigan investor's total investment in this offering and other similar offerings shall not exceed 10% of such investor's liquid net worth. For this purpose, liquid net worth is determined exclusive of home, home furnishings and automobiles. The investor suitability requirements stated above represent minimum suitability requirements we establish for prospective note holders. However, satisfaction of these requirements will not necessarily mean that the notes are a suitable investment for a prospective investor, or that we will accept the prospective investor's subscription agreement.

Notice to New Jersey Investors

New Jersey investors must have either a minimum liquid net worth of at least $100,000 and a minimum annual gross income of not less than $85,000 or a minimum liquid net worth of at least $350,000. For these purposes, “liquid net worth” is defined as that portion of net worth (total assets exclusive of home, home furnishings, and automobiles minus total liabilities) that consists of cash, cash equivalents, and readily marketable securities. In addition, a New Jersey investor’s investment in us, our affiliates, and other non-publicly traded direct investment programs including real estate investment trusts, business development companies, oil and gas programs, equipment leasing programs and commodity pools, but excluding unregistered, federally and state exempt private offerings, may not exceed 10% of his or her liquid net worth.

iii

Notice to New Mexico Investors

We have established suitability standards for New Mexico investors, which require such investors to have either a net worth not including home, furnishings, and personal automobiles of at least $70,000 and an annual gross income of at least $70,000 or a net worth not including home, furnishings, and personal automobiles of at least $250,000. Additionally, a New Mexico investor's total investment in this offering and other similar offerings shall not exceed 10% of such investor's liquid net worth. For this purpose, liquid net worth is determined exclusive of home, home furnishings, and automobiles. The investor suitability requirements stated above represent minimum suitability requirements we establish for prospective note holders. However, satisfaction of these requirements will not necessarily mean that the notes are a suitable investment for a prospective investor, or that we will accept the prospective investor's subscription agreement.

Notice to Vermont Investors

Accredited investors in Vermont, as defined in 17 C.F.R. § 230.501, may invest freely in this Offering. Non-accredited investors in Vermont must have either a liquid net worth of at least $70,000 and an annual gross income of at least $70,000, or a liquid net worth of at least $250,000. In addition, non-accredited Vermont investors may not purchase an amount in this offering that exceeds 10% of the investor's liquid net worth. For these purposes, "liquid net worth" is defined as an investor’s total assets (not including home, home furnishings, or automobiles) minus total liabilities.

FORWARD-LOOKING STATEMENTS

This prospectus contains, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward-looking statements can be identified by words such as: “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “continue,” “predict,” or other similar words making reference to future periods. Forward-looking statements appear in a number of places in this prospectus, including, without limitation, “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” and include statements regarding our intent, belief or current expectation about, among other things, trends affecting the markets in which we operate, our business, financial condition and growth strategies. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those predicted in the forward-looking statements as a result of various factors, including but not limited to those set forth in the “Risk Factors” section of this prospectus.

If any of the events described in “Risk Factors” occur, they could have a material adverse effect on our business, financial condition and results of operations. When considering forward-looking statements, you should keep these risk factors, as well as the other cautionary statements in this prospectus, in mind. You should not place undue reliance on any forward-looking statement. These forward-looking statements represent our estimates and assumptions only as of the date of this prospectus regardless of the time of delivery of this prospectus or any sale of our notes and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this prospectus.

DEFINITIONS

Abbreviation or acronym		Definition
AEMS		Aspirity Energy Mid States, LLC, a wholly owned subsidiary of Aspirity Energy
AENE		Aspirity Energy Northeast, LLC, a wholly owned subsidiary of Aspirity Energy
AES		Aspirity Energy South, LLC, a wholly owned subsidiary of Aspirity Energy
AOCI		Accumulated other comprehensive income
ASC		Accounting Standards Codification
Aspirity		Aspirity Holdings LLC, formerly known as Twin Cities Power Holdings, LLC
Aspirity Energy		Aspirity Energy LLC, a wholly owned subsidiary of Aspirity
Aspirity Financial		Aspirity Financial LLC, a wholly owned subsidiary of Aspirity
ASU		Accounting Standards Update
BLS		Bureau of Labor Statistics, an agency within the U.S. Department of Labor
Btu; therm; MMBtu		A “Btu” or British thermal unit is a measure of thermal energy or the amount of heat needed to raise the temperature of one pound of water from 39°F to 40°F. A “therm” is one hundred thousand Btu. One “MMBtu” is one million Btu.
CFTC		Commodity Futures Trading Commission, an independent agency of the United States government that regulates futures and option markets
Company		Aspirity and its subsidiaries
CoV		Abbreviates the coefficient of variation, a simple measure of volatility useful for comparing two or more data series; equal to the standard deviation divided by the mean
CSE		Comparison shopping engine, a web site that compares prices for specific products. While most comparison shopping engines do not offer the products or services themselves, some may earn commissions when users follow the links in the search results and make a purchase from an online vendor.
Degree-days; CDD; HDD		A “degree-day” compares outdoor temperatures to a standard of 65°F. Hot days require energy for cooling and are measured in cooling degree-days or “CDD” while cold days require energy for heating and are measured in heating degree-days or “HDD”. For example, a day with a mean temperature of 80°F would result in 15 CDD and a day with a mean temperature of 40°F would result in 25 HDD. If heating degree-days are less than the average for an area for a period, the weather was “warmer than normal”; if they were greater, it was “colder than normal”. The converse is true for cooling degree-days - if CDD are less than the average for an area for a period, the weather was “colder than normal”; if they were greater, it was “warmer than normal”.
Distribution		That certain distribution of 100% of the equity of Krieger Enterprises, LLC to the members of Aspirity as the final step of the Restructuring.
Distribution Date		The date of the Distribution is the same date that the registration statement of which this Prospectus is a part is declared effective.
DOE		U.S. Department of Energy
EDC; LDC		Electric distribution company; may also be known as a local distribution company
EIA		Energy Information Administration, an independent agency within DOE
Enterprises		Krieger Enterprises, LLC, a former subsidiary of Aspirity.
ERCOT		Electric Reliability Council of Texas, an ISO managing 85% of the electric Load of Texas and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature but not FERC
Existing Notes		Notes sold pursuant to our Notes Offering under the Form S-1 declared effective May 10, 2012 and outstanding as of the effective date of the new Form S-1 of which this prospectus is a part.

Abbreviation or acronym		Definition
FERC		Federal Energy Regulatory Commission, an independent regulatory agency within DOE
Form S-1		The Company’s Registration Statement on Form S-1 with respect to the Notes Offering
FTR		Financial Transmission Rights are financial instruments traded in certain ISOs and RTOs that entitle their holders to receive or pay charges based on congestion price differences in the day-ahead energy market across specific transmission paths. The value of an FTR reflects the difference in congestion prices rather than the difference in locational marginal prices, which includes energy, congestion, and marginal losses. FTRs are specified between any two pricing nodes on the system, including hubs, control zones, aggregates, generator buses, load buses and interface pricing points. FTRs are generally available in increments of 0.1 MW and for periods ranging from 1 month to multiple years. The value of an FTR can be positive or negative depending on the sink minus source congestion price difference, with a negative differences resulting in liability for the holder.
GAAP		Generally accepted accounting principles in the United States
ICE		Intercontinental Exchange, Inc. is the leading global network of regulated exchanges and clearing houses for financial and commodity markets in the U.S., Canada, Europe, and Asia. In November 2013, ICE completed the acquisition of NYSE Euronext.
INC and DEC		An increment offer or “INC” is an offer in the day-ahead market to sell energy at a specified source bus. An INC will clear if the LMP at the bus equals or exceeds the offer price. A decrement bid or “DEC” is a bid in the day-ahead market to purchase energy at a specified sink bus. A DEC will clear if the LMP at the bus does not exceed the bid price.
ISO; RTO		An Independent System Operator or “ISO” is a non-profit organization formed at the direction or recommendation of FERC that coordinates, controls, and monitors the operation of a bulk electric power system. A Regional Transmission Organization or “RTO” typically performs the same functions as an ISO but covers a larger area. ISOs and RTOs may also operate centrally cleared wholesale markets for electric power quoted on both a “real-time” and “day ahead” basis. ISOs and RTOs are collectively referred to as ISOs.
ISO-NE		ISO New England Inc., an RTO serving Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont
Legacy Businesses		The wholesale energy trading, real estate investments, investments in private companies, and legacy retail energy business operated by the Company’s former subsidiaries.
LMP		One of the unique aspects of FERC-regulated wholesale electricity markets is the availability of “locational marginal prices” or “LMPs”. The theoretical price of electricity at each node on a network is calculated based on the assumptions that one additional megawatt-hour of energy is demanded at the node in question, and the marginal cost to the system that would result from the re-dispatch of available generating units to serve such load can establish the production cost of the additional energy. LMPs are typically quoted on a “real-time” and “day-ahead” basis. In the real-time market, prices at specific nodes are updated every 5 minutes based on current and targeted supply and demand. Day-ahead prices are for power to be delivered at a specified hour and transmission point during the next day. LMPs vary by time and location due to physical system limitations, congestion, and loss factors; however, in an unconstrained system with no losses, all LMPs would be equal. This means that LMPs can be conceptually separated into three components - an energy price, a congestion component, and a loss component.

vii

Abbreviation or acronym		Definition
MISO		Midcontinent Independent System Operator, Inc., formerly the Midwest Independent Transmission System Operator, Inc., an RTO serving all or part of Arkansas, Illinois, Indiana, Iowa, Louisiana, Manitoba, Michigan, Minnesota, Mississippi, Missouri, Montana, North Dakota, South Dakota, Texas, and Wisconsin
MCF		One thousand cubic feet, a common unit of price measure for natural gas. In 2010, one MCF of natural gas had a heat content of 1,025 Btu.
NERC		North American Electric Reliability Corporation, a non-profit corporation formed on March 28, 2006 as the successor to the National Electric Reliability Council, also known as NERC, formed in 1968. NERC is the designated Electric Reliability Organization or “ERO” for the U.S. and operates under the auspices of FERC.
NGX		Natural Gas Exchange Inc., headquartered in Calgary, Alberta, provides electronic trading, central counterparty clearing, and data services to the North American natural gas and electricity markets. NGX is wholly owned by TMX Group Inc. which collectively manages all aspects of Canada’s senior and junior equity markets.
NOAA		National Oceanic and Atmospheric Administration, an agency of the U.S. Department of Commerce
notes		The Company’s Renewable Unsecured Subordinated Notes issued pursuant to its ongoing Notes Offering
Notes Offering		The direct public offering the Company’s notes pursuant to a registration statement on Form S-1 declared effective by the SEC
NRSRO		A SEC-recognized Nationally Recognized Statistical Rating Organization. The major NRSROs that rate utilities are Standard & Poor’s Financial Services LLC (“S&P”), Moody’s Investor Services, Inc. (“Moody’s”), and Fitch Ratings Inc. (“Fitch”)
NYISO		New York Independent System Operator, an ISO serving New York state
Operating Agreement		Aspirity’s Amended and Restated Operating Agreement, dated as of the Distribution Date
OTC		Over-the-counter
PJM		PJM Interconnection, a RTO serving all or part of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia.
POR; non-POR		All states with restructured retail markets have implemented laws and regulations with respect to permitted billing, credit, and collections practices. Some of these states require an EDC billing customers in their service territory on behalf of suppliers operating there to purchase the receivables generated as a result of energy sales, generally at a modest discount to reflect bad debt experience. These states are known as “purchase of receivables” or “POR” jurisdictions while those without this provision are known as “non-POR” areas.
PURPA		Public Utilities Regulatory Policy Act of 1978
RECs		Renewable energy certificates represent the property rights to the environmental, social, and other non-power qualities of renewable electricity generation and can be sold separately from the underlying physical electricity.
Restructuring		The restructuring of the Company that was completed on the Distribution Date and effected the separation of the Legacy Businesses from the Company.
SEC		U.S. Securities and Exchange Commission, an independent agency of the United States government with primary responsibility for enforcing federal securities laws and regulating the securities industry and stock exchanges

viii

Abbreviation or acronym		Definition
Term Loan		Term Loan Agreement, dated July 1, 2015, between Aspirity Financial and Enterprises, pursuant to which Aspirity Financial loaned Enterprises an aggregate principal amount of $22,205,613 with a weighted average interest rate of 14.08%.
Term Loan Notes		An aggregate principal amount of $22,205,613 with a weighted average interest rate of 14.08% of the Company’s notes that were outstanding as of June 30, 2015, excluding any renewals of such notes.
TIA		The Trust Indenture Act of 1939, as amended
UTC		In an up-to-congestion or “UTC” transaction, a day-ahead market participant offers to inject energy at a specified source and simultaneously withdraw the same quantity at a specific sink at a maximum bid price difference between the two locations. The transaction will clear if the price differential between sink and source does not exceed the bid price.
VaR		Value-at-Risk is a measure of the risk of loss on a specific portfolio of financial assets. For a given portfolio, probability, and time horizon, VaR is the value at which the probability that a mark-to-market loss over the given time horizon exceeds the calculated value, assuming normal markets and no trading. For example, if a portfolio has a one-day, 5% VaR of $1 million, there is a 5% probability that the portfolio will fall in value by more than $1 million over a one-day period.
Watt (W); Watt-hour (Wh)		Although in everyday usage, the terms “energy” and “power” are essentially synonyms, scientists, engineers, and the energy business distinguish between them. Technically, energy is the ability to do work, or move a mass a particular distance by the application of force while power is the rate at which energy is generated or consumed. In the case of electricity, power is measured in watts (W) and is equal to voltage or the difference in charge between two points multiplied by amperage or the current or rate of electrical flow. The energy supplied or consumed by a circuit is measured in watt-hours (Wh). For example, when a light bulb with a power rating of 100W is turned on for one hour, the energy used is 100 watt-hours. This same amount of energy would light a 40-watt bulb for 2.5 hours or a 50-watt bulb for 2.0 hours. Multiples of watts and watt-hours are measured using International Systems of Units (“SI”) conventions. For example:

Prefix	Symbol	Multiple (Number)	Value
kilo	k	one thousand (1,000)	10³
mega	M	one million (1,000,000)	10⁶
giga	G	one billion (1,000,000,000)	10⁹
tera	T	one trillion (1,000,000,000,000)	10¹²

Kilowatt (kW) or kilowatt-hour (kWh): one thousand watts or watt-hours. Kilowatt-hours are typically used to measure residential energy consumption and retail prices. One kWh is equal to 3,412 Btu, but fuel with a heat content of 7,000 to 11,500 Btu must be consumed to generate and deliver one kWh of electricity.

Megawatt (MW) or megawatt-hour (MWh): one million watts or watt-hours or one thousand kilowatts or kilowatt-hours. Megawatts are typically used to measure electrical generation capacity and megawatt-hours are the pricing units used in the wholesale electricity market.

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus and may not contain all the information that may be important to you. You should read the entire prospectus and the other information that is incorporated by reference before making an investment decision.

References in this prospectus to the “Company,” “we,” “our,” “us,” or similar terms refer to Aspirity Holdings LLC, formerly known as Twin Cities Power Holdings, LLC.

Our Company

Aspirity Holdings LLC (the “Company” or “Aspirity”), formerly known as Twin Cities Power Holdings, LLC or “TCPH”, is a holding company that conducts its operations principally through wholly-owned subsidiaries. We currently have two direct subsidiaries, Aspirity Energy LLC (“Aspirity Energy”), which houses our retail energy business, and Aspirity Financial LLC (“Aspirity Financial”), which houses our financial services business. Both subsidiaries are Minnesota limited liability companies.

Recent Restructuring

On the Distribution Date, the Company completed a significant restructuring (the “Restructuring”) by making a distribution of 100% of the equity interests of Krieger Enterprises, LLC (“Enterprises”) to the Company’s members (the “Distribution”). Prior to the Distribution, Enterprises was a first tier, wholly-owned subsidiary of the Company, which held nearly all of the Company’s business operations.

As shown by the chart below, prior to the start of the Restructuring, the Company’s name was Twin Cities Power Holdings, LLC and its active first tier subsidiaries consisted of Apollo Energy Services L.L.C. (“Apollo”, which provided administrative and other services to other subsidiaries), Twin Cities Power, L.L.C. (“TCP”), Chesapeake Trading Group, L.L.C. (“CTG”), Cygnus Partners, L.L.C. (“Cygnus”), Retail Energy Holdings L.L.C. (“REH”), and Cyclone Partners L.L.C. (“Cyclone”), each of which is a Minnesota limited liability company. These subsidiaries operated in three major business segments- wholesale trading, retail energy services, and diversified investments.

Our former wholesale trading segment bought and sold virtual electricity in certain North American markets regulated by the Federal Energy Regulatory Commission (“FERC”) and operated by Regional Transmission Organizations (“RTOs”) and Independent System Operators (collectively, “ISOs”) as well as derivative contracts based on the price of electricity, natural gas, and oil on exchanges regulated by the Commodity Futures Trading Commission (“CFTC”). We provided electricity supply services to retail customers in certain states that permit retail choice and engaged in certain asset management activities, including real estate development and investments in privately held businesses. As part of the Restructuring, the Company has exited these legacy businesses. As described below, the Company intends to develop new operations in two business segments - retail energy and financial services.

Background of the Restructuring

For some time, our Board of Directors (the “Board”) had been considering ways to better position the Company to access capital markets, including that for public equity. To do this effectively, the Board determined that the Company needed to substantially reduce its earnings volatility and regulatory exposure, believing that the complexities of the wholesale energy trading business made it difficult for the market to accurately value its businesses.

The Restructuring took on urgency after the commencement by FERC on August 29, 2014 of a regulatory action in the PJM market under Section 206 of the Federal Power Act (the “Proceeding”). Among other matters, the Proceeding, which is still ongoing as of the date hereof, sought to retroactively impose new fees - in still to be determined amounts - on trades in PJM’s up-to-congestion (“UTC”) product. The Board took note of the fact that since the announcement of the Proceeding, the trading volume of such product has decreased substantially and a number of companies have exited that market. The Company, through TCP and its Summit Energy LLC subsidiary (“Summit”, and collectively, “TCP”), was an active trader of UTCs.

On May 27, 2015, the Board approved a plan to restructure the Company with the goals of:

Closing the sale of TCP;

Transferring ownership of the remaining portions of the volatile and unpredictable wholesale energy trading segment, as well as the legacy retail energy services and the diversified investments businesses, to the Company’s members; and

Refocusing the Company solely as a retail energy and financial services business.

Execution of the Restructuring

Overall, the Restructuring incorporated several major steps.

First, we created new first and second tier subsidiaries. The new first tier subsidiaries consisted of Aspirity Energy, Aspirity Financial, and Enterprises. The second tier entities, which are first tier subsidiaries of Aspirity Energy, were formed to conduct business in the various areas of the U.S. that benefit from active wholesale and restructured retail electricity markets- Aspirity Energy Northeast LLC (“AENE” or “Northeast”), Aspirity Energy Mid-States LLC (“AEMS” or “Mid-States”), and Aspirity Energy South LLC (“AES” or “South”). These Aspirity Energy subsidiaries were organized to develop the Company’s retail energy business while Aspirity Financial was formed to provide energy-related financial services to companies and households.

Second, on June 1, 2015, we closed on the sale of TCP to Angell Energy, LLC, a Texas limited liability company (“Angell”). Pursuant to an Equity Interest Purchase Agreement (the “TCP Purchase Agreement”), we sold 100% of the outstanding equity interests of TCP to Angell for a purchase price of $20,740,704, paid with $500,000 cash and a secured promissory note of $20,240,704 bearing interest at an annual rate of 6.00% and payable in 12 quarterly installments of $1,855,668 each (the “Original Angell Note”). The Company and Angell also entered into a Security and Guarantee Agreement and Apollo and Angell entered into a Software License for Apollo’s proprietary DataLiveTM Software and an Administrative Services Agreement. The Company assigned all of its rights and obligations under these transaction documents to Enterprises.

On September 2, 2015, Enterprises and Angell entered into a First Amendment to the TCP Purchase Agreement (the “TCP Purchase Amendment”). In connection with its purchase of TCP, since June 1, 2015, Angell had been (i) subleasing the Lakeville, Minnesota office of TCP (the “Lakeville Office”), which included the use of certain equipment located at the Lakeville Office (collectively, the “Sublease”), and (ii) employing certain of TCP’s personnel located at the Lakeville Office (the “TCP Employees”). Pursuant to the TCP Purchase Amendment, Enterprises agreed to cancel the Sublease and re-employ the TCP Employees, and to correspondingly reduce the purchase price of TCP to $15,000,000 (the “Purchase Price”). In connection therewith, on September 2, 2015, Angell also executed an Amended and Restated Secured Promissory Note in favor of Enterprises, which supersedes and replaces the Original Angell Note and, after accounting for Angell’s payment of $500,000 on August 5, 2015 and certain prorated expenses of Angell related to the Lakeville Office and the transition of the TCP Employees, including bonuses and benefits costs, for the months of June, July, and August 2015, carries a principal amount of $15,024,573 (the “Amended Angell Note”). The Amended Angell Note bears interest at rate of 6% per annum, is payable in 16 quarterly installments beginning September 1, 2015 (with the first installment being $1,142,100 and the remaining 15 installments being $1,063,215), and matures on June 1, 2019. The Amended Angell Note is secured by a first priority security interest in the assets of Angell and TCP, and is guaranteed by TCP and Angell’s CEO, Michael Angell, individually, pursuant to that certain Security and Guarantee Agreement, dated June 1, 2015, made by Angell, TCP, and Michael Angell, individually, in favor of the Company.

In selling TCP, the Company accomplished its goal of substantially reducing its exposure to the FERC Proceeding and completed the second step in the Plan. However, as more fully described in Note 7 to the unaudited June 30, 2015 consolidated financial statements, the Company deferred a gain of $17,783,890 on the sale in this transaction. Following the purchase price reduction in connection with the TCP Purchase Amendment, the deferred gain was reduced to $12,038,160.

Third, effective July 1, 2015, we completed an internal reorganization that included the following actions:

The Company contributed the following assets, and transferred all related liabilities, to Enterprises:

100% of the outstanding equity interests of each of Apollo, CTG, Cygnus, and Cyclone;

100% of the financial rights associated with the equity of REH, with the governance rights to be contributed upon receipt of approval from FERC;

100% of the outstanding equity interests of the following wholly-owned non-operating or inactive subsidiaries:

Athena Energy Futures LLC;

Minotaur Energy Futures LLC;

Twin Cities Energy LLC and its subsidiary Twin Cities Power-Canada, Ltd.;

TC Energy Trading, LLC;

Twin Cities Power Services, LLC; and

Vision Consulting, LLC; and

Certain other assets and obligations held or owned directly by the Company but not related to the planned operations of the Company following the Restructuring, including:

The Angell Note;

The Company’s investments in certain real estate projects

The Series C Convertible Promissory Notes of Ultra Green Packaging, Inc.; and

The restricted cash pledged to a Canadian court in connection with the Company’s ex-employee litigation; and

Aspirity Financial entered into a Term Loan Agreement (the “Term Loan”) with Enterprises, pursuant to which Aspirity Financial loaned Enterprises an aggregate principal amount of $22,205,613 with a weighted average interest rate of 14.08%. The maturity date of the Term Loan is December 30, 2019. Prior to the Distribution, the Term Loan was accounted for as an intercompany transaction and eliminated in consolidation, but effective with the Distribution, it is treated as an arm’s length loan between two commercial entities.

The internal reorganization effected the separation of the Company’s wholesale energy trading, real estate investments, investments in private companies, and legacy retail energy business (collectively, the “Legacy Businesses”) from its new Aspirity subsidiaries, which will have a more limited and precise focus on retail energy and energy-related financial services. The Company believes this change of focus from wholesale to retail will substantially reduce its earnings volatility and regulatory exposure, which, among other benefits, will better position the Company to obtain future debt and equity financing.

As a result of Enterprises’ payment obligations to the Company under the Term Loan, the operations and cash flows of the Legacy Businesses support the repayment of the notes that were outstanding as of June 30, 2015 (the “Term Loan Notes”). Accordingly, and subject to monthly true-ups, the repayment schedule of the Term Loan reflects the maximum possible redemptions of the Term Loan Notes in a given month, the weighted average interest rate of the Term Loan Notes, and a portion of the costs incurred by the Company as a public reporting company. The equity of Enterprises has been pledged to Aspirity Financial to secure repayment of the Term Loan.

In addition, to signal to the market the change in the Company's focus, we changed our name from “Twin Cities Power Holdings, LLC” to “Aspirity Holdings LLC”, effective July 14, 2015.

The chart below reflects the organizational structure of the Company immediately following the internal reorganization but before the Distribution that completed the Restructuring.

The Distribution

On the Distribution Date, the Distribution of 100% of the equity interests of Enterprises to the owners of the Company, Timothy S. Krieger and Summer Enterprises, LLC (a company controlled by Mr. Krieger), took place, thus effectuating a complete and legal separation of the Legacy Businesses from the Company.

One of the key conditions precedent to the Distribution was obtaining the consent of the holders of our notes. Under the terms of the Indenture, the transfer of “all or substantially all” of the Company assets in a transaction such as the Distribution required the approval of the holders of a majority of the principal amount of the Notes. Accordingly, on June 3, 2015, a proposal was submitted to the 565 holders of the $21,914,968 of Notes outstanding as of May 27, 2015, asking them to approve the transfer of the Legacy Businesses to Mr. Krieger and Summer Enterprises. Noteholders were asked to vote “yes” or “no” to the proposal, with an abstention or a failure to vote counting as a “no”.

Our noteholders approved the proposal by a large margin. The Company received “yes” votes from holders of $15,028,720 in principal amount of notes, representing 68.58% of the total outstanding and 137.13% of the number required to pass the measure. Holders of $202,451 of principal amount voted “no” and holders of $6,683,797 in principal amount did not vote.

Our current organizational structure, following the Distribution and completion of the Restructuring, is presented below.

Summary Pro Forma Financial Information

Unaudited condensed pro forma financial information showing the effects of the Restructuring and Distribution are presented below. This information was derived from the Company’s historical consolidated financial statements and is furnished for informational purposes only. It does not purport to reflect the Company’s financial position and results of operations had the Distribution occurred on the dates indicated.

Further, these financial statements are not necessarily indicative of the Company’s future financial position and future results of operations and should be read in conjunction with the historical financial statements of the Company included in this prospectus for the six months ended June 30, 2015 and the year ended December 31, 2014.

The pro forma balance sheet data assumes the Distribution occurred June 30, 2015, while the statement of operations data for the six months ended June 30, 2015 assumes the Distribution occurred on January 1, 2015. Our historical financial statement data, presented in column A, was adjusted, as presented in Column B, to reflect the Distribution of the equity interests of Enterprises to our members. Enterprises directly or indirectly owned virtually all of our Legacy Businesses. Column C reflects Aspirity on an unconsolidated basis. Following the Distribution, we have determined that we must consolidate Enterprises as a VIE in which we have a non-controlling interest. An assessment of the relationship between the Company and Enterprises following the Distribution was performed because Timothy Krieger is a related party of both Aspirity and Enterprises, and because the entities have an ongoing business relationship resulting from the Term Loan. Aspirity holds a variable interest in Enterprises in the form of the Term Loan, making Enterprises a VIE. Following the Distribution Date, the Company will be the primary beneficiary of the VIE and will consolidate Enterprises. While the Company will include the assets and net income of Enterprises in its consolidated financial statements, the Company does not have rights to those assets other than pursuant to its rights under the Term Loan. Consequently, we have made adjustments, presented in column D, to re-consolidate Enterprises with Aspirity on a pro forma basis as of June 30, 2015 as presented in Column E. See “Critical Accounting Policies-- Variable Interest Entities - Principles of Consolidation.”

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC

Summary Pro Forma Financial Information

	At and For Six Months Ended June 30, 2015
	Historical			Pro Forma (1)
	Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)			Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Balance Sheet Data
Assets
Cash - unrestricted	$	5,082,537		$	919,287		$	4,163,250		$	–		$	5,082,537
Cash in trading accounts		8,481,124			8,481,124			–			–			8,481,124
Accounts receivable - trade		5,392,744			5,377,086			15,658			–			5,392,744
Marketable securities		1,080,837			–			1,080,837			–			1,080,837
Note receivable, net - current portion		1,075,453			1,075,453			–			–			1,075,453
Note receivable - related party (4)		–			1,454,846			–			(1,454,846	)		–
Prepaid expenses & other		492,591			385,862			106,729			–			492,591
Total current assets		21,605,286			17,693,658			5,366,474			(1,454,846	)		21,605,286
Equipment and furniture, net		746,840			746,840			–			–			746,840
Other assets, net		7,495,527			7,187,407			308,120			–			7,495,527
Term Loan (5)		–			–			22,206,113			(22,206,113	)		–
Total assets	$	29,847,653		$	25,627,905		$	27,880,707		$	(23,660,959	)	$	29,847,653

Liabilities and Members' Equity
Accounts payable and accrued expenses	$	7,421,497		$	5,964,648		$	1,456,849		$	–		$	7,421,497
Note payable - related party (4)		–			–			1,454,846			(1,454,846	)		–
Revolver		3,386,255			3,386,255			–			–			3,386,255
Senior notes		1,502,170			1,502,170			–			–			1,502,170
Term Loan (5)		–			22,206,113			–			(22,206,113	)		–
Renewable unsecured subordinated notes		22,206,113			–			22,206,113			–			22,206,113
Total liabilities		34,516,035			33,059,186			25,117,808			(23,660,959	)		34,516,035

Series A preferred equity		2,745,000			–			2,745,000			–			2,745,000
Common equity		(7,133,338	)		(7,133,338	)		–			–			(7,133,338	)
Other comprehensive income		(280,044	)		(297,943	)		17,899			–			(280,044	)
Total members' equity (deficit) attributable to:
Controlling interests (6)		(4,668,382	)		(7,431,281	)		2,762,899			7,431,281			2,762,899
Non-controlling interests in consolidated VIE (6)		–			–			–			(7,431,281	)		(7,431,281	)
Total members' equity		(4,668,382	)		(7,431,281	)		2,762,899			–			(4,668,382	)
Total liabilities and members' equity	$	29,847,653		$	25,627,905		$	27,880,707		$	(23,660,959	)	$	29,847,653

Statement of Operations Data
Total revenue, net	$	25,340,924		$	25,340,924		$	–		$	–		$	25,340,924
Costs and expenses		26,460,238			24,923,926			1,536,312			–			26,460,238
Expense reimbursement		–			1,035,483			(1,035,483	)		–			–
Total costs and expenses		26,460,238			25,959,409			500,829			–			26,460,238
Operating income (loss)		(1,119,314	)		(618,485	)		(500,829	)		–			(1,119,314	)
Interest expense (5)		(1,668,559	)		(1,668,559	)		(1,431,776	)		1,431,776			(1,668,559	)
Interest income (5)		221,815			221,815			1,431,776			(1,431,776	)		221,815
Other income (expense)		583,095			583,095			–			–			583,095
Other income (expense), net		(863,649	)		(863,649	)		–			–			(863,649	)
Net income (loss)		(1,982,963	)		(1,482,134	)		(500,829	)		–			(1,982,963	)
Net income (loss) attributable to:
Controlling interests		–			(1,482,134	)		(500,829	)		1,482,134			(500,829	)
Non-controlling interest in consolidated VIE		–			–			–			(1,482,134	)		(1,482,134	)
Distributions - preferred		(274,536	)		–			(274,536	)		–			(274,536	)
Net income (loss) attributable to common	$	(2,257,499	)	$	(1,482,134	)	$	(775,365	)	$	–		$	(775,365	)
Comprehensive income (loss)	$	(2,409,756	)	$	(1,915,710	)	$	(494,046	)	$	–		$	(2,409,756	)

Notes

1 - Balance sheet data assumes the Distribution occurred on June 30, 2015. Operating statement data assumes the Distribution occurred on January 1, 2015.

2 - Adjustment to record the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity ("VIE") of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the Term Loan.

4 - Reflects due to/due from amounts related to the Distribution.

5 - Reflects the Term Loan and the associated interest expense and income between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

6 - All balances in common equity accounts were assigned to Enterprises while all balances in preferred equity accounts were retained by Aspirity, leaving Aspirity’s common equity accounts with zero balances as of the Distribution Date.

Aspirity’s Current Business

Now that the Restructuring is complete, the Company has operations in two business segments — financial services through Aspirity Financial and retail energy through Aspirity Energy. AENE serves retail customers in the ISONE and NYISO footprints, AEMS serves those in PJM and MISO, and AES serves those in ERCOT.

On the Distribution Date, Mr. Krieger resigned his positions as President and Chief Executive Officer of Aspirity, but remained Chairman of the Board. Mark A. Cohn resigned his position with Apollo and was appointed as President and Chief Executive Officer of Aspirity. Wiley H. Sharp III remained as Vice President and Chief Financial Officer of the Company. Scott C. Lutz and Jeremy E. Schupp resigned their positions with Apollo and were appointed Vice President and Chief Marketing Officer and Vice President and Chief Supply Officer, respectively, of Aspirity. Jeremy Schupp was hired as Aspirity Energy’s new Vice President and Chief Supply Officer. Keith W. Sperbeck and Stephanie E. Staska, formerly Vice President - Operations and Vice President - Risk Management, respectively, resigned as officers of Aspirity and assumed comparable positions at Enterprises.

No provisions of the Existing Notes changed as a result of our Restructuring.

Our common equity capitalization and ownership changed immediately following the Distribution. We now have two classes of common membership units, Class A and Class B. The Class A units have governance and financial rights, while the Class B units have governance rights only. The Class B units will convert automatically into Class A units on a one-for-one basis after the Company achieves a profitable year. If the Company converts to a corporation, all Class A units and Class B units will automatically convert into a single class of common stock.

On the Distribution Date, Messrs. Cohn and Sharp were each awarded 1,654 Class B units, and Messrs. Lutz and Schupp each received 551 Class B units. The Class B units granted to Messrs. Cohn and Sharp vested immediately. The Class B units received by Messrs. Lutz and Schupp are subject to risk of forfeiture if they leave the Company. This risk will terminate with respect to one-third of their units on each of the first three anniversaries of their respective hire dates by the Company, and will vest completely upon the conversion of the Company from a limited liability company to a corporation, or upon a change in control of the Company, if earlier. Mr. Sperbeck also purchased 1,654 Class B units on the Distribution Date.

Immediately following the Distribution, Summer Enterprises distributed all of its Class A units to Mr. Krieger. Mr. Krieger now directly owns all of the 4,960 Class A units, which means he has 100% of the financial rights, but his voting power was diluted to 44.99% as a result of the issuance of the new Class B units on the Distribution Date.

The Company intends at some point to change its corporate form from a Minnesota limited liability company to a Delaware corporation. We anticipate this may occur as early as January 1, 2017, although no assurance can be given that such will be the case.

Business Plans

As a result of the Restructuring, we currently have limited operations and limited assets. We intend to develop and operate new retail energy businesses through Aspirity Energy to provide electricity supply services to retail customers in certain states that permit retail choice. Aspirity Energy and its subsidiaries, as applicable, have begun the process of becoming licensed as retail energy providers in all 14 jurisdictions that allow for full retail choice for all customer classes. We expect most of our licensing processes to be completed by the end of 2015 and that we will be able to offer electricity service beginning late in the 4th quarter of 2015 or early in 2016.

As of the date of this prospectus, Aspirity has five employees and is engaged in extensive hiring efforts to build staff. Until our retail energy business is operational and generating revenue, our primary sources of cash flow will be loan payments received by Aspirity Financial from Enterprises and note sales. In addition to building the Aspirity Energy business, we may also decide to lend additional funds to Enterprises, as well as other companies in the power sector, an industry in which we have significant experience.

Risks Related to the Offering and the Notes

Investing in our notes involves a high degree of risk. While you should carefully review and consider all of the risk factors set forth below under “Risk Factors” before deciding whether to invest in the notes, we view the following as some of the most significant risks of the offering and the notes:

The notes are unsecured and rank junior to all of our future debt. The notes will be subordinated to the prior payment in full of all of our other debt obligations.

The indenture covering the notes contains minimal restrictions on our activities and no financial covenants. In particular, we are not restricted from incurring additional indebtedness, all of which will have priority in payment over the notes, and we are not required to maintain a positive net worth.

We have limited operations and our ability to finance initial and expanded operations will depend in large part on our ability to sell notes. If we fail to successfully build our retail energy business, we may be unable to generate the cash necessary to pay our debts, including the interest or principal payments on the notes as they become due.

We have substantial debt in the form of currently Existing Notes, and our primary source of cash flow is payments we receive from Enterprises on the Term Loan. We are relying in large part on the ability of Enterprises to pay amounts owed under the Term Loan to service our Existing Notes. If Enterprises fails to pay amounts owed when due, or if our business does not provide enough cash to cover all of our liabilities, we may be unable to pay the interest or principal payments on the notes as they become due.

If we incur additional indebtedness or if our business does not provide enough cash to cover all of our liabilities, we may be unable to pay the interest or principal payments on the notes as they become due.

Our financial statements reflect historical operations of the Legacy Businesses and provide little meaningful insight or guidance about the Company as it exists today.

Because Enterprises must be consolidated as a VIE following the Distribution, our consolidated financial statements reflect the assets of Enterprises even though we have no right to access any assets of Enterprises except in connection with our rights under the term loan.

Certain Related Party Transactions

Our largest asset is currently the Term Loan, which is a note receivable from Enterprises. Timothy Krieger, the largest owner of Aspirity, also owns Enterprises.

In connection with the Restructuring, we have entered into transactions with certain of our officers, governors, and members, and their respective affiliates. Details regarding these transactions are set forth below under “Certain Relationships and Related Party Transactions”.

Principal Executive Office

We are headquartered at 701 Xenia Avenue, Suite 475, Golden Valley, Minnesota 55416, telephone (763) 432-1501. This is our only location at the present time.

THE OFFERING

Issuer	Aspirity Holdings LLC, formerly known as Twin Cities Power Holdings, LLC (the “Company” or “Aspirity”).

Trustee	BOKF, NA dba Bank of Oklahoma.

Paying Agent	BOKF, NA dba Bank of Oklahoma.

Securities Offered	Renewable unsecured subordinated notes. The notes represent our unsecured promise to repay principal at maturity and to pay interest during the term or at maturity. By purchasing a note, you are lending money to us without any collateral security.

Method of Purchase	Prior to your purchase of notes, you will be required to complete a subscription agreement that will set forth the principal amount of your purchase, the term of the notes and certain other information regarding your ownership of the notes and your investing experience. The form of subscription agreement is filed as an exhibit to the registration statement of which this prospectus is a part. We will mail you written confirmation that your subscription has been accepted.

Denomination	You may choose the denomination of the notes you purchase in any principal amount of $1,000 or more.

Offering Price	100% of the principal amount per note.

Rescission Right	You may rescind your investment within five business days of the postmark date of your purchase confirmation without penalty. In addition, if we accept your subscription agreement at a time when we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with the Securities and Exchange Commission, but such post-effective amendment has not yet been declared effective, you will be able to rescind your investment subject to the conditions set forth in this prospectus. See “Description of the Notes - Rescission Right” for additional information.

Maturity	You may generally choose maturities for your notes of 3 or 6 months or 1, 2, 3, 4, 5 or 10 years; however, depending on our capital requirements, we may not sell notes of all maturities at all times.

Interest Rate	The interest rates of the notes will be established at the time you purchase them, or at the time of renewal, based upon the rates we are offering in our latest interest rate supplement to this prospectus, and will remain fixed throughout each term. We may offer higher rates of interest to investors with larger note portfolios, as set forth in the then current interest rate supplement.

Interest Payment Dates	You may choose to receive interest payments monthly, quarterly, semiannually, annually or at maturity. If you choose to receive interest payments monthly, you may choose the day on which you will be paid. Subject to our approval, you may change the interest payment schedule or interest payment date once during each term of your notes.

Principal Payment	We will not pay principal over the term of the notes. We are obligated to pay the entire principal balance of the outstanding notes only upon maturity.

Payment Method	Principal and interest payments will be made by direct deposit to the account you designate in your subscription documents.

Renewal or Redemption at Maturity	Upon maturity, the notes will be automatically renewed for the same term at the interest rate we are offering at that time to other investors with similar portfolio amounts for notes of the same maturity, unless we notify you prior to the maturity date that we intend to repay the notes. You may also notify us before, or within 15 days after, the maturity date that you want your note repaid. The 15 day post maturity period will be automatically extended if you would otherwise be required to make the repayment election at a time when we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with the Securities and Exchange Commission, but such post-effective amendment has not yet been declared effective.

	If notes with similar terms are not being offered at the time of renewal, the interest rate upon renewal will be the rate specified by us on or before the maturity date, or if no such rate is specified, the rate of your existing notes. The interest rate being offered upon renewal may, however, differ from the interest rate applicable to your notes during the prior term. See “Description of the Notes - Renewal or Redemption on Maturity”.

Optional Redemption or Repurchase	After giving you 30 days’ prior notice, we may redeem some or all of your notes at a price equal to their original principal amount plus accrued but unpaid interest.

	You or your representative may request us to repurchase your notes prior to maturity; however, unless the request is due to your death or total permanent disability, we may, in our sole discretion, decline to repurchase your notes, and will, if we elect to repurchase your notes, charge you a penalty of up to three months of interest for notes with a three-month maturity and up to six months of interest for all other notes. The total principal amount of notes that we will be required to repurchase prior to maturity, for any reason in any calendar quarter, will be limited to the greater of $500,000 or 1% of the total principal amount of all notes outstanding at the end of the previous quarter. See “Description of Notes - Redemption or Repurchase Prior To Stated Maturity - Repurchase At Request of Holder”.

Consolidation, Merger or Sale	Upon any consolidation, merger in which Aspirity is not the surviving entity, or sale, we will either redeem all of the notes or our successor will be required to assume our obligations to pay principal and interest on the notes pursuant to the indenture for the notes. For a description of these provisions see “Description of the Notes - Consolidation, Merger or Sale”.

Ranking; No Security	The notes are unsecured and rank junior to all of our existing and future debt, other than Existing Notes, which will rank equally in priority for repayment.

	As of August 31, 2015, we had approximately $26,528,460 of debt outstanding, $22,770,910 of which are Existing Notes issued under Original Registration Statement.

Limited Restrictive Covenants	The indenture governing the notes contains very limited restrictive covenants.
	One of these covenants prohibits us from paying distributions to our members if there is an event of default with respect to the notes or if payment of the distribution would result in an event of default. The indenture also provides that the Company’s Board of Directors shall not declare or pay any distributions to its Members if, in the reasonable determination of the Directors, the Company would have insufficient cash to meet anticipated redemption or repayment obligations. The foregoing restriction shall not apply to distributions in respect of taxes payable by the Members based on net income or gains of the Company that have been allocated to the Members. We are not restricted from entering into financing transactions or incurring additional indebtedness. The covenants set forth in the indenture are more fully described under “Description of the Notes - Restrictive Covenants”. These covenants have significant exceptions. We do not plan to issue any debt that is subordinate to the notes.

Use of Proceeds	If all the notes are sold, we would expect to receive up to approximately $50.0 million of net proceeds from this offering after paying the estimated offering expenses of approximately $1,350,000 and accounting for renewals (for which we will receive no cash). The exact amount of net proceeds also may vary considerably depending on how long the notes are offered and other factors. We intend to use the net proceeds for general working capital, to facilitate the growth of our retail energy business, and to make loans to Enterprises and others. See “Use of Proceeds” and “Business - Retail Energy Services”.

Absence of Public Market and Restrictions on Transfers	There is no existing market for the notes. We do not anticipate that a secondary market for the notes will develop. We do not intend to apply for listing of the notes on any securities exchange or for quotation of the notes in any automated dealer quotation system, including without limitation the OTC Bulletin Board or any over-the-counter market. You will be able to transfer or pledge the notes only with our prior written consent. See “Description of the Notes – Transfers”.

Book Entry	The notes will be issued in book entry or uncertificated form only. Except under limited circumstances, the notes will not be evidenced by certificated securities or negotiable instruments. See “Description of the Notes - Book Entry Registration and Transfers”.

SUMMARY PRO FORMA FINANCIAL INFORMATION

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC
Pro Forma Consolidated Balance Sheets

		June 30, 2015
		Historical			Pro Forma (1)
		Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)		Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Assets

Current assets
Cash - unrestricted	$	5,082,537		$	919,287		$	4,163,250	$	–		$	5,082,537
Cash in trading accounts		8,481,124			8,481,124			–		–			8,481,124
Accounts receivable - trade		5,392,744			5,377,086			15,658		–			5,392,744
Marketable securities		1,080,837			–			1,080,837		–			1,080,837
Note receivable, net - current portion		1,075,453			1,075,453			–		–			1,075,453
Note receivable - related party (4)		–			1,454,846			–		(1,454,846	)		–
Prepaid expenses and other current assets		492,591			385,862			106,729		–			492,591
Total current assets		21,605,286			17,693,658			5,366,474		(1,454,846	)		21,605,286
Property equipment and furniture, net		746,840			746,840			–		–			746,840
Other assets
Intangible assets, net		115,057			115,057			–		–			115,057
Deferred financing costs, net		330,724			22,604			308,120		–			330,724
Cash - restricted		1,319,371			1,319,371			–		–			1,319,371
Land held for development		2,069,692			2,069,692			–		–			2,069,692
Note receivable, net - long term portion		1,980,386			1,980,386			–		–			1,980,386
Investment in convertible notes		1,680,297			1,680,297			–		–			1,680,297
Term Loan (5)		–			–			22,206,113		(22,206,113	)		–
Total assets	$	29,847,653		$	25,627,905		$	27,880,707	$	(23,660,959	)	$	29,847,653

Liabilities and Members' Equity
Current liabilities
Current portions of debt
Revolver	$	3,386,255		$	3,386,255		$	–	$	–		$	3,386,255
Senior notes		1,288,408			1,288,408			–		–			1,288,408
Term Loan (5)		–			9,451,231			–		(9,451,231	)		–
Renewable unsecured subordinated notes		9,451,231			–			9,451,231		–			9,451,231
Accounts payable - trade		2,896,781			2,649,990			246,789		–			2,896,779
Accrued expenses		1,099,951			1,099,953			–		–			1,099,953
Accrued compensation		2,190,272			2,190,272			–		–			2,190,272
Accrued interest		1,230,493			24,433			1,206,060		–			1,230,493
Accrued distributions		4,000			–			4,000		–			4,000
Note payable - related party (4)		–			–			1,454,846		(1,454,846	)		–
Total current liabilities		21,547,391			20,090,542			12,362,926		(10,906,077	)		21,547,391

Long term liabilities
Senior notes		213,762			213,762			–		–			213,762
Term Loan (5)		–			12,754,882			–		(12,754,882	)		–
Renewable unsecured subordinated notes		12,754,882			–			12,754,882		–			12,754,882
Total long term liabilities		12,968,644			12,968,644			12,754,882		(12,754,882	)		12,968,644
Total liabilities		34,516,035			33,059,186			25,117,808		(23,660,959	)		34,516,035

Members' equity (deficit)
Series A preferred equity		2,745,000			–			2,745,000		–			2,745,000
Common equity		(7,133,338	)		(7,133,338	)		–		–			(7,133,338	)
Other comprehensive income		(280,044	)		(297,943	)		17,899		–			(280,044	)
Total members' equity (deficit) attributable to:
Controlling interests (6)		(4,668,382	)		(7,431,281	)		2,762,899		7,431,281			2,762,899
Non-controlling interests in consolidated VIE (6)		–			–			–		(7,431,281	)		(7,431,281	)
Total members' equity (deficit)		(4,668,382	)		(7,431,281	)		2,762,899		–			(4,668,382	)
Total liabilities and members' equity	$	29,847,653		$	25,627,905		$	27,880,707	$	(23,660,959	)	$	29,847,653

Notes

1 - Assumes the Distribution of the common equity interests of Enterprises to Aspirity's members occurred on June 30, 2015.

2 - Reflects the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity (“VIE”) of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the Term Loan.

4 - Reflects due to/due from amounts related to the Distribution.

5 - Reflects the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC

Pro Forma Consolidated Statements of Comprehensive Income (Loss)

		Six Months Ended June 30, 2015
		Historical			Pro Forma (1)
		Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)			Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Revenue
Wholesale trading	$	11,772,207		$	11,772,207		$	–		$	–		$	11,772,207
Retail energy services		13,443,717			13,443,717			–			–			13,443,717
Management services		125,000			125,000			–			–			125,000
Total revenue, net		25,340,924			25,340,924			–			–			25,340,924

Costs and expenses
Cost of retail energy sold		12,318,876			12,318,876			–			–			12,318,876
Retail sales and marketing		602,907			602,907			–			–			602,907
Compensation and benefits		9,230,141			9,029,095			201,046			–			9,230,141
Professional fees		1,316,501			1,020,365			296,136			–			1,316,501
Other general and administrative		2,310,553			1,275,070			1,035,483			–			2,310,553
Trading tools and subscriptions		681,260			677,614			3,647			–			681,260
Expense reimbursement		–			1,035,483			(1,035,483	)		–			–
Total costs and expenses		26,460,238			25,959,409			500,829			–			26,460,238
Operating income		(1,119,314	)		(618,485	)		(500,829	)		–			(1,119,314	)

Other income (expense)
Interest expense (4)		(1,668,559	)		(1,668,559	)		(1,431,776	)		1,431,776			(1,668,559	)
Interest income (4)		221,815			221,815			1,431,776			(1,431,776	)		221,815
Gain (loss) on foreign currency exchange		501,109			501,109			–			–			501,109
Realized gain on sale of marketable securities		–			–			–			–			–
Other income		81,986			81,986			–			–			81,986
Other income (expense), net		(863,649	)		(863,649	)		–			–			(863,649	)
Net income (loss)		(1,982,963	)		(1,482,134	)		(500,829	)		–			(1,982,963	)
Net income (loss) attributable to:
Controlling interests		–			(1,482,134	)		(500,829	)		1,482,134			(500,829	)
Non-controlling interest in consolidated VIE		–			–			–			(1,482,134	)		(1,482,134	)
Distributions - preferred		(274,536	)		–			(274,536	)		–			(274,536	)
Net income (loss) attributable to common		(2,257,499	)		(1,482,134	)		(775,365	)		–			(775,365	)

Comprehensive income (loss)
Net income (loss)		(1,982,963	)		(1,482,134	)		(500,829	)		–			(1,982,963	)
Foreign currency translation adjustment		(411,839	)		(411,839	)		–			–			(411,839	)
Change in fair value of cash flow hedges		(21,737	)		(21,737	)		–			–			(21,737	)
Unrealized gain on investment securities		6,783			–			6,783			–			6,783
Comprehensive income (loss)	$	(2,409,756	)	$	(1,915,710	)	$	(494,046	)		–		$	(2,409,756	)

Notes

1 - Assumes the Distribution of the common equity interests of Enterprises to Aspirity's members occurred on January 1, 2015.

2 - Reflects the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity ("VIE") of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the interest on the Term Loan.

4 - Reflects the interest expense and income associated with the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC

Pro Forma Consolidated Statements of Comprehensive Income (Loss)

		Year Ended December 31, 2014
		Historical			Pro Forma (1)
		Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)			Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Revenue
Wholesale trading	$	38,611,944		$	38,611,944		$	–		$	–		$	38,611,944
Retail energy services		11,229,476			11,229,476			–			–			11,229,476
Management services		–			–			–			–			–
Total revenue, net		49,841,420			49,841,420			–			–			49,841,420

Costs and expenses
Cost of retail energy sold		11,440,672			11,440,672			–			–			11,440,672
Retail sales and marketing		324,948			324,948			–			–			324,948
Compensation and benefits		21,722,319			21,577,210			145,109			–			21,722,319
Professional fees		2,487,056			2,220,481			266,575			–			2,487,056
Other general and administrative		6,093,843			4,549,019			1,544,824			–			6,093,843
Trading tools and subscriptions		1,332,804			1,325,655			7,149			–			1,332,804
Expense reimbursement		–			1,544,824			(1,544,824	)		–			–
Total costs and expenses		43,401,642			42,982,809			418,833			–			43,401,642
Operating income		6,439,778			6,858,611			(418,833	)		–			6,439,778

Other income (expense)
Interest expense (4)		(2,293,376	)		(2,293,376	)		(1,968,175	)		1,968,175			(2,293,376	)
Interest income (4)		142,915			142,915			1,968,175			(1,968,175	)		142,915
Gain (loss) on foreign currency exchange		(720,952	)		(720,952	)		–			–			(720,952	)
Realized gain on sale of marketable securities		65,655			–			65,655			–			65,655
Other income		145,164			145,164			–			–			145,164
Other income (expense), net		(2,660,594	)		(2,726,249	)		65,655			–			(2,660,594	)
Net income (loss)		3,779,184			4,132,362			(353,178	)		–			3,779,184
Net income (loss) attributable to:
Controlling interests		–			4,132,362			(353,178	)		(4,132,362	)		(353,178	)
Non-controlling interest in consolidated VIE		–			–			–			4,132,362			4,132,362
Distributions - preferred		(549,072	)		–			(549,072	)		–			(549,072	)
Net income (loss) attributable to common		3,230,112			4,132,362			(902,250	)		–			(902,250	)

Comprehensive income (loss)
Net income (loss)		3,779,184			4,132,362			(353,178	)		–			3,779,184
Foreign currency translation adjustment		661,033			661,033			–			–			661,033
Change in fair value of cash flow hedges		(1,220,022	)		(1,220,022	)		–			–			(1,220,022	)
Unrealized gain on investment securities		5,349			–			5,349			–			5,349
Comprehensive income (loss)	$	3,225,544		$	3,573,373		$	(347,829	)	$	–		$	3,225,544

Notes

1 - Assumes the Distribution of the common equity interests of Enterprises to Aspirity's members occurred on January 1, 2014.

2 - Reflects the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity ("VIE") of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the interest on the Term Loan.

4 - Reflects the interest expense and income associated with the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

RISK FACTORS

Investing in our notes involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding whether or not to invest in the notes. If any of the following risks actually occurs, our business, financial condition, and results of operations would suffer. In that case, we may be unable to pay the interest or repay the principal amounts owed to you under the notes and you might lose all or part of your investment in the notes. The risks described below are not the only ones we face. Additional risks that we currently do not know about or that we currently believe to be immaterial may also impair our business, financial conditions and results of operations.

Risks Related to an Investment in the Notes

The characteristics of the notes, including maturity, interest rate, lack of collateral security or guarantee, and lack of liquidity, may not satisfy your investment objectives.

The notes may not be a suitable investment for you, and we advise you to consult your investment, tax and other professional financial advisors prior to purchasing notes. The characteristics of the notes, including maturity, interest rate, lack of collateral security or guarantee, and lack of liquidity, may not satisfy your investment objectives. The notes may not be a suitable investment for you based on your ability to withstand a loss of interest or principal or other aspects of your financial situation, including your income, net worth, financial needs, investment risk profile, return objectives, investment experience and other factors. Prior to purchasing any notes, you should consider your investment allocation with respect to the amount of your contemplated investment in the notes in relation to your other investment holdings and the diversity of those holdings.

Because the notes rank junior to all of our existing debt (other than Existing Notes) and future debt, and all other financial obligations, your notes will lack priority in payment.

Your right to receive payments on the notes is junior to all of our existing indebtedness (other than Existing Notes) and future borrowings. Your notes will be subordinated to the prior payment in full of all of our other debt obligations. While as of the Distribution Date, we have no senior debt outstanding, we anticipate obtaining financing which will be senior to the notes. As of August 31, 2015, we had approximately $22.8 million of debt in the form of Existing Notes that rank equal to the notes in priority of payment and that would share in any remaining assets after payment of the senior debt. We may also incur substantial additional indebtedness in the future that would also rank senior to your notes. Because of the subordination provisions of the notes, in the event of our bankruptcy, liquidation, or dissolution, our assets would be available to make payments to you under the notes only after all payments had been made on all of our secured and unsecured indebtedness and other obligations that are senior to the notes. Sufficient assets may not remain after all such senior payments have been made to make any payments to you under the notes, including payments of interest when due or principal upon maturity.

Because there will be no trading market for the notes and because transfers of the notes require our consent, it may be difficult to sell your notes.

Your ability to liquidate your investment is limited because of transfer restrictions, the lack of a trading market, and the limitation on repurchase requests prior to maturity. Your notes may not be transferred without our prior written consent. In addition, there will be no trading market for the notes. Due to the restrictions on transfer of the notes and the lack of a market for the sale of the notes, even if we permitted a transfer, you might be unable to sell, pledge, or otherwise liquidate your investment. In any event, the total principal amount of notes that we would be required to repurchase in any calendar quarter, for any reason, will be limited to the greater of $500,000 or 1% of the aggregate principal amount of all notes outstanding at the end of the previous quarter. See “Description of the Notes”.

Because the notes will have no sinking fund, collateral security, insurance, or guarantee, you could lose all or a part of your investment if we do not have enough cash to pay.

There is no sinking fund, collateral security, insurance or guarantee of our obligation to make payments on the notes. The notes are not secured by any of our assets. We will not contribute funds to a separate account, commonly known as a sinking fund, to make interest or principal payments on the notes. The notes are not certificates of deposit or similar obligations of, and are not guaranteed or insured by, any depository institution, the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation, or any other governmental or private fund or entity. Therefore, if you invest in the notes, you will have to rely only on our cash flow from operations and other sources of funds for repayment of principal at maturity or redemption and for payment of interest when due. Our current cash flow is from a single note receivable. This and any future cash flows from operations could be impaired under the circumstances described under “- Risks Related to Our Business.” If our cash flow from operations and other sources of funds are not sufficient to pay any amounts owed under the notes, then you may lose all or part of your investment.

The notes will automatically renew unless you request repayment and the interest rate of the renewed note may be lower.

Upon maturity, the notes will be automatically renewed for the same term as your maturing note and at an interest rate that we are offering at that time to other investors with similar note portfolios for notes of the same term, unless we notify you prior to the maturity date that we intend to repay the notes or you notify us before, or within 15 days after the maturity date that you want your notes repaid. This 15-day period will be automatically extended if you would otherwise be required to make the repayment election at a time when we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with the Securities and Exchange Commission, but such post-effective amendment has not yet been declared effective. If notes with the same term are not then being offered, the interest rate upon renewal will be the rate specified by us on or before the maturity date, or the rate of the existing note if no such rate is specified. The interest rate on your renewed note may be lower than the interest rate of your original note.

Because we have substantial indebtedness, our ability to pay the notes may be impaired.

We have a substantial amount of indebtedness. At June 30, 2015, on a pro forma basis we had approximately $22.2 million of debt outstanding, as shown by the table below:

	June 30, 2015
	Historical		Pro Forma
	Aspirity Holdings Consolidated (A)		Krieger Enterprises (1) (B)		Aspirity Holdings (C)		Adjustments (D)			Aspirity Holdings Re-Consolidated (2) (E=B+C+D)
Revolver	$	3,386,255	$	3,386,255	$	–	$	–		$	3,386,255
Senior notes		1,288,408		1,288,408		–		–			1,288,408
Term Loan (3)		–		9,451,231		–		(9,451,231	)		–
Renewable unsecured subordinated notes		9,451,231		–		9,451,231		–			9,451,231
Total current debt		14,125,894		14,125,894		9,451,231		(9,451,231	)		14,125,894
Senior notes		213,762		213,762		–		–			213,762
Term Loan (3)		–		12,754,882		–		(12,754,882	)		–
Renewable unsecured subordinated notes		12,754,882		–		12,754,882		–			12,754,882
Total long term debt		12,968,644		12,968,644		12,754,882		(12,754,882	)		12,968,644
Total debt	$	27,094,538	$	27,094,538	$	22,206,113	$	(22,206,113	)	$	27,094,538

Notes

1 - Adjustment to record the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity ("VIE") of Aspirity.

2 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the Term Loan.

3 - Reflects the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations under the notes by, among other things:

Increasing our vulnerability to general adverse economic and industry conditions;

Requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing amounts available for working capital, capital expenditures, and other general corporate purposes;

Limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

Placing us at a competitive disadvantage compared to our competitors that have less debt; and

Limiting our ability to borrow additional funds.

There is no assurance that we will be able to generate sufficient cash flow to service this debt and our obligations under the notes. If we do not generate sufficient operating profits, our ability to make required payments on our senior debt, as well as on the debt represented by the notes described in this prospectus, may be impaired.

If we incur substantially more indebtedness that is senior to your notes, our ability to pay the notes may be further impaired.

The indenture for the notes does not prohibit us from incurring additional indebtedness. We may incur substantial additional indebtedness in the future. Any such borrowings would be senior to the notes. If we borrow more money, the risks to noteholders described in this prospectus could be increased.

We can provide no assurance that we will continue to be able to service our debt, and if all of our indebtedness came due at once, we would not be able to pay the full amount.

As of June 30, 2015, we had a members’ deficit balance of $4,668,282 and we recorded a net loss of $2,815,591 and $1,982,963 for the three and six months ended June 30, 2015, respectively, which may increase the risk of us being unable to service our debt.

While we have sufficient assets to pay current liabilities and we expect to have sufficient assets to service our long term indebtedness when due, as of June 30, 2015 we had negative equity. If all of our long term indebtedness came due at once, we would not be able to pay the full amount.

Our management has broad discretion over the use of proceeds from the offering.

We intend to use the net proceeds for general working capital, to build our retail electricity business, to make loans to Enterprises, to possibly make corporate loans to other energy companies or for energy-related purposes, to possibly provide financing for homeowners for energy related purposes, and for other general corporate purposes. While we have provided guidance on our priorities for the use of proceeds, the timing and amount of note sales will impact our actual use of proceeds within the uses identified. Our management will have broad discretion in determining how the proceeds of the offering will be used in each of the identified use categories. See “Use of Proceeds”.

We can provide no assurance that any notes will be sold or that we will raise sufficient proceeds to carry out our business plans.

We are conducting this offering of notes ourselves without any underwriter or placement agent. Although we intend to sell up to $75 million in aggregate principal amount of the notes, there is no minimum amount of proceeds that must be received from the sale of the notes in order to accept proceeds from notes actually sold. Accordingly, we can provide no assurance about the total principal amount of notes that will be sold. Therefore, we cannot assure you that we will raise sufficient proceeds to carry out our business plans. Specifically, we may not be able to fund the development of our retail energy business if sufficient funds are not raised. Accordingly, our inability to raise such proceeds could have a material adverse impact on our business activities, results of operations and financial condition, and may limit our ability to repay amounts owed under the notes.

We will be substantially reliant upon the net offering proceeds we receive from the sale of our notes to meet our liquidity needs.

As a result of the Restructuring, we currently have limited operations and limited assets. We intend to develop and operate new retail energy businesses and have begun the process of becoming licensed as retail energy providers in all 14 jurisdictions that allow for retail choice. We expect most of our licensing processes to be completed by the end of 2015 and that we will be able to offer electricity service beginning in the 4th quarter of 2015. Until our retail energy business is operational and generating revenue, our primary sources of cash flow will be loan payments received by Aspirity Financial from Enterprises and note sales in this offering. In addition to building the Aspirity Energy business, we may also decide to lend additional funds to Enterprises.

Once we are operational, our operations alone may not produce a sufficient return on investment to pay the stated interest rates on the notes and fund our capital needs. We intend to use the net proceeds to fund the development of our retail electricity business, to make loans to Enterprises, to make loans to other energy companies or for energy-related purposes, to provide financing for homeowners for energy related purposes, and for other general corporate purposes, which are likely to include the payment of general and administrative expenses. We may not be able to attract new investors or have sufficient borrowing capacity when we need additional funds to repay principal and interest on your notes or redeem your notes.

Because there are limited restrictions on our activities under the indenture, you will have only limited protection.

The indenture governing the notes contains relatively minimal restrictions on our activities. In addition, the indenture contains only limited events of default other than our failure to timely pay principal and interest on the notes. Because there are only very limited restrictions and limited events of default under the indenture, we will not be restricted from issuing additional debt senior to your notes or be required to maintain any ratios of assets to debt in order to increase the likelihood of timely payments to you under the notes. Further, if we default in the payment of the notes or otherwise under the indenture, you will likely have to rely on the trustee to exercise your remedies on your behalf. You may not be able to seek remedies against us directly. See “Description of the Notes - Events of Default”.

Under the indenture, we will not be required to maintain a positive net worth.

The indenture for the notes offered hereby does not contain any financial covenants relating to our net worth. Accordingly, we will not be required to maintain a positive net worth.

Because we may redeem the notes at any time prior to their maturity, you may be subject to reinvestment risk.

We have the right to redeem any note at any time prior to its stated maturity upon 30 days written notice to you. The notes would be redeemed at 100% of the principal amount plus accrued but unpaid interest up to but not including the redemption date. Any such redemption may have the effect of reducing the income or return on investment that any investor may receive on an investment in the notes by reducing the term of the investment. If this occurs, you may not be able to reinvest the proceeds at an interest rate comparable to the rate paid on the notes. See “Description of the Notes - Redemption or Repurchase Prior To Stated Maturity”.

Under certain circumstances, you may be required to pay taxes on accrued interest on the notes prior to receiving a sufficient amount of cash interest payments to cover such tax liability.

If you choose to have interest on your note paid at maturity and the term of your note exceeds one year, you may be required to pay taxes on the accrued interest prior to our making any interest payments to you. You should consult your tax advisor to determine your tax obligations.

Our cash flows and ability to meet our obligations are largely dependent upon the earnings of our subsidiaries and the payment of such earnings to us in the form of distributions and repayments of loans or advances from us.

Aspirity is a holding company and our obligations are structurally subordinated to existing and future liabilities of our subsidiaries, Aspirity Energy and Aspirity Financial, and their respective subsidiaries. Our cash flows and ability to meet our obligations are largely dependent upon the earnings of our operating subsidiaries and the payment of such earnings to us in the form of distributions and repayments of loans or advances from us. These subsidiaries are separate and distinct legal entities and have no obligation to provide us with funds for our payment obligations. Any decision by a subsidiary to provide us with funds for our payment obligations will depend on, among other things, the subsidiary’s results of operations, financial condition, cash requirements, contractual restrictions, and other factors. In addition, a subsidiary’s ability to pay distributions may be limited by covenants in its future debt agreements or applicable law.

In addition, because Aspirity is a holding company, our obligations to our creditors are structurally subordinated to all existing and future liabilities of our subsidiaries. Therefore, our rights and the rights of our creditors to participate in the assets of any subsidiary in the event that such a subsidiary is liquidated or reorganized are subject to the prior claims of such subsidiary’s creditors. To the extent that we may be a creditor with recognized claims against any such subsidiary, our claims would still be subject to the prior claims of such subsidiary’s creditors to the extent that they are secured or senior to those held by us. Our subsidiaries may incur additional indebtedness and other liabilities.

If our subsidiaries are unable to provide us with funds for our payment obligations, whether by distributions, loans or otherwise, we may not be able to make interest or principal payments to you under the notes.

Our pro forma consolidated financial statements reflect the financial condition and results of operation of Enterprises.

Since we must consolidate Enterprises as a VIE following the Distribution, our pro forma consolidated financial statements include the financial condition and results of operation of Enterprises. See “Critical Accounting Policies - Variable Interest Entities - Principles of Consolidation.”

We do not have access to the assets of Enterprises except pursuant to our contractual rights and obligations with respect to the Term Loan and Enterprises is not a guarantor of the notes. Investors should consider our financial condition in light of these facts and look only to the assets and expected operations of Aspirity in determining whether to invest in the notes.

Risks Related to Our Business

As a result of the recent Restructuring, our only current source of cash flow is payments from Enterprises on the Term Loan and we will be largely dependent upon the timely payment of such obligation to fund payment of our Existing Notes.

We do not expect to have revenue-generating operations until the fourth quarter of 2015 or the first quarter of 2016. Prior to that, we will rely on the timely payment of the Term Loan and on our ability to sell notes in this offering in order to fund our retail energy start-up operations and repay Existing Notes as they come due. We have incurred credit risk, which is the risk of losses if our borrowers do not repay their loans or fail to perform according to the terms of their contracts. We are relying on the ability of Enterprises to pay amounts owed to us under the Term Loan to provide us with the funds necessary to repay our indebtedness on the Existing Notes. If Enterprises fails to pay amounts owed to us when due, or if our business does not provide enough cash to cover all of our liabilities, we may be unable to pay the interest or principal payments on the notes as they become due. Enterprises’ ability to make timely payments on the Term Loan will, at least initially, depend on the wholesale energy trading operations of Enterprises’ subsidiaries, its major debtor, Angell, and the operations of the other legacy businesses. Wholesale energy trading is volatile and unpredictable. While we have obtained security interests to protect repayment, there is always the chance that Enterprises will fail to repay the amounts loaned. In the event amounts owed to us are paid late or not paid, our ability to begin operations and repay notes will be negatively impacted.

Even after we begin generating revenue through our new retail energy business, those operations alone may not produce a sufficient return on investment to pay the stated interest rates on the notes and fund our capital needs. We may be substantially reliant upon the net offering proceeds we receive from the sale of our notes in order to meet our liquidity needs. We may not be able to attract new investors or have sufficient borrowing capacity when we need additional funds to repay principal and interest on your notes or redeem your notes.

As a result of the Distribution, we are in a start-up phase and before we can begin marketing our retail energy services to customers and generating revenue, we will have to apply for and receive the necessary licenses and enter into contracts with suppliers of energy.

We intend to develop and operate new retail energy businesses through Aspirity Energy to provide electricity supply services to retail customers in certain states that permit retail choice. Aspirity Energy and its subsidiaries, as applicable, have begun the process of becoming licensed as retail energy providers in all 14 jurisdictions that allow all retail customer classes to choose their electricity supplier. We expect most of our licensing processes to be completed by the end of 2015 and that we will be able to offer electricity service to consumers beginning in the 4th quarter of 2015 or the first quarter of 2016. We will fund the cost of entering the markets with the proceeds from the notes sold in this offering.

Aspirity Financial may make poor investment choices.

Aspirity Financial will be in the business of lending money to companies and households for energy related purposes, as well as continuing to provide funds to Enterprises and financing our own liquidity needs. There may be conflicting demands for note proceeds from multiple sources. Because Mr. Krieger is both a significant owner of Aspirity and the owner of Enterprises, there may be a conflict of interest in determining how note proceeds are used. In addition, some or all of the parties which borrow from us may be unable to repay their obligations, which would have a material adverse effect on us and our ability to repay the notes.

Risks Related to the Industry

Volatility in prices and consumption could have an adverse effect on our revenues, costs, and results of operations.

Unexpected volatility in prices and constraints in the availability of fuel supplies, particularly natural gas, may have an adverse impact on the cost of the electricity that we sell to our customers. Furthermore, consumption of energy is significantly affected by weather conditions. Typically, colder-than-normal winters and hotter-than-normal summers create higher demand and consumption for natural gas and electricity, respectively, and conversely, milder than normal weather may reduce the demand for energy. Natural gas prices also affect the cost of electricity as it is the fuel of choice for marginal generation requirements. As a result of these factors, we may be unable to correctly forecast the precise amount of energy our customers require and therefore put appropriate hedges in place. We expect to manage our exposure to movements in wholesale energy prices by hedging and forward purchases. The instruments we will use are principally physical forward contracts and registered derivative contracts. In addition, we may buy put and call options as hedges against unfavorable fluctuations in market prices. However, deviations between forecasted and actual customer usage, or “volumetric risk”, impacts us by reducing or increasing revenues and gross margins from expected results and may also impact our hedging program by causing an under- or over-hedged situation since we remain subject to commodity risk for any differences between the actual quantities used by our customers and the forecasted quantities upon which our hedging is based. Furthermore, although we are able to hedge certain of the market risks we face, others cannot be hedged.

Finally, we may not always choose to pass along increases in costs in order to maintain overall customer satisfaction and this action would have an adverse impact on our margins and results of operations. Alternatively, volatility in pricing related to the cost of energy may make it difficult for us to attract customers or lead to increased customer attrition. Changes in these factors, as well as others, could have an adverse effect on our revenues, profitability, and growth, or threaten the viability of our current business model.

We are exposed to market risk in our normal business activities.

Market risk is the potential loss that may result from changes associated with an existing or forecasted financial or commodity transaction. The types of market risks we are exposed to are commodity price risk, interest rate risk, liquidity risk, credit risk and currency exchange risk. In order to manage these risks we may use various fixed-price forward purchase and sales contracts, futures and option contracts, and swaps and options traded in the over-the-counter financial markets. See “MD&A - Quantitative and Qualitative Disclosures about Market Risk”.

We face risks that are beyond our control due to our reliance on third parties and on the electrical power and transmission infrastructure within the U.S.

Our ability to provide energy to our customers depends on the successful and reliable operations and facilities of third parties such as generators, wholesale suppliers, the ISOs, and energy distribution companies. The loss of use or destruction of third party facilities used to generate, transmit, and distribute electricity due to extreme weather conditions, breakdowns, war, acts of terrorism, or other occurrences could greatly reduce our potential earnings and cash flows.

The retail energy business is highly competitive.

We will compete based on value added, price, provision of services, and customer service. Increasing our market share depends in part on our ability to persuade customers to switch to our services. Our retail energy business faces substantial competition both from incumbent utilities as well as from other retail providers, including affiliates of utilities in specific territories. Utilities and other more established competitors have certain advantages such as name recognition, financial strength, and long-standing relationships with customers. Additionally, overall customer demand for electricity may decrease if the prevalence of residential solar panel systems increases. The use of solar panel systems to generate power may allow residential customers to decrease their electricity consumption from providers like us or eliminate it altogether. Persuading potential customers to switch to a new supplier of such important services is challenging. As a result, we may be forced to reduce prices or incur increased costs to gain market share, and we may not always be able pass along increases in commodity costs to customers. Existing or future competitors may have greater financial, technical, or other resources which could put us at a disadvantage. If we are not successful in convincing customers to switch, our business, results of operations, and financial condition will be adversely affected.

Our growth depends on our ability to enter new markets.

We evaluate new markets for our business based on many factors, including the regulatory environment and our ability to procure energy to serve customers in a cost-efficient manner. We may expend substantial effort to obtain required licenses and connections with local distribution companies. Furthermore, there are regulatory differences between the markets that we currently operate in and new markets, including, but not limited to, exposure to credit risk, additional churn caused by tariff requirements, rate-setting requirements, and incremental billing costs. We may also incur significant customer acquisition costs and while we seek to purchase wholesale energy in transparent markets that reflect fair prices, there can be no assurance that we will be successful.

We are currently seeking licenses as a competitive retail supplier in the 14 jurisdictions that allow choice of electricity supplier for all customer classes. There is no guarantee that we will be able to successfully obtain these licenses and a failure to do so will adversely affect our ability to start and then grow our retail energy business. Additionally, there is no guarantee that additional states and territories in the U.S. will implement retail choice in the future.

Unfair business practices or other activities of our competitors may adversely affect us.

Competitors in the retail market may engage in unfair business practices to sign up new customers, which may create an unfavorable impression about the industry on consumers or with regulators. Such unfair practices by other companies can adversely affect our ability to grow or maintain our customer base. The successes, failures, or other activities of our competitors within the markets that we serve may impact how we are perceived in the market.

Our operating strategy is based on current regulatory conditions and assumptions, which could change or prove to be incorrect.

Since the passage of PURPA in 1978, regulation of the energy markets has been in flux at both the federal and state levels. In particular, any changes adopted by FERC, or changes in state or federal laws or regulations, including environmental laws, may affect the prices at which we purchase energy for our customers. We may not always be able to pass these costs on to our customers due to competitive market forces and the risk of losing our customer base. In addition, regulatory changes may impact our ability to use different sales and marketing channels. Changes in these factors, as well as others, could have an adverse effect on our revenues, profitability, and growth or threaten the viability of our current business model.

Changes in certain programs in which we plan to participate could disrupt our operations and adversely affect our results.

Certain programs required by state regulators have been implemented by utilities in many of the service territories in which we intend to operate, one of which is purchase of receivables or POR. These programs are important to our control of bad debt risk. In the event that POR programs were to be revised or eliminated by state regulators or individual utilities, we would need to adjust our current strategy regarding customer acquisition and our focus on the growth of our customer base. We would also need to adjust our current business plan to reduce our exposure to existing customers who may pose a bad debt risk. Any failure to properly respond to changing conditions could adversely affect our results of operations and profitability. See “Business - Retail Energy Services - Retail Credit Risk Management”.

Our retail energy business depends on obtaining and maintaining licenses in the states in which we will operate and any loss of such would adversely affect our business, prospects and financial condition.

We require licenses from public utility commissions and other regulatory organizations to operate our business. These agencies impose various requirements to obtain or maintain licenses. Further, certain non-governmental organizations have been focusing on the retail energy industry and the treatment of customers by certain of our competitors. Any negative publicity regarding the industry in general and us in particular could negatively affect our relationship with various commissions and regulatory agencies and could negatively impact our ability to obtain new licenses to expand operations or maintain the licenses currently held. Any loss of our licenses would cause a negative impact on our results of operations, financial condition, and cash flow.

The retail energy business is subject to ongoing complex governmental regulations and legislation that have impacted, and may in the future impact, our businesses and results of operations.

State, federal and local rules and regulations affecting the retail energy business are subject to change, which may adversely impact our business model. Our costs of doing business may fluctuate based on these regulatory changes. For example, many electricity markets have rate caps, and changes to these rate caps by regulators can impact future price exposure. Similarly, regulatory changes can result in new fees or charges that may not have been anticipated when existing retail contracts were drafted, which can create financial exposure. For example, mandates to purchase a certain quantity or type of electricity capacity can create unanticipated costs. Our ability to manage cost increases that result from regulatory changes will depend, in part, on how the “change in law provisions” of our contracts are interpreted and enforced, among other factors.

Operators of systems providing for the delivery of natural gas and electricity maintain detailed tariffs that are kept on file with regulators. These tariffs and market rules applicable to operators are often very long and complex, and often are subject to service provider proposals to change them. We may not be able to prevent adoption of adverse tariff changes. Users of energy delivery systems also have rules and obligations applicable to them that are established by regulators. For instance, transactions involving a shipper’s release of interstate pipeline capacity are subject to regulation at the federal level. Our failure to abide by tariffs, market rules, or other delivery system rules may result in fines, penalties, and damages.

We are also subject to regulatory scrutiny in all of our markets that can give rise to compliance fees, licensing fees, or enforcement penalties. Regulations vary widely in the markets in which we operate, and these regulations change from time to time. Failure to follow prescribed regulatory guidelines could result in customer complaints and regulatory sanctions.

In addition, regulators are continuously examining certain aspects of our industry. For example, a number of public utility commissions in the northeast are investigating the impact of the harsh weather conditions during the 2013-2014 winter season on consumers in their territories due to the number of consumer complaints attributable to high bills for the winter season and are urging FERC to investigate circumstances during that period in wholesale energy markets. This heightened regulatory scrutiny resulted in additional obligations on retailers in various markets to provide more detailed disclosures to consumers as well as additional and more stringent requirements on notifying customers when their fixed contract converts to variable pricing. These new regulations could adversely affect our customer attrition rates and cause us to incur higher compliance costs. To the extent any of these commissions takes further regulatory action to address these complaints, such as imposing limits on products, services, rates or other business limitations, our business prospects in these regions could be materially adversely affected.

Finally, door-to-door marketing and outbound telemarketing may become a significant part of our marketing efforts. Each of these channels is continually under scrutiny by state and federal regulators and legislators. Additional regulation or restriction of these marketing practices could negatively impact our customer acquisition plan, and therefore our financial results and our ability to pay the notes.

We need substantial liquidity to operate our business.

Our retail energy business involves entering into contracts to purchase large quantities of electricity on an hourly basis. In general, the ISOs with which we do business require payment for the energy we purchase on a weekly or twice-weekly basis. In some markets, we are also required to buy capacity and certain ancillary services on a monthly basis, and in all cases, we are required to provide such markets with financial assurance, typically in the form of cash in an amount equal to 60 to 75 days’ worth of such purchases. However, we only receive payment from our customers on a monthly basis. Consequently, we require a substantial amount of liquidity and capital to both satisfy our payables and carry our receivables. While we intend to enter into agreements with wholesale electricity suppliers to purchase power from them upon terms more favorable than that of the ISOs, such agreements may not fulfill all our requirements, and there can be no assurance that we will be successful in finding trade financing of such type.

Historically, we have funded our operations through borrowings from related and unrelated parties and internally generated cash flows. Beginning in May 2012, we began a direct public offering of our Renewable Unsecured Subordinated Notes and to August 31, 2015, we have raised $28,432,726 through new note sales, of which $22,770,910 was outstanding as of that date. The notes offered hereby also supply us with liquidity to operate and grow our retail energy business. However, we may not be able to obtain sufficient funding for our future operations from such source to provide us with necessary liquidity. Difficulty in obtaining adequate credit and liquidity on commercially reasonable terms may adversely affect our business, prospects, and financial condition.

We could be harmed by network disruptions, security breaches, or other significant disruptions, or failures of our information technology infrastructure and related systems.

We face the risk, as does any company, of a breach of the security of, and unauthorized access to, our information systems, whether through cyber-attack, malware, computer viruses, or sabotage. Furthermore, the secure maintenance and transmission of information between us and our third party service providers is a critical element of our operations. If our information security were to be breached, our information and that of our customers may be lost, disclosed, accessed, or taken without our consent. Although we make significant efforts to maintain the security and integrity of our information systems, there can be no assurance that our efforts and measures will be effective or that attempted breaches or disruptions would not be successful or damaging, especially in light of the growing sophistication of cyber-attacks and intrusions. We may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures.

Network disruptions, security breaches, and other significant failures of the information systems upon which we depend could: (a) disrupt the proper functioning of our operations; (b) result in unauthorized access to, and destruction, loss, theft, misappropriation, or release of our proprietary, confidential, sensitive, or otherwise valuable information, including trade secrets, which others could use to compete against us or for disruptive, destructive, or otherwise harmful purposes and outcomes; (c) require significant management attention and financial resources to remedy the resulting damage or change to our systems; (d) result in a loss of business or damage to our reputation; or (e) expose us to litigation, any or all of which could have a negative impact on our results of operations, financial condition, and cash flows.

Shortcomings or failures in our systems, risk management methodology, internal control processes, or people could lead to disruption of our business, financial loss, or regulatory intervention.

We rely on our internal control systems and risk management methodologies to protect our operations from, among other things, improper activities by individuals within our organization. Shortcomings or failures in our systems, risk management methodology, internal control processes, or people could lead to disruption of our business, financial loss, or regulatory intervention.

If we lose key personnel, our results of operations may be impaired.

We are dependent on the services of our senior management because of their knowledge of the industry and our business. The loss of one or more of these key employees could seriously harm our business. It may be difficult to find a replacement with the same or similar level of knowledge. Competition for these types of personnel is high, and we may not be able to attract and retain qualified personnel on acceptable terms. Failure to recruit and retain such personnel could adversely affect our business, financial condition, results of operations and planned growth.

USE OF PROCEEDS

We expect to incur approximately $2,547,611 in expenses to offer the notes pursuant to this prospectus. The net proceeds we receive from this offering will be equal to the cash we receive from the principal amount of the notes we sell, less our offering expenses. Because renewals of the notes will be treated as additional sales of notes that reduce the aggregate amount of registered securities available for sale, and we will receive no additional proceeds from such renewals, we have based our use of proceeds on the estimated maximum net proceeds we will receive from the initial sale of renewable notes. If all of the notes are sold, and the rate of note renewals remains consistent with our historic levels since 2012, we would expect to receive approximately $50 million of net proceeds from this offering after payment of estimated offering expenses.

The exact amount of net proceeds may vary considerably depending on how long the notes are offered, the rate of note renewals, our advertising and marketing expenses, and other factors. Also, we will not receive the net proceeds in a single closing, and will use the proceeds as we sell notes.

We expect to apply the net proceeds to the following corporate purposes, listed in order of priority with the expected level of expenditure being detailed in the table that follows:

General working capital: will be used to fund our start-up operations and will likely include the payment of general and administrative expenses, such as salaries for the personnel necessary to begin operations;

Retail energy customer list acquisitions: one way we intend to build our retail energy business through Aspirity Energy and its operating subsidiaries;

Commercial energy financings: Aspirity Financial will make commercial loans to businesses operating in the energy industry, including making additional loans to Enterprises, probably of at least $5,000,000;

Retail energy entity acquisitions: another way we may build our retail energy business although we have no current targets; and

Consumer financing: Aspirity Financial may make loans to individuals and households, however this will not begin until after we have our retail energy operations established, if at all.

The following table summarizes the above information regarding our intended use of net proceeds, and sets forth our expected allocation of the net proceeds if we raise less than the maximum amount:

Net Offering Proceeds

Use of proceeds	Dollars		Percent		Dollars		Percent		Dollars		Percent
General working capital	$	7,500,000		15%	$	4,000,000		16%	$	3,000,000		20%
Retail energy customer list acquisitions		10,000,000		20%		5,000,000		20%		4,000,000		27%
Commercial energy financings		20,000,000		40%		10,000,000		40%		5,000,000		33%
Retail energy entity acquisitions		10,000,000		20%		5,000,000		20%		3,000,000		20%
Consumer financing		2,500,000		5%		1,000,000		4%		–		0%
Total	$	50,000,000		100%	$	25,000,000		100%	$	15,000,000		100%

DISTRIBUTION POLICY

Aspirity and its subsidiaries have paid distributions on their membership units in the past. Prior to the Distribution, Timothy S. Krieger and Summer Enterprises, LLC, which is controlled by him, were the only members. Any future determination to pay distributions will be at the discretion of our Board of Directors and will depend on various factors, including our results of operations, financial condition, capital requirements, contractual restrictions, outstanding indebtedness, investment opportunities, and other factors that our Board of Directors deems relevant. The indenture governing the notes prohibits us from paying distributions to our members if there is an event of default with respect to the notes or if payment of the distribution would result in an event of default. The indenture also prohibits our Board of Directors from declaring or paying any distributions other than tax distributions if, in the reasonable determination of the Directors, the Company would have insufficient cash to meet anticipated redemption or repayment obligations.

Separate from any such discretionary operating distributions, our Operating Agreement requires our Board of Directors to make quarterly distributions of cash to our members based upon their respective ownership interests in the amount necessary to permit each member who is in the highest income tax bracket to pay all state and federal taxes on our net income allocated to such member and to make regular quarterly distributions in respect of our Series A Preferred Units. We are taxed as a partnership for income tax purposes, which means that all of our income or loss for each fiscal year is allocated among our members who possess financial rights, who are then personally responsible for the tax liability associated with such income. We do not pay income taxes as a partnership but we do make tax distributions to our members, as described above, to cover their income tax liability attributable to our income. The holder of our Series A Preferred Units is entitled to distributions out of legally available funds in the amount of $92.25 per unit per month.

The following table sets forth historical information regarding distributions paid to our members for the periods indicated:

	Series A Preferred Units						Common Units
Year / Name of Member	Distributions received		Units held		Percent of class		Distributions received		Units held		Percent of class
Year ending December 31, 2013
Timothy S. Krieger (1)	$	549,036		496		100%	$	3,491,890		4,960		100%
Total	$	549,036		496		100%	$	3,491,890		4,960		100%

Year ending December 31, 2014
Timothy S. Krieger (1)	$	549,072		496		100%	$	4,726,730		4,960		100%
Total	$	549,072		496		100%	$	4,726,730		4,960		100%

Six months ending June 30, 2014
Timothy S. Krieger (1)	$	274,536		496		100%	$	3,073,080		4,960		100%
Total	$	274,536		496		100%	$	3,073,080		4,960		100%

Six months ending June 30, 2015
Timothy S. Krieger (1)	$	274,536		496		100%	$	4,678,213		4,960		100%
Total	$	274,536		496		100%	$	4,678,213		4,960		100%

____________________
(1) - Includes distributions paid to Summer Enterprises, LLC, an entity owned and controlled by Mr. Krieger.

On the Distribution Date, we made the Distribution of 100% of the membership interests of Enterprises to our members, Timothy S. Krieger and Summer Enterprises, LLC. Immediately following the Distribution, Summer Enterprises, LLC distributed its membership units to Mr. Krieger.

We do not expect to pay distributions in the foreseeable future, except required tax distributions and distributions on the Series A Preferred Units.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion (the “MD&A”) should be read in conjunction with the information under our audited annual consolidated financial statements and related notes and other financial data included in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

Important Note Regarding Recent Restructuring

On the Distribution Date, the Company completed a significant Restructuring by distributing 100% of the equity interests of Enterprises to its members. Enterprises was a first tier, wholly owned subsidiary of the Company, which held nearly all of the Company’s business operations. The details of the Restructuring are described above in the Executive Summary. See “Prospectus Summary – Recent Restructuring” for a full description.

While we no longer have an ownership interest in Enterprises and its subsidiaries, an assessment of the relationship between the Company and Enterprises following the Distribution was performed because Timothy Krieger is a related party of both Aspirity and Enterprises, and because the entities have an ongoing business relationship resulting from the Term Loan. Aspirity holds a variable interest in Enterprises in the form of the Term Loan, making Enterprises a VIE. Following the Distribution Date, Aspirity will be the primary beneficiary of the VIE and will consolidate Enterprises. While the Company will include the assets and net income of Enterprises in its consolidated financial statements, the Company does not have rights to those assets other than pursuant to its rights under the Term Loan. We will reevaluate the status of Enterprises as a VIE on a regular basis. See “Critical Accounting Policies – Variable Interest Entities.

Much of the discussion that follows focuses on our operations prior to the Restructuring. Our financial condition and operations will be significantly different from prior periods because we have distributed all of our Legacy Businesses. We no longer have any wholesale trading activities, which historically accounted for 46.5%, 74.0%, and 76.5% of our total revenues for the six months ended June 30, 2015 and the years ended December 31, 2014 and 2013, respectively. While we expect to begin new retail energy service activities within the next six months, our historical financial statements reflect the results from the operations of our former retail energy service activities through REH, which we no longer own or operate.

Prior to the Restructuring, the Company’s name was Twin Cities Power Holdings, LLC and its active first tier subsidiaries consisted of Apollo, TCP, CTG, Cygnus, REH, and Cyclone. These subsidiaries operated in three major business segments – wholesale trading, retail energy services, and diversified investments. As part of the Restructuring, the Company has exited these Legacy Businesses.

The Company is now in the process of beginning operations in two business segments - retail energy, which we will operate through Aspirity Energy and its subsidiaries – AENE, AEMS and AES – and financial services, which we will operate through Aspirity Financial. AENE will serve retail customers in the ISONE and NYISO footprints, AEMS will serve those in PJM and MISO, and AES will serve those in ERCOT.

Until we are able to generate revenue from our new Aspirity Energy operations, our cash flows will be derived almost entirely from payments we receive from Enterprises on the Term Loan and the sale of notes in this offering.

Operations Prior to the Restructuring

Prior to the Restructuring, the Company traded financial and physical electricity contracts in North American wholesale markets regulated by FERC and operated by ISOs and RTOs, traded energy derivative contracts on exchanges regulated by the CFTC, including ICE, NGX, and CME, provided electricity supply services to retail customers in certain states that permit retail choice, and was engaged in certain asset management activities, including real estate development and investments in privately held businesses. Consequently, we used to have three major business segments used to measure our activity – wholesale trading, retail energy services, and diversified investments.

Wholesale Trading

In general, the Company’s trading activities, which were done through TCP, CTG, and Cygnus, were characterized by the acquisition of electricity or other energy-related commodities at a given location and its delivery to another. Financial transactions settle in cash in an amount equal to the difference between the purchase and sale prices, while physical transactions are settled by the delivery of the commodity. The ISO-traded financial contracts known as “virtuals”, i.e., INCs, DECs, and UTCs, are outstanding overnight, and settle the next day. FTRs are also offered by the ISOs and may be outstanding overnight or longer. The Company also traded electricity and other energy derivatives on ICE, NGX, and CME.

For the six months ended June 30, 2015 and 2014 and the years ended December 31, 2014 and 2013, financial and virtual electricity represented 100% of our total trading volume in FERC-regulated markets, that is, we traded no physical power during these periods in our wholesale segment.

We no longer own TCP, CTG, or Cygnus and we do not intend to engage in wholesale trading.

Retail Energy Services

On June 29, 2012, we acquired certain assets and the business of a small retail energy supplier serving residential and small commercial markets in Connecticut, and beginning on July 1, 2012, the Company began selling electricity to retail accounts. During late 2012 and early 2013, we applied for retail electricity supplier licenses for the states of Massachusetts, New Hampshire, and Rhode Island which were issued on various dates in 2013. On January 2, 2014, we acquired a retail energy business licensed by the states of Maryland, New Jersey, Pennsylvania, and Ohio. The eight states in which our former subsidiary, REH, was licensed incorporated the service territories of 33 investor-owned electric utilities and as of June 30, 2015, REH was actively marketing its services in 19 of these.

Following the Restructuring, we no longer own REH and are not presently operating as a retail energy supplier. However, we intend to compete in this business as soon as Aspirity Energy has received the necessary licenses and has established the necessary relationships with utilities.

Diversified Investments

On October 23, 2013, we formed Cyclone as a wholly-owned subsidiary to take advantage of certain perceived investment opportunities present in the residential real estate market. Specifically, we acquired and intended to develop land for resale, either as improved sites for construction of single- and multi-family homes or as completed dwellings. Properties owned by Cyclone include Fox Meadows Townhome Project, Territory House Project, and the Texas Avenue Project. At various dates during 2014, we also acquired certain privately placed securities for long term investment purposes.

We no longer own Cyclone and do not intend to engage in these types of diversified investment activities in the future.

In connection with the Restructuring, the Company transferred the Series C Convertible Promissory Notes of Ultra Green Packaging, Inc. to Enterprises.

Derivative Instruments

In our wholesale operations, we used derivative contracts for trading purposes, seeking to profit from perceived opportunities driven by expected changes in market prices. These contracts include exchange-traded instruments such as futures contracts, which are Level 1 instruments in the fair value hierarchy as well as FTRs available through certain FERC-regulated markets, which we consider to be Level 3 instruments as they are not regularly quoted. See “Notes to Consolidated Financial Statements - 8. Fair Value Measurements” for additional information.

In our retail energy business, we are exposed to volatility in the cost of energy acquired for sale to customers, and as a result, we used derivatives to hedge or reduce this variability. Our retail operations follow GAAP guidance that permits “hedge accounting”. To qualify for hedge accounting, the relationship between the “hedged item” - say power purchases for a given delivery zone - and a derivative used as a “hedging instrument” - say, a swap contract for future delivery of electricity at a related hub - must meet extensive documentation requirements and hedge effectiveness and ineffectiveness must be assessed and measured on an on-going basis. For these derivatives “designated” as cash flow hedges, the effective portion of any change in the hedging instrument’s fair value is recorded as other comprehensive income and deferred until the change in value of the hedged item is recognized in earnings. Our risk management policies also permit the use of undesignated derivatives which we refer to as “economic hedges”. For an undesignated economic hedge, all changes in the derivative financial instrument’s fair value are recognized currently in revenues.

The table below details the open derivative contracts we held for trading purposes, as undesignated, economic hedges by our retail segment, and as cash flow hedges by our retail segment as of June 30, 2015 and December 31, 2014:

Open Derivative Contracts Held for Trading

Fair Value

Date, segment and contract type

Hub or zone

Delivery period

Final settlement

Energy
(MWh)

Asset

Liability

As of June 30, 2015

Wholesale Trading

Electricity futures

PJM West Hub

Q3 2015

various

6,400

–

13,000

Electricity futures

AESO

Q3 2015

various

23,680

180,752

559,161

Electricity futures

AESO

Q4 2015

various

32,520

222,967

236,410

Electricity futures

AESO

Q1 2016

various

7,440

47,176

50,900

Electricity futures

AESO

Q2 2016

various

25,560

45,269

221,088

Electricity futures

AESO

Q3 2016

various

22,080

384,373

145,531

Electricity futures

AESO

Q4 2016

various

22,080

158,426

136,321

Subtotal

139,760

1,038,963

1,362,411

Retail Energy Services - Economic Hedges

Electricity futures

PJM West Hub

Q3 2015

various

24,880

–

239,492

Electricity futures

PJM West Hub

Q4 2015

various

20,085

–

115,277

Subtotal

44,965

–

354,769

Retail Energy Services - Designated Cash Flow Hedges

Electricity futures

ISO-NE Mass Hub

Q3 2015

various

58,080

–

867,492

Electricity futures

ISO-NE Mass Hub

Q4 2015

various

3,872

–

17,653

Subtotal

61,952

–

885,145

Totals

246,677

1,038,963

2,602,325

As of December 31, 2014

Wholesale Trading

Electricity futures

PJM West Hub

daily

6,400

22,400

–

FTR’s

MISO, NYISO, PJM

Q1 & Q2 2015

various

8,981,440

1,435,819

–

Electricity futures

AESO

Q1 2015

various

80,320

785,617

286,250

Electricity futures

AESO

Q2 2015

various

135,600

892,838

1,094,059

Electricity futures

AESO

Q3 2015

various

78,120

601,993

783,893

Subtotal

9,281,880

3,738,667

2,164,202

Retail Energy Services - Economic Hedges

Electricity futures

ISO-NE Mass Hub, PJM West Hub

Q1 2015

various

3,715

–

44,373

Electricity futures

PJM West Hub

Q2 2015

various

14,280

–

107,120

Natural gas futures

Henry Hub

Q2 2015

various

155,000

14,803

–

Electricity futures

PJM West Hub

Q3 2015

various

16,240

31,926

65,196

Natural gas futures

Henry Hub

Q3 2015

various

77,500

1,085

–

Electricity futures

PJM West Hub

Q4 2015

various

21,285

–

175,971

Subtotal

288,020

47,814

392,660

Retail Energy Services - Designated Cash Flow Hedges

Electricity futures

ISO-NE Mass Hub

Q1 2015

various

13,995

–

498,166

Electricity futures

ISO-NE Mass Hub

Q2 2015

various

16,120

–

184,378

Electricity futures

ISO-NE Mass Hub

Q3 2015

various

18,480

15,732

189,116

Electricity futures

ISO-NE Mass Hub

Q4 2015

various

352

–

7,480

Subtotal

48,947

15,732

879,140

Totals

9,618,847

3,802,213

3,436,002

The table below details our open derivative contracts held for trading purposes, as undesignated, economic hedges by our retail segment, and as cash flow hedges by our retail segment as of December 31, 2013:

Open Derivative Contracts

As of December 31, 2013

						Fair Value
Segment and contract type	Hub or zone	Delivery period	Final settlement	Energy (MWh)		Asset		Liability
*Wholesale Trading*
Electricity futures	PJM West Hub	Q4 2013	various		23,200	$	–	$	55,448
Electricity futures	AESO	Q1 2014	various		60,600		614,592		631,708
Subtotal					83,800		614,592		687,156

*Retail Energy Services - Economic Hedges*
Electricity futures	ISO-NE Mass Hub, NYISO Zone G, and PJM West Hub	Q1 2014	various		22,200		60,226		36,724
Electricity futures	PJM West Hub	Q2 2014	various		5,120		1,932		7,660
Electricity futures	PJM West Hub	Q3 2014	various		5,120		40,856		4,872
Electricity futures	PJM West Hub	Q4 2014	various		5,120		–		21,416
Subtotal					37,560		103,014		70,672


*Retail Energy Services - Designated Cash Flow Hedges*
Electricity futures	ISO-NE Mass Hub	Q1 2014	various		12,200		289,338		–
Electricity futures	ISO-NE Mass Hub	Q2 2014	various		8,560		2,436		24,564
Electricity futures	ISO-NE Mass Hub	Q3 2014	various		5,120		11,588		251
Electricity futures	ISO-NE Mass Hub	Q4 2014	various		6,880		113,948		35,880
Subtotal					32,760		417,310		60,695
Totals					154,120	$	1,134,916	$	818,523

Results of Operations

Six Months Ended June 30, 2015 and 2014

The following table sets forth selected financial data for the periods indicated, which has been derived from the consolidated financial statements included in this report:

	For the Six Months Ended June 30,
Dollars in thousands	2015					2014					Increase (decrease)
	Dollars			Percent		Dollars			Percent		Dollars			Percent
Revenue
Wholesale trading revenue, net	$	11,772			46.5%	$	31,326			85.9%	$	(19,554	)		-62.4%
Retail electricity revenue		13,444			53.1%		5,127			14.1%		8,317			162.2%
Management services		125			0.5%		–			0.0%		125			na
Net revenue		25,341			100.0%		36,453			100.0%		(11,112	)		-30.5%

Operating costs & expenses
Cost of retail electricity sold		12,319			48.6%		6,267			17.2%		6,052			96.6%
Retail sales & marketing		603			2.4%		151			0.4%		452			299.3%
Compensation & benefits		9,230			36.4%		13,862			38.0%		(4,632	)		-33.4%
Professional fees		1,317			5.2%		1,559			4.3%		(242	)		-15.5%
Other general & administrative		2,310			9.1%		1,669			4.6%		641			38.4%
Trading tools & subscriptions		681			2.7%		629			1.7%		52			8.3%
Total operating expenses		26,460			104.4%		24,137			66.2%		2,323			9.6%
Operating income (loss)		(1,119	)		-4.4%		12,316			33.8%		(13,435	)		-109.1%

Interest expense		(1,669	)		-6.6%		(982	)		-2.7%		(687	)		70.0%
Interest income		222			0.9%		56			0.2%		166			296.4%
Loss on foreign currency exchange		501			2.0%		(261	)		-0.7%		762			192.0%
Other income		82			0.3%		3			0.0%		79			2633.3%
Other expense, net		(864	)		-3.4%		(1,184	)		-3.2%		320			-27.0%
Net income (loss)		(1,983	)		-7.8%		11,132			30.5%		(13,115	)		-117.8%

Preferred distributions		(275	)		-1.1%		(275	)		-0.8%		–			0.0%
Net income (loss) attributable to common	$	(2,258	)		-8.9%	$	10,857			29.8%	$	(13,115	)		-120.8%

Wholesale trading revenue: Market conditions during the first half of 2015 were characterized by slightly cooler than normal weather, with 152 more heating degree-days than normal, an average temperature of 49.5°F versus a normal of 49.6°F, and cheaper than normal natural gas, down about 3% to $2.82/MCF versus the 5 year average of $3.85/MCF.

The first six months of 2015 was warmer than the same period in 2014. Heating degree-days for the U.S. in the first half of 2015 totaled 2,816 or 5% below 2014’s figure of 2,974 and cooling degree-days totaled 470 compared to 418 in 2014. For 2015, the Henry Hub natural gas spot price averaged $2.82/MCF, 42% below 2014’s $4.88 mark. Supplies of gas during 2015 were adequate. Weekly storage levels averaged 2,068 BCF or 41% more than 2014’s level of 1,470 and 3% lower than the 5 year average of 2,129.

	Six Months Ended June 30,
							Increase (decrease)
	Units						This year vs last					This year vs LTA
	2015		2014		LTA (1)		Units			Percent		Units			Percent
U.S. Weather
Heating degree-days		2,816		2,974		2,664		(158	)		-5%		152			6%
Cooling degree-days		470		418		411		52			12%		59			14%
Avg temperature (°F)		49.5°F		47.6°F		49.6°F		1.9°F			4%		-0.2°F			0%

Natural Gas
Henry Hub spot price ($/MCF)		2.82		4.88		3.85		(2.06	)		-42%		(1.02	)		-27%
Working gas in underground storage, Lower 48 states, EIA weekly estimates (BCF)		2,068		1,470		2,129		598			41%		(61	)		-3%

________________________

1 - "LTA" abbreviates long term average. For weather data, the 30 year period is 1984-2013 and for natural gas the 5 year period is 2009-2013.

The average for the day-ahead PJM West Peak price during 2015 was $46.97/MWh with a standard deviation of $26.95 resulting in a coefficient of variation of 57%, compared to $76.28/MWh, $73.43, and 96% for 2014. The high for the year to date was $237.48/MWh and the low was $27.58. As shown by the table below, price levels and volatility were generally lower in 2015 as compared to 2014.

	Six Months Ended June 30,
PJM West Hub Peak Day Ahead					Increase (decrease)
	2015		2014		Units			Percent
*Price ($/MWh)*
Average		46.97		76.28		(29.32	)		-38%
Maximum		237.48		655.75		(418.27	)		-64%
Minimum		27.58		37.15		(9.57	)		-26%
Standard deviation		26.95		73.43		(46.48	)		-63%
Coefficient of variation (stdev ÷ avg)		57%		96%		-39%			-40%

*Daily percentage changes*
Average		2.7%		4.9%		-2.1%			-43%
Maximum		209.3%		200.3%		9.0%			4%
Minimum		-63.5%		-78.1%		14.7%			-19%
Standard deviation		26.8%		34.7%		-7.8%			-23%

*Number of days*
Up 10% or more		36		40		(4	)		-10%
Between 10% up and 10% down		54		50		4			8%
Down 10% or more		37		37		–			0%

As a result of these factors and the inclusion of the fair value amount of $2,462,000 of unrealized revenue on FTR positions as of June 30, 2014, for the six month period ended June 30, 2015, net trading revenue decreased by $19,554,000 or 62.4% compared to $31,326,000 for the same period in 2014.

Retail electricity sales: Revenue from the retail sale of electricity is recorded in the period in which customers consume the commodity, net of any applicable sales tax. Revenue applicable to electricity consumed by customers but not yet billed under the cycle billing method is estimated and accrued along with the related costs. Changes in estimates are reflected in operations in the period in which they are refined.

In addition to the designated hedges described below in “costs of retail electricity sold” to which hedge accounting was applied, we also used certain derivative contracts to which hedge accounting was not applied as economic hedges in our retail energy business to reduce our exposure to higher costs. In our segment reporting, the gain on these contracts net of any losses is reported as “wholesale trading revenue, net”.

For the six months ended June 30, 2015 and 2014, we recorded total revenues in our retail segment of $13,112,000 and $7,177,000, respectively. These totals consisted of retail energy sales of $13,444,000 in 2015 and $5,127,000 in 2014, up 162.2%, and a wholesale trading loss of $332,000 in 2015 and a gain of $2,050,000 in 2014. 2015’s results were driven by a 318.3% increase in customers as a result of increased marketing efforts.

The following table details key operating statistics for the periods indicated:

Key Operating Statistics	For/At Six Months Ended June 30,
(in units unless otherwise indicated)						Increase (decrease)
	2015			2014		Units			Percent
Retail electricity sales ($000s)		13,444			5,127		8,317			162.2%
Wholesale trading revenue, net ($000s)		(332	)		2,050		(2,382	)		-116.2%
Total segment revenues ($000s)		13,112			7,177		5,935			82.7%

Unit sales (MWh)		147,995			49,130		98,865			201.2%
Weighted average retail price (¢/kWh)		8.86			14.61		(5.75	)		-39.4%

Customers receiving service, end of period		38,500			9,204		29,296			318.3%

Diversified investments: During the six months ended June 30, 2015 and 2014, the Company recorded no revenue but capitalized a total of $1,116,000 and $57,000, respectively, of costs associated with its real estate development activities, consisting primarily of purchases of land for development and construction costs incurred.

Interest income on securities is recorded in other income and fair value is reported on the balance sheet. Securities are reviewed for possible impairment at least quarterly, or more frequently if circumstances arise which may indicate impairment.

Beginning in the second quarter of 2015, we began selling management services to third parties and recorded revenue of $125,000.

Costs of retail electricity sold: For the six months ended June 30, 2015, the Company hedged the cost of 33,635 MWh via designated derivatives, or 22.73% of the 147,995 MWh of electricity sold to its retail customers in such period. For the year, our hedges had the effect of increasing the cost of retail electricity sold by $911,000.

As shown by the Open Derivative Contracts table on page 29, as of June 30, 2015, we had designated 61,952 MWh of electricity futures as hedges against the cost of expected 2015 electricity purchases and $885,000, representing the net loss on the effective portion of the hedges, was deferred in accumulated other comprehensive income and this entire amount is expected to be reclassified to cost of retail electricity sold by December 31, 2015.

As of June 30, 2015, AOCI includes $705,300 of losses related to cash flow hedges that were discontinued. The total amount will be reclassified to cost of retail electricity sold by August 31, 2015.

As shown by the Open Derivative Contracts table on page 29, as of December 31, 2014, we had hedged the cost of 48,947 MWh (approximately 10.5% of expected 2015 electricity purchases for the customers receiving service from us as of that date) and $863,408 of the net loss on the effective portion of the hedge was deferred and included in AOCI. This amount is expected to be reclassified to cost of retail electricity sold by December 31, 2015.

Principally as a result of increases in the amount of energy used per customer, increased costs, and an increase customer count, for the six months ended June 30, 2015, our cost of retail electricity sold, net of losses on designated hedges, increased by $6,052,000 or 96.6% to $12,319,000 compared to $6,267,000 for the same period in 2014.

Retail sales and marketing: For the six months ended June 30, 2015 and 2014, we spent $603,000 and $151,000 on retail sales and marketing, principally on outbound telemarketing.

Compensation and benefits: During the six months ended June 30, 2015 and 2014, salaries, wages, and related costs decreased by $4,632,000 or 33.4% to $9,230,000 compared to $13,862,000 for the same period in 2014. Our personnel expense is directly related to the revenue we record, since our trader’s compensation is tied to revenue production, this decrease in expense is in line with the decrease in revenues.

Professional fees: For the six months ended June 30, 2015 and 2014, professional fees decreased by $242,000 to $1,317,000 compared to $1,559,000 at June 30, 2014. The majority of the decrease is due to professional fees incurred during 2014 for recruiter fees to hire additional traders.

Other general and administrative: For the period ended June 30, 2015 and 2014, these costs increased by approximately $641,000 to $2,310,000 compared to $1,669,000 for 2014. The increase was primarily related to additional spending on marketing and administrative expenses associated with the Notes Offering. We incurred $1,103,000 and $563,000 in marketing and administrative expenses associated during the six months ended June 30, 2015, and 2014, respectively. In addition, costs for travel has increased during the six months ended June 30, 2015 due to the Restructuring.

Trading tools and subscriptions: For the six months ended June 30, 2015 and 2014, trading tools and subscriptions expense increased by $52,000 or 8.3% to $681,000 compared to $629,000 for the same period in 2014, primarily due to an increase in our volumetric fees that we incur for services that we utilize for billing our retail customers.

Other income (expense): Other expense, net of other income, decreased by $321,000 to $864,000 for the first half of 2015 compared to $1,185,000 for the same period in 2014. As the principal component of other expense, interest expense increased by $687,000 to $1,669,000 for 2015 year to date compared to $982,000 for the same period in 2014. The increase was attributed primarily to an increase in outstanding debt of $7,807,000 for the six month period ended June 30, 2015 compared to $3,512,000 for the six month period ended June 30, 2014. In addition, the foreign currency exchange rate increased by $762,000 for the six months ended June 30, 2015 compared to 2014 due to the need to convert funds in trading accounts and deposits to CAD funds to cover losses that were incurred during the quarter. In addition, interest income increased by $166,000 from $56,000 in 2014 to $222,000 in 2015. The primary reason for the increase is due to interest on the note receivable of $99,000 and interest earned on the investment in convertible notes of $75,000 earned in 2015 over 2014’s amount of $28,000, an increase of $47,000.

Preferred distributions: During the six months ended June 30, 2015 and 2014, we distributed $275,000 to our preferred unit holder.

Years Ended December 31, 2014 and 2013

The following table sets forth selected financial data for the periods indicated, which has been derived from the consolidated financial statements included in this prospectus:

	For the Years Ended December 31,
Dollars in thousands	2014					2013					Increase (decrease)
	Dollars			Percent		Dollars			Percent		Dollars			Percent
Revenue
Wholesale trading revenue, net	$	38,612			77.5%	$	25,305			77.2%	$	13,307			52.6%
Retail electricity revenue		11,229			22.5%		7,480			22.8%		3,749			50.1%
Net revenue		49,841			100.0%		32,785			100.0%		17,056			52.0%

Operating costs & expenses
Cost of retail electricity sold		11,441			23.0%		7,761			23.7%		3,680			47.4%
Retail sales & marketing		325			0.7%		–			0.0%		325			na
Salaries, wages & related		21,722			43.6%		15,965			48.7%		5,757			36.1%
Professional fees		2,487			5.0%		1,673			5.1%		814			48.7%
Other general & administrative		6,094			12.2%		2,853			8.7%		3,241			113.6%
Trading tools & subscriptions		1,333			2.6%		923			2.7%		410			44.4%
Total operating expenses		43,402			87.1%		29,175			89.0%		14,227			48.8%
Operating income		6,439			12.9%		3,610			11.0%		2,829			78.4%

Interest expense		(2,293	)		-4.6%		(1,502	)		-4.6%		(791	)		52.7%
Interest income		143			0.3%		31			0.1%		112			361.3%
Loss on foreign currency exchange		(721	)		-1.4%		2			0.0%		(723	)		-36150%
Realized gain on sale of marketable securities		66			0.1%		–			0.0%		66			na
Other income		145			0.3%		–			0.0%		145			na
Other expense, net		(2,660	)		-5.3%		(1,469	)		-4.5%		(1,191	)		81.1%
Income before income taxes		3,779			7.6%		2,141			6.5%		1,638			76.5%
Income tax provision		–			0.0%		9			0.0%		(9	)		-100.0%
Net income		3,779			7.6%		2,132			6.5%		1,647			77.3%
Preferred distributions		(549	)		-1.1%		(549	)		-1.7%		–			0.0%
Net income attributable to common	$	3,230			6.5%	$	1,583			4.8%	$	1,647			104.0%

Wholesale trading revenue: In our wholesale trading business, we recorded revenues based upon changes in the fair values of the contracts we traded, net of costs. The initial recognition of fair value and subsequent changes in fair value affect reported earnings in the period the change occurs. The fair values of instruments that remain open at a balance sheet date represent unrealized gains or losses. Our primary costs in generating trading revenue were compensation of our energy traders as well as the interest expense of obtaining the capital necessary to post collateral.

Generally, the greatest opportunities for profitable trades occurred during periods of market turbulence, when the forecast for supply or demand is more likely to be inaccurate. When demand for energy is relatively stable, price variations tend to be small or non-existent. During periods of market turbulence, prices tend to be volatile, which gives traders the opportunity to take advantage of such volatility.

Market conditions during 2014 were characterized by abnormal weather, with a colder winter (281 more heating degree-days than normal), cooler summer (36 fewer cooling degree-days than normal), below-normal average temperature (52.5°F versus 53.7°F), and more expensive natural gas (up about 16% to $4.37/MCF versus the 5 year average of $3.76/MCF).

Comparing 2014 to 2013, 2014 was a bit cooler; HDD for the U.S. were 4,607 or 2% above 2013’s figure of 4,519 and CDD during 2014 totaled 1,271 compared to 1,273 in 2013. For 2014, the Henry Hub natural gas spot price averaged $4.37/MCF, 17% above 2013’s $3.73 mark. Supplies of gas during 2014 were adequate. Weekly storage levels averaged 2,222 BCF or 20% less than in 2013’s level of 2,784 and 22% lower than the 5 year average of 2,833.

	Years Ended December 31,
							Increase (decrease)
	Units						This year vs last year					This year vs LTA
	2014		2013		LTA (1)		Units			Percent		Units			Percent
U.S. Weather
Heating degree-days		4,607		4,519		4,326		88			2%		281			6%
Cooling degree-days		1,271		1,273		1,307		(2	)		0%		(36	)		-3%
Avg temperature (°F)		52.5°F		52.4°F		53.7°F		0.1°F			0%		-1.2°F			-2%

Natural Gas
Henry Hub spot price ($/MCF)		4.37		3.73		3.76		0.64			17%		0.61			16%
Working gas in underground storage, Lower 48 states, EIA weekly estimates (BCF)		2,222		2,784		2,833		(562	)		-20%		(610	)		-22%

The average for the day-ahead PJM West Peak price during 2014 was $58.65/MWh with a standard deviation of $54.81 resulting in a coefficient of variation of 93%, compared to $43.26/MWh, $14.69, and 34% for 2013. The high for the year was $655.75/MWh and the low was $26.49. As shown by the table below, price levels and volatility were generally higher in 2014 as compared to 2013. It is interesting to note that most of the high prices and volatility of 2014 occurred in the first quarter.

	Years Ended December 31,
PJM West Hub Peak Day Ahead					Increase (decrease)
	2014		2013		Units			Percent
*Price ($/MWh)*
Average		58.65		43.26		15.38			36%
Maximum		655.75		153.85		501.89			326%
Minimum		26.49		29.70		(3.22	)		-11%
Standard deviation		54.81		14.69		40.11			273%
Coefficient of variation (stdev ÷ avg)		93%		34%		59%			175%

*Daily percentage changes*
Average		2.5%		1.0%		1.5%			152%
Maximum		200.3%		127.6%		72.7%			57%
Minimum		-78.1%		-55.3%		-22.8%			41%
Standard deviation		25.8%		14.6%		11.1%			76%

*Number of days*
Up 10% or more		62		48		14			29%
Between 10% up and 10% down		131		165		(34	)		-21%
Down 10% or more		62		42		20			48%

On December 30, 2014, FERC accepted the Company’s settlement offer dated November 14, 2014 with respect to their investigation into the activities of certain ex-employees in the MISO market. During the third quarter of 2014, disgorgement of profits and interest on such totaling $1,107,000 was recorded as a reduction of 2014’s revenue since the settlement related to trades that were initially recorded in revenue during the 13 month period from January 1, 2010 to January 31, 2011. With regard to the civil penalty of $2,500,000, the Company expensed it as an operating expense since the charge results from the Company’s operations. The final settlement agreement calls for payment of the disgorgement and interest amount to MISO with the penalty amount to the U.S. Treasury. The Company further agreed to implement certain procedures to improve compliance. The first installment of $500,000 was paid on December 31, 2014 and the remaining $3,107,013 will be paid in 16 equal quarterly installments of $194,188 each, which began April 1, 2015.

As a result of these factors, for the year ended December 31, 2014, net wholesale trading revenue increased by $13,307,000 or 52.6% to $38,612,000 compared to $25,305,000 for 2013.

Retail electricity sales: We entered the retail energy services business on June 29, 2012. Revenue from the retail sale of electricity is recorded in the period in which customers consume the commodity, net of any applicable sales tax. Revenue applicable to electricity consumed by customers but not yet billed under the cycle billing method is estimated and accrued along with the related costs. Changes in estimates are reflected in operations in the period in which they are refined.

For the years ended December 31, 2014 and 2013, we recorded total revenues in our retail segment of $12,946,000 and $7,694,000, respectively. These totals consisted of retail energy sales of $11,229,000 in 2014 and $7,480,000 in 2013, up 50.1%, and wholesale trading revenues of $1,717,000 and $214,000, respectively, up 702%. During 2014, retail energy sales revenue increased principally as a result of an increase in prices. Our customer base consisted largely of residential consumers with a few small commercial accounts.

The following table details key operating statistics for the periods indicated.

Key Operating Statistics	For and at years ended December 31,
(in units unless otherwise indicated)					Increase (decrease)
	2014		2013		Units			Percent
Retail electricity sales ($000s)		11,229		7,480		3,749			50.1%
Wholesale trading revenue, net ($000s)		1,717		214		1,503			702.3%
Total segment revenues ($000s)		12,946		7,694		5,252			68.3%

Unit sales (MWh)		112,378		99,231		13,147			13.2%
Weighted average retail price (¢/kWh)		9.99		7.54		2.45			32.6%

Customers receiving service, end of period		9,501		9,822		(321	)		-3.3%

Diversified investments: Revenues from real estate developments, if any, are recognized at the time of sale closing if all significant conditions are satisfied, including adequate down payment, reasonable assurance of collectability of any notes received, and completion of other contract requirements. Recognition of all or part of the revenue is deferred if any significant conditions are not satisfied.

Costs that relate directly to development projects are capitalized and allocated using the specific identification method. Land acquisition, improvements, and holding costs, including real estate taxes and interest are capitalized while a development is in progress. Interest expense, if any, is capitalized based on specific identification of notes payable issued to finance specific assets under development. Once development on a project has been completed and sales have begun, remaining inventory is recorded at the lower of cost or market. Development costs are charged to cost of sales when the related revenue is recognized or when a development is abandoned.

During the years ended December 31, 2014 and 2013, the Company recorded no revenue but capitalized a total of $489,000 and $784,000, respectively, of costs associated with its real estate development activities, consisting primarily of purchases of land for development and actual development costs incurred.

Costs of retail electricity sold: Our costs of electricity sold include the cost of purchased power, EDC service fees, renewable energy certificates, bad debt expense, and gains net of losses and commissions on derivative contracts used to hedge power purchase costs. Cost of sales does not include the net gain or loss on the economic hedges described above. During 2014, we purchased electricity for sale to retail customers in ISO-NE’s and PJM’s wholesale markets and from certain other wholesale suppliers. We are typically required to maintain cash deposits in separate accounts to meet our wholesale energy vendors’ financial assurance requirements to purchase energy, ancillary services, and capacity which amount is included in “cash in trading accounts”.

During 2014, we hedged the cost of 76,915 MWh or 68% of the 112,378 MWh of electricity sold to our retail customers. For the year, our hedges had the effect of decreasing the cost of retail electricity sold by $91,508.

During 2013, we hedged the cost of 103,280 MWh or 105% of the 99,231 MWh of electricity sold to our retail customers. For the year, our hedges had the effect of decreasing the cost of retail electricity sold by $247,290.

As shown by the Open Derivative Contracts table on page 29, as of December 31, 2014, we had designated 48,947 MWh of electricity futures as hedges against the cost of expected 2015 electricity purchases and $863,000, representing the net loss on the effective portion of the hedges, was deferred in accumulated other comprehensive income and this entire amount is expected to be reclassified to cost of retail electricity sold by December 31, 2015.

As of December 31, 2013 as shown by the Open Derivative Contracts table on page 30, we had designated 32,760 MWh of electricity futures as hedges against the cost of expected 2014 electricity purchases. $357,000, representing the net gain on the effective portion of the hedges, was deferred in AOCI and this entire amount was reclassified to cost of retail electricity sold by December 31, 2014.

In total, during 2014 and 2013, we recorded costs of retail electricity sold of $11,441,000 and $7,761,000, respectively, resulting in a gross profit of $1,506,000 in 2014 and a gross loss of $67,000 in 2014. If the economic hedges were treated in the same way as that of the designated hedges, that is, with gains decreasing costs of sales and with losses increasing such, gross margins would have been 12.6% in 2014 and -0.9% for 2013.

Retail sales and marketing: Retail sales and marketing costs and expenses include off-line and on-line marketing costs related to retail customer acquisition and retention. Major off-line marketing channels may include out-bound telemarketing, direct mail, door-to-door, mass media (radio, television, print, and outdoor), and affiliates. On-line marketing channels may include paid search, affiliates, comparison shopping engines, banner or display advertising, search engine optimization, and e-mail marketing.

During 2014, we spent $325,000 on retail sales and marketing, principally on outbound telemarketing in connection with the DEG brand, compared to zero in 2013.

Salaries, wages and related: Salaries, wages, and related costs such as employee benefits and payroll taxes consist primarily of base and incentive compensation paid to our administrative officers, energy traders, and other employees.

For 2014, salaries, wages, and related costs increased by $5,757,000 or 36.1% to $21,722,000 compared to $15,965,000 for 2013. Our personnel expense is directly related to the revenue we record, since our trader’s compensation is tied to revenue production, and this increase in expense is in line with the increase in revenues.

Professional fees: Professional fees consist of legal expenses, audit fees, tax compliance reporting service fees, and other fees paid for outside consulting services.

For 2014, professional fees increased by $814,000 to $2,487,000 compared to $1,673,000 in 2013. A majority of the increase is due to the acquisition of DEG that incurred $597,000 of professional fees for outside services. The Company also continues to incur legal fees in 2014 in connection with the Canadian former employee litigation and the FERC investigation.

Other general and administrative: Other general and administrative expenses consist of rent, depreciation, travel, outside retail customer service costs, and all other direct office support expenses.

For 2014, these costs increased by approximately $3,241,000 to $6,094,000 compared to $2,853,000 for 2013. The increase was primarily related to the $2,500,000 civil penalty resulting from the FERC settlement, and an increase in amortization expense by $326,000 to $697,000 from $371,000 due to the amortization of certain intangible assets acquired in connection with the DEG acquisition. In addition, DEG incurred an additional $150,000 of general and administrative expenses in the period that were not present in 2013. Finally, the Company incurred an additional $271,000 in additional marketing and administrative expenses associated with the prior notes offering in 2014.

Trading tools and subscriptions: Trading tools and subscriptions consist primarily of amounts paid for services that provide weather reports and forecasting, electrical load forecasting, congestion analysis and other factors relative to electricity production and consumption.

For the year ended December 31, 2014, trading tools and subscriptions expense increased by $410,000 or 44.4% to $1,333,000 compared to $923,000 for 2013, primarily due to the acquisition of DEG and the increase in the number of traders.

Other income (expense): Other expense, net of other income, increased by $1,191,000 to $2,660,000 for 2014 compared to $1,469,000 for 2013. As the principal component of other expense, interest expense increased by $791,000 to $2,293,000 for the year from $1,502,000 during 2013, primarily due to an increase of $9,103,000 in outstanding debt from $10,185,000 at December 31, 2013 to $19,288,000 at December 31, 2014.

Provision for taxes: The tax provision is directly related to foreign income taxes associated with TCPC.

Preferred distributions: During 2014 and 2013, we distributed $549,000 to our preferred unit holder.

Liquidity, Capital Resources, and Cash Flow

We anticipate receiving payments from Enterprises in accordance with the Term Loan. As discussed in the Use of Proceeds section, we intend to use capital to make additional loans to Enterprises and possibly other borrowers as part of our new financial services business. With respect to both our historical and future retail operations, we are required to post collateral with the ISOs in order to acquire power for customers, fund accounts receivable, and fund margin requirements associated with forward contracts. We are generally required by the ISOs to pay for power every 4 days or so, while our average collection period on receivables is 40 to 45 days. As such, our capital is largely invested in trading account deposits and receivables.

Our capital expenditure requirements are nominal, being limited largely to computer and office equipment, software, and office furniture. Therefore, in any given reporting period, the amount of cash consumed or generated will primarily be due to changes in working capital.

Historically, our capital requirements were funded by notes payable and operating profits and we were dependent on cash on hand, cash-flow positive operations, and additional financing to service our obligations. As we build our new retail energy and financial service operations, we expect our capital requirements to be funded by note sales and cash flow from payments on the Term Loan and we expect to incur losses from operations until the middle of 2016. Should future note sales prove to be insufficient, Enterprises fail to pay, or operating losses prove to be greater than expected, we may be forced to obtain capital from other sources and there can be no assurance that such would be available at a reasonable cost or at all. Any of such events could have a detrimental effect on the Company.

We are taxed as a partnership for income tax purposes, which means that we do not pay any income taxes. All of our income (or loss) for each year is allocated among holders of our common units who are then personally responsible for the tax liability associated with such income. Our Operating Agreement provides for distributions of cash to these members based upon their respective ownership interests in the amount necessary to permit the member who is in the highest income tax bracket to pay all state and federal taxes on our net income allocated to such member.

The decision to make distributions other than tax distributions to holders of our common units and required distributions to holders of preferred units is at the discretion of our Board and depends on various factors, including our results of operations, financial condition, capital requirements, contractual restrictions, outstanding indebtedness, investment opportunities, and other factors considered by the Board to be relevant. The indenture governing our notes prohibits us from paying distributions to our members if there is an event of default with respect to the notes or if payment of the distribution would result in an event of default. The indenture also prohibits our Board from declaring or paying any distributions other than tax distributions if, in the reasonable determination of the Board, the Company would have insufficient cash to meet anticipated note redemption or repayment obligations.

While we believe we have sufficient cash on hand, coupled with the anticipated proceeds from our notes offering and the Term Loan to meet our operating cash requirements for the next twelve months as our operations ramp up, we regularly evaluate other potential sources of capital, which may include sourcing additional financing in the form of debt in order to provide added flexibility to support our working capital needs and reduce our overall costs of borrowing.

The following table is presented as a measure of our liquidity and capital resources as of the dates indicated:

	At June 30, 2015					At December 31,
Dollars in thousands	2015					2014					2013
	Dollars			Percent of total assets		Dollars			Percent of total assets		Dollars		Percent of total assets
Liquidity
Cash - unrestricted	$	5,083			17.0%	$	2,397			7.5%	$	3,190		18.2%
Cash in trading accounts		8,481			28.4%		20,987			66.1%		10,484		59.7%
Accounts receivable - trade		5,393			18.1%		2,394			7.5%		1,316		7.5%
Total liquid assets		18,957			63.5%		25,778			81.1%		14,990		85.4%

Total assets	$	29,848			100.0%	$	31,770			100.0%	$	17,562		100.0%

Capital Resources
Current debt	$	21,547			72.2%	$	8,652			27.2%	$	5,123		29.2%
Long term debt		12,969			43.5%		10,636			33.5%		5,062		28.8%
Total debt		34,516			115.6%		19,288			60.7%		10,185		58.0%

Preferred equity		2,745			9.2%		2,745			8.6%		2,745		15.6%
Common equity		(7,133	)		-23.9%		(47	)		-0.1%		2,003		11.4%
Total equity		(4,668	)		-15.6%		2,698			8.5%		4,748		27.0%
Total capitalization	$	29,848			100.0%	$	21,986			69.2%	$	14,933		85.0%

The tables below summarizes our primary sources and uses of cash for the six month periods ended June 30, 2015 and 2014 and the years ended December 31, 2014 and 2013 as derived from the statements of cash flows included elsewhere in this prospectus.

	For the Six Months Ended June 30,
Dollars in thousands							Increase (decrease)
	2015			2014			Dollars			Percent
Net cash provided by (used in):
Operating activities	$	2,288		$	3,352		$	(1,064	)		-31.7%
Investing activities		(1,269	)		(3,722	)		2,453			-65.9%
Financing activities		1,686			(63	)		1,749			2676.2%
Net cash flow		2,705			(433	)		3,138			624.7%
Effect of exchange rate changes on cash		(19	)		218			(237	)		-108.7%

Cash - unrestricted:
Beginning of period		2,397			3,190			(793	)		-24.9%
End of period	$	5,083		$	2,295		$	2,108			70.9%

For the six months ended June 30, 2015, we generated $2,288,000 from operating activities. The largest sources of cash from operations were a decrease from our trading accounts and deposits of $6,856,000, due to the sale of TCP and exiting markets. The most significant item affecting our operating cash flow was a $1,353,000 increase in accounts payable for the cost of retail electricity sold, which was directly related to the growth in the customer count during the six months ended June 30, 2015. Due to the trading revenue lost during the six months ended June 30, 2015, there was also a decrease in accrued compensation of $1,411,000. Growth in accounts receivable also used $2,998,000 of cash. During the six month period ended June 30, 2015, we used $1,269,000 of cash for investing activities, primarily related to the purchase of additional marketable securities, which had a net effect of $761,000 after accounting for the sale of the securities, during the same period.

	For the Years Ended December 31,
Dollars in thousands							Increase (decrease)
	2014			2013			Dollars			Percent
Net cash provided by (used in):
Operating activities	$	53		$	4,350		$	(4,297	)		-98.8%
Investing activities		(3,515	)		(1,310	)		(2,205	)		168.3%
Financing activities		3,009			(386	)		3,395			779.5%
Net cash flow		(453	)		2,654			(3,107	)		-117.1%
Effect of exchange rate changes on cash		(341	)		(236	)		(105	)		44.5%

Cash - unrestricted:
Beginning of period		3,190			772			2,418			313.2%
End of period	$	2,397		$	3,190		$	(794	)		-24.9%

For the year ended December 31, 2014, we generated $53,000 from operating activities. The largest sources of cash from operations was net income of $3,779,000 which included a non-cash charge of $3,607,000 related to the FERC settlement, and an increase in accrued compensation of $3,302,000. The most significant items affecting our operating cash flow was a $10,528,000 increase in cash in trading accounts due to increased collateral requirements for both our wholesale and retail energy businesses. Growth in accounts receivable also used $1,079,000 of cash. During 2014, we used $3,515,000 of cash for investing activities. Our investment in Ultra Green’s convertible notes consumed $1,605,000, we increased our restricted cash balance by $999,000 to secure our position with the Canadian court in conjunction with the former employee litigation (see “Business - Legal Proceedings - Former Employee Litigation”), and the purchase of DEG used $680,000. At December 31, 2014, our debt totaled $19,288,000 compared to $10,185,000 as of the prior year end. For the year, the Company generated $3,009,000 from financing activities, including a net $9,103,000 increase in debt and payment of $5,276,000 in distributions. Of the total distribution amount, $549,000 was paid to the holder of our preferred units and $4,727,000 was paid to our common unit-holders.

For the year ended December 31, 2013, we generated $4,350,000 from operating activities. The largest sources of cash from operations were net income of $2,131,000 and a decrease in deposits in trading accounts of $2,014,000, while the largest use was a decrease in accrued compensation. During 2013, we used $1,310,000 of cash for investing activities, with the two largest expenditures being for the purchase of the Fox Meadows mortgage for $354,000 and an increase in restricted cash associated with the project of $320,000 to secure a letter of credit. At December 31, 2013, our debt totaled $10,185,000 compared to $6,280,000 as of the prior year end. For the year, the Company used $386,000 for financing activities, including a net increase in debt of $3,655,000 and payment of $4,041,000 in distributions. Of the total distribution amount, $549,000 was paid to the holder of our preferred units and $3,492,000 was paid to our common unit-holders.

Financing

Continuous Notes Offering

On May 10, 2012, our first Form S-1 registration statement relating to the offer and sale of our Renewable Unsecured Subordinated Notes (File No. 333-179460) was declared effective by the SEC, and the offering of notes commenced on May 15, 2012. The Original Registration Statement covered up to $50,000,000 in principal amount of 3 and 6 month and 1, 2, 3, 4, 5, and 10 year notes.

For the six months ended June 30, 2015 and 2014 and the years ended December 31, 2014 and 2013, we incurred $1,103,000, $563,000, $1,396,000, and $1,113,000, respectively, of offering-related expenses, including marketing and printing expense, legal and accounting fees, filing fees, and trustee fees. These costs and expenses are expensed as incurred. From the effective date of May 10, 2012 through August 31, 2015, we issued a total of $38,927,997 of notes, of which $28,432,726 were initial sales and $10,495,271 were renewals for which we did not receive additional proceeds. As of August 31, 2015, we had $22,744,477 in principal amount of notes outstanding.

On May 8, 2015, we filed a new registration statement with respect to the notes (File No. 333-179460) to continue our notes offering after the expiration of our Original Registration Statement. Sales of notes under the Original Registration Statement continued until the effective date of the current registration statement. The current registration statement, of which this prospectus is a part, replaces the Original Registration Statement and covers up to $75,000,000 in principal amount of 3 and 6 month and 1, 2, 3, 4, 5, and 10 year notes. The current registration statement was declared effective by the SEC on the Distribution Date.

RBC Line of Credit

On May 12, 2014, the Company drew $700,000 under an evergreen, uncommitted line of credit from Royal Bank of Canada (the “RBC Line” and “RBC”, respectively). Advances under the RBC Line bear interest at a variable annual interest rate of 1 month LIBOR plus 2.25% set at the time of advance for a 30 day term, mature at various dates, and are collateralized by assets held in the Company’s marketable securities account. RBC is not obligated to make any extensions of credit to the Company and availability of funds may be increased or decreased by RBC in its sole and absolute discretion. Prepayment of any outstanding principal under the RBC Line may subject the Company to LIBOR break funding costs. There were no borrowings outstanding under the RBC Line as of June 30, 2015.

Enterprises Term Loan Receivable

On July 1, 2015, as part of the internal reorganization, Aspirity Financial entered into the Term Loan with Enterprises. Pursuant to the Term Loan, the Company agreed to loan Enterprises an aggregate principal amount of $22,205,613, with a weighted average interest rate of 14.08%, and maturity date of December 30, 2019. The purpose of the Term Loan is to establish the principle that the Legacy Businesses will continue to support the notes that were outstanding as of June 30, 2015 (the “Term Loan Notes”). Accordingly, and subject to monthly true-ups, the repayment schedule of the Term Loan reflects the maximum possible redemptions of the Term Loan Notes in given month, the weighted average interest rate of the Term Loan Notes, and a portion of the costs incurred by the Company as a public reporting company. The equity of Enterprises has been pledged to Aspirity Financial to secure repayment of the Term Loan.

Non-GAAP Financial Measures

The Company’s communications may include certain non- GAAP financial measures. A “non-GAAP financial measure” is defined as a numerical measure of a company's financial performance, financial position, or cash flows that excludes, or includes, amounts that are included in, or excluded from, the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements.

Non-GAAP financial measures utilized by the Company include a debt-to-total capital ratio, debt-to-equity ratio, liquidity as a percent of total assets, and an earnings ratio. The Company’s management believes that these non-GAAP financial measures provide useful information to investors and enable investors and analysts to more accurately compare the Company's ongoing financial performance over the periods presented.

Critical Accounting Policies and Estimates

Many of the critical accounting policies and estimates discussed below focus on our operations prior to the Restructuring. These policies may change to reflect our current and future operations.

Revenue Recognition and Commodity Derivative Instruments

Revenues in our wholesale trading business are derived from trading financial, physical, and derivative energy contracts while those for our retail segment result from electricity sales to end-use consumers. In our trading activities, contracts with the exchanges on which we trade permit net settlement, including the right to offset cash collateral in the settlement process. Accordingly, we net cash collateral against the derivative position in the accompanying consolidated balance sheets. All realized and unrealized gains and losses on derivative instruments are recorded in revenues. Revenue from the retail sale of electricity, including estimates of unbilled revenues for power consumed by customers but not yet billed under the cycle billing method, is recorded in the period in which customers consume the commodity, net of any applicable sales tax.

Hedge Accounting

In our retail energy business, we are exposed to volatility in the cost of energy acquired for sale to customers, and as a result, in October 2012, we began using derivatives to hedge or reduce this variability, since changes in the price of certain derivatives are expected to be highly effective at offsetting changes in this cost.

For a cash flow hedge, the effective portion of any change in the hedging instrument’s fair value is recorded as other comprehensive income until the change in value of the hedged item is recognized in earnings. To qualify for hedge accounting, the hedge relationships must meet extensive documentation requirements and hedge effectiveness and ineffectiveness must be assessed and measured on an on-going basis.

Variable Interest Entities - Principles of Consolidation

Generally, we consolidate only business enterprises that we control by ownership of a majority voting interest. However, there are situations in which consolidation is required even though the usual condition of consolidation (ownership of a majority voting interest) does not apply. Generally, this occurs when an entity holds an interest in another business enterprise that was achieved through arrangements that do not involve voting interests, which results in a disproportionate relationship between such entity's voting interests in, and its exposure to the economic risks and potential rewards of, the other business enterprise. This disproportionate relationship results in what is known as a variable interest, and the entity in which we have the variable interest is referred to as a “VIE.”

The Company follows ASC 810-10-15 guidance with respect to accounting for VIEs. A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of the entity’s expected residual returns. Variable interests are contractual, ownership, or other pecuniary interests that change with changes in the fair value of the entity’s net assets. A party is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provides the party with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of a VIE due to changes in facts and circumstances.

An assessment of the relationship between the Company and Enterprises following the Distribution was performed because Timothy Krieger is a related party of both Aspirity and Enterprises, and because the entities have an ongoing business relationship resulting from the Term Loan. Aspirity holds a variable interest in Enterprises in the form of the Term Loan, making Enterprises a VIE. The outstanding balance of the Term Loan (and any future amounts that the Company may lend to Enterprises) represent the Company’s maximum exposure to loss from the VIE. Creditors of Enterprises do not have recourse against the general credit of the Company, regardless of whether it is accounted for as a consolidated entity. While the Company will include the assets and net income of Enterprises in its consolidated financial statements, the Company does not have rights to those assets other than pursuant to its rights under the Term Loan.

Fair Value Measurements

FASB’s Fair Value Measurement Topic establishes a hierarchy of inputs with respect to determining the fair value of assets and liabilities for financial reporting purposes. The three types of inputs are “Level 1” (quoted prices in active markets for identical assets or liabilities), “Level 2” (inputs other than quoted prices that are observable either directly or indirectly for the asset or liability), and “Level 3” (unobservable inputs for which little or no market data exists). Financial instruments that are not traded in publicly quoted markets or that are acquired based on prices and terms determined by direct negotiation with the issuer are classified as Level 3 and carried at book value, which management believes approximates fair value, until circumstances otherwise dictate.

With respect to Level 3 inputs in particular, significant increases or decreases in specific inputs in isolation could result in higher or lower fair value measurements and the methods and calculations used by the Company to estimate fair values may not be indicative of net realizable value or reflective of future fair values. Furthermore, the use of different methodologies or assumptions to determine fair values could result in different fair value measurements and such variations could be material. In addition to management’s assessments, from time to time, the Company may engage third parties such as appraisers, brokers, or investment bankers to assist management in its valuation and classification of financial instruments.

Real Estate Development

Revenues from real estate developments, if any, are recognized at the time of sale closing if all significant conditions are satisfied, including adequate down payment, reasonable assurance of collectability of any notes received, and completion of other contract requirements. Recognition of all or part of the revenue is deferred if any significant conditions are not satisfied. Costs that relate directly to development projects are capitalized and allocated using the specific identification method. Land acquisition, improvements, and holding costs, including real estate taxes and interest are capitalized while a development is in progress. Interest expense, if any, is capitalized based on specific identification of notes payable issued to finance specific assets under development. Once development on a project has been completed and sales have begun, remaining inventory is recorded at the lower of cost or market. Development costs are charged to cost of sales when the related revenue is recognized or when a development is abandoned.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk in our normal business activities. Market risk is the potential loss that may result from changes associated with an existing or forecasted financial or commodity transaction. The types of market risks we are exposed to are commodity price risk, interest rate risk, liquidity risk, credit risk and currency exchange risk. In order to manage these risks we may use various fixed-price forward purchase and sales contracts, futures and option contracts, and swaps and options traded in the over-the-counter financial markets.

Commodity Price Risk

Commodity price risks result from exposures to changes in spot prices, forward prices, volatilities, and correlations between various commodities, such as natural gas, electricity, coal, oil, and emissions credits.

We manage the commodity price risk of our retail load serving obligations by entering into various derivative or non-derivative instruments to hedge the variability in future cash flows from forecasted sales and purchases of electricity. These instruments include forwards, futures, swaps, and option contracts traded on various exchanges as well as in over-the-counter markets. The portion of forecasted transactions hedged may vary based upon management's assessment of market, weather, operation and other factors.

In our wholesale trading businesses, we measured the risk of our portfolio using several analytical methods, including position limits, stop loss, stress testing, and value-at-risk (“VaR”).

Our daily long term VaR model is based upon log-normal returns calculated from the last 30 business days of prices at the 95% confidence level, or 1.645 standard deviations, with a one day liquidity assumption. Our short term VaR model measures the risk of virtual and up-to-congestion transactions and is based upon 4 years of seasonal prices at the 95% confidence level, with a one day liquidity assumption.

VaR is calculated daily, using positions and prices updated to the close of business on the previous day. The price history used is ideally that of the instrument held; however, in the cases where those prices are unavailable, benchmarking is used. Our VaR calculations always use the market value of the position, not its cost. In the case of a position where it is likely to take more than one day to close out, VaR is multiplied by the square root of the average days to liquidate the position in a stressed market.

The VaR model we apply to FTRs (“illiquid VaR”) is based upon 5 years of seasonal prices at the 95% confidence level but with no liquidity assumption, that is, we will not be able to exit the position prior to its maturity due to a lack of trading activity in the instruments. As a result of this liquidity assumption, the VaR of our FTRs may not be added to that of our other positions. As of June 30, 2015 and December 31, 2014, the longest tenor of our FTR positions was zero and 5 months, respectively.

The following table summarizes our liquid VaR as of and for the six months ended June 30, 2015 and 2014:

					Increase (decrease)
	2015		2014		Units			Percent
Liquid VaR
As of June 30	$	181,377	$	400,895	$	(219,518	)		-54.8%
For the six months ended June 30:
Average	$	240,310	$	1,387,075	$	102,235			74.0%
Maximum		394,857		426,201		(31,344	)		-7.4%
Minimum		83,078		7,453		75,625			1014.7%

VaR, pct of cash in trading accounts
As of June 30		1.23%		2.86%		-1.63%			-57.1%
For the six months ended June 30:
Average (1)		1.62%		0.99%		0.64%			64.9%
Maximum (1)		2.67%		3.04%		-0.37%			-12.2%
Minimum (1)		0.56%		0.05%		0.51%			-956.0%

______________________

1 - Dollar VaR divided by the average balance of cash in trading accounts for the period.

The following table summarizes our liquid and illiquid VaR as of and for the years ended December 31, 2014, and 2013:

	At December 31,				Increase (decrease)
	2014		2013		Units			Percent
Liquid VaR
As of December 31	$	164,772	$	265,201	$	(100,429	)		-37.9%
For the year ended December 31:
Average	$	384,094	$	232,729	$	151,365			65.0%
Maximum		1,470,187		1,076,618		393,569			36.6%
Minimum		7,453		5,985		1,468			24.5%

VaR, pct of cash in trading accounts
As of December 31		0.79%		2.53%		-1.74%			-69.0%
For the year ended December 31:
Average (1)		2.44%		2.07%		0.37%			18.0%
Maximum (1)		9.34%		9.57%		-0.22%			-2.3%
Minimum (1)		0.05%		0.05%		-0.01%			-10.9%

Illiquid VaR
As of December 31	$	3,951,414		na		na			na
For the year ended December 31:
Average		na		na		na			na
Maximum		na		na		na			na
Minimum		na		na		na			na

VaR, pct of cash in trading accounts
As of December 31		18.83%		na		na			na
For the year ended December 31:
Average (1)		na		na		na			na
Maximum (1)		na		na		na			na
Minimum (1)		na		na		na			na

______________________

1 - Dollar VaR divided by the average balance of cash in trading accounts for the period.

Due to the inherent limitations of statistical measures such as VaR, the evolving nature of the competitive markets for electricity and related derivatives, and the seasonality of changes in market prices, the VaR calculation may not capture the full extent of commodity price exposure. As a result, actual changes in the fair value of mark-to-market derivative instruments assets and liabilities could differ from the calculated VaR, and such changes could have a material impact on our financial results.

The value of the derivative financial instruments we hold for trading purposes and as cash flow hedges is significantly influenced by forward commodity prices. Periodic changes in forward prices could cause significant changes in the marked-to-market (“MTM”) valuation of these contracts. For example, assuming that all other variables remain constant:

		Average percentage change in mark-to-market valuation						Dollar change in mark-to-market valuation
Percentage change in forward price from June 30, 2015		Derivatives held for trading		Economic hedges		Cash flow hedges		Derivatives held for trading			Economic hedges			Cash flow hedges
	10%		116.6%		26.5%		10.0%		377,050			94,049			88,100
	5%		58.3%		13.3%		5.0%		188,525			47,025			44,050
	1%		11.7%		2.7%		1.0%		37,705			9,405			8,810
	-1%		-11.7%		-2.7%		-1.0%		(37,705	)		(9,405	)		(8,810	)
	-5%		-58.3%		-13.3%		-5.0%		(188,525	)		(47,025	)		(44,050	)
	-10%		-116.6%		-26.5%		-10.0%		(377,050	)		(94,049	)		(88,100	)

Interest Rate Risk

As of June 30, 2015, we had $4,888,000 of variable rate debt outstanding and at December 31, 2014, we had $1,635,000 of such debt outstanding. The interest rates charged on such are based in part on changes in certain market indices plus a credit margin, but are subject to “floors”, which may have the effect of converting variable rates to fixed rates and such was the case at June 30, 2015 and December 31, 2014. Consequently, at either date, we had no variable rate debt, although in the future we may be exposed to fluctuations in interest rates. Exposures to interest rate fluctuations may be mitigated by entering into derivative instruments known as interest rate swaps, caps, collars, and put or call options. These contracts reduce exposure to interest rate volatility and result in primarily fixed rate debt obligations when taking into account the combination of the variable rate debt and the interest rate derivative instrument.

Liquidity Risk

Liquidity risk arises from our general funding needs and the management of our assets and liabilities. We are exposed to additional collateral posting or margin requirements with the ISOs and exchanges if price volatility or levels increase. Based on a sensitivity analysis for positions under marginable contracts, a 20% change in electricity prices would cause an increase in margin collateral posted of approximately $1,118,000 as of June 30, 2015. This analysis uses simplified assumptions and is calculated based on portfolio composition and margin-related contract provisions as of June 30, 2015.

Credit Risk

Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations.

We are exposed to the risk of default by Enterprises on repayment of the Term Loan. Any new loans made to Enterprises or other third parties by Aspirity Financial will further expose us to credit risk.

In our retail energy business, we may be exposed to certain customer credit risks. Although we historically have not been exposed to retail customer credit risk to a large degree due to our participation in POR programs, we expect that this situation will change as we grow our retail energy business and expand into non-POR areas. Furthermore, economic and market conditions may affect our customers' willingness and ability to pay their bills in a timely manner, which could lead to an increase in bad debt expense above and beyond the allowance for uncollectible accounts charged to us by utilities. In general, we intend to manage retail credit risk as described in “Business - Retail Energy Services - Credit Risk Management”.

Foreign Exchange Risk

A portion of our assets and liabilities are denominated in Canadian dollars and are therefore subject to fluctuations in exchange rates, however, we do not have any exposure to any highly inflationary foreign currencies. We believe our foreign currency exposure is limited.

BUSINESS

Historically, we were primarily a wholesale electricity trading firm. We traded virtual electricity in North American wholesale markets regulated by FERC and operated by ISOs and derivative contracts on exchanges regulated by the CFTC. We also offered electricity generation services in 8 states that permit all retail customer classes to choose their provider of such and engaged in certain asset management activities, including real estate development and investments in privately held businesses. Consequently, we had three major business segments used to measure our activity – wholesale trading, retail energy services, and diversified investments.

On the Distribution Date, we completed a significant Restructuring and disposed of 100% of the equity interests of Enterprises to our members. Enterprises was a first tier, wholly owned subsidiary of the Company which held nearly all of our business operations, including certain retail energy businesses operated by REH. See “Prospectus Summary – Recent Restructuring” for a full description.

We expect to begin new retail activities in late 2015. While ultimately we plan to offer an array of energy-related products and services, initially, we expect to offer electricity supply services to retail customers in certain states that permit retail choice. We are in the process of obtaining the licenses necessary for our first and second tier operating subsidiaries—Aspirity Energy, AENE, AEMS, and AES—to begin selling electricity in markets where retail choice is permitted.

Industry Background

By virtually any measure, the electric power industry in the U.S. is substantial. According to EIA data, in 2013, the most recent year for which full data is available, the industry sold 3,725 TWh (up 0.8% from 2012) for more than $375.7 billion (up 3.3%) to over 146.4 million residential, commercial, and industrial customers (up 0.8%).

Electric power in commercial quantities, unlike other energy commodities such as coal or natural gas, cannot be stored, i.e., the supply must be produced or generated exactly when used or demanded by customers. Further, the laws of physics dictate that power flows within a network along the lines of least resistance, not necessarily where we may want it to go. These facts, coupled with the essential nature of the service to modern life, have obvious implications for electricity market structures and regulations.

Today, the industry includes any entity producing, distributing, trading, or selling electricity. Physically, the nation’s power system includes generation resources, transmission lines, and retail distribution systems. As of the end of 2013, according to an analysis of the EIA’s Form 860, participants in the generation segment included investor-owned, publicly-owned, cooperative, and federal utilities, and non-utility power producers, including independent power producers and commercial and industrial entities that operate co-generation facilities. These entities owned over 19,000 generating units with total nameplate capacity of 1,164 GW. In addition to generation, the nation’s bulk power system also included over 190,000 circuit-miles of high-voltage (over 100kV) transmission lines. Our retail distribution network includes substations, wires, poles, metering, billing, and related support systems. Power marketers and retail energy providers do not own any generation, transmission, or distribution assets, but buy and sell in wholesale and retail markets. Finally, participants in wholesale power markets include banks, hedge funds, private equity firms, and trading houses.

The investor-owned portion of the industry, including utilities, retail energy providers, and non-utility generators, constitutes over 70% of the industry’s revenues, unit sales, and customers as shown by the table below. According to the Edison Electric Institute, a trade group representing the largest investor-owned utilities, in 2013, total energy operating revenues of shareholder-owned electric companies were $356.5 billion. As of December 31, 2013, consolidated holding company-level assets of these entities were $1.292 trillion, and of these assets, $791.8 billion were net property in service. In 2013, shareholder-owned electric utilities spent $16.9 billion on transmission investment, compared to $14.8 billion in 2012, are projected to spend $20.2 billion in 2014, and are planning to invest approximately $58 billion in 2015, 2016, and 2017. The total market capitalization of U.S. shareholder-owned electric companies was $504.4 billion on December 31, 2013.

Since the passage of the Public Utilities Regulatory Policy Act of 1978, the industry has been undergoing a massive restructuring process that has had a particular impact on investor-owned utilities. PURPA stimulated development of renewable energy sources and co-generation facilities and laid the groundwork for deregulation and competition by opening wholesale power markets to non-utility producers of electricity for the first time.

U.S. Electric Power Industry Revenue, Unit Sales, Customers, and Average Retail Prices, All Sectors, 2013

	Entities (count)		Revenues ($millions)		% of Total		Unit Sales (TWh)		% of Total		Customers (000s)		% of Total		Avg Retail price (¢/kWh)
By Energy Provider
Investor-owned utilities		217		219,680		58.5%		1,925		51.7%		86,679		59.2%		11.41
Retail energy providers		545		51,866		13.8%		723		19.4%		17,764		12.1%		7.17
Non-utility power producers		145		1,152		0.3%		18		0.5%		1		0.0%		6.52
Subtotal		907		272,698		72.6%		2,666		71.6%		104,443		71.3%		10.23
Cooperatives		859		41,986		11.2%		414		11.1%		18,755		12.8%		10.15
Municipally-owned utilities		828		38,128		10.1%		391		10.5%		14,924		10.2%		9.76
Public power districts		80		9,378		2.5%		106		2.8%		3,841		2.6%		8.85
State-owned utilities		12		5,862		1.6%		51		1.4%		1,338		0.9%		11.41
Federally-owned utilities		26		1,490		0.4%		37		1.0%		34		0.0%		3.99
Subtotal		946		54,858		14.6%		585		15.7%		20,137		13.8%		9.37
Adjustments (1)		65		6,174		1.6%		60		1.6%		3,070		2.1%		10.23
Total U.S.		2,777		375,716		100.0%		3,725		100.0%		146,406		100.0%		10.09
By Choice Type (2)
Type 0		2,604		253,983		67.6%		2,876		77.2%		97,300		66.5%		8.83
Type 1		145		75,222		20.0%		501		13.4%		28,711		19.6%		15.01
Type 2		7		27,402		7.3%		169		4.5%		11,805		8.1%		16.26
Type 3		9		9,733		2.6%		81		2.2%		4,168		2.8%		12.01
Type 4		12		9,376		2.5%		99		2.6%		4,422		3.0%		9.50
Subtotal		173		121,733		32.4%		849		22.8%		49,106		33.5%		14.33
Total U.S.		2,777		375,716		100.0%		3,725		100.0%		146,406		100.0%		10.09
By Census Region (3)
New England		210		17,558		4.7%		121		3.3%		7,098		4.8%		14.47
Middle Atlantic		247		47,399		12.6%		369		9.9%		18,019		12.3%		12.85
South Atlantic		388		76,733		20.4%		570		15.3%		29,952		20.5%		13.47
East North Central		394		54,229		14.4%		298		8.0%		22,134		15.1%		18.23
East South Central		246		27,737		7.4%		787		21.1%		9,470		6.5%		3.52
West North Central		514		26,716		7.1%		318		8.5%		10,651		7.3%		8.39
West South Central		291		48,110		12.8%		571		15.3%		17,270		11.8%		8.42
Mountain		244		25,073		6.7%		273		7.3%		10,598		7.2%		9.18
Pacific - contiguous		213		47,967		12.8%		402		10.8%		20,403		13.9%		11.93
Pacific - noncontiguous		30		4,194		1.1%		16		0.4%		811		0.6%		26.59
Total US		2,777		375,716		100.0%		3,725		100.0%		146,406		100.0%		10.09

______________________________

Source: Company analysis of U.S. EIA Form 861 data, released February 19, 2015, next release October 2015.

Notes

1 - Adjustments are required to reconcile federal and state reporting requirements.

2 - Retail choice types defined as follows: Type 0 - no retail customers have choice of generation services provider ("GSP"); Type 1 - all residential, commercial, and industrial customers in investor-owned utility ("IOU") service areas have choice of GSP; Type 2 - limited number of residential customers have choice, choice of commercial and industrial customers is capped; Type 3 - no residential customers have choice, choice of commercial and industrial customers is capped; and Type 4 - no residential customers have choice, choice of commercial and industrial customers is limited.

3 - Census regions defined as follows: New England - CT, ME, MA, NH, RI, VT; Middle Atlantic - NJ, NY, PA; South Atlantic - DE, DC, FL, GA, MD, NC, SC, VA, WV; East North Central - IL, IN, MI, OH, WI; East South Central - AL, KY, MS, TN; West North Central - IA, KS, MN, MO, NE, ND, SD; West South Central - AR, LA, OK, TX; Mountain - AZ, CO, ID, MT, NV, NM, UT, WY; Pacific-contiguous - CA, OR, WA; and Pacific-noncontiguous - AK, HI.

Since PURPA, the nation has moved from a system of vertically integrated monopolies providing retail service at state-determined, cost-based rates to one where the ownership of generation assets is no longer regulated and the majority of the nation’s bulk power systems are operated under the supervision of the Federal Energy Regulatory Commission, an independent agency within the DOE. Furthermore, while some states have restructured their markets such that individual consumers are allowed to choose their electricity supplier, most state public utility commissions continue to regulate their utilities under the traditional cost-based framework.

Today, wholesale prices are subject to a federal regulatory framework focused on ensuring fair competition and reliability of supply. At the state level, under the traditional system which most states continue to employ, a vertically integrated utility (a “full service provider”) is responsible for serving all consumers in a defined territory and customers are obligated to pay the regulated rate for their class of service.

However, in a state with a restructured or “deregulated” market, that is, the “restructured retail” business or one with retail choice, the generation, transmission, distribution, and retail marketing functions of the business are legally separated and pricing of energy is unbundled from delivery services.

U.S. Electric Power Industry Revenue, Unit Sales, Customers, and Average Retail Prices, 2013

	Revenues ($millions)		% of Total		Unit Sales (TWh)		% of Total		Customers (000s)		% of Total		Avg Retail Price (¢/kWh)
By Customer Type
Residential		169,131		45.0%		1,395		37.4%		127,880		87.3%		12.13
Commercial		138,533		36.9%		1,344		36.1%		17,782		12.1%		10.31
Industrial & other		68,052		18.1%		986		26.5%		744		0.5%		6.90
Total industry		375,716		100.0%		3,725		100.0%		146,406		100.0%		10.09
Residential		155,181		41.3%		1,291		34.7%		116,728		79.7%		12.02
Commercial		109,494		29.1%		1,082		29.0%		15,920		10.9%		10.12
Industrial & other		53,450		14.2%		792		21.3%		693		0.5%		6.75
Full service providers		318,125		84.7%		3,166		85.0%		133,341		91.1%		10.05
Residential		13,949		3.7%		103		2.8%		11,152		7.6%		13.49
Commercial		29,039		7.7%		262		7.0%		1,862		1.3%		11.08
Industrial & other		14,602		3.9%		194		5.2%		51		0.0%		7.54
Restructured retail		57,591		15.3%		559		15.0%		13,065		8.9%		10.30
Residential		7,777		2.1%		–		–		–		–		7.52
Commercial		18,186		4.8%		–		–		–		–		6.94
Industrial & other		11,120		3.0%		–		–		–		–		5.74
Energy only providers		37,083		9.9%		–		–		–		–		6.63
Residential		6,172		1.6%		–		–		–		–		5.97
Commercial		10,853		2.9%		–		–		–		–		4.14
Industrial & other		3,482		0.9%		–		–		–		–		1.80
Delivery service only		20,507		5.5%		–		–		–		–		3.67

_________________________

Source: Company analysis of U.S. EIA Form 861 data, released February 19, 2015, next release October 2015.

Wholesale prices are typically quoted as “on-peak”, “off-peak”, or “flat”, and in dollars per megawatt-hour ($/MWh). Peak hours are generally the 16 hours ending 0800 (8:00 am) to 2300 (11:00 pm) on weekdays, except for the NERC holidays of New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day. Off-peak periods are all NERC holidays and weekend hours plus the 8 weekday hours from the hour ending at 2400 (midnight) until the hour ending at 0700 (7:00 am). Each month in a calendar year has a different number of on- and off- peak hours, consequently, the flat price for a given month takes this into account. The flat price for a day is simply the average of the 24 hourly prices. Retail prices are quoted in cents per kilowatt-hour (¢/kWh).

Wholesale electricity prices are driven by supply and demand and actually change minute-by-minute. Near term demand is largely affected by the weather and consumer behavior while supply is driven by plant availability and fuel prices, particularly for natural gas as it is the fuel of choice for marginal generation requirements.

Factors that affect electricity prices in the long term include climate, fuel prices and availability, generation and efficiency technologies deployed, population growth, economic activity, and governmental policies and regulatory actions with respect to energy and the environment.

One of the unique aspects of certain wholesale electricity markets run by ISOs is the availability of “locational marginal prices” (“LMPs”), also known as “nodal pricing”. The theoretical price of electricity at each node on the network is calculated based on the assumptions that one additional kilowatt-hour is demanded at the node in question, and that the marginal cost to the system that would result from the optimized re-dispatch of available generating units to serve the load can establish the production cost of the additional energy. LMPs are typically quoted on a “real-time” and “day-ahead” basis. In the real-time market, prices at specific nodes on the grid are updated every 5 minutes based on current and targeted supply and demand. Day-ahead prices are for power to be delivered at a specified hour and transmission point during the next day.

LMPs vary by time and location due to physical system limitations, congestion, and loss factors; however, in an unconstrained system with no losses, all LMPs would be equal. This means that LMPs can be conceptually separated into three components- an energy price, a marginal congestion component or “MCC”, and a loss component or “MLC”.

As generators are dispatched to meet load, the energy transfer capacity of transmission lines is used. Bulk power systems must be operated to allow for continuity of supply even if a contingent event, like the loss of a line, generator, or transformer were to occur. At times, transmission lines may also reach their maximum thermal capacity. These “security constraints”, also known as “congestion”, limit the ability to use the least expensive generation. In other words, when constraints exist on a transmission network, there is a need for more expensive generation to be used, and separate prices on either side of a node give rise to congestion pricing to relieve the constraint and reduce line loadings. Finally, since transmission lines act as resistors to the flow of energy, to receive a specific quantity at a particular destination, more than the expected quantity must be injected into the line at origination to compensate for losses.

After PURPA, the Energy Policy Act of 1992 was the next major legislative step towards full deregulation of wholesale power markets. In 1996, FERC issued Orders 888 and 889, which allowed for energy to be scheduled across multiple power systems, and in 1999, FERC issued Order 2000 calling for electric utilities to form RTOs or ISOs to operate the nation’s bulk power system. The intended benefits of ISOs include eliminating discriminatory access to transmission for all generators, improving operating efficiency, and increasing system reliability. ISOs are typically not-for-profit entities using governance models developed by FERC. To date, seven ISOs have been formed in the U.S. In the parts of the country where ISOs have not been established, including the southeast, southwest and northwest, active wholesale markets are still present, although they operate with different structures.

In addition to controlling the physical flow of power within its area of responsibility via direction to generators operating within the ISO’s footprint, many ISOs also operate wholesale markets for real-time and day-ahead energy, as well as for generating capacity and ancillary services required to ensure system reliability.

In general, wholesale trading activity is characterized by the acquisition of electricity at a given location such as a node or hub and its delivery to another. Financial transactions settle in cash in an amount equal to the difference between the purchase and sale prices, while physical transactions are settled by the delivery of the commodity. In general, financial contracts offered by ISOs such as INCs, DECs, and UTCs are also known as “virtual” trades, are outstanding overnight, and settle the next day. In addition, ISOs may also offer longer term financial contracts generally known as FTRs. In any case, the ISO serves as the counter-party and central clearinghouse for all trades.

In addition to the markets operated by the ISOs, derivative contracts such as swaps, options, and futures keyed to a wholesale electricity price are traded over-the-counter and on regulated exchanges, including ICE, NGX, and CME. Derivative contracts are available for many terms and pricing points and always settle in cash with profit or loss determined by price movements in the underlying commodity, whether it be electricity or another energy commodity such as natural gas or crude oil.

Retail Energy Services

Historically, at the state level, electricity was a regulated market, where vertically-integrated utilities owned all or a major part of the bulk power and distribution infrastructure and were responsible for generating electricity or buying it from other producers and distributing it to homes and businesses. Regulated utilities are responsible for serving all consumers in their defined territory and customers are obligated to pay the regulated rate for their class of service. Neither provider nor consumer has a choice about who they do business with.

In the 1990s, many states, particularly those in the Northeast and California where retail prices were historically among the highest in the country, began restructuring their electric power industries in an effort to bring the benefits of competition to retail customers. This new regulatory approach centered on deregulation of generation and retail marketing while continuing the traditional cost-of-service plan for transmission and distribution. The regulated portions of formerly vertically-integrated utilities, now generally known as electric distribution companies (“EDCs”) or local distribution companies (“LDCs”) are responsible for delivering power, billing consumers, and resolving any service issues, but customers can shop around and buy power from any licensed supplier or broker doing business in the state, hence “retail choice”.

Restructuring created new business opportunities in an established industry. In general, there are two types of non-utility businesses participating in the deregulated retail energy marketing function in the U.S. today – “brokers” and “suppliers” – but each state licenses these businesses in a different way. For example, not every jurisdiction makes a broker/supplier distinction and some divide licenses based on potential customer categories such as “residential” or “non-residential” while other states divide their markets based on historical utility service territories and license an entity to only provide services in particular areas. Overall, as of January 2014, there were over 700 of these licensed retail energy businesses in the U.S.

Brokers, also known as “aggregators”, negotiate supply agreements between retail customers and wholesale suppliers. Brokers collect commissions from the supplier that wins a particular piece of business. Brokers do not bill customers directly and never take title to energy; they work for the customer. Their major expense is signing up new customers. As a result, brokers generally have relatively limited margins but high quality cash flows and comparatively small balance sheets.

Suppliers, also known as retail energy providers (each, a “REP”), energy service companies (each, an “ESCO”), competitive energy providers (each, a “CEP”), or the like depending upon the state, are also licensed by a state to deal with retail customers. They have an up-stream supply arrangement which may include purchasing directly from a pool like PJM or NYISO or bilaterally from large integrated energy companies or independent power producers. In contrast to brokers, suppliers potentially have higher margins on the energy sold but require larger amounts of capital to acquire energy and carry receivables and payables for some period of time.

Today, 16 years after Massachusetts and Rhode Island became the first states to effectively implement choice in 1998, 20 jurisdictions have some form of choice. We define these forms of retail choice as follows:

Type 1

All residential, commercial, and industrial customers may choose their energy provider. While this applies primarily in areas served by investor-owned utilities, in certain jurisdictions, customers of specific cooperatives and public utilities may also have choice but these instances are rare;

Type 2

A limited number of residential customers have choice and the choice of non-residential customers is capped, usually at a specific number of megawatt-hours per year;

Type 3

No residential customers have choice and the choice of non-residential customers is capped; and

Type 4

No residential customers have choice and the number of non-residential with choice is limited.

In addition, we define Type 0 jurisdictions as those in which no retail customers of any class have choice.

Overall, we believe that choice is proving to be a boon for consumers. According to an analysis of data from the EIA, between 2001 and 2013, retail rates for all customer sectors in states with restructured retail markets increased by only 21.0% compared with a 35.1% increase in states that rely on regulated utilities.

In the 14 areas where all rate classes had choice during 2013, according to EIA data, 25.58 million residential and 3.14 million non-residential customers were eligible to choose their supplier. Of these totals, 11.15 million residential (43.6%) and 1.91 million non-residential (61.2%) customers purchased over 559 million MWh from competitive suppliers.

Retail Electric Bills

Unbundling of electric bills in restructured markets made many aware for the first time exactly what they were paying for. In general, the bills of retail electricity customers include numerous costs and charges that can be classified into three major categories – generation costs, delivery charges, and governmental policy costs:

Energy costs: In addition to energy, this category may include other wholesale supply costs such as capacity charges and ancillary services.

Delivery charges: Depending upon the state, transmission charges may be included in energy costs. Distribution costs recover the EDCs’ costs to own, operate, and maintain their distribution systems.

Governmental policy costs: These charges include the costs of federal and state polices with respect to electricity and may include:

Transition charges are costs associated with moving from a regulated market to a restructured one and allow EDCs to recapture stranded costs that would otherwise be unrecoverable after deregulation.

Societal benefits charges include the costs of government-mandated programs such as universal service, lifeline service, and energy efficiency programs.

Sales and use taxes include taxes collected by state and local authorities on retail electricity sales.

According to analysis of EIA data for states with restructured markets, on average between 2001 and 2013 (the latest year for which information is available) energy and delivery costs accounted for about 66.5% and 33.5%, respectively, of the average retail electricity price. Of course, these percentages fluctuate from year to year and state to state, primarily due to wholesale energy market conditions, weather, and state rules.

The following graph, prepared from EIA data, shows the composition of electric bills in Connecticut and illustrates these points.

In general, there are three billing structures available to competitive suppliers in restructured markets:

•

Under a “utility consolidated billing” system, also known as “UCB”, the utility is responsible for billing all retail customers for all electric service charges as well as the collection of outstanding accounts. Retailer charges included in the utility’s bill are calculated in one of two ways:

For “rate ready” utilities, the retailer posts its rates with the utility and the utility calculates the charges for inclusion on the customer’s bill.

For “bill ready” utilities, retailers receive usage data from the utility and calculate the amount owed by the customer. This amount is then communicated back to the utility for inclusion on the customer’s bill.

•

Under the “dual billing” framework, the utility sends bills to the customer for transmission and distribution charges and retailers send separate bills for generation charges. Each is responsible for the collection of its outstanding accounts and has direct credit exposure to the customer.

•

Under the “retailer consolidated billing” structure, retailers are responsible for billing customers for all charges and, consequently, have direct credit exposure to the customer and are responsible for collection of all outstanding amounts.

Purchase of Receivables

Some states require that utilities billing customers in their service territory on behalf of a retailer purchase the receivables generated as a result of energy sales. These states are known as “purchase of receivables” or “POR” jurisdictions. The purchase generally occurs at a modest discount of 0% to 2.5% to reflect bad debt experience by customer class within the service territory. In POR areas, retailers have no customer credit exposure other than the bad debt charge because the utility pays regardless of whether or not the customer does. However, if a customer fails to pay, the utility will typically disconnect service, which results in the loss of the account for the retailer.

In states with retail choice but without POR programs - the “non-POR” jurisdictions - retailers are exposed to the credit risk of the customer. Beginning in late 2014, Massachusetts became a POR jurisdiction. New Jersey is currently the only “recourse POR” state. Under these rules, retailers have no exposure to customer credit risk provided that the customer is billed under a utility’s consolidated billing program. However, if an electric account is in default for 90 days (about 120 days from the last invoice date), the utility has the option to convert the customer to dual billing. In Ohio, the only POR service territory, is currently served by Duke Energy Ohio. The rest of the state is non-POR. The District of Columbia is in the process of becoming a POR jurisdiction.

POR Program Type	Retail Choice Type and Areas
Full or recourse	Type 1: Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Ohio - Duke, Pennsylvania
In progress	Type 1: District of Columbia, Ohio-AEP
None	Type 1: Delaware, Maine, New Hampshire, Ohio – excluding Duke and AEP, Rhode Island, Texas
	Type 2: California
	Type 3: Michigan
	Type 4: Montana, Nevada, Oregon, Washington

POR laws have the effect of converting the retailer’s exposure to its customers’ credit to that of the applicable utility, which is generally “investment grade” under the scales of the Nationally Recognized Statistical Rating Organizations recognized by the SEC. The major NRSROs that rate utilities are S&P, Moody’s, and Fitch. “BBB-” by S&P or Fitch or “Baa3” by Moody’s are considered to be the lowest investment grades by market participants.

The table below summarizes the credit ratings of certain investor-owned utilities operating in Type 1 retail choice jurisdictions:

S&P's Long Term Credit Ratings of Investor Owned Utilities with 25,000 or More Retail Customers Operating in 14 Full Choice Jurisdictions, September 2014

Jurisdiction

POR Status

Number of IOUs

Number of Rated IOUs

Average Credit Rating

Number of Non-Rated IOUs

Connecticut

POR

BBB+

–

Delaware

non-POR

BBB+

–

District of Columbia

POR in process

BBB+

–

Illinois

POR

BBB+

Maine

non-POR

BBB+

–

Maryland

POR

BBB

–

Massachusetts

POR

A-

–

New Hampshire

non-POR

A-

–

New Jersey

recourse POR

BBB+

–

New York

POR

BBB+

Ohio (Duke)

POR

BBB+

–

Ohio (non-Duke)

non-POR

BBB-

–

Pennsylvania

POR

BBB-

Rhode Island

non-POR

A-

Texas

non-POR

BBB+

Total/average

BBB+

Sales & Marketing

Prior to the Restructuring, the Company owned subsidiaries that were licensed as competitive retail suppliers in 8 of the 14 jurisdictions that allow full retail choice. Within the eight states in which we were licensed, there are a total of 33 investor-owned utility service territories and, of this total, we were marketing services in 19. We are in the process of applying for licenses in these jurisdictions through our new Aspirity Energy subsidiaries. We also intend to apply for retail supplier licenses in additional states.

We expect that our services will be made available to customers under fixed price and variable rate contracts as well as some that provide up to 100% renewable energy. All contracts regardless of price and term are subject to standard terms and conditions as filed from time to time with state regulatory authorities. Retail customers make purchase decisions based on a variety of factors, including price, customer service, brand, product choices, bundles, or value-added features.

The prices we offer customers are determined by us and are not subject to regulation. The terms we offer are also determined by us, and we develop such to align with regulatory requirements within each state where we do business. However, due to unprecedented cold weather during the winter of 2013-14 that caused prices to spike to record high levels, we expect additional rules and regulations to be imposed on the pricing and terms offered by competitive energy suppliers in the near future.

The electricity we will sell is generally metered and delivered to our customers by local utilities. As such, we will not have a maintenance or service staff for customer locations. These utilities will also provide billing and collection services for the majority of our customers on our behalf, generally under the utility consolidated billing structure.

In 2014, we went to market through various channels including outbound telemarketing, brokerage relationships, and online comparison shopping engines. We generally price our contracts such that our offers provide savings compared to the standard offer default rates offered by the incumbent utilities. In 2014, we also experimented with other direct marketing methods such as radio and direct mail. When we start our new operations, we expect to continue to use these methods as well as others.

Energy Supply

We do not own any electrical power generation, transmission, or distribution facilities and utilize ISOs and utilities for transmission and distribution services. We will buy the energy we need to serve our customers in wholesale markets under both short- and long-term contracts for delivery to the various utility load zones we serve. We expect to generally purchase most of the power demanded by our customers in the day-ahead markets operated by the ISOs and may also enter into bilateral contracts with wholesale energy market participants. The ISOs also perform real-time load balancing, which ensures that the amount of electricity purchased is equal to the amount necessary to service customer demand at any point in time. We will be charged or credited for balancing electricity purchased and sold for our account by the ISOs.

We will also be required to meet certain minimum “green” energy supply criteria in some of the states in which we will operate and we plan to meet these thresholds by acquiring renewable energy certificates or “RECs”. In addition, we will offer green energy products to our customers in several territories and we may buy additional voluntary RECs to satisfy the requirements for these customers. RECs represent the property rights to the environmental, social, and other non-power qualities of renewable electricity generation and can be sold separately from the underlying physical electricity. As renewable generators produce electricity, they create one REC for every megawatt-hour of electricity. If the physical electricity and the associated RECs are sold to separate buyers, the electricity is no longer considered “renewable” or “green” as the REC is what conveys the attributes and benefits of the renewable electricity, not the electricity itself.

We will manage our exposure to movements in wholesale energy prices by hedging. The instruments we will use are principally physical forward contracts and registered derivative contracts. Under a physical contract, we agree to take delivery of a specified quantity of electricity at a specific location and specified time, the price of which is usually determined by reference to a market index. Under a derivative contract, we agree with a counterparty to cash settle the difference between the floating price and the fixed price on a notional quantity of electricity for a specified time frame. In addition, we may buy put and call options as hedges against unfavorable fluctuations in market prices. However, deviations between forecasted and actual customer usage, or “volumetric risk”, impacts us by reducing or increasing revenues and gross margins from expected results and may also impact our hedging program by causing an under- or over-hedged situation since we remain subject to commodity risk for any differences between the actual quantities used by our customers and the forecasted quantities upon which our hedging is based.

Our hedging strategy is based on, among other variables, forecasted customer energy usage, which can vary substantially as a result of weather patterns deviating from historical norms within a given period. This variability is exaggerated as a result of our concentration in the residential customer segment, in which energy usage is highly sensitive to weather conditions which impact heating and cooling demand. Cooling degree-days and heating degree-days are widely used in the energy industry for measuring the impact of weather patterns on energy usage. CDD represents the number of degrees that a day’s average temperature is above 65° Fahrenheit and people start to use air conditioning while HDD are the number of degrees that a day’s average temperature is below 65° Fahrenheit and people start to use heating. Other variables that might affect our hedging strategy include anticipated weather conditions, the forward price, and supply, of natural gas and other fuels, and the condition of the power generation, transmission, and distribution infrastructure.

Our retail hedging policy guidelines are summarized as follows:

Approved hedging instruments include off-the-shelf and customized or shaped electricity futures, swap, and option products or others as approved by management.

For a given delivery month, hedges of forecasted energy sales to retail customers (“load”) shall be in place no later than one business day in advance of the beginning of such month as follows:

80% to 120% of on-peak load;

At least 50% of off-peak load for all months; and

At least 70% of off-peak load during winter and summer.

When possible, hedges shall be executed at the zonal or nodal location of the load. If derivatives indexed to such zonal or nodal location are not available or liquid, the hedge will be executed at the nearest liquid hub that meets the criteria for a hedge that is expected to be "highly effective" under Accounting Standards Codification 815, Derivatives and Hedging, that is, prospective hedge effectiveness testing using the regression approach must show both a slope (m) greater than or equal to 0.80 and less than or equal to 1.25 and an R-squared correlation coefficient of greater than or equal to 0.80.

Appropriate memoranda on approved forms that designate specific derivative contracts for hedge accounting treatment shall be prepared except for intra-month and prompt month purchases.

Credit Risk Management

With respect to our loan to Enterprises and any additional loans we make through our Aspirity Financial subsidiary, we will be exposed to counterparty credit risk. Consistent with our existing Term Loan with Enterprises, we will conduct due diligence on any prospective borrower and will include covenants to protect our financial interest as a lender in future loan transactions.

In connection with the retail electricity business, retailers like the Company may provide trade credit to both utilities and retail customers. As part of implementing retail choice, all states with restructured retail energy markets have put in place laws and regulations with respect to permitted billing, credit, and collections practices. Once we start operations, this will expose us to certain credit risks which we plan to manage in different ways.

We intend to implement a credit policy and underwriting strategy consistent with the summary presented below, which will allow us to prudently accept any business in non-POR areas by taking deposits only from the riskiest accounts. Collection activity and cost is largely eliminated since if a customer fails to pay in a timely fashion, then we will simply cease providing service and apply the deposit to the outstanding bill.

Our retail credit underwriting policy is summarized as follows:

If a prospect is located in a POR area, we will accept the account as the utility is the account obligor.

If a prospect is located in a non-POR area and is a residential account, we will check their three-bureau FICO score:

If the score is above a certain threshold, we will accept the account without a deposit.

If the score is below the threshold, we will accept the account with a deposit equal to the dollar value of 90 days of expected energy sales.

If a prospect is located in a non-POR area and is a non-residential account, we will check their trade credit score:

If the score is above the threshold level, we will accept the account without a deposit.

If the score is below the threshold, we will accept the account with a deposit equal to the dollar value of 90 days of expected energy sales.

To size any deposits required, we will estimate or check the account’s last 12 months of historical energy usage and the most recent average forecast wholesale energy price for the area for the next 12 months. Our general deposit sizing formula is as follows: Deposit = annual kWh usage x average energy price/kWh ÷ 100 x deposit factor of 25%.

After a year of prompt payments on their account, the customer may elect to either have their deposit returned to them or applied to their account.

Under New Jersey’s recourse POR rules, retailers have no exposure to customer credit risk provided that the customer is billed via UCB. However, if an electric account is in default for 90 days (about 120 days from invoice date), the utility has the option to convert the customer to “dual billing”. New Jersey utilities periodically review their accounts receivable and designate “dual billers” as appropriate.

If an account is not designated as a “dual biller”, no collection action is required.

If an account is designated as a “dual biller”, then we will drop the account.

If no balance is due, then nothing needs to be done.

If a balance is due, an invoice will be sent to the customer. The customer has 30 days to respond with either a payment or a disputation.

If full payment is received, then it is applied to the balance due, and the account is closed.

If partial payment is received, then it is applied to the balance due, and 15 days later, a new invoice is sent requesting payment of the new balance.

If a payment is not received, then the account is added to the collection agency’s list which is updated if the amount exceeds $50.

If the agency’s collection effort is successful, then it will notify us via email with respect to the total amount they were able to collect, followed within two weeks by a receipt and check for the amount collected, less their fee. Customer accounts are not credited until the agency’s check is received.

If the collection effort is unsuccessful after 90 days, then the account balance will be written off.

Competition

We will compete with local utility companies in the areas where we provide service. Some utilities have affiliated companies that are retail energy suppliers, and many compete in the same markets as we do. We also compete with large energy companies as well as many independent suppliers. Many of these competitors or potential competitors may be larger and better capitalized than we are. This competition may negatively impact our ability to obtain customers and over time will expose us to the risk of losing customers, especially since our customers generally will not sign long term contracts.

Financial Services

We expect our financial services business to be primarily focused on commercial and consumer lending opportunities in the energy sector, an area in which we have long experience. We also expect to consider investments in wholesale power, retail power, and energy-related products and services. As part of the use of proceeds in this offering, our financial services subsidiary intends to loan funds to Enterprises.

Seasonality

The sale of electric power to retail customers is a seasonal business. As a result, net working capital requirements for the Company's retail operations generally will increase during peak months and then decline during off-peak months. Weather may impact operating results and extreme weather conditions could materially affect results of operations. The rates charged to retail customers may be impacted by fluctuations in total power prices and market dynamics like the price of natural gas, transmission constraints, competitor actions, and changes in market heat rates.

Intellectual Property

In 2013 and 2014, we capitalized $60,265 and $47,188 of development costs of internal-use software for use in our retail energy business, to be amortized on a straight-line basis over 36 months.

Personnel

As of the Distribution Date, we employed 5 persons (5 full-time and 0 part-time), all of whom are executives. Employee benefits available through, or paid by, us include medical and dental insurance, a 401(k) plan, employee-managed time off, and holiday pay.

We are presently engaged in extensive hiring efforts to our build staff. Initially, our ability to hire employees and build operations will depend in large part on having proceeds available from the sale of notes.

Regulatory Matters

In order to enter the retail energy services business, Aspirity Energy and its subsidiaries must obtain the necessary licenses from public utility commissions and other regulatory organizations to operate in each state. These agencies impose various requirements to obtain or maintain licenses.

We are required to comply with the rules and regulations of FERC, the CFTC with respect to energy futures contracts, the Federal Trade Commission, and the market rules and tariffs of the ISOs and RTOs of which we are a member. In addition to regulating our operations, FERC regulations also require us to make certain filings and applications for FERC approval prior to certain changes in our governance and ownership. In addition to applicable Federal laws and regulations, we are also subject to the laws and regulations of the states in which we conduct business.

As Aspirity Financial expands to provide additional loans and consumer financing, we will also be subject to additional regulations.

Facilities

We are headquartered at 701 Xenia Avenue, Suite 475, Golden Valley, Minnesota 55416, telephone (763) 432-1501. Pursuant to our office sublease, which commenced on July 1, 2015 and will terminate on May 31, 2017, from August 1, 2015 through May 31, 2017, we will make monthly rent payments of $10,671. This is our only location at the present time. We do not engage in any production or manufacturing activities, and we do not have any environmental issues related to our operations.

Legal Proceedings

See “Note 16 – Commitments and Contingencies” to our unaudited consolidated financial statements at and for the six months ended June 30, 2015 and “Note 19 – Commitments and Contingencies” to our audited consolidated financial statements at and for the year ended December 31, 2014.

MANAGEMENT

Directors and Executive Officers

Pursuant to the terms of our Operating Agreement, our affairs are managed by our board of directors (the “Board”). Directors hold office until the election and qualification of their successors and generally serve the same role as directors do for corporations, although we are organized as a limited liability company. Officers are elected by the Board and serve at their direction.

On the date of the Distribution that completed our recent Restructuring, Timothy Krieger left his position as Chief Executive Officer of Aspirity, but he remains Chairman of the Board. Mark A. Cohn left his position with Apollo, and became President and Chief Executive Officer of Aspirity. Wiley H. Sharp III continued to serve as our Vice President and Chief Financial Officer. Scott C. Lutz and Jeremy E. Schupp left their positions with Apollo and became Vice President and Chief Marketing Officer and Vice President and Chief Supply Officer, respectively, of Aspirity. We also disbanded our Risk Management Committee. Keith W. Sperbeck and Stephanie E. Staska, formerly our Vice President - Operations and Vice President - Risk Management, respectively, now work for Enterprises and are no longer executive officers of Aspirity. Messrs. Cohn, Sharp, and Lutz hold no offices at Enterprises or any of its subsidiaries.

The following table lists our current executive officers and directors:

Name	Age	Position
Timothy S. Krieger	49	Chairman of the Board
Mark A. Cohn	58	President, Chief Executive Officer, and Director
Wiley H. Sharp III	58	Vice President and Chief Financial Officer
Scott C. Lutz	56	Vice President and Chief Marketing Officer
Jeremy E. Schupp	41	Vice President and Chief Supply Officer
William M. Goblirsch (1, 2)	71	Director
Paul W. Haglund (1, 2)	49	Director
David B. Johnson (1, 2)	64	Director


(1) Member of the Audit Committee. (2) Member of the Compensation Committee.

Timothy S. Krieger founded the Company in July 2006 and has served as the Chairman of the Board, Chief Executive Officer and President of the Company and its predecessors from their dates of inception through the Distribution Date, and continues to serve as our Chairman of the Board. On the Distribution Date, Mr. Krieger resigned from all other officer positions with Aspirity and its subsidiaries. Mr. Krieger currently serves as the Chairman of the Board and Chief Executive Officer of Enterprises. Until January 2010, Mr. Krieger was a governor, co-founder, and the Secretary and Treasurer of Fairway Dairy & Ingredients, LLC (“FDI”), a buyer and seller of dairy commodities, and FDI’s affiliates. Mr. Krieger graduated from Iowa State University in 1989 with a BBA in marketing. The principal qualifications that led to Mr. Krieger’s selection as a Director include his extensive experience with the Company and its businesses.

Mark A. Cohn was elected as the Company’s President and Chief Executive Officer effective as of the Distribution Date and has served as a Director since January 2013. From January 1 until the Distribution Date, Mr. Cohn was an employee of our former subsidiary, Apollo. Mr. Cohn also is currently the Chairman and Chief Executive Officer of Third Season, LLC, a company founded as an incubator of micro-consumer marketing companies, a position he has held since founding the company in 2003. During 2010, he was also the Managing Director and Chief Executive Officer of Dorado Ocean Resources Limited, a deep ocean mining company, from April 2010 to March 2011. From 2003 to 2009, he served as Chief Executive Officer of Second Act, an e-commerce company focused on the resale of consumer electronics. Mr. Cohn served as Chairman, President and Chief Executive Officer of Intelefilm Corporation from October 2001 to August 2002. From its inception in 1986 until February 2001, Mr. Cohn was founder and Chief Executive Officer of Damark International, Inc., a consumer catalog company. During that time, Damark grew to become one of the nation’s largest consumer marketing companies with revenues of $600 million. At its peak, Damark had a market capitalization of over $500 million and employed 2,000 people in three states. Mr. Cohn currently serves as a member of the Board of Directors of Christopher and Banks Corporation, a specialty retailer of women’s clothing (NYSE-CBK) with over 650 stores in the US. In 2012, the National Association of Corporate Directors named him a Governance Fellow. The principal qualifications that led to Mr. Cohn’s selection as a Director include his extensive experience with public reporting companies, and in direct marketing and finance.

Wiley H. Sharp III was appointed Vice President and Chief Financial Officer of the Company on March 6, 2012. Mr. Sharp is also a co-founder and Partner of Altus Financial Group LLC, a boutique investment banking firm specializing in the institutional placement of senior debt facilities, junior capital, and project financing, a position he has held since 2005. From March 2012 to April 2015, Mr. Sharp was a non-employee registered representative of First Liberties Financial. From May to October 2011, Mr. Sharp also served as Vice President - Finance for Christopher & Banks Corporation, a publicly traded retailer of women’s clothing. Mr. Sharp graduated from Tulane University in 1979 with a BS in management. He currently holds Series 79 (Investment Banking Representative), Series 7 (General Securities Representative), and Series 63 (Uniform State Securities Law) FINRA licenses.

Scott C. Lutz was appointed Vice President and Chief Marketing Officer of the Company effective as of the Distribution Date. Prior to that, Mr. Lutz was an employee of our former subsidiary, Apollo, since May 2015. Before joining Apollo, he worked as a consultant for TK&O Catalysts, a boutique consultancy combining business strategy and commercialization tactics, which Mr. Lutz founded in June 2012. From October 2010 through June 2012, Mr. Lutz served as CEO of Grocery Shopping Network, Inc., an early stage company building digital loyalty solutions for consumers, retailers and advertisers. Prior to that, he served as Chief Marketing Officer for Life Time Fitness, a $1.6B health & wellness fitness club operator, from May 2008 through June 2012. Over the past 25 years, Mr. Lutz has held C-level officer and executive roles at Best Buy, General Mills and Procter & Gamble as well as serving on the boards of multiple private and non-profit organizations. Mr. Lutz presently serves on the board of directors for The E.A.Sween Company and Emergency Physicians P.A. Mr. Lutz graduated from the University of Missouri with a BS in Chemical Engineering (1981).

Jeremy E. Schupp was appointed Vice President and Chief Supply Officer of the Company effective as of the Distribution Date. Prior to that, Mr. Schupp was an employee of our former subsidiary, Apollo, since September 2015. Before joining Apollo, he was President and CEO of energy.me, LLC, a retail energy marketer, with $140 million in annual sales, supplying the electricity needs of more than 10,000 residential and commercial consumers across PJM and MISO from January 2013 through September 2015. From April 2012 through January 2013, Mr. Schupp was Director of Consulting for INTL FCStone Inc., a global supplier of customized price risk management services to commodity producers and consumers with annual operating revenue of more than $500 million. Prior to that, Mr. Schupp was Group Manager - Commodity Procurement for Nestle USA from June 2008 through April 2012.

William M. Goblirsch was elected a Director in May 2012 and became an independent financial consultant in December 2006. From January 2013 to December 2014, Mr. Goblirsch was employed as Chief Financial Officer of Tzfat Spirits of Israel, LLC and also served as a member on its board. Mr. Goblirsch is an independent financial consultant and certified public accountant (inactive license) who started his career in 1966 with Arthur Andersen & Co. From 2003 to 2006, he served at various times as financial consultant to the creditors' committee, Executive Vice President and Chief Financial Officer, and board member of Stockwalk Group Inc. Prior to 2003, among other roles, he served as an independent financial consultant or financial officer for a blender, packager and distributor of oil products and lubricants; a cellular air time reseller; and a shopping mall franchisor of dental centers. The principal qualifications that led to Mr. Goblirsch's selection as a Director include his extensive financial background.

Paul W. Haglund became a Director of the Company on June 30, 2015. He has owned and operated Paul Haglund & Co., LLC, a public accounting practice serving small businesses headquartered in Lakeville, MN since 1994. He graduated from the College of St. Thomas in 1988 with a degree in accounting. The principal qualifications that led to Mr. Haglund’s selection as a Director include his extensive financial background.

David B. Johnson has served as a Director of the Company since December 2011. Mr. Johnson is currently Chief Executive Officer of Cedar Point Capital, LLC, a private company that raises capital for early stage companies, a position he has held since May 2007. Prior to forming Cedar Point, he served as a Managing Director of Private Placements at Stifel, Nicolaus & Company, an investment banking firm, beginning in December 2006 when Stifel purchased Miller Johnson Steichen Kinnard, Inc., an investment banking firm specializing in high-tech, medical device and other start-up and growth companies, of which Mr. Johnson was a founder, and lastly served as Chief Executive Officer. Mr. Johnson graduated from Augsburg College in Minneapolis, Minnesota in 1973 with a BS in business. The principal qualifications that led to Mr. Johnson’s selection as a Director include his experience with growth companies and companies that undergo initial public offerings.

Board Composition, Election of Directors, and Committees

Our Board currently consists of five members. All directors serve for an indefinite term until the election and qualification of their successors. Three of our directors, William Goblirsch, David Johnson and Paul Haglund, are independent as defined by the applicable rules of The Nasdaq Stock Market. While we have not applied for listing on Nasdaq or any other securities exchange or market, we have chosen to apply Nasdaq’s independence standards in making our determination of independence.

Our Board has established an Audit Committee and a Compensation Committee. We do not have a nominating committee and have not appointed directors to participate in nomination functions.

Audit Committee

Our Audit Committee consists of William Goblirsch, who serves as chair and the financial expert, David Johnson and Paul Haglund. The Audit Committee assists our Board in its oversight of the integrity of our consolidated financial statements, our independent registered public accounting firm’s qualifications and independence, and the performance of our independent registered public accounting firm. A copy of the audit committee charter is available on our website at www.aspirityholdings.com.

The Audit Committee’s responsibilities include:

Appointing, approving the compensation of, and assessing the independence of, our independent registered public accounting firm;

Overseeing the work of our independent registered public accounting firm, including the receipt and consideration of reports;

Reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly consolidated financial statements and related disclosures;

Monitoring our internal control over financial reporting, disclosure controls and procedures, and code of business conduct and ethics;

Establishing procedures for the receipt and retention of accounting-related complaints and concerns;

Meeting independently with our independent registered public accounting firm and management; and

Preparing the Audit Committee report required by SEC rules.

All audit and non-audit services, other than de minimus non-audit services to be provided by our independent registered public accounting firm must be approved in advance by our Audit Committee.

Compensation Committee

Prior to the Distribution Date, our Compensation Committee consisted of Mark Cohn, who served as chair, David Johnson, and William Goblirsch. As the CEO of the Company, Mr. Cohn has resigned from the Committee, Paul Haglund has been appointed to the Committee, and Mr. Johnson has assumed the position of chair. The Compensation Committee assists our Board in the discharge of its responsibilities relating to the compensation of our executive officers. A copy of the compensation committee charter is available on our website at www.aspirityholdings.com.

The Compensation Committee’s responsibilities include:

Reviewing, approving, or making recommendation to the Board with respect to our chief executive officer’s compensation;

Evaluating the performance of our executive officers and reviewing, approving, or making recommendations to the Board with respect to the compensation of our executive officers;

Overseeing and administering, and making recommendations to the Board with respect to any cash and equity incentive plans that the Board may adopt; and

Reviewing and making recommendations to the Board with respect to director compensation.

Board Meetings and Committee Meetings

The Board of Directors and our former Risk Management Committee each held four meetings during the 2014 calendar year. The Audit Committee held five meetings during the 2014 calendar year and the Compensation Committee held one meeting during the same period. No director attended less than 75% of the meetings during the 2014 fiscal year.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation paid to our Principal Executive Officer (“PEO”) and named executive officers during the years ended December 31, 2014 and 2013:

Name and Principal Position	Year		Salary ($)		Bonus ($)		Other Incentive Compen- sation ($) (1)		All Other Compen- sation ($) (2)		Total ($)
Timothy S. Krieger		2014		300,000		–		–		14,055		314,055
Chairman of the Board;		2013		600,000		–		–		17,320		617,320
Former President and Chief
Executive Officer

Mark A. Cohn (3)		2014		–		–		–		–		–
President and Chief		2013		–		–		–		–		–
Executive Officer (PEO)

Wiley H. Sharp III		2014		168,000		100,000		–		9,350		277,350
Vice President - Finance		2013		173,500		25,000		–		4,790		203,290
and Chief Financial Officer

Keith W. Sperbeck		2014		180,000		75,000		–		18,887		273,887
Former Vice President - Operations		2013		180,000		–		–		23,554		203,554
and Secretary

Stephanie E. Staska		2014		175,000		35,000		–		22,801		232,801
Former Vice President – Chief		2013		150,000		45,000		–		22,234		217,234
Risk Officer

(1)	The Company does not have an incentive stock plan, non-equity incentive plan, or non-qualified deferred compensation plan. There were no equity awards, option awards, non-equity incentive plan compensation, or non-qualified deferred compensation earnings.

(2)	Other compensation consists of health care premiums paid on behalf of the employee and, in the case of Ms. Staska, tuition reimbursement.

(3)

Mr. Cohn was elected as Chief Executive Officer effective as of the Distribution Date. He was not employed by the Company or its subsidiaries in 2014 or 2013. Mr. Cohn did receive board fees as disclosed below under Director Compensation. He also received $160,000 in compensation from Apollo for the period January 1, 2015 through August 31, 2015.

Outstanding Equity Awards

The Company does not have an incentive stock plan, non-equity incentive plan, or non-qualified deferred compensation plan. There were no stock awards, option awards, non-equity incentive plan compensation, or non-qualified deferred compensation earnings for any of our named executive officers outstanding as of the end of our last completed fiscal year. On the Distribution Date, the Company granted 1,654 Class B units to Mark Cohn, our Chief Executive Officer, and 1,654 Class B units to Wiley Sharp, our Vice President and Chief Financial Officer

Director Compensation

Current compensation to Board and Committee members is as follows:

Each non-employee director attending board meetings in person - $5,000.

Each non-employee director attending a committee meeting in person and serving as chair - $1,500.

Each non-employee director attending a committee meeting in person - $1,000.

Any Board or Committee meeting attended telephonically reduces fees by one-half.

The Company does not have an incentive stock plan, non-equity incentive plan, or non-qualified deferred compensation plan, or provide retirement benefits for directors. The amount of compensation each director received in 2014 is shown in the table below:

Name and Committee Assignments

Fees Earned or Paid in Cash
($) (1)

Stock Awards
($) (2)

Total
($)

Mark A. Cohn (3)

28,000

–

28,000

William M. Goblirsch

27,000

–

27,000

Chairman, Audit Committee

Member, Compensation Committee

David B. Johnson

24,500

–

24,500

Chairman, Risk Management Committee

Member, Compensation Committee

(1)

Represents cash payments of meeting fees and additional payments for service as committee chairs or members.

(2)

The Company does not have an incentive stock plan, non-equity incentive plan, or non-qualified deferred compensation plan, and consequently, there were no stock awards, option awards, non-equity incentive plan compensation, or non-qualified deferred compensation earnings.

(3)

Mr. Cohn is now employed as our Chief Executive Officer and will no longer receive board fees.

Retirement Plans

Except as described below, we currently have no plans that provide for the payment of retirement benefits, or benefits that will be paid primarily following retirement, including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans, tax-qualified defined contribution plans, and nonqualified defined contribution plans.

The Company maintains a 401(k) plan that is tax-qualified for its employees, including its executive officers. The plan does not offer employer matching, however, it does offer a discretionary employer contribution at year-end. No discretionary contributions have been made.

Potential Payments upon Termination or Change-in-Control

Except as described below under “Employment Agreements”, we currently have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to a named executive officer at, following, or in connection with any termination, including without limitation resignation, severance, retirement, or a constructive termination of a named executive officer, or a change in control of the Registrant or a change in the named executive officer’s responsibilities, with respect to each named executive officer.

Employment Agreements

The following are summaries of our employment agreements with our named executive officers.

Wiley H. Sharp III: On June 16, 2013, we entered into an employment agreement with Mr. Sharp pursuant to which Mr. Sharp serves as our Vice President and Chief Financial Officer. On December 19, 2014, the Company and Mr. Sharp amended his employment agreement. The amendment provides that the Company shall pay Mr. Sharp a salary of $14,000 per month, subject to review and adjustment by the Company on a monthly basis based on both Mr. Sharp’s performance and the performance of the Company. The Amendment provides further that Mr. Sharp is entitled to participate in all benefit plans adopted by the Company, and is entitled to 20 days per year of personal time off. As part of the Amendment, the Company paid Mr. Sharp a discretionary bonus of $100,000 for 2014, but will no longer pay Mr. Sharp severance upon his separation from the Company.

Compensation Policies and Practices as They Relate to Risk Management

We believe that risks arising from our compensation policies and practices for our employees, and the respective policies and practices for our subsidiaries, are not reasonably likely to have a material adverse effect on us. In addition, our Board believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks.

Indemnification of Directors and Executive Officers and Limitations of Liability

Under our Operating Agreement, as amended (the “Operating Agreement”), we indemnify our directors and officers against liabilities they may incur in such capacities including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Operating Agreement provides for the indemnification, to the fullest extent permitted by the Securities Act and Minnesota law, as amended from time to time, of officers, directors, employees, and agents of the Company. We may, prior to the final disposition of any proceeding, pay expenses incurred by an officer or director upon receipt of an undertaking by or on behalf of that director or officer to repay those amounts if it should be determined ultimately that he or she is not entitled to be indemnified under the Operating Agreement or otherwise. We shall indemnify any officer, director, employee or agent upon a determination that such individual has met the applicable standards of conduct specified in the Operating Agreement. In the case of an officer or director, the determination shall be made (1) by the Board by a majority vote of a quorum consisting of directors who are not parties to such action, suit, or proceeding or (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by a majority vote of disinterested members.

The Operating Agreement provides that each director will continue to be subject to liability for any act or omission that constitutes fraud, willful misconduct, bad faith, gross negligence, or a breach of the Operating Agreement.

We have entered into indemnification agreements with our officers and directors. These agreements provide each such individual with indemnification retroactively for actions taken in his or her role as an officer or director to the Company.

We have been advised that in the opinion of the Securities and Exchange Commission, insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by its director, officer, or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

At present, there is no pending litigation or proceeding involving any of our directors, officers, or employees in which indemnification is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information concerning beneficial ownership of our common units as of the Distribution Date for: (a) each director; (b) the executive officers as set forth in the Summary Compensation Table; and (c) the directors and current executive officers as a group. Unless otherwise indicated, each person has sole investment and voting power (or shares such powers with his or her spouse) with respect to the shares set forth in the following table.

Name and Principal Position of Beneficial Owner	Common Units		Percent of Common
Timothy S. Krieger (1)		4,960		44.99%
Chairman of the Board;

Mark A. Cohn (2)		1,654		15.00%
Chief Executive Officer, President and Director

Paul W. Haglund		–		0.00%
Director

William M. Goblirsch		–		0.00%
Director

David B. Johnson		–		0.00%
Director

Wiley H. Sharp III (2)		1,654		15.00%
Vice President and Chief Financial Officer

Scott C. Lutz (2)(3)		551		5.00%
Vice President and Chief Marketing Officer

Jeremy Schupp (2)(3)		551		5.00%
Vice President and Chief Supply Officer

Keith W. Sperbeck		1,654		15.00%
Former Vice President - Operations and Secretary

Stephanie E. Staska		–		0.00%
Former Vice President – Risk Management and Chief Risk Officer

All directors and executive officers as a group (10 persons)		11,024		100%

1 - Excludes 496 Series A preferred units owned by Mr. Krieger.

2 - Consists of Class B units which currently have governance rights only.

3 - Units vest ratably over a three year period beginning on the date of hire.

On the Distribution Date, the Company awarded 1,654 Class B units to each of Mark Cohn and Wiley Sharp, with such Class B units being fully vested on such date. On the same date, the Company awarded 551 Class B units to each of Scott Lutz, our Vice President and Chief Marketing Officer, and Jeremy Schupp, our Vice President and Chief Supply Officer. The Class B units issued to Messrs. Lutz and Schupp vest in three equal annual installments beginning on the first anniversary of their respective hire dates provided the holder remains employed by the Company on each vesting date. Keith Sperbeck purchased 1,654 Class B units on the Distribution Date.

Class A units have voting and financial rights. Class B units have voting rights but no financial rights. Upon Aspirity achieving net income, as defined in our Operating Agreement, all outstanding Class B units automatically convert into Class A units on a one-for-one basis. Upon a conversion from a limited liability company to a corporation, all Class A and Class B units automatically convert into shares of common stock on a one-for-one basis.

CERTAIN RELATIONSHIPS, RELATED PARTY TRANSACTIONS, AND GOVERNOR INDEPENDENCE

The following is a description of certain transactions and relationships between us and our directors, officers, and other affiliates during the past two years. Other than in connection with the transactions described below, we have not been a party to, and we have no plans to be a party to, any transaction or series of similar transactions in which the amount involved exceeded or will exceed $120,000 and in which any director, executive officer, holder of more than 5% of our units of limited liability company interest, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest.

Related Party Transactions

Interest expense associated with notes payable to related parties was $31,550 for the year ended December 31, 2013. There were no notes payable to related parties at December 31, 2014.

Effective January 1, 2013, in connection with the purchase of David B. Johnson’s units by Timothy S. Krieger (our current Chairman and former Chief Executive Officer), the Company entered into a non-competition agreement with Mr. Johnson, a current director and former member of the Company, pursuant to which the Company was obligated to pay DBJ 2001 Holdings, LLC, a company controlled by Mr. Johnson, $500,000 in 24 equal monthly installments of $20,833 each. The total amount paid each year pursuant to the agreement during the years ended December 31, 2014 and 2013 was $250,000.

In connection with the Company’s initial investment of $1.0 million in Ultra Green, Ultra Green paid a 10% commission of $100,000 to Cedar Point Capital, LLC, a registered broker dealer (“Cedar Point”). David B. Johnson, a director of the Company, is the sole owner of Cedar Point.

Restructuring and Term Loan

As described in the “Prospectus Summary – Recent Restructuring” section of this prospectus, the final step in the Restructuring was the Distribution of 100% of the equity interests of Enterprises to our members, Timothy S. Krieger (our current Chairman and former Chief Executive Officer) and Summer Enterprises, LLC (a company controlled by Mr. Krieger). Following the completion of the Restructuring, Mr. Krieger beneficially owns and controls 100% of Enterprises. In addition, after the Distribution, Mr. Krieger will continue to own 100% of the issued and outstanding Class A units of the Company, entitling him to 100% of the financial benefits and approximately 44.99% of the governance rights.

Effective July 1, 2015, Aspirity Financial entered into a Term Loan Agreement (the “Term Loan”) with Enterprises, pursuant to which Aspirity Financial loaned Enterprises an aggregate principal amount of $22,205,613 with a weighted average interest rate of 14.08%. The repayment schedule of the Term Loan provides for monthly true-ups, reflects the outstanding principal amount and weighted average interest rate of the Existing Notes as of June 30, 2015, the maximum possible monthly redemptions of our Existing Notes in a given month, and a portion of the costs incurred by the Company as a public reporting company. Mr. Krieger has pledged the equity interests of Enterprises to Aspirity Financial to secure repayment of the Term Loan. The maturity date of the Term Loan is December 30, 2019. Prior to the Distribution, the Term Loan was accounted for as an intercompany transaction and eliminated in consolidation, but now it is treated as an arm’s length loan between two commercial entities.

As described in the “Use of Proceeds” section of this prospectus, we intend to use a portion of the proceeds from the sale of the notes to make additional loans to Enterprises. We expect that any such future loan would be made on similar terms to the current Term Loan.

Real Estate Leases

The building in Lakeville, Minnesota in which the Company leased office space for its corporate headquarters prior to the Restructuring is owned by Kenyon, an entity owned by Timothy S. Krieger (our Chairman and former Chief Executive Officer) and Keith W. Sperbeck (our former Vice President of Operations). On January 1, 2013, the Company and Kenyon entered into a five year lease expiring December 31, 2017 for 11,910 square feet at a monthly rent of $12,264. On September 25, 2014, the lease was amended to reduce the square footage to 10,730 and monthly rent to $11,113. For rent, real estate taxes, and operating expenses, the Company paid Kenyon $235,000 and $227,200 for the years ended December 31, 2014 and 2013, respectively. Aspirity transferred this lease to Enterprises in connection with the Restructuring.

On June 17, 2014, the building in which the Company leases its Chandler, Arizona office space occupied by certain of its Legacy Business retail energy business functions was purchased by Fulton Marketplace, LLC (“Fulton”), a company owned by Mr. Krieger and Mr. Sperbeck. Effective August 1, 2014, the Company and Fulton entered into a five year lease expiring July 31, 2019, subject to two consecutive five year extension periods, for 2,712 square feet. The rent for the first lease year is $4,068 per month and it will increase by 3% annually at the start of each lease year thereafter. The Company paid $26,700 to Fulton for the year ended December 31, 2014 for rent, real estate taxes, and operating expenses. This lease was assigned to Enterprises in connection with the Restructuring.

Fulton is the owner of a single family residence located in Chandler, Arizona. Effective December 1, 2014, Fulton and REH entered into a seven month lease expiring June 30, 2015 with respect to the property for rent of $2,800 per month.

On December 23, 2014, via an assignment and assumption agreement between Cyclone and Kenyon, Cyclone took ownership of a 10 acre parcel of undeveloped land located at 170xx Texas Avenue, Credit River Township, Minnesota and assumed a note secured by a mortgage on the property and owed to Lakeview Bank. The total acquisition cost paid to Kenyon was $52,000 and represented Kenyon’s total expenditures on the property (interest, closing fees, and property taxes) since its acquisition in 2013.

DESCRIPTION OF THE NOTES

General

The renewable unsecured subordinated notes in the aggregate principal amount of up to $75 million offered by us will represent subordinated, unsecured debt obligations of Aspirity. We will issue the notes under an indenture, as supplemented from time to time, between Aspirity and BOKF, NA dba Bank of Oklahoma, as trustee. The terms and conditions of the notes include those stated in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939 (the “TIA”). In accordance with the requirements of the TIA, the notes will be issued under an indenture that complies with the TIA’s substantive requirements. The following is a summary of the material provisions of the indenture. For a complete understanding of the notes, you should review the definitive terms and conditions contained in the indenture, which include definitions of certain terms used below. A copy of the indenture and any supplements thereto have been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part and is available from us at no charge upon request.

The notes will be subordinated in right of payment to the prior payment in full of all our secured, unsecured (other than Existing Notes), senior or subordinate indebtedness, as well as all other financial obligations of the Company, whether outstanding on the date of this prospectus or incurred after the date of this prospectus, whether such indebtedness is or is not specifically designated as being senior debt in its defining instruments, other than any future offerings of additional renewable unsecured subordinated notes, which will rank equally with the notes. Subject to limited restrictions contained in the indenture discussed below, there is no limit under the indenture on the amount of additional debt we may incur. See “- Subordination” below.

The notes are not secured by any collateral or lien and we are not required to establish or maintain a sinking fund to provide for payments on the notes. See “- No Security; No Sinking Fund” below. In addition, the notes are not bank certificates of deposit and are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation, or any other agency or company.

You may select the amount, subject to a minimum principal amount of $1,000, and term, ranging from 3 months to 10 years, of the notes you would like to purchase when you subscribe; however, depending upon our capital requirements, we may not always offer notes with the requested terms. See “- Denomination” and “- Term” below.

We will determine the rate at which we will pay you interest on the notes at the time of subscription and the rate will be fixed for the term of your note. Currently available rates will be set forth in interest rate supplements to this prospectus. The interest rate will vary based on the term to maturity of the note you purchase and the total principal amount of all notes owned by you. We may change the interest rates at which we are offering new or renewed notes based on market conditions, the demand for notes and other factors. See “- Interest Rate” below.

Upon acceptance of your subscription to purchase notes, we will create an account in a book-entry registration and transfer system for you, and credit the principal amount of your subscription to your account. We will send you a purchase confirmation that will indicate our acceptance of your subscription. You will have five business days from the postmark date of your purchase confirmation to rescind your subscription. If your subscription is rejected, or if you rescind your subscription during the rescission period, all funds deposited will be promptly returned to you without any interest. See “- Book-Entry Registration and Transfer” and “- Rescission Right” below. Investors whose subscriptions for notes have been accepted and anyone who subsequently acquires notes in a qualified transfer are referred to as “holders” or “registered holders” in this prospectus and in the indenture.

We may modify or supplement the terms of the notes described in this prospectus from time to time in a supplement to the indenture and a supplement to this prospectus. Except as set forth under “- Amendment, Supplement and Waiver” below, any modification or amendment will not affect notes outstanding at the time of such modification or amendment.

Denomination

You may purchase notes in the minimum principal amount of $1,000 or any amount in excess of $1,000. You will determine the original principal amount of each note you purchase when you subscribe. You may not cumulate purchases of multiple notes with principal amounts less than $1,000 to satisfy the minimum denomination requirement.

Term

We may offer notes with the following terms to maturity:

Three months

Six months

One year

Two years

Three years

Four years

Five years

Ten years

You will select the term of each note you purchase when you subscribe. You may purchase multiple notes with different terms by filling in investment amounts for more than one term on your subscription agreement. However, we may not always sell notes with all of the above terms.

Interest Rate

The rate of interest we will offer to pay you on notes at any particular time will vary based upon market conditions, and will be determined by the length of the term of the notes, the total principal amount of all notes owned by you, our capital requirements and other factors described below. The interest rate on a particular note will be determined at the time of subscription or renewal, and then remain fixed for the original or renewal term of the note. We will establish and may change the interest rates payable for notes of various terms and at various investment levels in an interest rate supplement to this prospectus.

The notes will earn incrementally higher interest rates when, at the time they are purchased or renewed, the aggregate principal amount of the note portfolio owned by the holder and the note portfolios owned by the holder's immediate family members increases above specified amounts. Immediate family members include parents, children, siblings, grandparents, and grandchildren. Members of sibling families are also considered immediate family members if the holder's sibling is also a note holder. Investors must identify on the subscription agreement or in accompanying correspondence the immediate family members who also own notes in order for their new and renewing notes to qualify for the higher interest rates that are based on their immediate family’s aggregate portfolio amount. The interest rates payable at each investment level will be set forth in an interest rate supplement to this prospectus.

Interest rates we offer on the notes may vary based on numerous factors in addition to length of the term and principal amount. These factors may include, but are not limited to:

The desire to attract new investors;

Whether the notes exceed certain principal amounts;

Whether the notes are being renewed by existing holders; and

Whether the notes are beneficially owned by persons residing in particular geographic localities

Computation of Interest

We will compute interest on notes on the basis of a calendar year consisting of 365 days. Interest will compound daily and accrue from the date of purchase. The date of purchase will be the date we receive and accept funds if the funds are received prior to 12:01 p.m. Central Time on a business day, or the next business day if the funds are received on a non-business day or at or after 12:01 p.m. Central Time on a business day. Our business days are Monday through Friday, except for legal holidays in the State of Minnesota.

Interest Payment Dates

Holders of notes may elect at the time a subscription agreement is completed to have interest paid either monthly, quarterly, semiannually, annually or at maturity. If you choose to have interest paid monthly, you may elect the day of the month on which interest will be paid, subject to our approval. For all other payment periods, interest will be paid on the same day of the month as the purchase date of your note. You will not earn interest on any rescinded note. See “- Rescission Right” below for additional information on your right to rescind your investment.

Place and Method of Payment

We will pay principal and interest on the notes by direct deposit to the account you specify in your subscription documents. We will not accept subscription agreements from investors who are unwilling to receive their interest payments via direct deposit. If the foregoing payment method is not available, principal and interest on the notes will be payable at our principal executive office or at such other place as we may designate for payment purposes.

Servicing Agent

We have engaged a non-affiliated third party to act as our servicing agent. Such person’s responsibilities as servicing agent involve the performance of certain administrative and customer service functions for the notes that we are responsible for performing as the issuer of the notes.

For example, the servicing agent will serve as our registrar and transfer agent and may manage certain aspects of the customer service function for the notes, which may include handling phone inquiries, mailing investment kits, processing subscription agreements, issuing quarterly investor statements and redeeming and repurchasing notes. In addition, the servicing agent will provide us with monthly reports and analysis regarding the status of the notes and the amount of notes that remain available for purchase.

You may contact us with any questions about the notes at the following address and telephone number:

Aspirity Notes

P.O. Box 4126

Hopkins, MN 55343

Telephone: 888-955-3385

Fax: 952-546-5585

Book-Entry Registration and Transfer

The notes are issued in book entry form, which means that no physical note is created. Evidence of your ownership is provided by written confirmation. Except under limited circumstances described below, holders will not receive or be entitled to receive any physical delivery of a certificated security or negotiable instrument that evidences their notes. The issuance and transfer of notes will be accomplished exclusively through the crediting and debiting of the appropriate accounts in our book-entry registration and transfer system.

The holders of the accounts established upon the purchase or transfer of notes will be deemed to be the owners of the notes under the indenture. The holders of the notes must rely upon the procedures established by the trustee to exercise any rights of a holder of notes under the indenture. We will regularly provide the trustee with information regarding the establishment of new accounts and the transfer of existing accounts.

We will also regularly provide the trustee with information regarding the total amount of any principal and/or interest due to holders with regard to the notes on any interest payment date or upon redemption.

On each interest payment date, we will credit interest due on each account and direct payments to the holders. We will determine the interest payments to be made to the book-entry accounts and maintain, supervise and review any records relating to book-entry beneficial interests in the notes.

Book-entry notations in the accounts evidencing ownership of the notes are exchangeable for actual notes in principal denominations of $1,000 and any amount in excess of $1,000 and fully registered in those names as we direct only if:

We, at our option, advise the trustee in writing of our election to terminate the book-entry system, or

After the occurrence of an event of default under the indenture, holders of more than 50% of the aggregate outstanding principal amount of the notes advise the trustee in writing that the continuation of a book-entry system is no longer in the best interests of the holders of notes and the trustee notifies all registered holders of the occurrence of any such event and the availability of certificated securities that evidence the notes.

Subject to the exceptions described above, the book-entry interests in these securities will not be exchangeable for fully registered certificated notes.

Rescission Right

A purchaser of notes has the right to rescind his or her investment, without penalty, upon written request within five business days from the postmark date of the purchase confirmation, but not upon transfer or automatic renewal of a note. You will not earn interest on any rescinded note. We will promptly return any funds sent with a subscription agreement that is properly rescinded. A written request for rescission, if personally delivered or delivered via electronic transmission, must be received by us on or prior to the fifth business day following the mailing of written confirmation by us of the acceptance of your subscription. If mailed, the written request for rescission must be postmarked on or before the fifth business day following the mailing of such written confirmation by us.

In addition, if your subscription agreement is accepted at a time when we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with the Securities and Exchange Commission, but such post-effective amendment has not yet been declared effective, we will send to you at your registered address a notice and a copy of the post-effective amendment once it has been declared effective. You will have the right to rescind your investment upon written request within five business days from the postmark date of the notice that the post-effective amendment has been declared effective. We will promptly return any funds sent with a subscription agreement that is properly rescinded without penalty, although any interest previously paid on the notes being rescinded will be deducted from the funds returned to you upon rescission. A written request for rescission, if personally delivered or delivered via electronic transmission, must be received on or prior to the fifth business day following the mailing of the notice that the post-effective amendment has been declared effective. If mailed, the written request for rescission must be postmarked on or before the fifth business day following the mailing of such notice.

The limitations on the amount of notes that can be redeemed early in a single calendar quarter described under “- Redemption or Repurchase Prior to Stated Maturity” below do not affect your rescission rights.

Right to Reject Subscriptions

We may reject any subscription for notes in our sole discretion. If we reject a subscription for notes, we will promptly return any funds sent with that subscription, without interest.

Renewal or Redemption at Maturity

Approximately 15, but not less than 10 days prior to maturity of your note, we will send you a notice at your registered address indicating that your note is about to mature and whether we will allow automatic renewal of your note. If we allow you to renew your note, we will also send to you the then current form of prospectus, which will include an interest rate supplement and any other required updates to the information contained in this prospectus. The interest rate supplement will set forth the interest rates then in effect. The notice will recommend that you review the then current prospectus, including any prospectus supplements, and the interest rate supplement, prior to exercising one of the below options. If we do not send you a new prospectus because the prospectus has not changed since the delivery of this prospectus in connection with your original subscription or any prior renewal, we will send you a new prospectus upon your request.

Unless the election period is extended as described below, you will have until 15 days after the maturity date to exercise one of the following options:

You can do nothing, in which case your note will automatically renew for a new term equal to the original term at the interest rate in effect at the time of renewal. If your note pays interest only at maturity, all accrued interest will be added to the principal amount of your note upon renewal. For notes with other payment options, interest will be paid on the renewed note on the same schedule as the original note.

You can elect repayment of your note, in which case the principal amount will be repaid in full along with any accrued but unpaid interest. To exercise this option, you will need to send a written request to us. If you choose this option, your note will not earn interest on or after the maturity date.

You can elect repayment of your note and use all or part of the proceeds to purchase a new note with a different term or principal amount. To exercise this option, you will need to complete a subscription agreement for the new note and mail it along with your request. The issue date of the new note will be the maturity date of the old note. Any proceeds from the old note that are not applied to the new note will be sent to you.

If your note pays interest only at maturity, you can receive the accrued interest that you have earned during the note term just ended while allowing the principal amount of your note to roll over and renew for the same term at the interest rate then in effect. To exercise this option, you will need to call, fax or send a written request to us.

Interest will accrue from the first day of each renewed term. Each renewed note will retain all its original provisions, including provisions relating to payment, except that the interest rate payable during any renewal term will be the interest rate that is being offered at that time to other holders with similar note portfolios for notes of the same term as set forth in the interest rate supplement delivered with the maturity notice. If similar notes are not then being offered, the interest rate upon renewal will be the rate specified by us on or before the maturity date, or the rate of the existing note if no such rate is specified.

If we notify the holder of our intention to repay a note at maturity, we will pay the holder the principal amount and any accrued but unpaid interest on the stated maturity date. Similarly, if, the holder requests repayment with respect to a note before the stated maturity date or within 15 days after a note’s stated maturity date, or during any applicable extension of the 15-day period, as described below, we will pay the holder the principal amount of the note plus accrued but unpaid interest up to, but not including, the note’s stated maturity date. In the event that a holder’s regularly scheduled interest payment date falls after the maturity date of the note but before the date on which the holder requests repayment, the holder may receive interest payments that include interest for periods after the maturity date of the note. If this occurs, the excess interest will be deducted from our final payment of the principal amount of the note to the holder. We will initiate payment to any holder timely requesting repayment by the later of the maturity date or five business days after the date on which we receive such notice from the holder. Because payment is made by ACH transfer, funds may not be received in the holder’s account for 2 to 3 business days. Requests for repayment should be made in writing.

We will be required from time to time to file post-effective amendments to the registration statement of which this prospectus is a part to update the information it contains. If you would otherwise be required to elect to have your notes renewed or repaid following their stated maturity at a time when we have determined that a post-effective amendment must be filed with the Securities and Exchange Commission, but such post-effective amendment has not yet been declared effective, the period during which you can elect renewal or repayment will be automatically extended until ten days following the postmark date of a notice, which will be sent to you at your registered address, that the post-effective amendment has been declared effective. In the event that a holder’s regularly scheduled interest payment date falls after the maturity date of the note but before the date on which the holder requests repayment, the holder may receive an interest payment that includes interest for periods after the maturity date of the note. If this occurs, the excess interest will be deducted from our final payment of the principal amount of the note to the holder. All other provisions relating to the renewal or redemption of notes upon their stated maturity described above shall remain unchanged.

Redemption or Repurchase Prior To Stated Maturity

The notes may be redeemed prior to stated maturity only as set forth in the indenture and described below. The holder has no right to require us to prepay or repurchase any note prior to its maturity date as originally stated or as it may be extended, except as indicated in the indenture and described below.

Redemption by Us. We have the right to redeem any note at any time prior to its stated maturity upon 30 days written notice to the holder of the note. The holder of the note being redeemed will be paid a redemption price equal to the outstanding principal amount thereof plus accrued and unpaid interest up to but not including the date of redemption without any penalty or premium. We may use any criteria we choose to determine which notes we will redeem if we choose to do so. We are not required to redeem notes on a pro rata basis.

Repurchase Election Upon Death or Total Permanent Disability. Notes may be repurchased prior to maturity, in whole and not in part, at the election of a holder who is a natural person, including notes held in an individual retirement account, by giving us written notice within 45 days following the holder’s total permanent disability, as established to our satisfaction, or at the election of the holder’s estate, by giving written notice within 45 days following his or her death. Subject to the limitations described below, we will repurchase the notes within 10 days after the later to occur of the request for repurchase or the establishment to our satisfaction of the holder’s death or total permanent disability. The repurchase price, in the event of such a death or total permanent disability, will be the principal amount of the notes, plus interest accrued and not previously paid up to but not including the date of repurchase. If spouses are joint registered holders of a note, the right to elect to have us repurchase will apply when either registered holder dies or suffers a total permanent disability. If the note is held jointly by two or more persons who are not legally married, none of these persons will have the right to request that we repurchase the notes unless all joint holders have either died or suffered a total permanent disability. If the note is held by a person who is not a natural person such as a trust, partnership, corporation or other similar entity, the right to request repurchase upon death or total permanent disability does not apply.

Repurchase at Request of Holder. In addition to the right to elect repurchase upon death or total permanent disability, a holder may request that we repurchase one or more of the holder’s notes prior to maturity, in whole and not in part, at any time by giving us written notice. Subject to our approval, at our sole discretion, and the limitations described below, we may repurchase the holder’s note(s) specified in the notice within 10 days of receipt of the notice. The repurchase price, in the event we elect to repurchase the notes, will be the principal amount of the note, plus interest accrued and not previously paid up to but not including the date of repurchase, minus a repurchase penalty. The early repurchase penalty for a note with a three month maturity is the interest accrued on such note up to the date of repurchase, not to exceed three months of simple interest at the existing rate. The early repurchase penalty for a note with a maturity of six months or longer is the interest accrued on such note up to the date of repurchase, not to exceed six months of simple interest at the existing rate.

Limitations on Requirements to Repurchase. Our obligation to repurchase notes prior to maturity for any reason will be subject to a calendar quarter limit equal to the greater of $500,000 or 1% of the total principal amount of all notes outstanding at the end of the previous calendar quarter. This limit includes any notes we repurchase upon death or total permanent disability of the holder and any notes that we repurchase pursuant to the holders’ request to elect repurchase. Repurchase requests related to death or total permanent disability will be honored in the order in which they are received, to the extent possible, and any such repurchase request not honored in a calendar quarter will be honored for repurchase in the next calendar quarter, to the extent possible, since repurchases in the next calendar quarter are also subject to these limits. Likewise, repurchase requests not related to the death or total permanent disability will be considered in the order in which they are received, and any such repurchase request not honored in a calendar quarter will be considered for repurchase in the next calendar quarter. For purposes of determining the order in which repurchase requests are received, a repurchase request will be deemed made on the later of the date on which it is received by us or, if applicable, the date on which the death or total permanent disability is established to our reasonable satisfaction.

Modifications to Repurchase Policy. We may modify the policies on repurchase in the future. No modification will affect the right of repurchase applicable to any note outstanding at the time of any such modification.

Transfers

The notes are not negotiable debt instruments and, subject to certain limited exceptions, will be issued only in book-entry form. The purchase confirmation issued upon our acceptance of a subscription is not a certificated security or negotiable instrument, and no rights of record ownership can be transferred without our prior written consent.

Ownership of notes may be transferred on the note register only as follows:

The holder must deliver to us written notice requesting a transfer signed by the holder(s) or such holder’s duly authorized representative on a form to be supplied by us.

We must provide our written consent to the proposed transfer.

We may require a legal opinion from counsel satisfactory to us that the proposed transfer will not violate any applicable securities laws.

We may require a signature guarantee in connection with such transfer.

Upon transfer of a note, we will provide the new holder of the note with a purchase confirmation that will evidence the transfer of the account on our records. We may charge a reasonable service charge in connection with the transfer of any note.

Quarterly Statements

We will provide holders of the notes with quarterly statements, which will indicate the account balance at the end of the quarter, interest credited, redemptions or repurchases made, if any, and the interest rate paid during the quarter. These statements will be mailed not later than the 10th business day following the end of each calendar quarter. We may charge such holders a reasonable fee to cover the charges incurred in providing such information.

Subordination

The indebtedness evidenced by the notes, and any interest thereon, is subordinated in right of payment to all of our senior debt. “Senior debt” means all of our secured, unsecured, senior or subordinate indebtedness, as well as all other financial obligations of the Company, whether outstanding on the date of this prospectus or incurred after the date of this prospectus, whether such indebtedness is or is not specifically designated as being senior debt in its defining instruments, other than Existing Notes and any future offerings of additional renewable unsecured subordinated notes, which will rank equally with the notes. Any documents, agreements or instruments evidencing or relating to any senior debt may be amended, restated, supplemented or renewed from time to time without requiring any notice to or consent of any holder of notes or any person or entity acting on behalf of any such holder or the trustee.

The indenture does not prevent holders of senior debt from disposing of, or exercising any other rights with respect to, any or all of the collateral securing the senior debt. As of June 30, 2015, we had $4,888,425 of debt outstanding that is senior to the notes.

Except for certain limited restrictions, neither the terms of the notes nor the indenture impose any limitation on the amount of senior debt or other indebtedness we may incur. See “Risk Factors - Risk Factors Relating to an Investment in the Notes - Because the notes rank junior to all of our existing and future debt and all other financial obligations, your notes will lack priority in payment.”

The notes are not guaranteed by any of our subsidiaries, affiliates or control persons. Accordingly, in the event of a liquidation or dissolution of one of our subsidiaries, creditors of that subsidiary will be paid in full, or provision for such payment will be made, from the assets of that subsidiary prior to distributing any remaining assets to us as a member of that subsidiary. Therefore, in the event of liquidation or dissolution of a subsidiary, no assets of that subsidiary may be used to make payment to the holders of the notes until the creditors of that subsidiary are paid in full from the assets of that subsidiary.

In the event of any liquidation, dissolution or any other winding up of us, or of any receivership, insolvency, bankruptcy, readjustment, reorganization or similar proceeding under the U.S. Bankruptcy Code or any other applicable federal or state law relating to bankruptcy or insolvency, or during the continuation of any event of default on the senior debt, no payment may be made on the notes until all senior debt has been paid in full or provision for such payment has been made to the satisfaction of the senior debt holders. If any of the above events occurs, holders of senior debt may also submit claims on behalf of holders of the notes and retain the proceeds for their own benefit until they have been fully paid, and any excess will be turned over to the holders of the notes. If any distribution is nonetheless made to holders of the notes, the money or property distributed to them must be paid over to the holders of the senior debt to the extent necessary to pay senior debt in full.

We will not make any payment, direct or indirect, whether for interest, principal, as a result of any redemption or repurchase at maturity, on default, or otherwise, on the notes and any other indebtedness being subordinated to the payment of the notes, and neither the holders of the notes nor the trustee will have the right, directly or indirectly, to sue to enforce the indenture or the notes, if a default or event of default under any senior debt has occurred and is continuing, or if any default or event of default under any senior debt would result from such payment, in each case unless and until:

The default and event of default has been cured or waived or has ceased to exist; or

The end of the period (the “blockage period”) commencing on the date the trustee receives written notice of default from a holder of the senior debt and ending on the earlier of:

The trustee’s receipt of a valid waiver of default from the holder of senior debt; or

The trustee’s receipt of a written notice from the holder of senior debt terminating such a payment blockage period.

Provided, however, that if any of the blockage events described above has occurred and 179 days have passed since the trustee’s receipt of the notice of default without the occurrence of the cure, waiver or termination of all blockage periods described above, the trustee may thereafter sue on and enforce the indenture and the notes as long as any funds paid as a result of any such suit or enforcement action shall be paid toward the senior debt until it is indefeasibly paid in full before being applied to the notes.

No Collateral Security; No Sinking Fund

The notes are unsecured, which means that none of our tangible or intangible assets or property, nor any of the assets or property of any of our subsidiaries, has been set aside or reserved to make payment to the holders of the notes in the event that we default on our obligations to the holders.

In addition, we will not contribute funds to any separate account, commonly known as a sinking fund, to repay principal or interest due on the notes upon maturity or default. See “Risk Factors - Risk Factors Relating to the Notes - Because the notes will have no sinking fund, security, insurance or guarantee, you may lose all or a part of your investment in the notes if we do not have enough cash to pay the notes.”

Restrictive Covenants

The indenture contains certain limited restricted covenants that restrict us from certain actions as set forth below. The indenture provides that, so long as the notes are outstanding:

We will not declare or pay any distributions or other payments of cash or other property solely in respect of our equity capital to our members, other than a distribution paid in units of our limited liability company interests on a pro rata basis to all our members, unless no default and no event of default with respect to the notes exists or would exist immediately following the declaration or payment of the distribution or other payment;

Our board of directors will not declare or pay any distributions to our members if, in the reasonable determination of the directors, we would have insufficient cash to meet anticipated redemption or repayment obligations; the foregoing restriction shall not apply to distributions in respect of taxes payable by our members with respect to net income or gains of the Company that have been allocated to our members;

To the extent legally permissible, we will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of the indenture; and

Neither our board of directors nor our members will adopt a plan of liquidation that provides for, contemplates or the effectuation of which is preceded by (a) the sale, lease, conveyance or other disposition of all or substantially all of our assets, otherwise than substantially as an entirety, and (b) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and of our remaining assets to the holders of our units of limited liability company interests, unless, prior to making any liquidating distribution pursuant to such plan, we make provision for the satisfaction of our obligations under the notes.

We are not restricted from incurring additional indebtedness. See “Risk Factors - Risk Factors Relating to the Notes - Because there are limited restrictions on our activities under the indenture, you will have only limited protection under the indenture”.

Consolidation, Merger or Sale

The indenture generally permits a consolidation or merger between us and another entity. It also permits the sale or transfer by us of all or substantially all of our property and assets. These transactions are permitted if:

The resulting or acquiring entity, if other than us, is a U.S. corporation, limited liability company or limited partnership and assumes all of our responsibilities and liabilities under the indenture, including the payment of all amounts due on the notes and performance of the covenants in the indenture; and

Immediately after the transaction, and giving effect to the transaction, no event of default under the indenture exists.

If we consolidate or merge with or into any other entity or sell or lease all or substantially all of our assets, according to the terms and conditions of the indenture, the resulting or acquiring entity will be substituted for us in the indenture with the same effect as if it had been an original party to the indenture. As a result, the successor entity may exercise our rights and powers under the indenture, in our name and we will be released from all our liabilities and obligations under the indenture and under the notes.

Events of Default

The indenture provides that each of the following constitutes an event of default:

Failure to pay interest on a note within 15 days after the due date for such payment, whether or not prohibited by the subordination provisions of the indenture;

Failure to pay principal on a note within 15 days after the due date for such payment, whether or not prohibited by the subordination provisions of the indenture;

Our failure to observe or perform any material covenant, condition or agreement or our breach of any material representation or warranty, but only after we have been given notice of such failure or breach and such failure or breach is not cured within 60 days after our receipt of notice;

Defaults in certain of our other payment obligations that result in such payment obligations becoming or being declared immediately due and payable and such declaration is not rescinded or annulled within 60 days after our receipt of notice of such declaration; and

Certain events of bankruptcy or insolvency with respect to us.

If any event of default occurs and is continuing, other than an event of default involving certain events of bankruptcy or insolvency with respect to us, the trustee or the holders of at least a majority in principal amount of the then outstanding notes may by notice to us declare the unpaid principal of and any accrued interest on the notes to be due and payable immediately. So long as any senior debt is outstanding, however, and a payment blockage period on the notes is in effect, a declaration of this kind will not be effective, and neither the trustee nor the holders of notes may enforce the indenture or the notes, except as otherwise set forth above in “- Subordination”. In the event senior debt is outstanding and no payment blockage period on the notes is in effect, a declaration of this kind will not become effective until the later of the day which is five business days after the receipt by us and the holders of senior debt of such written notice of acceleration or the date of acceleration of any senior debt.

In the case of an event of default arising from defaults in our other payment obligations, we will not make any payment, whether for interest or principal, on the notes, and neither the holders of the notes nor the trustee will have the right to sue to enforce the indenture or the notes, so long as the default or event of default under our other debt has occurred and is continuing, unless and until:

The default and event of default has been cured or waived or has ceased to exist; or

The end of the payment blockage period, which commences on the date the trustee receives written notice of default from a holder of the senior debt and ends on the earlier of:

The trustee’s receipt of a valid waiver of default from the holder of senior debt; or

The trustee’s receipt of a written notice from the holder of senior debt terminating such a payment blockage period.

In the case of an event of default arising from certain events of bankruptcy or insolvency, with respect to us, all outstanding notes will become due and payable without further action or notice.

Holders of the notes may not enforce the indenture or the notes except as provided in the indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding notes may direct the trustee in its exercise of any trust power. The trustee may withhold from holders of the notes notice of any continuing default or event of default, except a default or event of default relating to the payment of principal or interest on the notes, if the trustee in good faith determines that withholding notice would have no material adverse effect on the holders.

The holders of a majority in aggregate principal amount of the notes then outstanding by notice to the trustee may, on behalf of the holders of all of the notes, waive any existing default or event of default and its consequences under the indenture, except a continuing default or event of default in the payment of interest on, or the principal of, a note held by a non-consenting holder or a waiver that would conflict with any judgment or decree.

We are required to deliver to the trustee within 120 days of the end of our fiscal year a certificate regarding compliance with the indenture, and we are required, upon becoming aware of any default or event of default, to deliver to the trustee a certificate specifying such default or event of default and what action we are taking or propose to take with respect to the default or event of default.

Amendment, Supplement and Waiver

Except as provided in this prospectus or the indenture, the terms of the indenture or the notes then outstanding may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the notes then outstanding, and any existing default or compliance with any provision of the indenture or the notes may be waived with the consent of the holders of a majority in principal amount of the then outstanding notes.

Notwithstanding the foregoing, an amendment or waiver will not be effective with respect to the notes held by a holder who has not consented if it has any of the following consequences:

Reduces the aggregate principal amount of notes whose holders must consent to an amendment, supplement or waiver;

Reduces the principal of or changes the fixed maturity of any note or alters the repurchase or redemption provisions or the price at which we shall offer to repurchase or redeem the note;

Reduces the rate of or changes the time for payment of interest, including default interest, on any note;

Waives a default or event of default in the payment of principal or interest on the notes, except a rescission of acceleration of the notes by the holders of at least a majority in aggregate principal amount of the then outstanding notes and a waiver of the payment default that resulted from such acceleration;

Makes any note payable in money other than that stated in this prospectus;

Makes any change in the provisions of the indenture relating to waivers of past defaults or the rights of holders of notes to receive payments of principal of or interest on the notes;

Makes any change to the subordination provisions of the indenture that has a material adverse effect on holders of notes;

Modifies or eliminates the right of the estate of a holder or a holder to cause us to repurchase a note upon the death or total permanent disability of a holder; or

Makes any change in the foregoing amendment and waiver provisions.

Notwithstanding the foregoing, without the consent of any holder of the notes, we and the trustee may amend or supplement the indenture or the notes:

To cure any ambiguity, defect or inconsistency;

To provide for assumption of our obligations to holders of the notes in the case of a merger, consolidation or sale of all or substantially all of our assets;

To make any change that does not adversely affect the legal rights under the indenture of any such holder;

To modify our policy regarding repurchases elected by a holder of notes prior to maturity and our policy regarding repurchase of the notes prior to maturity upon the death or total permanent disability of any holder of the notes, but such modifications shall not materially adversely affect any then outstanding notes; or

To comply with requirements of the SEC in order to effect or maintain the qualification of the indenture under the TIA.

The Trustee

BOKF, NA dba Bank of Oklahoma is the trustee under the indenture. The indenture contains certain limitations on the rights of the trustee, should it become one of our creditors, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any claim as security or otherwise. The trustee will be permitted to engage in other transactions with us.

Subject to certain exceptions, the holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. The indenture provides that in case an event of default specified in the indenture shall occur and not be cured, the trustee will be required, in the exercise of its power, to use the degree of care of a reasonable person in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of notes, unless the holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense.

Resignation or Removal of the Trustee

The trustee may resign at any time, or may be removed by the holders of a majority of the aggregate principal amount of the outstanding notes. In addition, upon the occurrence of contingencies relating generally to the insolvency of the trustee or the trustee’s ineligibility to serve as trustee under the TIA, we may remove the trustee. However, no resignation or removal of the trustee may become effective until a successor trustee has accepted the appointment as provided in the indenture.

Reports to Trustee

We will provide the trustee with quarterly reports containing any information reasonably requested by the trustee. These quarterly reports will include information on each note outstanding during the preceding quarter, including outstanding principal balance, interest credited and paid, transfers made, any redemption or repurchase and interest rate paid.

No Personal Liability of Our Directors, Officers, Employees and Members

No director, officer, employee, organizer or member of ours will have any liability for any of our obligations under the notes, the indenture or for any claim based on, in respect to, or by reason of, these obligations or their creation. Each holder of the notes waives and releases these persons from any liability, excluding any liability arising under federal securities laws, rules and regulations. The waiver and release are part of the consideration for issuance of the notes.

Service Charges

We may assess service charges for changing the registration of any note to reflect a change in name of the holder, multiple changes in interest payment dates, or transfers, whether by operation of law or otherwise, of a note by the holder to another person.

Additional Securities

We may offer additional classes of securities with terms and conditions different from the notes currently being offered in this prospectus, provided we comply with all applicable securities laws and regulations. We will amend or supplement this prospectus if and when we decide to offer to the public any additional class of security under this prospectus. If we sell the entire principal amount of notes offered in this prospectus, we may register and sell additional notes by amending this prospectus, but we are under no obligation to do so.

Variations in Terms and Conditions

We may from time to time vary the terms and conditions of the notes offered by this prospectus, including, but not limited to: minimum initial principal investment amount requirements; maximum aggregate principal amount limits; interest rates; minimum denominations; service and other fees and charges; and redemption provisions. Terms and conditions may be varied by state, locality, principal amount, type of investor - for example, new or current investor - or as otherwise permitted under the indenture governing the securities offered by this prospectus. No change in terms, however, will apply to any notes issued and outstanding.

Interest Withholding

We will withhold 28% of any interest paid to any investor who has not provided us with a social security number, employer identification number, or other satisfactory equivalent in the subscription agreement, or another document, or where the Internal Revenue Service has notified us that backup withholding is otherwise required. Please read “Material Federal Income Tax Consequences - Reporting and Backup Withholding.”

Liquidity

There is not currently a trading market for the notes, and we do not expect that a trading market for the notes will develop.

Satisfaction and Discharge of Indenture

The indenture shall cease to be of further effect upon the payment in full of all of the outstanding notes and the delivery of an officer’s certificate to the trustee stating that we do not intend to issue additional notes under the indenture or, with certain limitations, upon deposit with the trustee of funds sufficient for the payment in full of all of the outstanding notes.

Reports

We will publish annual reports containing financial statements and quarterly reports containing financial information for the first three quarters of each fiscal year. We will send copies of these reports, at no charge, to any holder of notes who sends a written request to:

Aspirity Holdings LLC

701 Xenia Avenue, Suite 475

Golden Valley, Minnesota 55416

Telephone: (763) 432-1501

Attention: Chief Financial Officer

Our annual and quarterly reports will be filed with the SEC and will also be available for your review on the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

To ensure compliance with United States Treasury Department Circular 230, prospective investors are hereby notified that:

•

Any discussion of United States Federal Tax matters in this Offering Summary is not intended to be relied upon and cannot be relied upon by prospective investors for the purpose of avoiding penalties that may be imposed on them under the United States Tax Laws;

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Such discussion is included in connection with the promotion or marketing of the notes; and

•

Prospective investors should seek advice based on their particular circumstances from an independent tax advisor.

The following discussion summarizes the material federal income tax consequences relating to the ownership and disposition of the notes. The discussion is based upon the current provisions of the Internal Revenue Code of 1986, as amended, regulations issued under the Internal Revenue Code and judicial or ruling authority, all of which are subject to change that may be applied retroactively. The discussion assumes that the notes are held as capital assets and does not discuss the federal income tax consequences applicable to all categories of investors, some of which may be subject to special rules such as banks, tax-exempt organizations, insurance companies, dealers in securities or currencies, persons that will hold notes as a position in hedging, straddle, or conversion transactions, or persons that have a functional currency other than the U.S. dollar. If a partnership holds notes, the tax treatment of a partner will generally depend on the status of the partner and on the activities of the partnership. In addition, it does not deal with holders other than original purchasers. You are urged to consult your own tax advisor to determine the specific federal, state, local and any other tax consequences applicable to you relating to your ownership and disposition of the notes.

Interest Income on the Notes

Subject to the discussion below applicable to “non-U.S. holders,” unless the original issue discount or “OID” rules otherwise require, interest paid on the notes will generally be taxable to you as ordinary income as the income is paid if you are a cash method taxpayer or as the income accrues if you are an accrual method taxpayer. Under the OID rules, the excess of total payments on a note, including interest that is not unconditionally payable at least annually throughout the term of the note, will be currently deductible by the issuer and currently includible in income by the holder, under the constant yield method. Under the constant yield method, you generally would be required to include in income increasingly greater amounts of OID in successive accrual periods.

If you are a cash method holder of a note with a term of one year or less, you are not required to include this OID as income currently unless you elect to do so. Cash method holders who make that election and accrual method holders of short-term notes are generally required to recognize the OID in income currently as it accrues on a straight-line basis unless the holder elects to accrue the OID under the constant yield method, as described above.

Cash method holders of short-term notes who do not include OID in income currently will generally be taxed on stated interest at the time it is received and will treat any gain realized on the disposition of a short-term note as ordinary income to the extent of the accrued OID generally reduced by any prior payments of interest. In addition, these cash method holders will be required to defer deductions for certain interest paid on indebtedness related to purchasing or carrying the short-term notes until the OID is included in the holder’s income.

However, if you report income on the cash method and you hold a note with a term longer than one year that pays interest only at maturity, you generally will be required to include OID accrued during the original term, without regard to renewals, as ordinary gross income as the OID accrues. OID accrues under the constant yield method, as described above.

Treatment of Dispositions of Notes

Upon the sale, exchange, retirement or other taxable disposition of a note, you will recognize gain or loss in an amount equal to the difference between the amount realized on the disposition and your adjusted tax basis in the note. Your adjusted tax basis in a note generally will equal your original cost for the note, increased by any accrued but unpaid interest, including OID, you previously included in income with respect to the note and reduced by any payments you previously received, other than interest that is unconditionally payable at least annually throughout the term of the note, with respect to the note. Any gain or loss will be capital gain or loss, except for gain representing accrued interest not previously included in your income. This capital gain or loss will be short-term or long-term capital gain or loss, depending on whether the note had been held for more than one year or for one year or less.

Non-U.S. Holders

Generally, if you are a nonresident alien individual or a non-U.S. corporation and do not hold the note in connection with a United States trade or business, interest paid and OID accrued on the notes will be treated as “portfolio interest” and therefore will be exempt from a 30% United States withholding tax. In that case, you will be entitled to receive interest payments on the notes free of United States federal income tax provided that you periodically provide a statement on applicable IRS forms certifying under penalty of perjury that you are not a United States person and provide your name and address. In addition, in that case you will not be subject to United States federal income tax on gain from the disposition of a note unless you are an individual who is present in the United States for 183 days or more during the taxable year in which the disposition takes place and certain other requirements are met. Interest paid and accrued OID paid to a non-U.S. person are not subject to withholding if they are effectively connected with a United States trade or business conducted by that person and we are provided a properly executed IRS Form W-8ECI. They will, however, generally be subject to the regular United States income tax. If you are a non-U.S. corporation, that portion of your earnings and profits that is effectively connected with your U.S. trade or business also may be subject to a “branch profits tax” at a 30% rate, although an applicable income tax treaty may provide for lower rate.

Reporting and Backup Withholding

We will report annually to the Internal Revenue Service and to holders of record that are not excepted from the reporting requirements any information that may be required with respect to interest on the notes.

Under certain circumstances, as a holder of a note, you may be subject to “backup withholding” currently at a 28% rate. Backup withholding may apply to you if you are a United States person and, among other circumstances, you fail to furnish on IRS Form W-9 or a substitute Form W-9 your Social Security number or other taxpayer identification number to us. Backup withholding may apply, under certain circumstances, if you are a non-U.S. person and fail to provide us with the statement necessary to establish an exemption from federal income and withholding tax on interest on the note. Backup withholding, however, does not apply to payments on a note made to certain exempt recipients, such as corporations and tax-exempt organizations, and to certain non-U.S. persons. Backup withholding is not an additional tax and may be refunded or credited against your United States federal income tax liability, provided that you furnish certain required information.

This federal tax discussion is included for general information only and may not be applicable depending upon your particular situation. You are urged to consult your own tax advisor with respect to the specific tax consequences to you of the ownership and disposition of the notes, including the tax consequences under state, local, foreign and other tax laws and the possible effects of changes in federal or other tax laws.

Foreign Account Tax Compliance Withholding

Sections 1471 through 1474 of the Code, commonly known as the Foreign Account Tax Compliance Act (“FACTA”), impose a U.S. withholding tax of a 30% on payments of interest on the notes and, on or after January 1, 2017, the gross proceeds from a sale or other disposition of the notes paid to (i) a foreign financial institution (as the beneficial owner or as an intermediary for the beneficial owner), unless such institution enters into an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners), and (ii) a foreign entity that is not a financial institution (as the beneficial owner or as an intermediary for the beneficial owner), unless such entity provides the withholding agent with a certification identifying the substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity. An intergovernmental agreement between the U.S. and the applicable foreign country may modify these requirements. Prospective investors should consult their own tax advisors regarding the implications of FACTA with respect to their purchase, ownership and disposition of the notes.

PLAN OF DISTRIBUTION

Except as we may otherwise indicate in an applicable prospectus supplement, we will sell these securities directly, without an underwriter, and the securities will be sold by our employees who, under Rule 3a4-1(a) of the Exchange Act, are deemed not to be brokers; however, we do reserve the right to sell the securities through a broker-dealer and use best efforts selling.

In accordance with the provisions of Rule 3a4-1(a), our employees who sell securities will not be compensated by commission or other remuneration based either directly or indirectly on transactions in the securities, will not be associated with any broker or dealer, and will limit their activities so that, among other things, they do not engage in oral solicitations of, and comply with certain specified limitations when responding to inquiries from, potential purchasers.

We plan to market the notes directly to the public, principally through the internet, but from time to time we may use other direct advertising means such as newspaper, radio, and mail.

We have engaged a third party, Redwater, LLC (“Servicing Agent”), to act as our servicing agent and manage certain administrative and customer service functions relating to the notes, including handling administrative inquiries from potential investors, mailing investment kits, processing subscription agreements and responding to certain written and telephonic questions relating to the notes.

The Servicing Agent will forward to us written or telephonic questions by investors and note holders regarding topics that are not addressed in the prospectus or its supplements, including without limitation questions relating to our finances and business, our performance and practices with regard to the notes, and substantive matters regarding an investment in the notes, unless such questions can be answered solely by reference to our SEC filings. The Servicing Agent may respond to questions that are purely administrative or ministerial in nature.

The Servicing Agent will also be responsible for recording changes in note holders’ addresses or accounts, preparing and issuing maturity and renewal notices, quarterly statements, newsletters, reports and analyses to note holders and to us, directing the paying agent to make scheduled payments, repurchase payments and redemption payments in a timely manner, and directing the paying agent to issue Form 1099INT’s to note holders as required by law. In addition, the Servicing Agent will provide us and the trustee with management reports regarding the notes as required under the indenture. We may elect to perform these duties ourselves.

Subject to a minimum of $2,500, we will pay the Servicing Agent a monthly service fee of $7.50 per note based on the maximum number of notes outstanding during the month. We will also pay the Servicing Agent fulfillment fees of $2.00 per investment kit mailed and $1.00 per other mailing.

From time to time, the Servicing Agent may also serve as an “advertising agency” and earn the difference between published gross and net advertising rates. The Servicing Agent may also earn a mark-up for facilitating the printing of marketing materials.

All subscriptions, investor materials, and advertisements must be approved by us and we will bear all expenses incurred in connection with the offer and sale of the notes, including document fulfillment expenses, legal and accounting fees, regulatory fees, due diligence expenses, and marketing costs. No one will receive a commission based on notes sold or renewed.

Prior to the offering, there has been no public market for the notes. We do not intend to list the notes on any securities exchange or include them for quotation on Nasdaq. No one is obligated to make a market in the notes, and we do not anticipate that a secondary market for the notes will develop.

We may vary the terms and conditions of the offer by state, locality or as otherwise described under “Description of the Notes - Interest Rate” and “- Variations in Terms and Conditions” in this prospectus.

LEGAL MATTERS

Certain legal matters in connection with the notes will be passed upon for us by Stinson Leonard Street LLP, Minneapolis, Minnesota.

EXPERTS

The consolidated financial statements of Aspirity Holdings LLC, formerly known as Twin Cities Power Holdings, LLC, and Subsidiaries as of and for the years ended December 31, 2014 and 2013, included in this prospectus have been so included in reliance on the report of Baker Tilly Virchow Krause, LLP, an independent registered public accounting firm, included herein, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-1 under the Securities Act of 1933, as amended, with respect to the notes being offered by this prospectus. This prospectus does not contain all of the information in the registration statement and its exhibits. For further information with respect to Aspirity Holdings LLC, formerly known as Twin Cities Power Holdings, LLC, and the notes offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

The SEC maintains an Internet site that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. You can read our SEC filings, including the registration statement, on the Internet at the SEC’s website. You may also read and copy any document we file with the SEC at its Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

We are subject to the informational requirements of the Exchange Act and, in accordance with the requirements of the Exchange Act, we file annual, quarterly, and current reports and other information with the SEC. These reports and other information will be available for inspection and copying at the public reference room and web site of the SEC referred to above. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our website at http://www.aspirityholdings.com. The information contained in, or that can be accessed through, our website is not part of this prospectus.

INDEX TO FINANCIAL STATEMENTS

Aspirity Holdings LLC and Subsidiaries

	Page

Unaudited Pro Forma Condensed Consolidated Financial Statements

Basis of Presentation	F-1

Pro Forma Consolidated Balance Sheets as of June 30, 2015	F-2

Pro Forma Consolidated Statements of Comprehensive Income (Loss) for the Six Months Ended June 30, 2015	F-3

Pro Forma Consolidated Statements of Comprehensive Income (Loss) for the Year Ended December 31, 2014	F-4

Unaudited Consolidated Financial Statements

Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	F-5

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2015 and 2014	F-6

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014	F-7

Notes to Unaudited Consolidated Financial Statements	F-9

Consolidated Financial Statements (Audited)

Report of Independent Registered Public Accounting Firm	F-36

Consolidated Balance Sheets as of December 31, 2014 and 2013	F-37

Consolidated Statements of Comprehensive Income for the Years ended December 31, 2014 and 2013	F-38

Consolidated Statements of Cash Flows for the Years ended December 31, 2014 and 2013	F-39

Consolidated Statements of Members’ Equity (Deficit) for the Years ended December 31, 2014 and 2013	F-41

Notes to Consolidated Financial Statements	F-42

Aspirity Holdings LLC and Subsidiaries

Basis of Presentation

F-1

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC
Pro Forma Consolidated Balance Sheets

		June 30, 2015
		Historical			Pro Forma (1)
		Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)		Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Assets

Current assets
Cash - unrestricted	$	5,082,537		$	919,287		$	4,163,250	$	–		$	5,082,537
Cash in trading accounts		8,481,124			8,481,124			–		–			8,481,124
Accounts receivable - trade		5,392,744			5,377,086			15,658		–			5,392,744
Marketable securities		1,080,837			–			1,080,837		–			1,080,837
Note receivable, net - current portion		1,075,453			1,075,453			–		–			1,075,453
Note receivable - related party (4)		–			1,454,846			–		(1,454,846	)		–
Prepaid expenses and other current assets		492,591			385,862			106,729		–			492,591
Total current assets		21,605,286			17,693,658			5,366,474		(1,454,846	)		21,605,286
Property equipment and furniture, net		746,840			746,840			–		–			746,840
Other assets
Intangible assets, net		115,057			115,057			–		–			115,057
Deferred financing costs, net		330,724			22,604			308,120		–			330,724
Cash - restricted		1,319,371			1,319,371			–		–			1,319,371
Land held for development		2,069,692			2,069,692			–		–			2,069,692
Note receivable, net - long term portion		1,980,386			1,980,386			–		–			1,980,386
Investment in convertible notes		1,680,297			1,680,297			–		–			1,680,297
Term Loan (5)		–			–			22,206,113		(22,206,113	)		–
Total assets	$	29,847,653		$	25,627,905		$	27,880,707	$	(23,660,959	)	$	29,847,653

Liabilities and Members' Equity
Current liabilities
Current portions of debt
Revolver	$	3,386,255		$	3,386,255		$	–	$	–		$	3,386,255
Senior notes		1,288,408			1,288,408			–		–			1,288,408
Term Loan (5)		–			9,451,231			–		(9,451,231	)		–
Renewable unsecured subordinated notes		9,451,231			–			9,451,231		–			9,451,231
Accounts payable - trade		2,896,781			2,649,990			246,789		–			2,896,779
Accrued expenses		1,099,951			1,099,953			–		–			1,099,953
Accrued compensation		2,190,272			2,190,272			–		–			2,190,272
Accrued interest		1,230,493			24,433			1,206,060		–			1,230,493
Accrued distributions		4,000			–			4,000		–			4,000
Note payable - related party (4)		–			–			1,454,846		(1,454,846	)		–
Total current liabilities		21,547,391			20,090,542			12,362,926		(10,906,077	)		21,547,391

Long term liabilities
Senior notes		213,762			213,762			–		–			213,762
Term Loan (5)		–			12,754,882			–		(12,754,882	)		–
Renewable unsecured subordinated notes		12,754,882			–			12,754,882		–			12,754,882
Total long term liabilities		12,968,644			12,968,644			12,754,882		(12,754,882	)		12,968,644
Total liabilities		34,516,035			33,059,186			25,117,808		(23,660,959	)		34,516,035

Members' equity (deficit)
Series A preferred equity		2,745,000			–			2,745,000		–			2,745,000
Common equity		(7,133,338	)		(7,133,338	)		–		–			(7,133,338	)
Other comprehensive income		(280,044	)		(297,943	)		17,899		–			(280,044	)
Total members' equity (deficit) attributable to:
Controlling interests (6)		(4,668,382	)		(7,431,281	)		2,762,899		7,431,281			2,762,899
Non-controlling interests in consolidated VIE (6)		–			–			–		(7,431,281	)		(7,431,281	)
Total members' equity (deficit)		(4,668,382	)		(7,431,281	)		2,762,899		–			(4,668,382	)
Total liabilities and members' equity	$	29,847,653		$	25,627,905		$	27,880,707	$	(23,660,959	)	$	29,847,653

Notes

1 - Assumes the Distribution of the common equity interests of Enterprises to Aspirity's members occurred on June 30, 2015.

2 - Reflects the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity (“VIE”) of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the Term Loan.

4 - Reflects due to/due from amounts related to the Distribution.

5 - Reflects the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

6 - All balances in common equity accounts were assigned to Enterprises while all balances in preferred equity accounts were retained by Aspirity, leaving Aspirity’

F-2

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC

Pro Forma Consolidated Statements of Comprehensive Income (Loss)

		Six Months Ended June 30, 2015
		Historical			Pro Forma (1)
		Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)			Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Revenue
Wholesale trading	$	11,772,207		$	11,772,207		$	–		$	–		$	11,772,207
Retail energy services		13,443,717			13,443,717			–			–			13,443,717
Management services		125,000			125,000			–			–			125,000
Total revenue, net		25,340,924			25,340,924			–			–			25,340,924

Costs and expenses
Cost of retail energy sold		12,318,876			12,318,876			–			–			12,318,876
Retail sales and marketing		602,907			602,907			–			–			602,907
Compensation and benefits		9,230,141			9,029,095			201,046			–			9,230,141
Professional fees		1,316,501			1,020,365			296,136			–			1,316,501
Other general and administrative		2,310,553			1,275,070			1,035,483			–			2,310,553
Trading tools and subscriptions		681,260			677,614			3,647			–			681,260
Expense reimbursement		–			1,035,483			(1,035,483	)		–			–
Total costs and expenses		26,460,238			25,959,409			500,829			–			26,460,238
Operating income		(1,119,314	)		(618,485	)		(500,829	)		–			(1,119,314	)

Other income (expense)
Interest expense (4)		(1,668,559	)		(1,668,559	)		(1,431,776	)		1,431,776			(1,668,559	)
Interest income (4)		221,815			221,815			1,431,776			(1,431,776	)		221,815
Gain (loss) on foreign currency exchange		501,109			501,109			–			–			501,109
Realized gain on sale of marketable securities		–			–			–			–			–
Other income		81,986			81,986			–			–			81,986
Other income (expense), net		(863,649	)		(863,649	)		–			–			(863,649	)
Net income (loss)		(1,982,963	)		(1,482,134	)		(500,829	)		–			(1,982,963	)
Net income (loss) attributable to:
Controlling interests		–			(1,482,134	)		(500,829	)		1,482,134			(500,829	)
Non-controlling interest in consolidated VIE		–			–			–			(1,482,134	)		(1,482,134	)
Distributions - preferred		(274,536	)		–			(274,536	)		–			(274,536	)
Net income (loss) attributable to common		(2,257,499	)		(1,482,134	)		(775,365	)		–			(775,365	)

Comprehensive income (loss)
Net income (loss)		(1,982,963	)		(1,482,134	)		(500,829	)		–			(1,982,963	)
Foreign currency translation adjustment		(411,839	)		(411,839	)		–			–			(411,839	)
Change in fair value of cash flow hedges		(21,737	)		(21,737	)		–			–			(21,737	)
Unrealized gain on investment securities		6,783			–			6,783			–			6,783
Comprehensive income (loss)	$	(2,409,756	)	$	(1,915,710	)	$	(494,046	)		–		$	(2,409,756	)

Notes

1 - Assumes the Distribution of the common equity interests of Enterprises to Aspirity's members occurred on January 1, 2015.

2 - Reflects the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity ("VIE") of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the interest on the Term Loan.

4 - Reflects the interest expense and income associated with the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

F-3

Aspirity Holdings LLC formerly known as Twin Cities Power Holdings, LLC

Pro Forma Consolidated Statements of Comprehensive Income (Loss)

		Year Ended December 31, 2014
		Historical			Pro Forma (1)
		Aspirity Holdings Consolidated (A)			Krieger Enterprises (2) (B)			Aspirity Holdings (C)			Adjustments (D)			Aspirity Holdings Re-Consolidated (3) (E =B+C+D)
Revenue
Wholesale trading	$	38,611,944		$	38,611,944		$	–		$	–		$	38,611,944
Retail energy services		11,229,476			11,229,476			–			–			11,229,476
Management services		–			–			–			–			–
Total revenue, net		49,841,420			49,841,420			–			–			49,841,420

Costs and expenses
Cost of retail energy sold		11,440,672			11,440,672			–			–			11,440,672
Retail sales and marketing		324,948			324,948			–			–			324,948
Compensation and benefits		21,722,319			21,577,210			145,109			–			21,722,319
Professional fees		2,487,056			2,220,481			266,575			–			2,487,056
Other general and administrative		6,093,843			4,549,019			1,544,824			–			6,093,843
Trading tools and subscriptions		1,332,804			1,325,655			7,149			–			1,332,804
Expense reimbursement		–			1,544,824			(1,544,824	)		–			–
Total costs and expenses		43,401,642			42,982,809			418,833			–			43,401,642
Operating income		6,439,778			6,858,611			(418,833	)		–			6,439,778

Other income (expense)
Interest expense (4)		(2,293,376	)		(2,293,376	)		(1,968,175	)		1,968,175			(2,293,376	)
Interest income (4)		142,915			142,915			1,968,175			(1,968,175	)		142,915
Gain (loss) on foreign currency exchange		(720,952	)		(720,952	)		–			–			(720,952	)
Realized gain on sale of marketable securities		65,655			–			65,655			–			65,655
Other income		145,164			145,164			–			–			145,164
Other income (expense), net		(2,660,594	)		(2,726,249	)		65,655			–			(2,660,594	)
Net income (loss)		3,779,184			4,132,362			(353,178	)		–			3,779,184
Net income (loss) attributable to:
Controlling interests		–			4,132,362			(353,178	)		(4,132,362	)		(353,178	)
Non-controlling interest in consolidated VIE		–			–			–			4,132,362			4,132,362
Distributions - preferred		(549,072	)		–			(549,072	)		–			(549,072	)
Net income (loss) attributable to common		3,230,112			4,132,362			(902,250	)		–			(902,250	)

Comprehensive income (loss)
Net income (loss)		3,779,184			4,132,362			(353,178	)		–			3,779,184
Foreign currency translation adjustment		661,033			661,033			–			–			661,033
Change in fair value of cash flow hedges		(1,220,022	)		(1,220,022	)		–			–			(1,220,022	)
Unrealized gain on investment securities		5,349			–			5,349			–			5,349
Comprehensive income (loss)	$	3,225,544		$	3,573,373		$	(347,829	)	$	–		$	3,225,544

Notes

1 - Assumes the Distribution of the common equity interests of Enterprises to Aspirity's members occurred on January 1, 2014.

2 - Reflects the Distribution of Enterprises. Post-Distribution, Enterprises will be accounted for as a variable interest entity ("VIE") of Aspirity.

3 - Reflects Aspirity's re-consolidation of Enterprises as a VIE including the elimination of the interest on the Term Loan.

4 - Reflects the interest expense and income associated with the Term Loan between Enterprises and Aspirity. The Term Loan is the variable interest in Enterprises held by Aspirity.

F-4

Aspirity Holdings LLC and Subsidiaries

Consolidated Balance Sheets

As of June 30, 2015 and December 31, 2014

	June 30, 2015			December 31, 2014
Assets	Unaudited			Unaudited
Current assets
Cash - unrestricted	$	5,082,537		$	2,397,300
Cash in trading accounts		8,481,124			21,099,652
Accounts receivable - trade		5,392,744			2,394,246
Marketable securities		1,080,837			311,586
Note receivable - current portion		6,948,323			–
Less: deferred gain - current portion		(5,872,870	)		–
Prepaid expenses and other current assets		492,591			416,419
Total current assets		21,605,286			26,619,203

Property, equipment ,and furniture, net		746,840			762,529
Other assets
Intangible assets, net		115,057			269,149
Deferred financing costs, net		330,724			241,744
Cash - restricted		1,319,371			1,319,371
Land held for development		2,069,692			953,462
Note receivable - long term portion		13,891,406			–
Less: deferred gain - long term portion		(11,911,020	)		–
Investment in convertible notes		1,680,297			1,604,879
Total assets	$	29,847,653		$	31,770,337

Liabilities and Members' (Deficit) Equity
Current liabilities
Current portions of debt
Revolver	$	3,386,255		$	1,105,259
Senior notes		1,288,408			312,068
Renewable unsecured subordinated notes		9,451,231			7,234,559
Accounts payable - trade		2,896,781			1,544,103
Accrued expenses		1,099,951			681,995
Accrued compensation		2,190,272			3,601,282
Accrued interest		1,230,493			849,913
Accrued distributions		4,000			–
Obligations under settlement agreement		–			582,565
Total current liabilities		21,547,391			15,911,744

Long-term liabilities
Senior notes		213,762			217,451
Renewable unsecured subordinated notes		12,754,882			10,418,569
Obligations under settlement agreement		–			2,524,448
Total long term liabilities		12,968,644			13,160,468
Total liabilities		34,516,035			29,072,212

Commitments and contingencies		–			–

Members' (deficit) equity
Series A preferred equity		2,745,000			2,745,000
Common equity		(7,133,338	)		(193,624	)
Accumulated other comprehensive income (loss)		(280,044	)		146,749
Total members' (deficit) equity		(4,668,382	)		2,698,125
Total liabilities and members' (deficit) equity	$	29,847,653		$	31,770,337

See notes to consolidated financial statements.

F-5

Aspirity Holdings LLC and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Three and Six Months Ended June 30, 2015 and 2014

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2015			2014			2015			2014
	Unaudited			Unaudited			Unaudited			Unaudited
Revenue
Wholesale trading, net	$	922,511		$	4,304,660		$	11,772,207		$	31,326,385
Retail energy services		8,066,608			2,226,834			13,443,717			5,126,548
Management services		125,000			–			125,000			–
		9,114,119			6,531,494			25,340,924			36,452,933

Costs and expenses
Cost of retail electricity sold		6,095,655			1,677,901			12,318,876			6,267,307
Retail sales and marketing		357,008			22,953			602,907			151,395
Compensation and benefits		3,033,902			2,821,578			9,230,141			13,862,277
Professional fees		730,121			831,738			1,316,501			1,559,060
Other general and administrative		1,074,488			837,539			2,310,553			1,667,871
Trading tools and subscriptions		353,955			336,219			681,260			629,421
		11,645,129			6,527,928			26,460,238			24,137,331
Operating income (loss)		(2,531,010	)		3,566			(1,119,314	)		12,315,602

Other income (expense)
Interest expense		(904,546	)		(514,512	)		(1,668,559	)		(982,277	)
Interest income		172,530			43,330			221,815			55,482
Gain (loss) on foreign currency exchange		405,836			(261,217	)		501,109			(260,849	)
Other income		41,599			3,320			81,986			3,320
		(284,581	)		(729,079	)		(863,649	)		(1,184,324	)
Net income (loss)		(2,815,591	)		(725,513	)		(1,982,963	)		11,131,278
Preferred distributions		(137,268	)		(137,268	)		(274,536	)		(274,536	)
Net income (loss) attributable to common		(2,952,859	)		(862,781	)		(2,257,499	)		10,856,742

Comprehensive income (loss)
Net income (loss)		(2,815,591	)		(725,513	)		(1,982,963	)		11,131,278
Foreign currency translation adjustment		(360,569	)		293,310			(411,839	)		218,128
Change in fair value of cash flow hedges		(462,721	)		(204,281	)		(21,737	)		(242,416	)
Unrealized gain on securities		(5,492	)		46,261			6,783			58,136

Comprehensive income (loss)	$	(3,644,373	)	$	(590,223	)	$	(2,409,756	)	$	11,165,126

See notes to consolidated financial statements.

F-6

Aspirity Holdings LLC and Subsidiaries

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2015 and 2014

	Six Months
	Ended June 30,
	2015			2014
	Unaudited			Unaudited
Cash flows from operating activities
Net income (loss)	$	(1,982,963	)	$	11,131,278
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		337,612			430,259
Gain on sale of marketable securities		(1,916	)		–
(Increase) decrease in:
Trading accounts and deposits		7,451,742			(9,568,417	)
Accounts receivable - trade		(2,998,498	)		(806,678	)
Note receivable		(99,000	)		–
Prepaid expenses and other assets		(76,172	)		(74,089	)
Increase (decrease) in:
Accounts payable - trade		1,352,678			543,379
Accrued expenses		417,956			96,568
Accrued compensation		(2,398,605	)		1,325,076
Accrued interest		380,580			274,995
Obligations under settlement agreement		(194,188	)		–
Net cash provided by operating activities		2,189,226			3,352,371

Cash flows from investing activities
Repayment of note receivable		–			140,964
Purchase of marketable securities		(3,250,000	)		(760,009	)
Proceeds from sale of marketable securities		2,489,449			–
Purchase of investment in convertible notes.		(75,418	)		(1,128,861	)
Purchase of property, equipment and furniture		(194,225	)		(113,312	)
Increase in cost of land held for development		(337,446	)		(56,505	)
Proceeds from land held for development		197,382			–
Increase in restricted cash		–			(999,183	)
Payments on obligations under non-competition agreement		–			(125,000	)
Acquisition of Discount Energy Group, LLC		–			(680,017	)
Net cash used in investing activities		(1,170,258	)		(3,721,923	)

Cash flows from financing activities
Deferred financing costs		(191,524	)		–
Proceeds from line of credit		–			700,000
Payments on senior notes payable		(3,515	)		(200,000	)
Renewable unsecured subordinated notes:
Issuances		6,210,798			3,272,819
Redemptions		(1,657,813	)		(488,695	)
Proceeds from revolver		13,204,000			–
Payments on revolver		(10,923,004	)		–
Distributions - preferred		(274,536	)		(274,536	)
Distributions - common		(4,678,213	)		(3,073,080	)
Net cash provided by (used in) financing activities		1,686,193			(63,492	)

Net increase (decrease) in cash		2,705,161			(433,044	)
Effect of exchange rate changes on cash		(19,924	)		218,129

Cash - unrestricted
Beginning of period		2,397,300			3,190,495
End of period	$	5,082,537		$	2,975,580

See notes to consolidated financial statements.

F-7

Aspirity Holdings LLC and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

Six Months Ended June 30, 2015 and 2014

	Six Months
	Ended June 30,
	2015			2014
	Unaudited			Unaudited
Non-cash investing and financing activities:
Effective portion of cash flow hedges	$	(885,145	)	$	114,198
Accrued distributions - common	$	4,000		$	–
Unrealized gain on marketable securities	$	17,899		$	58,136
Note receivable from sale of subsidiary, gross	$	20,740,729		$	–
Less deferred gain on sale		(17,783,890	)		–
Note receivable from sale of subsidiary, net	$	2,956,839		$	–

Land held for development obtained via foreclosure on mortgage loan	$	–		$	353,504
Acquisition of land for development via assignment and assumption agreement	$	976,166		$	–
Acquisition of property, plant, and equipment via mortgage loan	$	–		$	228,000

Supplemental disclosures of cash flow information:
Cash payments for interest	$	1,287,979		$	707,282
Capitalized interest related to land held for development	$	21,169		$	–

See notes to consolidated financial statements.

F-8

Aspirity Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements

1. Basis of Presentation and Description of Business

Basis of Presentation

Aspirity Holdings LLC (“Aspirity” or the “Company”), formerly known as Twin Cities Power Holdings, LLC or “TCPH” prior to July 14, 2015, has prepared the foregoing unaudited consolidated financial statements in accordance with GAAP and the requirements of the SEC with respect to interim reporting. As permitted under these rules, certain footnotes and other financial information required by GAAP for complete financial statements have been condensed or omitted. The interim consolidated financial statements include all normal and recurring adjustments that are necessary for a fair presentation of our financial position and operating results and include the accounts of Aspirity and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

For additional information, please refer to our audited consolidated financial statements and the accompanying notes for the years ended December 31, 2014 and 2013 included in our 2014 Form 10-K.

Businesses

Aspirity is a Minnesota limited liability company formed on December 30, 2009. On November 14, 2011, the Company entered into an Agreement and Plan of Reorganization (the “Reorganization”) with its then current members and Twin Cities Power, LLC (“TCP”), Cygnus Partners, LLC (“Cygnus”), and Twin Cities Energy, LLC (“TCE”) which were affiliated through common ownership. Effective December 31, 2011, following receipt of approval from the Federal Energy Regulatory Commission (“FERC”), the members of TCP, CP, and TCE each contributed all of their ownership interests in these entities to TCPH in exchange for ownership interests in TCPH, which made TCPH a holding company and the sole member of each of TCP, CP, and TCE. The Reorganization was accounted for as a transaction among entities under common control.

Since then, the Company has formed additional first- and second-tier subsidiaries. First-tier subsidiaries include Apollo Energy Services, LLC (“Apollo”), formed on October 27, 2014 for the purpose of providing centralized services to the Company’s various other subsidiaries. Substantially all of the management rights and certain of the direct employees of TCPH were transferred to Apollo as of January 1, 2015. Retail Energy Holdings, LLC (“REH”) was formed on October 25, 2013 in anticipation of the acquisition of Discount Energy Group, LLC or “DEG” and Cyclone Partners LLC (“Cyclone”) was formed on October 23, 2013 to take advantage of certain investment opportunities present in the residential real estate market.

With respect to second-tier subsidiaries, as of March 31, 2015, TCP had three active subsidiaries - Summit Energy, LLC (“SUM”), Chesapeake Trading Group, LLC (“CTG”), and Minotaur Energy Futures, LLC (“MEF”), formed on March 25, 2014. Effective April 30, 2015, TCP distributed the ownership interests of CTG to TCPH and it became a first tier subsidiary of the Company. MEF was deactivated in the second quarter of 2015. Cygnus has one subsidiary - Cygnus Energy Futures, LLC (“CEF”). REH has three subsidiaries - Town Square Energy, LLC (“TSE”), Town Square Energy East, LLC (“TSEE”, formerly DEG), and Town Square Energy Canada, Ltd. (“TSEC”). TCE and its wholly-owned subsidiary, Twin Cities Power – Canada, Ltd. (“TCPC”), became inactive in the third quarter of 2012.

Through its subsidiaries, the Company trades electricity in North American wholesale markets, provides electricity supply services to retail customers in certain states that permit retail choice, and engages in certain investment and real estate development activities. Consequently, we have three major business segments used to measure our activity – wholesale trading, retail energy services, and diversified investments.

F-9

The Restructuring

Since mid-2014, the Board of Directors has been considering ways to better position the business to access capital markets, in particular that for public equity. Ultimately, the Board concluded that the Company’s regulatory exposure and earnings volatility, particularly that related to the wholesale trading business, needed to be substantially reduced or eliminated in order for such efforts to be successful on the desired scale. On May 27, 2015, the Board approved a plan to restructure the business via the sale of TCP, spinning out the remaining legacy businesses as defined below, and recasting the Company solely as a retail energy and financial services business. Overall, the restructuring incorporated several major steps.

New first- and second-tier subsidiaries were created to facilitate the process. The new first-tier subsidiaries consisted of Aspirity Energy LLC (“AE” or “Aspirity Energy”), Aspirity Financial LLC (“AF” or “Aspirity Financial”), and Krieger Enterprises, LLC (“KE” or “Enterprises”). The new second-tier entities, subsidiaries of Aspirity Energy, were formed to conduct business in the various areas of the U.S. that benefit from active wholesale and restructured retail electricity markets - Aspirity Energy Northeast LLC (“AENE” or “Northeast”), Aspirity Energy Mid-States LLC (“AEMS” or “Mid-States”), and Aspirity Energy South LLC (“AES” or “South”).

Aspirity Financial was formed to provide energy-related financial services to companies and households. Enterprises was formed to accept the contribution of the Legacy Businesses as defined below.

On June 1, 2015, the Company closed on the sale of TCP and SUM to Angell Energy, LLC, a Texas limited liability company (“Angell”). Pursuant to an Equity Interest Purchase Agreement, the Company sold 100% of the outstanding equity interests of TCP (which included the equity of SUM) to Angell for a purchase price of $20,740,729, paid with $500,000 cash and a secured promissory note of $20,240,729 bearing interest at an annual rate of 6.00% and payable in 12 quarterly installments of $1,855,670 each (the “Angell Note”). The Company and Angell also entered into a security and guarantee agreement and Apollo and Angell entered into software license and administrative services agreements. In selling TCP, the Company partially accomplished its goal of substantially reducing its regulatory exposure and earnings volatility. See also “Note 2 - Summary of Significant Accounting Policies – Variable Interest Entities” and “Note 7 – Note Receivable and Deferred Gain”.

The following table summarizes the effect of the sale on the Company’s balance sheet at closing:

Cash in trading accounts	$	5,740,729
Property, equipment, and furniture, net		128,935
Obligations under settlement agreement		(2,912,825	)
Net assets sold, net of liabilities assumed	$	2,956,839

Purchase price (note receivable)	$	20,740,729
Deferred gain		(17,783,890	)
Net assets sold, net of liabilities assumed	$	2,956,839

Effective July 1, 2015, the Company completed an internal reorganization that effected the separation of the Company’s wholesale energy trading, real estate investments, investments in private companies, legacy retail energy business, and certain other assets and obligations (collectively, the “Legacy Businesses”) from its new Aspirity subsidiaries. Specifically, the internal reorganization consisted of the following actions.

The Company contributed the following assets, and transferred all related liabilities, to Enterprises:

100% of the outstanding equity interests of each of Apollo, CTG, Cygnus, and Cyclone;

100% of the financial rights associated with the equity of REH, with the governance rights to be contributed upon receipt of approval from FERC;

100% of the outstanding equity interests of the following wholly-owned non-operating or inactive subsidiaries:

Athena Energy Futures LLC;

Minotaur Energy Futures LLC;

F-10

Twin Cities Energy LLC and its subsidiary Twin Cities Power-Canada, Ltd.);

TC Energy Trading, LLC;

Twin Cities Power Services, LLC; and

Vision Consulting, LLC; and

Certain other assets and obligations held or owned directly by the Company but not related to the planned operations of the Company following the Restructuring, including:

The Angell Note;

The Company’s investments in certain real estate projects

The Series C Convertible Promissory Notes of Ultra Green Packaging, Inc.; and

The restricted cash pledged to a Canadian court in connection with the Company’s ex-employee litigation; and

The last major step in the restructuring is the “Distribution” of 100% of the equity interests of Enterprises to the Company’s common equity owners, thus completing the legal separation of the Legacy Businesses from the Aspirity companies.

Declaration and execution of the Distribution is subject to two major conditions precedent:

Receipt of approval of the holders of a majority by principal amount of the Company’s outstanding Notes. This was condition was satisfied on June 26, 2015.

Declaration of effectiveness of the Company’s new Registration Statement on Form S-1 regarding the sale of up to $75 million of Notes, filed May 8, 2015. This is expected to occur in the fourth quarter of 2015.

Under the terms of the Indenture governing the Notes, the disposition of all or substantially all of the Company’s assets requires the affirmative approval of the holders of a majority by principal amount of Notes. Enterprises and the Legacy Businesses constitute a majority of the Company’s assets, and consequently, on June 3, 2015, a proposal was submitted to the 565 holders of the $21,914,968 of Notes outstanding as of May 27, 2015, asking them to approve the transfer of the Legacy Businesses to Mr. Timothy S. Krieger and Summer Enterprises, LLC, the owners of the Company’s common equity interests. Noteholders were asked to vote YES or NO to the proposal by June 26, 2015, with an abstention counting as a NO. The Noteholders approved the transaction by a large margin. The Company received YES votes from holders of $15,028,720 in principal amount of Notes representing 68.6% of the total outstanding and 137% of the number required to pass the measure. Holders of $202,421 and $6,683,797 in principal amount of Notes voted NO and abstained, respectively.

After the Distribution, the Company will no longer be directly exposed to the regulatory risks and earnings volatility of the wholesale trading business. It will have operations in two business segments, Aspirity Financial in financial services and Aspirity Energy in the retail energy business, the provisions of the Notes will not change, and it will remain a SEC reporting company.

The final step in the restructuring will be for the Company to change its corporate form from a Minnesota limited liability company to a Delaware corporation. We anticipate that the earliest this final step could occur is January 2016.

Wholesale Trading

The Company trades financial and physical contracts in wholesale electricity markets managed by Independent System Operators or Regional Transmission Organizations (collectively, the “ISOs”) and regulated by FERC, including those managed by the Midcontinent Independent System Operator (“MISO”), the PJM Interconnection (“PJM”), ISO New England (“ISO-NE”), and the New York Independent System Operator (“NYISO”). We also are members of the Electric Reliability Council of Texas (“ERCOT”) which is an ISO regulated by the Texas Public Utilities Commission and the Texas Legislature. The Company also trades electricity and other energy-related commodities and derivatives on exchanges operated by the Intercontinental Exchange® (“ICE”), the Natural Gas Exchange Inc. (“NGX”), and the CME Group (“CME”), all of which are regulated the Commodity Futures Trading Commission (“CFTC”).

F-11

As of June 1, 2015 with the sale of TCP the Company no longer is trading in ISO-NE, NYISO, or ERCOT.

Retail Energy Services

On October 25, 2013, in anticipation of receipt of FERC approval of the Company’s acquisition of TSEE formerly known as DEG, a retail energy business licensed by the states of Maryland, New Jersey, Pennsylvania, and Ohio, the Company formed REH and transferred the ownership of TSE to this entity. FERC approval of the acquisition was received on December 13, 2013 and the transaction closed on January 2, 2014. Consequently, the retail markets in which the Company competes include Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, Pennsylvania, Ohio, and Rhode Island.

Diversified Investments

On October 23, 2013, the Company formed Cyclone as a wholly-owned subsidiary to take advantage of certain investment opportunities present in the residential real estate market. Specifically, Cyclone acquires and develops land for resale, either as improved sites for construction of single- and multi-family homes or as completed dwellings. In addition to real estate investments, the Company’s diversified investments segment includes certain securities issued by privately-held companies and the provision of management services to third parties.

Effective June 1, 2015 the Company entered into a 12 month agreement with Ultra Green Packaging, Inc. (“Ultra Green”) to provide CEO services. Also on June 1, 2015, the Company entered into two agreements with Angell - a six month contract to provide certain management, operations, and administrative services and a 24 month software license which is subject to renewal for successive one year periods.

2. Summary of Significant Accounting Policies

A description of our significant accounting policies is included in the 2014 Form 10-K and our interim consolidated financial statements should be read in conjunction with the financial statements and accompanying notes included in that report.

Results for the three and six month periods ended June 30, 2015 are not indicative of the results expected for the year ending December 31, 2015.

Cash Equivalents

Cash equivalents include highly liquid investments with an original maturity of three months or less at the time of purchase. As of June 30, 2015 and December 31, 2014, the Company had no cash equivalents included in its cash balances.

F-12

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current period’s presentation. There was no effect on members’ equity or net income as previously reported.

Revenue Recognition

Wholesale Trading

The Company’s wholesale trading activities use derivatives such as swaps, forwards, futures, and options to generate trading revenues. These contracts are marked to fair value in the accompanying consolidated balance sheets. The Company’s agreements with the ISOs and the exchanges permit net settlement of contracts, including the right to offset cash collateral in the settlement process. Accordingly, the Company nets cash collateral against the derivative position in the accompanying consolidated balance sheets. All realized and unrealized gains and losses on derivative instruments held for trading purposes are recorded in revenues.

Retail Energy Services

Diversified Investments

Derivative Instruments

In our wholesale operations, we use derivative contracts for trading purposes, seeking to profit from perceived opportunities driven by expected changes in market prices.

In our retail operations, we are exposed to volatility in the cost of energy acquired for sale to customers, and as a result, we use derivatives to hedge or reduce this variability. We follow ASC 815, Derivatives and Hedging (“ASC 815”) guidance that permits “hedge accounting” under which the effective portion of gains or losses from the derivative and the hedged item are recognized in earnings in the same period. To qualify for hedge accounting, the relationship between the “hedged item” - say power purchases for a given delivery zone - and a derivative used as a “hedging instrument” - say, a swap contract for future delivery of electricity at a related hub - must meet extensive documentation requirements and hedge effectiveness and ineffectiveness must be assessed and measured on an on-going basis.

For these derivatives “designated” as cash flow hedges, the effective portion of any change in the hedging instrument’s fair value is recorded as other comprehensive income and deferred until the change in value of the hedged item is recognized in earnings. Our risk management policies also permit the use of undesignated derivatives which we refer to as “economic hedges”. For an undesignated economic hedge, all changes in the derivative financial instrument’s fair value are recognized currently in revenues.

“Hedge effectiveness” is the extent to which changes in the fair value of the hedging instrument offset the changes in the cash flows of the hedged item. Conversely, “hedge ineffectiveness” is the measure of the extent to which the change in fair value of the hedging instrument does not offset those of the hedged item. If a transaction qualifies as a “highly effective” hedge, ASC 815 permits matching of the timing of gains and losses of the hedged item and the hedging instrument.

F-13

Financial Instruments

The Company holds various financial instruments. The nature of these instruments and the Company’s operations expose the Company to foreign currency risk, credit risk, and fair value risk.

Foreign Currencies

A portion of the Company’s assets and liabilities are denominated in Canadian dollars and are subject to fluctuations in exchange rates. The Company does not have any exposure to any highly inflationary foreign currencies.

Balance sheet accounts are translated at exchange rates in effect at the end of the month and income statement accounts are translated at average monthly exchange rates for the period. Foreign currency transactions result in gains and losses due to the increase or decrease in exchange rates between periods. Translation gains and losses are included as a separate component of equity. Gains and losses from foreign currency transactions are included in other income or expense. Foreign currency transactions resulted in gains of $405,836 and $501,109, respectively, for the three and six months period ended June 30, 2015. During the three and six months period ended June 30, 2014 the Company realized foreign currency losses of $261,217 and $260,849.

Concentrations of Credit Risk

Financial instruments that subject the Company to concentrations of credit risk consist principally of deposits in trading accounts and accounts receivable. The Company has a risk policy that includes value-at-risk calculations, position limits, stop loss limits, stress testing, system controls, position monitoring, liquidity guidelines, and compliance training.

At any given time there may be a concentration of receivables balances with one or more of the exchanges upon which we transact our wholesale business or, in the case of retail, one or more of the utilities operating in purchase-of-receivables states in which we do business.

Fair Value

The fair values of the Company’s cash, accounts receivable, note receivable, accounts payable, and revolver were considered to approximate their carrying values at June 30, 2015 and December 31, 2014 due to the short-term nature of the accounts.

Management believes the carrying values of the Notes reasonably approximate their fair values at June 30, 2015 and December 31, 2014 due to the relatively new age of these particular instruments. No assessment of the fair value of these obligations has been completed and there is no readily available market price.

See also “Note 8 – Fair Value Measurements”.

Accounts Receivable

Receivables are reported at the amount management expects to collect from outstanding balances. Differences between amounts due and expected collections are reported in the results of operations for the period in which those differences are determined. Receivables are written off only after collection efforts have failed, and the Company typically does not charge interest on past due accounts. There was no allowance for doubtful accounts as of June 30, 2015 and December 31, 2014.

Business Combinations

The Company accounts for business combinations in accordance with ASC 805, Business Combinations (“ASC 805”), which requires an acquirer to recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquisition at fair value at the transaction date. In addition, transaction costs are expensed as incurred. See “Note 9 - Intangible Assets”.

F-14

Variable Interest Entities

The Company follows ASC 810-10-15 guidance with respect to accounting for variable interest entities (each, a “VIE”). A VIE is an entity that does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, or whose equity investors lack any of the characteristics of a controlling financial interest. A variable interest is an investment or other interest that will absorb portions of a VIE’s expected losses or receive portions of the entity’s expected residual returns. Variable interests are contractual, ownership, or other pecuniary interests that change with changes in the fair value of the entity’s net assets. A party is the primary beneficiary of a VIE and must consolidate it when that party has a variable interest, or combination of variable interests, that provides the party with a controlling financial interest. A party is deemed to have a controlling financial interest if it meets both of the power and losses/benefits criteria. The power criterion is the ability to direct the activities of the VIE that most significantly impact its economic performance. The losses/benefits criterion is the obligation to absorb losses from, or right to receive benefits from, the VIE that could potentially be significant to the VIE. The VIE model requires an ongoing reconsideration of whether a reporting entity is the primary beneficiary of a VIE due to changes in facts and circumstances.

At June 30, 2015, an assessment of the relationship between the Company and Angell was performed as a result of the sale of TCP on June 1, 2015. See “Note 1 - Basis of Presentation and Description of Business - Businesses – The Restructuring”. The Company estimates that total assets of Angell immediately after closing were substantially equal to the purchase price. Angell is a VIE since the equity at risk is small compared to the sale price. Further, the Company held a variable interest in the form of the Angell Note in a net amount of $2,956,839, equal to the gross principal amount of the loan of $20,740,729 adjusted for the deferred gain on the sale of $17,783,890. The Angell Note represents the Company’s maximum loss in the VIE. However, the Company has no power to direct any of the activities of Angell, therefore it does not have a controlling financial interest, thus it is not considered a primary beneficiary, and consequently, as of June 30, 2015, the Company should not consolidate Angell. The Company does not provide, nor does it intend to provide, any other financial support to Angell.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of, if any, are reported at the lower of the carrying amount or fair value less costs to sell. To date, the Company has determined that no impairment of long-lived assets exists.

Profits Interests

Specific second-tier subsidiaries of the Company have Class B members. Under the terms of the subsidiaries’ member control agreements, Class B members have no voting rights, are not required to contribute capital, and have no rights to distributions following termination of employment, but are entitled to a defined share of profits while employed. Since Class B members have no corporate governance rights or risk of capital loss (or gain), they do not own non-controlling equity interests and profits interests payments are recorded as compensation expense during the period earned and are classified as accrued compensation on the balance sheet.

During the three and six months ended June 30, 2015 and 2014, the Company included $506,785, $236,777, $2,273,312, and $5,423,412, respectively, in compensation and benefits representing the allocation of profits interests to Class B members.

F-15

Income Taxes

The Company and its subsidiaries are not taxable entities for U.S. federal income tax purposes. As such, the Company and its subsidiaries do not directly pay federal income tax. Taxable income or loss, which may vary substantially from the net income or net loss reported in our consolidated statements of comprehensive income, is includable in the federal income tax returns for each member. The holder of the Company’s preferred units is taxed based on distributions received, while holders of common units are taxed on their proportionate share of the Company’s taxable income. Therefore, no provision or liability for federal or state income taxes has been made for those entities.

TCPC files tax returns with the Canada Revenue Agency and the Tax and Revenue Administration of Alberta.

In accounting for uncertainty in income taxes, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. The Company recognizes interest and penalties on any unrecognized tax benefits as a component of income tax expense. Based on evaluation of the Company’s tax positions, management believes all positions taken would be upheld under an examination.

The Company’s federal and state tax returns are potentially open to examinations for the years 2011 through 2014 and its Canadian tax returns are potentially open to examination for the years 2011 through 2014.

On January 6, 2014, the Company received a notice from the Internal Revenue Service notifying that the Company’s 2012 return was under review. On July 31, 2014, the Company was informed by the IRS that its 2012 return was accepted with no adjustments.

New Accounting Pronouncements

In April 2015, FASB issued a proposal for a one-year deferral of the effective date for ASU 2014-09 Revenue from Contracts with Customers (Topic 606). Originally, in May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will eliminate all industry-specific guidance and replace all current U.S. GAAP guidance on the topic. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company was originally required to adopt the standard on January 1, 2017. Subsequently, the FASB proposed a one-year deferral of the effective date for this standard. If the deferral is adopted, the Company would now be required to adopt the standard on January 1, 2018. Early application is not permitted. The update may be applied using one of two methods, either retrospective application to each prior reporting period presented or retrospective application with the cumulative effect of initially applying the update recognized at the date of initial application. We are currently assessing the impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (Topic 835) simplifying the presentation of debt issuance costs. The new guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the new guidance. This guidance is effective for annual and interim periods beginning after December 15, 2015, and early adoption is permitted for financial statements that have not been previously issued. The Company is currently evaluating the impact of ASU 2015-03 on the Company’s consolidated financial position and disclosures.

F-16

3. Cash

The Company deposits its unrestricted cash in financial institutions. Balances, at times, may exceed federally insured limits.

Restricted cash at June 30, 2015 and December 31, 2014 was $1,319,371. All restricted cash was posted as security in connection with certain litigation in the Canadian courts. See “Note 16 - Commitments and Contingencies”.

Cash held in trading accounts may be unavailable at times for immediate withdrawal depending upon trading activity. Cash needed to meet credit requirements for outstanding trades and that was available for immediate withdrawal as of June 30, 2015 and December 31, 2014 was as follows:

	June 30,		December 31,
	2015		2014
Credit requirement	$	2,933,484	$	6,113,160
Available credit		5,547,640		14,986,492
Cash in trading accounts	$	8,481,124	$	21,099,652

4. Accounting for Derivatives and Hedging Activities

The following table lists the fair values of the Company’s derivative assets and liabilities as of June 30, 2015 and December 31, 2014:

	Fair Value
	Asset Derivatives		Liability Derivatives
At June 30, 2015
Designated as cash flow hedges:
Energy commodity contracts	$	–	$	(885,145	)

Not designated as hedging instruments:
Energy commodity contracts		1,038,963		(1,717,180	)
Total derivative instruments		1,038,963		(2,602,325	)
Cash deposits in collateral accounts		10,044,486		–
Cash in trading accounts, net.	$	11,083,449	$	(2,602,325	)

At December 31, 2014
Designated as cash flow hedges:
Energy commodity contracts	$	15,732	$	(879,140	)

Not designated as hedging instruments:
Energy commodity contracts		2,350,662		(2,556,862	)
FTRs		1,435,819		–
Total derivative instruments		3,802,213		(3,436,002	)
Cash deposits in collateral accounts		20,733,441		–
Cash in trading accounts, net	$	24,535,654	$	(3,436,002	)

For the three months ended June 30, 2015, the Company hedged the cost of 19,640 MWh via designated derivatives or 21.43% of the 91,647 MWh of electricity sold to its retail customers in such period.

For the six months ended June 30, 2015, the Company hedged the cost of 33,635 MWh via designated derivatives or 22.73% of the 147,995 MWh of electricity sold to its retail customers in such period.

As of June 30, 2015, we had designated futures contracts for 61,952 MWh for delivery in the remainder of 2015 as cash flow hedges of expected electricity purchases for customers receiving service from us as of that date. $885,145 of the net loss on the 2015 contracts was deferred and included in accumulated other comprehensive income (“AOCI”). These amounts are expected to be reclassified to cost of energy sold by December 31, 2015.

F-17

As of June 30, 2015, AOCI includes $705,300 of losses related to cash flow hedges that were discontinued. The total amount will be reclassified to cost of retail electricity sold by August 31, 2015.

As of December 31, 2014, we had hedged the cost of 48,947 MWh (approximately 10.5% of expected 2015 electricity purchases for the customers receiving service from us as of that date) and $863,408 of the net loss on the effective portion of the hedge was deferred and included in AOCI. This amount is expected to be reclassified to cost of retail electricity sold by December 31, 2015.

The following table summarizes the amount of gain or loss recognized in AOCI or earnings for derivatives designated as cash flow hedges for the periods indicated:

	Gain (Loss) Recognized in AOCI			Income Statement Classification	Gain (Loss) Reclassified from AOCI
Three Months Ended June 30, 2015
Cash flow hedges	$	(898,116	)	Cost of energy sold	$	(435,395	)

Six Months Ended June 30, 2015
Cash flow hedges	$	(932,739	)	Cost of energy sold	$	(911,002	)

Year Ended December 31, 2014
Cash flow hedges	$	(1,128,514	)	Cost of energy sold	$	91,508

The following table provides details with respect to changes in AOCI as presented in our consolidated balance sheets, including those relating to our designated cash flow hedges, for the three and six month periods from ended June 30, 2015:

	Foreign Currency			Cash Flow Hedges			Available for Sale Securities			Total
Three Months ended June 30, 2015
Balance - March 31, 2015	$	947,771		$	(422,424	)	$	23,391		$	548,738
Other comprehensive income (loss) before reclassifications		(360,569	)		(898,116	)		(5,492	)		(1,264,177	)
Amounts reclassified from AOCI		–			435,395			–			435,395
Net current period other comprehensive income (loss)		(360,569	)		(462,721	)		(5,492	)		(828,782	)
Balance - June 30, 2015	$	587,202		$	(885,145	)	$	17,899		$	(280,044	)

Six Months ended June 30, 2015
Balance - December 31, 2014	$	999,041		$	(863,408	)	$	11,116		$	146,749
Other comprehensive income (loss) before reclassifications		(411,839	)		(932,739	)		6,783			(1,337,795	)
Amounts reclassified from AOCI		–			911,002			–			911,002
Net current period other comprehensive income (loss)		(411,839	)		(21,737	)		6,783			(426,793	)
Balance - June 30, 2015	$	587,202		$	(885,145	)	$	17,899		$	(280,044	)

F-18

Accounts Receivable

Accounts receivable – trade consists of receivables from our wholesale trading, retail, and diversified investment segments. Wholesale trading receivables represent net settlement amounts due from a market operator or an exchange. While those from retail include amounts resulting from sales to end-use customers and diversified investments include services that were invoiced for in accordance with agreements with third parties.

	June 30,		December 31,
	2015		2014
Wholesale trading	$	57,902	$	515,999
Retail energy services - billed		3,043,320		1,158,019
Retail energy services - unbilled		1,714,000		720,228
Diversified investments		577,522		–
Accounts receivable - trade	$	5,392,744	$	2,394,246

As of June 30, 2015, there were two accounts with a balance greater than 10% of the total, summing to 69% of all receivables. A majority of this concentration, 59%, was from the retail energy service segment.

As of December 31, 2014, there were two individual accounts with receivable balances greater than 10%; one in the wholesale segment, representing 21% of the balance at year end, and one in the retail energy services segment, representing 44% of the balance at year end.

The Company believes that any risk associated with these concentrations is minimal.

Marketable Securities

The following table shows the cost and estimated fair value of available-for-sale securities at June 30, 2015 and December 31, 2014:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
At June 30, 2015
U.S. equities	$	804,394	$	36,124	$	(19,453	)	$	821,065
International equities		72,049		2,494		(1,130	)		73,413
Money market fund		186,359		–		–			186,359
Total	$	1,062,802	$	38,618	$	(20,583	)	$	1,080,837

At December 31, 2014
U.S. equities	$	299,836	$	11,116	$	–		$	310,952
Money market fund		634		–		–			634
Total	$	300,470	$	11,116	$	–		$	311,586

For the three and six months ended June 30, 2015 the Company received gross proceeds of $2,500,000 and realized a gain of $1,916 with no realized impairment charges.

For the year ended December 31, 2014, the Company had sales of securities and realized a gain of $65,655, and recognized no impairment charges.

F-19

The following table shows the gross unrealized losses on, and fair value of, securities positions by the length of time such assets were in a continuous loss position as of June 30, 2015 and December 31, 2014:

	Less than Twelve Months
	Unrealized Losses			Fair Value
At June 30, 2015
U.S. equities	$	(19,453	)	$	821,065
International equities.		(1,130	)		73,413

At December 31, 2014
International equities	$	–		$	–

7. Note Receivable and Deferred Gain

On June 1, 2015, the Company closed on the sale of TCP and SUM to Angell for a purchase price of $20,740,729, to be paid with $500,000 cash and a secured promissory note of $20,240,729 bearing interest at an annual rate of 6.00% and payable in 12 quarterly installments of $1,855,670 each. The Company and Angell also entered into a security and guarantee agreement and Apollo and Angell entered into software license and administrative services agreements. The down payment was received August 5, 2015.

In the event of default, Angell has 45 days to cure. If the default is uncured at the end of such period, the holder may declare all or any part of the note immediately due and payable or exercise any other rights and remedies under the Uniform Commercial Code. Interest on the note is accrued monthly and is added to the note’s principal balance. As of June 30, 2015 a total of $99,000 in interest receivable was accrued.

ASC 450-30-25-1 and SEC SAB Topic 13.A state, in part, that gains should not be recognized prior to their realization, consequently, the Company has deferred the $17,783,890 of gain associated with the sale and recorded such on the balance sheet as an offset to the note receivable. The deferred gain will be recognized on a pro rata basis as payments on the note are received.

8. Fair Value Measurements

The Fair Value Measurement Topic of FASB’s ASC establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three types of valuation inputs in the fair market hierarchy are as follows:

“Level 1 inputs” are quoted prices in active markets for identical assets or liabilities.

“Level 2 inputs” are inputs other than quoted prices that are observable either directly or indirectly for the asset or liability.

“Level 3 inputs” are unobservable inputs for which little or no market data exists.

Financial instruments categorized as Level 1 holdings are publicly traded in liquid markets with daily quotes and include exchange-traded derivatives such as futures contracts and options, certain highly-rated debt obligations, and some equity securities. Holdings such as shares in money market mutual funds that are based on net asset values as derived from quoted prices in active markets of the underlying securities are also classified as Level 1.

The fair values of financial instruments that are not publicly traded in liquid markets, but do have characteristics similar to observable market information such as wholesale commodity prices, interest rates, credit margins, maturities, collateral, and the like upon which valuations are based are categorized in Level 2.

Financial instruments that are not traded in publicly quoted markets or that are acquired based on prices and terms determined by direct negotiation with the issuer are classified as Level 3. Level 3 securities are carried at book value which management believes approximates fair value, until circumstances otherwise dictate while Level 3 derivatives are adjusted to fair value based on appropriate mark-to-model methodologies.

F-20

Generally, with respect to valuation of Level 3 instruments, significant changes in inputs will result in higher or lower fair value measurements, any particular calculation or valuation methodology may produce estimates that may not be indicative of net realizable value or reflective of future fair values, and such variations could be material.

From time to time, the Company may engage third parties such as appraisers, brokers, or investment bankers to assist management in its valuation and classification of financial instruments.

There have been no changes in the methodologies used since December 31, 2014.

The following table presents certain assets measured at fair value on a recurring basis as of the dates indicated:

	Level 1		Level 2		Level 3		Total
At June 30, 2015
Cash in trading accounts, net	$	8,481,124	$	–	$	–	$	8,481,124
Marketable securities		1,080,837		–		–		1,080,837
Investment in convertible notes		–		–		1,680,297		1,680,297

At December 31, 2014
Cash in trading accounts, net	$	19,663,833	$	–	$	–	$	19,663,833
FTR positions, net		–		–		1,435,819		1,435,819
Marketable securities		311,586		–		–		311,586
Investment in convertible notes		–		–		1,604,879		1,604,879

There were no transfers during the six months ended June 30, 2015 between Levels 1 and 2.

Level 3 Assets

The following table reconciles beginning and ending Level 3 fair value financial instrument balances for the six months ended June 30, 2015:

Balance - December 31, 2014	$	3,040,698

Total gains and losses:
Included in other comprehensive income		–
Included in earnings		(1,435,819	)
Purchases		75,418
Sales		–
Transfers into Level 3		–
Transfers out of Level 3		–
Balance - June 30, 2015	$	1,680,297

Losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held as of June 30, 2015	$	(1,435,819	)

9. Intangible Assets

On June 29, 2012, TCP acquired certain assets and the business of Community Power & Utility LLC (“CP&U”), a retail energy supplier serving residential and small commercial markets in Connecticut, for $160,000. The business has been re-named “Town Square Energy” and is now a wholly-owned second-tier subsidiary of the Company. Of the purchase price, $85,000 was allocated to the acquisition of an existing service contract with an industry-specific provider of transaction management, billing, and customer information software and services, and $75,000 was allocated to customer relationships. The purchase price will be amortized over 36 months using the straight line method.

F-21

Effective January 1, 2013, in connection with the sale of his units to Mr. Krieger, the Company’s founder, Chairman, Chief Executive Officer, and controlling member, the Company entered into a Non-Competition Agreement (the “NCA”) with David B. Johnson, a current director of the Company valued at $500,000, to be amortized and paid in equal installments over 24 months.

On January 2, 2014, the Company acquired 100% of the outstanding membership interests of Discount Energy Group, LLC (“DEG”) for a total purchase price of $848,527, consisting of $680,017 in cash and $168,510 in assumption of accounts payable. Of this total consideration, $293,869 was allocated to tangible assets including deposits with PJM and certain utilities and prepaid expenses and $554,658 was allocated to intangible assets. Intangible assets acquired included state licenses and utility relationships, the DEG brand name, a fully functional website, active and inactive customer lists, and domain names. The intangible assets will be amortized over 24 months using the straight line method.

	June 30,			December 31,
	2015			2014
Other intangibles	$	714,658		$	714,658
Non-competition agreement		500,000			500,000
Less: accumulated amortization		(1,099,601	)		(945,509	)
Intangible assets, net	$	115,057		$	269,149

Total amortization of intangible assets for the three and six month periods ended June 30, 2015 and 2014 was $77,046 and $139,340 and $154,092 and $288,676, respectively, and is included in other general and administrative expenses.

10. Deferred Financing Costs

Prior to the May 10, 2012 effective date of its 2012 registration statement, the Company incurred certain professional fees and filing costs associated with the offering totaling $393,990. The Company has capitalized these costs and amortizes them on a monthly basis over the weighted average term of the Notes sold, exclusive of any expected renewals.

During the six month period ended June 30, 2015 the Company incurred $191,523 in professional fees associated with its 2015 registration statement associated with its Notes Offering. Amortization of these costs will begin when the new registration statement becomes effective.

On October 14, 2014, the Company entered into a credit agreement with a bank and $35,000 of the associated transaction costs were capitalized and will be amortized over 24 months.

	June 30,			December 31,
	2015			2014
Renewable unsecured subordinated notes
2012 registration statement	$	393,990		$	393,990
2015 registration statement		191,523			–
Revolver		35,000			35,000
Less: accumulated amortization		(289,789	)		(187,246	)
Deferred financing costs	$	330,724		$	241,744

Total amortization of deferred financing costs for the three and six month periods ended June 30, 2015 and 2014 was $55,843 and $29,573 and $102,543 and $55,071, respectively and is included in other general and administrative expenses.

F-22

11. Land Held for Development

As of June 30, 2015 and December 31, 2014 land held for development consisted of $2,069,692 and $953,462, respectively.

On January 26, 2015, Cyclone closed on the purchase of a single family home located in New Prague, Minnesota for a price of $198,650, paid in cash. On April 13, 2015, the property was sold to Mr. Krieger, a related party, for a price of $197,382.

12. Convertible Promissory Note

During 2014, the Company invested $1,500,000 in privately placed Series C Convertible Promissory Notes issued by Ultra Green Packaging, Inc. (“Ultra Green”). Ultra Green develops, manufactures, and markets “ecopaper” products made from wheat straw, bamboo, or sugarcane fibers and bioplastic products made from cornstarch. Ultra Green’s ecopaper and bioplastic products are certified as biodegradable and sustainable, and are compostable in about 160 days.

In addition to its cash investments as described above, the Company has lent the services of Mr. Keith Sperbeck, its Vice President – Operations, to Ultra Green as its Interim CEO for an indefinite period concluding when Ultra Green hires a full-time chief executive officer. In lieu of any cash compensation to either Mr. Sperbeck or the Company, on June 19, 2014, Ultra Green issued the Company a non-statutory option to purchase 50,000,000 shares of its common stock for $0.01 per share, which option was fully vested and exercisable immediately upon issuance.

The C Notes will mature on December 31, 2019 and bear interest at a fixed rate of 10% per annum. Interest will accrue until June 30, 2016, at which time all accrued and unpaid interest will become due and payable. Thereafter, interest will be due and payable on a quarterly basis. Each dollar of C Note principal and accrued but unpaid interest is ultimately convertible into 100 shares of Ultra Green’s common stock.

13. Debt

Notes payable by the Company are summarized as follows:

	June 30, 2015		December 31, 2014
Demand and Revolving Debt
Payable to ABN AMRO	$	–	$	–
Payable to Royal Bank of Canada		–		–
Revolving note payable to Maple Bank		3,386,255		1,105,259
Subtotal		3,386,255		1,105,259

Term Debt
Mortgage note payable to Security State Bank		221,052		224,568
Mortgage note payable to Lakeview Bank		119,976		119,976
Construction note payable to American Land & Capital		1,161,142		184,975
Renewable unsecured subordinated notes		22,206,113		17,653,128
Subtotal		23,708,283		18,182,647
Total	$	27,094,538	$	19,287,906

F-23

Notes payable by maturity are summarized as follows:

	June 30, 2015		December 31, 2014
Demand and Revolving Debt
Demand	$	–	$	–
2016		3,386,255		1,105,259
Subtotal		3,386,255		1,105,259

Term Debt
2015		–		7,546,627
2016 to June 30		10,739,639		–
Current maturities		10,739,639		7,546,627

2016 after June 30		3,482,007		–
2016		–		2,648,150
2017		3,908,507		2,869,383
2018		2,982,062		2,642,972
2019		963,227		1,213,227
2020 & thereafter		1,632,841		1,262,288
Long term debt		12,968,644		10,636,020
Subtotal		23,708,283		18,182,647
Total	$	27,094,538	$	19,287,906

ABN-AMRO Margin Agreement

In February 2012, CEF executed a Futures Risk-Based Margin Finance Agreement (“Margin Agreement”) with ABN AMRO. The Margin Agreement provides CEF with an uncommitted $25,000,000 revolving line of credit on which it pays a commitment fee of $35,000 per month. Any loans outstanding are payable on demand and bear interest at an annual rate equal to 1.00% in excess of the Federal Funds Target Rate, or approximately 1.25%. The Margin Line is secured by all balances in CEF’s trading accounts with ABN AMRO. Under the Margin Agreement, CEF is also subject to certain reporting, affirmative, and negative covenants, including certain financial tests. The Margin Agreement was amended on May 31, 2013 to reduce the uncommitted credit line to $15,000,000, the commitment fee to $25,000 per month, and the covenant with respect to net liquidating equity as defined to $1,500,000.

As of June 30, 2015 and December 31, 2014, there were no borrowings outstanding under the Margin Agreement and the Company was in compliance with all covenants.

RBC Line of Credit

As of June 30, 2015 and December 31, 2014, there were no borrowings outstanding under the RBC Line and the Company was in compliance with all terms and conditions.

Maple Bank Revolver

On October 14, 2014, REH, TSE, and TSEE entered into a Credit Agreement with the Toronto, Ontario branch of Maple Bank GmbH (the “Maple Revolver” and “Maple Bank”), expiring October 31, 2016. The Maple Revolver provides the Company’s retail energy services businesses with a revolving line of credit of up to $5,000,000 in committed amount secured by a first position security interest in all of the assets, a pledge of the equity of such companies by the Company, and certain guarantees. Availability of loans is keyed to advance rates against certain eligible receivables as defined. Any loans outstanding bear interest at an annual rate equal to 3 month LIBOR, subject to a floor of 0.50%, plus a margin of 6.00%. In addition, the Company is obligated to pay an annual fee of 1.00% of the committed amount on a monthly basis and a monthly non-use fee of 1.00% of the difference between the committed amount and the average daily principal balance of any outstanding loans. The Company is also subject to certain reporting, affirmative, and negative covenants.

F-24

As of June 30, 2015 and December 31, 2014, there was $3,386,255 and $1,105,259, respectively, outstanding under the Maple Revolver and the Company was in compliance with all covenants.

Security State Mortgage

On June 16, 2014, Cyclone purchased a single family home in Garrison, Minnesota for use as a corporate retreat (the “Garrison Property”) for a purchase price of $285,000, paid with $57,000 of cash and the proceeds of a $228,000 note (the “Security State Mortgage”) advanced by the Security State Bank of Aitkin (“Security State Bank”) and secured by a first mortgage. The loan is payable in 239 equal installments of $1,482 due on the 16th of each month beginning on July 16, 2014 and one irregular installment due on June 16, 2034 (the “maturity date”). The note bears interest at an annual rate equal to the prime rate as published from time to time by The Wall Street Journal plus 0.75%, subject to a floor of 4.75%. Whenever increases occur in the interest rate, Security State, at its option and with notice to the Company, may: (a) increase Cyclone’s payments to insure the loan will be paid off by the maturity date; (b) increase Cyclone’s payments to cover accruing interest; (c) increase the number of Cyclone’s payments; or (d) continue the payments at the same amount and increase Cyclone’s final payment. The loan may be prepaid in whole or in part at any time without penalty.

As of June 30, 2015 and December 31, 2014, there was $221,052 and $224,568, respectively, outstanding under the Security State Mortgage and Cyclone was in compliance with all terms and conditions of the loan.

Lakeview Bank Mortgage

On December 23, 2014, via an assignment and assumption agreement between Cyclone and Kenyon Holdings, LLC (“Kenyon”), a related party, Cyclone took ownership of a 10 acre parcel of undeveloped land located at 170xx Texas Avenue, Credit River Township, Minnesota and assumed a note secured by a mortgage on the property and owed to Lakeview Bank (the “Lakeview Bank Mortgage”). Kenyon is owned by Mr. Krieger, the Company’s primary owner and its Chief Executive Officer, and Keith W. Sperbeck, the Company’s Vice President of Operations. The Lakeview Bank Mortgage bears interest at the highest prime rate reported as such from time to time by The Wall Street Journal. Interest only is payable monthly on the 25^th, the note matured on April 30, 2015 and was renewed for another year until April 30, 2016. The loan may be prepaid in whole or in part at any time without penalty.

As of June 30, 2015 and December 31, 2014, there was $119,976 outstanding under the Lakeview Bank Mortgage and the Company was in compliance with all terms and conditions of the loan.

American Land and Capital Construction Loans

On November 21, 2014, American Land and Capital, LLC (“American Land”) and Cyclone entered into four construction loan agreements, each for a committed amount of $205,000 or $820,000 in total (the “Construction Loans”). Each commitment is secured by a mortgage on a lot (numbers 1, 2, 3, and 4) in Block 1 of Fox Meadows 3rd Addition and is personally guaranteed by Mr. Krieger. Fox Meadows is a townhouse development located in Lakeville, Minnesota in which Cyclone owns 35 attached residential building sites. Proceeds of the Construction Loans will be used to construct the first four spec/model homes on Cyclone’s Fox Meadows property. Draws on the Construction Loans bear interest at the higher of: (a) 6.50% or (b) the prime rate as reported from time to time by The Wall Street Journal plus 3.00%. Interest only is payable monthly on the 10^th, the note matured on May 21, 2015, and was renewed for an additional three months. The loans may be prepaid in whole or in part at any time without penalty.

F-25

On February 24, 2015, American Land and Cyclone entered into a construction loan agreement for a committed amount of $485,000 secured by a mortgage on Lot 2, Block 1, Territory 1^st Addition, also referred to as “21580 Bitterbush Pass”. The loan is also personally guaranteed by Mr. Krieger. Proceeds will be used to construct a home on the property and draws bear interest at the higher of: (a) 6.50% or (b) the prime rate as reported from time to time by The Wall Street Journal plus 3.00%. Interest only is payable monthly on the 10^th and the note matures on November 24, 2015. The loan may be prepaid in whole or in part at any time without penalty.

As of June 30, 2015 and December 31, 2014, there was $1,161,142 and $184,975, respectively, outstanding under the American Land Construction Loans and the Company was in compliance with all terms and conditions of the agreements.

Renewable Unsecured Subordinated Notes

On May 10, 2012, the Company’s registration statement on Form S-1 with respect to its offering of up to $50,000,000 of 3 and 6 month and 1, 2, 3, 4, 5, and 10 year Renewable Unsecured Subordinated Notes was declared effective by the SEC. Interest on the Subordinated Notes is paid monthly, quarterly, semi-annually, annually, or at maturity at the sole discretion of each investor.

On May 8, 2015, the Company filed a replacement registration statement on Form S-1 relating to the offer and sale of our Renewable Unsecured Subordinated Notes (the “2015 S-1”). The 2015 S-1 covers up to $75,000,000 in principal amount of 3 and 6 month and 1, 2, 3, 4, 5, and 10 year notes.

The Company made interest payments of $580,173, $326,984, $1,075,628, and $539,777 during the three and six month periods ended June 30, 2015 and 2014, respectively. Total accrued interest on the Subordinated Notes at June 30, 2015 and December 31, 2014 was $1,206,061 and $849,913, respectively.

As of June 30, 2015, the Company had $22,206,113 of its Subordinated Notes outstanding as follows:

Initial Term	Principal Amount		Weighted Average Interest Rate
3 months	$	487,915		8.43%
6 months		413,316		10.69%
1 year		6,999,325		12.98%
2 years		3,088,414		13.38%
3 years		4,066,820		14.72%
4 years		2,020,875		15.79%
5 years		3,681,905		15.91%
10 years		1,447,543		14.89%
Total	$	22,206,113		14.08%

Weighted average term.		36.0 mos

14. Ownership

As of June 30, 2015 and December 31, 2014, the Company’s ownership is as presented below:

	Series A Preferred				Common
	Units held		Percent of class		Units held		Percent of class
Timothy S. Krieger		496		100.00%		4,935		99.50%
Summer Enterprises, LLC		–		0.00%		25		0.50%
Total		496		100.00%		4,960		100.00%

For the period ending, June 30, 2015 and December 31, 2014, total common and preferred distributions paid to the owners of the respective units was $4,952,749 and $4,726,730, respectively.

F-26

15. Related Party Transactions

On January 1, 2013, the Company and Kenyon Holdings, LLC (“Kenyon”), a company owned by Mr. Krieger and Mr. Sperbeck, entered into a five year lease expiring December 31, 2017 for 11,910 square feet at a monthly rent of $12,264. On September 25, 2014, the lease was amended to reduce the square footage to 10,730 and monthly rent to $11,113. The lease was redone on May 19, 2015, effective June 1, 2015, to reduce the square footage to 8,543 square feet and increase the monthly rent to $14,968. For rent, real estate taxes, and operating expenses, the Company paid Kenyon $57,265, $37,228, $115,600, and $98,851 for the three and six months ended June 30, 2015 and 2014, respectively.

Effective January 1, 2013, in connection with the purchase of David B. Johnson’s units by Mr. Krieger, the Company entered into the NCA with Mr. Johnson, a current governor and former member of the Company, pursuant to which the Company is obligated to pay Mr. Johnson $500,000 in 24 equal monthly installments of $20,833 each. The total amount paid pursuant to the NCA during the six months ended June 30, 2014 was $62,500. There were no payments during 2015 as the NCA was paid in full on December 31, 2014.

On March 5, 2013, CEF entered into a 36 month lease for 1,800 square feet of office space in Tulsa, Oklahoma with the Brandon J. and Heather N. Day Revocable Trust at a monthly rent of $3,750. Mr. Day is an employee of CEF, a second-tier subsidiary of the Company. Total rent paid for the three and six months ended June 30, 2015 and 2014 was $11,250 and $22,500, respectively.

In connection with the Company’s initial investment of $1.0 million in Ultra Green, Ultra Green paid a 10% commission to Cedar Point Capital, LLC, a registered broker dealer (“Cedar Point”). David B. Johnson, a governor of the Company, is the sole owner of Cedar Point. No commissions were paid on the Company’s follow-on investments.

On June 17, 2014, the building in which the Company leases its Chandler, Arizona office space occupied by certain of its retail energy business functions was purchased by Fulton Marketplace, LLC (“Fulton”), a company owned by Mr. Krieger and Mr. Sperbeck. Effective August 1, 2014, the Company and Fulton entered into a five year lease expiring July 31, 2019, subject to two consecutive five year extension periods, for 2,712 square feet. The rent for the first lease year is $4,068 per month and it will increase by 3% annually at the start of each lease year thereafter. On June 30, 2015 the Company discontinued the lease as the office was relocated to a new location. Thus effective July 1, 2015 the Company entered into a new five year lease with Fulton for a 3,321 square foot office space with a monthly base rent of $4,982 that will increase by 3% annually at the start of each lease year thereafter. The Company paid $16,059 and $32,118 to Fulton for the three and six months ended June 30, 2015 for rent, real estate taxes, and operating expenses.

Fulton is also the owner of a single family residence located in Chandler, Arizona. Effective December 1, 2014, Fulton and REH entered into a seven month lease expiring June 30, 2015 with respect to the property for rent of $2,800 per month. For the three and six months ended June 30, 2015 the Company paid Fulton total rent of $8,568 and $17,136.

See also “Note 1 - Basis of Presentation and Description of Business - Businesses – The Restructuring”.

F-27

16. Commitments and Contingencies

FERC Settlement

On October 12, 2011, FERC initiated a formal non-public investigation into TCE’s power scheduling and trading activity in MISO for the period from January 1, 2010 through May 31, 2011 (the “Investigation”). The Investigation addressed trading activity by former employees of TCPC whose employment contracts were terminated by TCPC on February 1, 2011 in connection with the Company’s reorganization of its Canadian operations. TCE and TCPC have no employees and do not conduct any operations.

On June 12, 2014, FERC issued a Notice of Alleged Violations (“NAV”) indicating that the staff of its Office of Enforcement had preliminarily determined that during the period from January 1, 2010 through January 31, 2011, TCPC and certain affiliated companies, including TCE and TCP, and individuals Allan Cho, Jason F. Vaccaro, and Gaurav Sharma, each violated the FERC’s prohibition on electric energy market manipulation by scheduling and trading physical power in MISO to benefit related swap positions that settled based on real-time MISO prices.

On November 14, 2014, the Company agreed to a settlement regarding the Investigation and the NAV. The settlement required the Company to pay $978,186 plus interest of $128,827 as disgorgement of profits and $2,500,000 as a civil penalty, for a total of $3,607,013. On December 30, 2014, FERC formally accepted the settlement and on December 31, 2014, the Company paid $500,000 to MISO as disgorgement and beginning with the second quarter 2015, the Company agreed to pay the remainder in 16 equal quarterly installments, first to MISO as disgorgement until it is fully paid, and thereafter to the Treasury in satisfaction of the penalty. The Company further agreed to implement certain procedures to improve compliance. Failure to comply with the terms and conditions will be deemed a violation of the final order and may subject the Company to additional action.

On June 1, 2015, the Company’s financial obligations under the settlement agreement were transferred to Angell in connection with its purchase of TCP.

Former Employee Litigation

On February 1, 2011, the Company commenced a major restructuring of the operations of TCPC and all personnel were terminated, although several were subsequently re-hired. During the course of 2011, three former employees of TCPC commenced legal proceedings and brought separate summary judgment applications seeking damages aggregating C$3,367,000 for wrongful dismissal and payment of performance bonuses. The Company filed a counterclaim for C$3,096,000 against one of the former employees for losses suffered, inappropriate expenses, and related matters. Two of the three summary judgment applications were dismissed on January 12, 2012. All three summary judgment applications were appealed and were heard on July 4, 5, and 6, 2012 by the Alberta Court of Queen’s Bench. On July 6, 2012, the court dismissed two of the three applications and allowed the third, awarding summary judgment against TCPC for a portion of the claim amounting to C$1,376,726. This third matter will hereinafter be referred to as the “TCPC judgment action”.

In 2013, the former employees brought applications to amend their pleadings to include as additional corporate defendants certain TCPC U.S. affiliates (“Twin Cities USA”). One of the former employees proceeded with the application and the others were adjourned. The application that proceeded went forward on April 29 and 30, 2013. In a decision dated January 31, 2014, the Court of Queen’s Bench dismissed the applications to add additional corporate defendants but allowed certain refinements to the pleadings. Thereafter the Company and TCPC consented to an amendment of pleadings of the other employees consistent with the Court’s ruling.

In addition, on January 31, 2014 within the “TCPC judgment action” the Court of Queen’s Bench ordered Twin Cities USA to post security for costs in the sum of C$75,000 together with security for judgment in the sum of C$1,376,726. In order to preserve its claims and counterclaims against the former employees in the TCPC judgment action, Twin Cities USA posted security for the judgment and costs and continues to maintain that security pending further order or direction from the Court of Queen’s Bench.

Twin Cities USA and TCPC intend to continue to vigorously defend against the allegations and claims of the former employees and have filed counterclaims or amended counterclaims for losses suffered and costs incurred in responding to the FERC investigation, inappropriate expenses, and related matters.

F-28

Further, on April 24, 2015, the Company commenced a new action against another former employee of TCPC, Guarav Sharma, claiming amounts owing in relation to the FERC settlement arising from his conduct as an employee.

In all of this former employee litigation, the parties are proceeding with discovery. A case management justice has been appointed who will assist the parties in scheduling and any required motions.

Due to the uncertainty surrounding the outcome of the litigation, including that of its counterclaims against the former employees, the Company is presently unable to determine a range of reasonably possible outcomes.

PJM Resettlements

On May 11, 2012, FERC issued an order denying rehearing motions in regards to PJM resettlement fees confirming its intent to reverse refunds it had granted to a number of market participants in a 2009 order. These refunds were related to transmission line loss refunds issued to the Company by PJM for prior periods. Pursuant to the order, the Company was required to return $782,000 to PJM which amount was paid in full in July 2012.

On July 9, 2012, several parties filed a petition for review of the May 11, 2012 FERC order with the District of Columbia Circuit of the U.S. Court of Appeals and certain subsidiaries of the Company filed motions to intervene in the proceeding. In an order issued August 6, 2013, the Court remanded to FERC for further consideration the issue of recoupment of refunds that had previously been directed by FERC. The Court found that FERC’s orders failed to explain why refund recoupment was warranted and therefore its recoupment directive was found to be arbitrary and capricious.

On February 20, 2014, the FERC issued an order establishing a briefing schedule allowing parties to the proceeding to provide briefs on whether or not the recoupment orders should be reconsidered. Although briefing on all issues relevant to the remand was invited by FERC, it also presented five specific questions, primarily relating to the effect of the recoupment orders, for the parties to address. Initial briefs were due on April 6, 2014 and FERC’s reply briefs were due May 6, 2014.

Now that briefing is completed, it is expected that FERC will issue an order responding to the Court’s remand directive. If FERC affirms its prior order it is expected that some or all of the financial marketer appellants and interveners will again challenge the lawfulness of the decision on rehearing or before the Court of Appeals. If FERC reconsiders its order and finds that the refunds should not have been recouped, or failing that action, if the Court again finds the FERC order unlawful, then some or all of the funds paid to PJM in July 2012 could be returned to the Company. Due to the uncertainty surrounding the outcome of the remand and appeals process, the Company is presently unable to determine a reasonable estimate of the amount, if any, which could be returned.

Finally, management believes that the liability for such charges, if any, associated with TCP and SUM’s trading activity was assumed by Angell in conjunction the sale of the equity interests.

PJM Up To Congestion Fees

On August 29, 2014, FERC initiated a proceeding under Section 206 of the Federal Power Act, as amended, described in Docket No. EL14-37-000 regarding how PJM treats up-to-congestion (“UTC”) transactions in the market (the “§206 proceeding”). The purpose of the proceeding is for FERC to examine how uplift is, or should be, allocated to all virtual transactions within the PJM market. The Company is an active trader of these UTCs.

Currently, under PJM’s Tariff and Operating Agreement, UTCs are treated differently under its FTR forfeiture rule than are INCs and DECs, two other types of virtual transactions. Further, INCs and DECs are subject to uplift charges, but UTCs are not. In Docket No EL14-37-000, FERC noted that should any uplift be charged UTCs, it would apply such back to the date that notice of the proceeding was published in the Federal Register (September 8, 2014), thus setting a “refund effective date”. From the refund effective date to June 30, 2015, the Company traded about 6,000,000 MWh of UTCs in PJM and recorded $13,100,000 of associated revenues. Over 95% of this trading activity was transacted by TCP and SUM.

F-29

Although the Company’s UTC trading activity exposes it to potential uplift charges, none have been billed as the investigation is still pending. Further, the Company has not established any reserves for such as management is uncertain as to the probability, amount, and timing of the actual payment, if any, that might be due. Finally, management believes that the liability for such charges, if any, associated with TCP and SUM’s trading activity was assumed by Angell in conjunction the sale of the equity interests.

Letter of Credit

On June 24, 2014, the Company’s restricted cash balance of $320,188 was returned by the City of Lakeville and a letter of credit in favor of Cyclone was issued by Vermillion State Bank for the same amount. The note evidencing the letter of credit calls for maximum advances of up to $320,188, bears interest at an annual rate of 5.25%, is secured by a mortgage on the property being developed and the guaranty of Cyclone, and matures on demand. As of June 30, 2015 the Company was in compliance with all terms and conditions of the letter of credit.

Guarantees

In the ordinary course, the Company provided guarantees of the obligations of TCP, SUM, and CEF with respect to their participation in certain ISOs. During the three month period ended June 30, 2015, many of these guarantees were cancelled and as of June 30, 2015, such guarantees were up to $2,000,000 for TCP, SUM, and CEF’s participation in MISO.

On June 17, 2015, REH entered into two separate guaranties of the obligations of TSE and TSEE of up to $1,000,000 in favor of BP Energy Company (“BP”). The guarantees remain effective until the earlier of June 17, 2020 or ten days after REH gives notice of cancellation to BP.

On May 13, 2015, the Company gave notice to ERCOT and NYISO of the cancellation of its guarantees of TCP’s obligations, and a concurrent pledge of $500,000 of additional collateral to NYISO. On May 14, 2015, NYISO accepted the collateral and the cancellation of the Company’s obligation. On June 9, 2015, ERCOT accepted the cancellation of the Company’s obligation.

On April 13, 2015, the Company pledged additional collateral of $700,000 to PJM and consequently cancelled its guarantees for the benefit of PJM with respect to TCP and SUM effective April 30, 2015.

On April 25, 2014, the Company entered into a guaranty of the obligations of TSEE of up to $1,000,000 (plus any costs of collection or enforcement) in favor of Noble. The Company may cancel the guarantee upon 30 days’ written notice to Noble.

On November 5, 2014, the Company entered into two separate guaranties of the obligations of TSE and TSEE of up to $500,000 (plus any costs of enforcement or collection) in favor of Shell Energy North America L.P. (“Shell”). The guarantee is in effect until the earlier of November 5, 2019 or ten days’ after the Company gives notice to Shell of its cancellation.

On August 12, 2013, the Company entered into a guaranty of the obligations of TSE of up to $1,000,000 (plus any costs of collection or enforcement) in favor of Noble Americas Energy Solutions LLC (“Noble”). The Company may cancel the guarantee upon 30 days’ written notice to Noble.

Legal fees, if any, related to commitments and contingencies are expensed as incurred.

F-30

17. Segment Information

The Company has three business segments used to measure its business activity – wholesale trading, retail energy services, and diversified investments:

Wholesale trading activities earn profits from trading financial, physical, and derivative electricity in wholesale markets regulated by the FERC and the CFTC. On June 1, 2015, the Company sold two subsidiaries operating within this segment. See “Note 1 - Basis of Presentation and Description of Business – Businesses – The Restructuring”, “Note 2 – Summary of Significant Accounting Policies – Variable Interest Entities”, and “Note 7 – Note Receivable and Deferred Gain”.

On July 1, 2012, the Company began selling electricity to residential and small commercial customers.

On October 23, 2013, the Company formed a new entity to take advantage of certain investment opportunities in the residential real estate market and in 2014, it made certain investments in the securities of emerging companies. On June 1, 2015, the Company began selling management, operation and administrative services and licensing software to third parties.

Trading profits and sales are classified as “foreign” or “domestic” based on the location where the trade or sale originated. For the three and six month periods ended June 30, 2015 and the year ended December 31, 2014, all such transactions were “domestic”. Furthermore, the Company has no long-lived assets in foreign jurisdictions.

These segments are managed separately because they operate under different regulatory structures and are dependent upon different revenue models. The performance of each is evaluated based on the operating income or loss generated.

Certain amounts reported in prior periods have been reclassified to conform to the current period’s presentation.

F-31

Information on segments for the three and six months ended and at June 30, 2015 is as follows:

	Wholesale Trading		Retail Energy Services			Diversified Investments			Corporate, Net of Eliminations			Consolidated Total
Six Months Ended
June 30, 2015
Wholesale trading	$	12,104,420	$	(332,213	)	$	–		$	–		$	11,772,207
Retail energy services		–		13,443,717			–			–			13,443,717
Management services		–		–			125,000			–			125,000
Revenues, net		12,104,420		13,111,504			125,000			–			25,340,924

Costs of retail electricity sold		–		12,318,876			–			–			12,318,876
Retail sales and marketing		–		602,907			–			–			602,907
Compensation and benefits		7,595,069		390,357			648,713			596,002			9,230,141
Professional fees		40,957		538,820			2,200			734,524			1,316,501
Other general and administrative		2,504,675		1,308,770			89,415			(1,592,307	)		2,310,553
Trading tools and subscriptions		470,451		185,477			272			25,060			681,260
Operating costs and expenses		10,611,152		15,345,207			740,600			(236,721	)		26,460,238
Operating income (loss)	$	1,493,268	$	(2,233,703	)	$	(615,600	)	$	236,721		$	(1,119,314	)
Capital expenditures	$	1,377	$	25,302		$	361,753		$	143,239		$	531,671

Three Months Ended
June 30, 2015
Wholesale trading	$	1,338,624		$	(416,113	)	$	–		$	–		$	922,511
Retail energy services		–			8,066,608			–			–			8,066,608
Management services		–			–			125,000			–			125,000
Revenues, net		1,338,624			7,650,495			125,000			–			9,114,119

Costs of retail electricity sold		–			6,095,655			–			–			6,095,655
Retail sales and marketing		–			357,008			–			–			357,008
Compensation and benefits		2,202,808			202,042			336,042			293,010			3,033,902
Professional fees		12,007			283,369			1,000			433,745			730,121
Other general and administrative		1,006,086			691,102			47,190			(669,890	)		1,074,488
Trading tools and subscriptions		234,599			102,010			74			17,272			353,955
Operating costs and expenses		3,455,500			7,731,186			384,306			74,137			11,645,129
Operating income (loss)	$	(2,116,876	)	$	(80,691	)	$	(259,306	)	$	(74,137	)	$	(2,531,010	)
Capital expenditures	$	1,377		$	9,475		$	150,458		$	34,207		$	195,517

F-32

Information on segments at June 30, 2015 is as follows:

	Wholesale Trading		Retail Energy Services		Diversified Investments		Corporate, Net of Eliminations		Consolidated Total

At June 30, 2015
Identifiable Assets
Cash - unrestricted	$	335,885	$	572,184	$	4,768	$	4,169,700	$	5,082,537
Cash in trading accounts		6,539,481		1,941,643		–		–		8,481,124
Accounts receivable - trade		42,244		4,757,320		577,522		15,658		5,392,744
Marketable securities		–		–		–		1,080,837		1,080,837
Note receivable, net - current		–		–		1,075,453		–		1,075,453
Prepaid expenses and other assets		6,624		67,968		204,343		213,656		492,591
Total current assets		6,924,234		7,339,115		1,862,086		5,479,851		21,605,286
Property, equipment, and furniture, net		37,447		106,120		110,404		492,869		746,840
Intangible assets, net		–		115,057		–		–		115,057
Deferred financing costs, net		–		22,604		–		308,120		330,724
Cash - restricted		–		–		1,319,371		–		1,319,371
Land held for development		–		–		2,069,692		–		2,069,692
Note receivable, net - long term		–		–		1,980,386		–		1,980,386
Investment in convertible notes		–		–		1,680,297		–		1,680,297
Total assets	$	6,961,681	$	7,582,896	$	9,022,236	$	6,280,840	$	29,847,653

Identifiable Liabilities and Equity
Current portion of:
Revolver	$	–		$	3,386,255		$	–	$	–		$	3,386,255
Senior notes		–			–			1,288,408		–			1,288,408
Subordinated notes		–			–			–		9,451,231			9,451,231
Accounts payable - trade		44,985			2,109,677			145,257		596,862			2,896,781
Accrued expenses		–			1,090,622			2,941		6,388			1,099,951
Accrued compensation		206,388			10,676			–		1,973,208			2,190,272
Accrued interest		–			24,433			–		1,206,060			1,230,493
Accrued distributions		–			–			–		4,000			4,000
Total current liabilities		251,373			6,621,663			1,436,606		13,237,749			21,547,391

Senior notes		–			–			213,762		–			213,762
Subordinated notes		–			–			–		12,754,882			12,754,882
Total liabilities		251,373			6,621,663			1,650,368		25,992,631			34,516,035

Investment in subsidiaries		6,604,000			9,252,889			1,347,387		(17,204,276	)		–
Series A preferred equity		–			–			–		2,745,000			2,745,000
Common equity		124,105			(7,406,511	)		6,024,481		(5,875,413	)		(7,133,338	)
Accumulated other comprehensive income		(17,797	)		(885,145	)		–		622,898			(280,044	)
Total members' equity		6,710,308			961,233			7,371,868		(19,711,791	)		(4,668,382	)
Total liabilities and equity	$	6,961,681		$	7,582,896		$	9,022,236	$	6,280,840		$	29,847,653

F-33

Information on segments for the three and six months ended June 30, 2014 is as follows:

	Wholesale Trading		Retail Energy Services			Diversified Investments			Corporate, Net of Eliminations			Consolidated Total
Six Months Ended
June 30, 2014
Wholesale trading	$	29,275,907	$	2,050,478		$	–		$	–		$	31,326,385
Retail energy services		–		5,126,548			–			–			5,126,548
Revenues, net		29,275,907		7,177,026			–			–			36,452,933

Costs of retail electricity sold		–		6,267,307			–			–			6,267,307
Retail sales and marketing		–		151,395			–			–			151,395
Compensation and benefits		12,907,359		166,449			–			788,469			13,862,277
Professional fees		494,860		494,902			–			569,298			1,559,060
Other general and administrative		2,334,691		603,047			59,555			(1,329,422	)		1,667,871
Trading tools and subscriptions		407,914		191,876			1,468			28,163			629,421
Operating costs and expenses		16,144,824		7,874,976			61,023			56,508			24,137,331
Operating income (loss)	$	13,131,083	$	(697,950	)	$	(61,023	)	$	(56,508	)	$	12,315,602

Capital expenditures	$	15,218	$	686,621		$	56,505		$	91,490		$	849,834


Three Months Ended
June 30, 2014
Wholesale trading	$	4,066,387	$	238,273	$	–		$	–		$	4,304,660
Retail energy services		–		2,226,834		–			–			2,226,834
Revenues, net		4,066,387		2,465,107		–			–			6,531,494

Costs of retail electricity sold		–		1,677,901		–			–			1,677,901
Retail sales and marketing		–		22,953		–			–			22,953
Compensation and benefits		2,291,322		91,167		–			439,089			2,821,578
Professional fees		382,127		214,471		–			235,140			831,738
Other general and administrative		1,175,642		314,131		35,327			(687,561	)		837,539
Trading tools and subscriptions		217,051		101,247		693			17,228			336,219
Operating costs and expenses		4,066,142		2,421,870		36,020			3,896			6,527,928
Operating income (loss)	$	245	$	43,237	$	(36,020	)	$	(3,896	)	$	3,566

Capital expenditures	$	12,531	$	3,527	$	34,226		$	72,091		$	122,375

F-34

18. Subsequent Events

From July 1 to August 11, 2015, the Company sold additional Subordinated Notes totaling $964,435 with a weighted average term of 34 months and bearing a weighted average interest rate of 14.45%.

On July 1, 2015, Aspirity Financial lent Enterprises an aggregate principal amount of $22,205,613 with a weighted average interest rate of 14.08% and a maturity date of December 30, 2019 (the “Term Loan”). Although initially an intercompany relationship, the loan agreement between the parties is constructed on an arm’s length basis, contains customary protective provisions for the lender, including certain guarantees, collateral, and covenants, and ensures that the cash flows generated by the Legacy Businesses may continue to be used to pay the interest and principal on the outstanding Notes. See also See also “Note 1 - Basis of Presentation and Description of Business - Businesses – The Restructuring”.

On June 4, 2015, the Company entered into an agreement with Bell State Bank & Trust (“Bell”) to sublease 8,000 square feet of furnished office space at 701 Xenia Avenue South, Golden Valley, Minnesota 55416 from July 1, 2015 to May 31, 2017 for a monthly rent of $10,671 beginning September 1, 2015. The office space will house Aspirity Energy and Aspirity Financial.

On July 6, 2015, the effective date, the Company gave notice to MISO of the cancellation of its guarantees of TCP, CEF, and SUM’s obligations.

On July 10, 2015, the board approved a resolution authorizing a distribution to members of $750,000. The distribution was paid to members on July 10. Total distributions paid to common owners from July 1, 2015 to August 14, 2015 was $950,000.

On July 24, 2015, Enterprises loaned Ultra Green $50,000. The note is secured by a first mortgage on Ultra Green’s production facility in Devil’s Lake, North Dakota and bears interest at 10% per annum. Interest only payments are due beginning September 1, 2015. The note will mature when the sale of the North Dakota facility is closed.

On August 4, 2015 the Maple Revolver was amended to increase the committed amount to $7,500,000.

On August 5, 2015, the Company received the $500,000 down payment for the sale of TCP.

On August 7, 2015, Enterprises lent Noble Conservation Solutions, Inc. $400,000 (the “Noble Note”) as bridge financing until the parties negotiate definitive agreements regarding an equity investment. The Noble Note bears interest at a rate of 6% per annum and matures on September 1, 2015.

The Company has evaluated subsequent events occurring through the date that the financial statements were issued.

F-35

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Members

Twin Cities Power Holdings, LLC and Subsidiaries

Lakeville, Minnesota

We have audited the accompanying consolidated balance sheets of Twin Cities Power Holdings, LLC and Subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of comprehensive income, members’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Twin Cities Power Holdings, LLC and Subsidiaries as of December 31, 2014 and 2013, and the results of their operations and cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Baker Tilly Virchow Krause, LLP

Minneapolis, Minnesota

March 27, 2015

F-36

Twin Cities Power Holdings, LLC and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2014 and 2013

	2014			2013
Assets

Current assets
Cash - unrestricted	$	2,397,300		$	3,190,495
Cash in trading accounts		20,987,152			10,484,448
Accounts receivable - trade		2,394,246			1,315,209
Note receivable		–			140,964
Marketable securities		311,586			256,004
Prepaid expenses and other current assets		528,919			242,482
Total current assets		26,619,203			15,629,602

Property, equipment, and furniture, net		762,529			504,298

Other assets
Intangible assets, net		269,149			305,978
Deferred financing costs, net		241,744			337,559
Cash - restricted		1,319,371			320,188
Land held for development		953,462			110,477
Mortgage note receivable		–			353,504
Investment in convertible notes		1,604,879			–
Total assets	$	31,770,337		$	17,561,606

Liabilities and Members' Equity

Current liabilities
Current portions of debt
Revolver	$	1,105,259		$	–
Senior notes		312,068			200,000
Renewable unsecured subordinated notes		7,234,559			4,922,596
Accounts payable - trade		1,544,103			1,035,644
Accrued expenses		681,995			683,556
Accrued compensation		3,601,282			299,439
Accrued interest		849,913			359,758
Obligations under non-competition agreement		–			250,000
Obligations under settlement agreement		582,565			–
Total current liabilities		15,911,744			7,750,993

Long-term liabilities
Senior notes		217,451			–
Renewable unsecured subordinated notes		10,418,569			5,062,230
Obligations under settlement agreement		2,524,448			–
Total liabilities		29,072,212			12,813,223

Commitments and contingencies

Members' equity
Series A preferred equity		2,745,000			2,745,000
Common equity		(193,624	)		1,302,994
Accumulated other comprehensive income		146,749			700,389
Total members' equity		2,698,125			4,748,383
Total liabilities and members' equity	$	31,770,337		$	17,561,606

See notes to consolidated financial statements.

F-37

Twin Cities Power Holdings, LLC and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2014 and 2013

	2014			2013
Revenue
Wholesale trading revenue, net	$	38,611,944		$	25,305,723
Retail electricity revenue		11,229,476			7,479,775
		49,841,420			32,785,498

Costs and expenses
Cost of retail electricity sold		11,440,672			7,760,674
Retail sales and marketing		324,948			493
Compensation and benefits		21,722,319			15,965,063
Professional fees		2,487,056			1,673,454
Other general and administrative		6,093,843			2,853,517
Trading tools and subscriptions		1,332,804			922,756
		43,401,642			29,175,957

Operating income		6,439,778			3,609,541

Other income (expense)
Interest expense		(2,293,376	)		(1,501,935	)
Interest income		142,915			30,272
Gain (loss) on foreign currency exchange		(720,952	)		2,261
Realized gain on sale of marketable securities		65,655			–
Other income		145,164			–
		(2,660,594	)		(1,469,402	)

Income before income taxes		3,779,184			2,140,139
Income tax provision		–			8,823

Net income		3,779,184			2,131,316
Distributions - preferred		(549,072	)		(549,036	)
Net income attributable to common		3,230,112			1,582,280

Other comprehensive income (loss)
Foreign currency translation adjustment		661,033			(201,303	)
Change in fair value of cash flow hedges		(1,220,022	)		438,646
Unrealized gain on investment securities		5,349			5,767

Comprehensive income	$	3,225,544		$	2,374,426

See notes to consolidated financial statements.

F-38

Twin Cities Power Holdings, LLC and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2014 and 2013

	2014			2013
Cash flows from operating activities
Net income	$	3,779,184		$	2,131,316
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		869,631			557,035
Gain on sale of marketable securities		(65,655	)
Loss on sale of property, equipment, and furniture		–			14,802
Loss on settlement agreement		3,607,013			–
(Increase) decrease in:
Trading accounts and deposits		(10,528,239	)		2,013,968
Accounts and notes receivable		(1,079,036	)		876,059
Prepaid expenses and other assets		(183,638	)		(52,674	)
Increase (decrease) in:
Accounts payable - trade		508,459			(433,664	)
Accrued expenses		(145,870	)		613,178
Accrued compensation		3,301,843			(1,684,949	)
Accrued interest		490,155			315,286
Obligations under settlement agreement		(500,000	)		–
Net cash provided by operating activities		53,847			4,350,357

Cash flows from investing activities
Purchase of marketable securities		(1,214,004	)		(250,237	)
Proceeds from sale of marketable securities		1,229,426			–
Purchase of convertible notes		(1,604,879	)		–
(Advance) repayment of note receivable		140,964			(140,964	)
Purchase of property, equipment, and furniture		(202,759	)		(134,135	)
Purchase of land held for development		(184,529	)		(110,477	)
Purchase of mortgage note receivable		–			(353,504	)
Advance of restricted cash		(999,183	)		(320,188	)
Acquisition of Discount Energy Group, LLC		(680,017	)		–
Net cash used in investing activities		(3,514,981	)		(1,309,505	)

Cash flows from financing activities
Deferred financing costs		(35,000	)		–
Proceeds from line of credit		700,000			–
Payments on line of credit		(700,000	)		–
Payments on senior notes		(203,433	)		(4,066,927	)
Proceeds from revolver		1,850,000			–
Payments on revolver		(744,741	)		–
Proceeds from renewable unsecured subordinated notes		9,308,708			8,625,775
Redemptions of renewable unsecured subordinated notes		(1,640,406	)		(654,087	)
Payment of obligations under non-competition agreement		(250,000	)		(250,000	)
Distributions - preferred		(549,072	)		(549,036	)
Distributions - common		(4,726,730	)		(3,491,890	)
Net cash from (used in) financing activities		3,009,326			(386,165	)

Net increase (decrease) in cash		(451,808	)		2,654,687
Effect of exchange rate changes on cash		(341,387	)		(236,044	)

Cash - unrestricted
Beginning of year		3,190,495			771,852
End of year	$	2,397,300		$	3,190,495

See notes to consolidated financial statements.

F-39

Twin Cities Power Holdings, LLC and Subsidiaries

Consolidated Statements of Cash Flows (Continued)

For the Years Ended December, 31 2014 and 2013

	2014			2013
Non-cash investing and financing activities:
Effective portion of cash flow hedges	$	(863,408	)	$	356,614
Obligations under non-competition agreement	$	–		$	500,000
Series A preferred units issued in exchange for redeemable preferred units	$	–		$	2,745,000
Acquisition of land for development via foreclosure on mortgage loan	$	353,504		$	–
Acquisition of land for development via assignment and assumption agreement	$	304,952		$	–
Unrealized gain on marketable securities	$	11,116		$	5,767
Supplemental disclosures of cash flow information:
Cash payments for interest	$	1,793,221		$	1,186,649
Cash payments for income taxes, net	$	–		$	8,823

See notes to consolidated financial statements.

F-40

Twin Cities Power Holdings, LLC and Subsidiaries

Consolidated Statements of Changes in Members’ Equity

For the Years ended December 31, 2014 and 2013

	Series A Preferred Equity		Common Equity			Accumulated Other Comprehensive Income			Total
Balance - December 31, 2012	$	–	$	3,196,737		$	457,279		$	3,654,016
Issued in exchange for redeemable preferred units		2,745,000		–			–			2,745,000
Net income		–		2,131,316			–			2,131,316
Other comprehensive income		–		–			243,110			243,110
Distributions - preferred		–		(549,036	)		–			(549,036	)
Distributions - common		–		(3,476,023	)		–			(3,476,023	)
Balance - December 31, 2013	$	2,745,000	$	1,302,994		$	700,389		$	4,748,383
Net income		–		3,779,184			–			3,779,184
Other comprehensive loss		–		–			(553,640	)		(553,640	)
Distributions - preferred		–		(549,072	)		–			(549,072	)
Distributions - common		–		(4,726,730	)		–			(4,726,730	)
Balance - December 31, 2014	$	2,745,000	$	(193,624	)	$	146,749		$	2,698,125

See notes to consolidated financial statements.

F-41

Twin Cities Power Holdings, LLC and Subsidiaries

Notes to Consolidated Financial Statements

Organization

Twin Cities Power Holdings, LLC (“TCPH” or the “Company”) is a Minnesota limited liability company formed on December 30, 2009, but had no assets or operations prior to December 31, 2011. On November 14, 2011, TCPH entered into an Agreement and Plan of Reorganization (the “Reorganization”) with its then current members and Twin Cities Power, LLC (“TCP”), Cygnus Partners, LLC (“CP”), and Twin Cities Energy, LLC (“TCE”) which were affiliated through common ownership. Effective December 31, 2011, following receipt of approval from the Federal Energy Regulatory Commission (“FERC”), the members of TCP, CP, and TCE each contributed all of their ownership interests in these entities to TCPH in exchange for ownership interests in TCPH. Consequently, after the Reorganization, which made TCPH a holding company and the sole member of each of TCP, CP, and TCE, the financial statements are presented on a consolidated basis. The Reorganization was accounted for as a transaction among entities under common control.

Through its wholly-owned subsidiaries, the Company maintains market-based rate authority granted by FERC and trades financial power in wholesale electricity markets managed by Independent System Operators or Regional Transmission Organizations and regulated by FERC (collectively, “ISOs”) including those managed by the Midcontinent Independent System Operator (“MISO”), the PJM Interconnection (“PJM”), ISO New England (“ISO-NE”), and the New York Independent System Operator (“NYISO”). We also are members of the Electric Reliability Council of Texas (“ERCOT”) which is an ISO regulated by the Texas Public Utilities Commission and the Texas Legislature. The Company also trades electricity and other energy-related commodities and derivatives on exchanges operated by the Intercontinental Exchange® (“ICE”), the Natural Gas Exchange Inc. (“NGX”), and the CME Group (“CME”) which are regulated the Commodity Futures Trading Commission (“CFTC”). The Company entered the retail energy services business in 2012 via the acquisition of certain assets and the business of a small retail energy supplier, in 2013 the Company entered the residential real estate development business, and in 2014, the Company made additional investments in its diversified investments segment. Consequently, the Company has three business segments used to measure its activity – wholesale trading, retail energy services, and diversified investments.

On October 27, 2014, the Company formed Apollo Energy Services, LLC (“Apollo”) as a wholly-owned subsidiary for the purpose of providing centralized services to the Company’s various other subsidiaries. Substantially all of the management rights and certain of the direct employees of TCPH were transferred to Apollo as of January 1, 2015.

The Operating Companies

TCP was formed on January 1, 2007 and currently has the following subsidiaries:

TC Energy Trading, LLC was formed on May 22, 2009 and is currently inactive.

Chesapeake Trading Group, LLC (“CTG”) was formed on June 16, 2009 and is currently active.

Summit Energy, LLC, (“SUM”) was formed on December 4, 2009, is currently active, and has two classes of members- a voting class, Class A, and a non-voting class, Class B. TCP owns 100% of the Class A units, which represent 100% of the equity interest in SUM. The rights of Class B members are limited to specific allocations of income and loss as set forth in the member control agreement and are recorded as profits interests in the year earned. Accordingly, the accompanying balance sheets and statements of comprehensive income do not reflect a non-controlling interest related to Class B members.

Minotaur Energy Futures, LLC (“MEF”) was formed on March 25, 2014 and is currently active.

CP was formed on March 14, 2008. CP is consolidated with Cygnus Energy Futures, LLC (“CEF”) which was formed on July 24, 2007. CEF has two classes of members- a voting class, Class A, and a non-voting class, Class B. CP owns 100% of CEF’s Class A member units, which represent 100% of the equity interest in CEF. The rights of Class B members are limited to specific allocations of income and loss as set forth in the member control agreement and are recorded as profits interests in the year earned. Accordingly, the accompanying balance sheets and statements of comprehensive income do not reflect a non-controlling interest related to Class B members.

F-42

TCE was formed on March 27, 2008. TCE is consolidated with TCPC, which was formed on January 29, 2008 as a Canadian unlimited liability corporation and converted to a regular Alberta corporation in February 2012. On February 1, 2011, TCPH commenced a major restructuring of the operations of TCPC. During the third quarter of 2012, after review of the progress of the restructuring, the potential implications of the FERC investigation, and the outlook for the subsidiary, management concluded that it was unlikely that TCPC would ever be able to provide an adequate return. Consequently, on September 5, 2012, TCE resolved that TCPC should cease all operations on September 14, 2012. TCPC’s remaining employee was terminated and he became an independent contractor to the Company; its remaining fixed assets were transferred, the office lease was abandoned; the process of canceling or withdrawing its permits and licenses issued by Canadian energy regulatory authorities was initiated; and all accounts were closed except for two bank accounts.

During the year ended December 31, 2014, TCPC was inactive. During the year ended December 31, 2013 the entity had no revenue and operating income of $4,500 due solely to refunds received as a result of cancelling certain insurance policies and trading subscriptions.

On June 29, 2012, TCP acquired certain assets and the business of Community Power & Utility LLC, a retail energy supplier serving residential and small commercial markets in Connecticut. The business was re-named Town Square Energy (“TSE”), and beginning on July 1, 2012, the Company began selling electricity to retail accounts. Initially, TSE was run as a division of TCP but effective June 1, 2013, TSE was reorganized as a wholly-owned subsidiary of the Company and on October 25, 2013, in anticipation of the receipt of FERC approval of the Company’s acquisition of Discount Energy Group, LLC (“DEG”), a retail energy business licensed by the states of Maryland, New Jersey, Pennsylvania, and Ohio, the Company formed a new first-tier subsidiary, Retail Energy Holdings, LLC (“REH”), and transferred the ownership of TSE to this entity. FERC approval of the acquisition of DEG was received on December 13, 2013 and the transaction closed on January 2, 2014.

On October 23, 2013, the Company formed Cyclone Partners, LLC (“Cyclone”) as a wholly-owned subsidiary to take advantage of certain investment opportunities believed to be present in the residential real estate market.

Summary of Significant Accounting Policies

Consolidation

The accompanying consolidated financial statements include all of the accounts of the Company and its first and second-tier subsidiaries. Intercompany transactions and balances have been eliminated.

Use of Estimates

Preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts for revenue and expenses during the reported period. Actual results could differ from those estimates.

Cash Equivalents

Cash equivalents include highly liquid investments with an original maturity of three months or less at the time of purchase. As of December 31, 2014 and 2013, the Company had no cash equivalents.

Reclassifications

Certain amounts reported in prior periods have been reclassified to conform to the current period’s presentation. There was no effect on members’ equity or net income as previously reported.

F-43

Revenue Recognition

Wholesale Trading

Retail Energy Services

Revenue from the retail sale of electricity to customers is recorded in the period in which the commodity is consumed, net of any applicable sales tax. The Company follows the accrual method of accounting for revenues whereby electricity consumed by customers but not yet billed under the cycle billing method is estimated and accrued along with the related costs. Changes in estimates are reflected in operations in the period in which they are refined. During the years ended December 31, 2014 and 2013, the Company recorded additional retail sales of electricity of $465,000 and $0, respectively, due to a change in the amount of estimated unbilled revenue.

Diversified Investments

Derivative Instruments

In our wholesale operations, we use derivative contracts for trading purposes, seeking to profit from perceived opportunities driven by expected changes in market prices. In our retail energy business, the Company is exposed to volatility in the cost of energy acquired for sale to customers, and as a result, we use derivatives to hedge or reduce this variability.

Our retail operations follow ASC 815, Derivatives and Hedging (“ASC 815”) guidance that permits “hedge accounting” under which the effective portion of gains or losses from the derivative and the hedged item are recognized in earnings in the same period. To qualify for hedge accounting, the hedge relationships must meet extensive documentation requirements and hedge effectiveness and ineffectiveness must be assessed and measured on an on-going basis.

F-44

Financial Instruments

The Company holds various financial instruments. The nature of these instruments and the Company’s operations expose the Company to foreign currency risk, credit risk, and fair value risk.

Foreign Currencies

For foreign subsidiaries whose functional currency is the local foreign currency, balance sheet accounts are translated at exchange rates in effect at the end of the month and income statement accounts are translated at average monthly exchange rates for the period. Foreign currency transactions denominated in a foreign currency result in gains and losses due to the increase or decrease in exchange rates between periods. Translation gains and losses are included as a separate component of equity. Gains and losses from foreign currency transactions are included in other income or expense. Foreign currency transactions resulted in losses of $720,952 and $2,261 for the years ended December 31, 2014 and 2013, respectively.

Concentrations of Credit Risk

At any given time there may be concentrations of receivables balances with one or more of the exchanges upon which we transact our wholesale business or, in the case of retail, one or more of the utilities operating in purchase of receivables states in which we do business.

Fair Value

The fair values of the Company’s cash, accounts receivable, and accounts payable were considered to approximate their carrying values at December 31, 2014 and 2013 due to the short-term nature of the accounts.

Management believes the carrying values of the Company’s notes payable and Renewable Unsecured Subordinated Notes reasonably approximate their fair value at December 31, 2014 and 2013 due to the relatively new age of these particular instruments. No assessment of the fair value of these obligations has been completed and there is no readily available market price.

See also “Note 8 – Fair Value Measurements”.

Accounts Receivable

Marketable Securities

The Company classifies its investments in marketable securities as “available-for-sale”. Available-for-sale securities are required to be carried at their fair value, with unrealized gains and losses that are considered temporary in nature recorded in “accumulated other comprehensive income” or “AOCI”. The Company periodically evaluates its investments in marketable securities for impairment due to declines in market value considered to be other than temporary. Such impairment evaluations include, in addition to persistent, declining market prices, general economic and Company-specific valuations. If the Company determines that a decline in market value is other than temporary, then a charge to operations is recorded in “other expense” and a new cost basis in the investment is established.

F-45

Property, Equipment, and Furniture

Property, equipment and furniture are carried at cost and additions or replacements are capitalized. The cost of equipment disposed of or retired and the related accumulated depreciation are eliminated from the accounts with any gain or loss included in operations. Equipment, computers, internally-developed software, and furniture are depreciated using the straight-line method over the estimated useful lives of the assets that range from 3 to 7 years. Property is depreciated using the straight-line method over the estimated useful life of 27.5 years. Leasehold improvements are depreciated using the straight-line method over the shorter of the lease term, or the estimated useful life of the asset. Expenditures for repairs and maintenance are charged to expense as incurred.

Land Held for Development

Business Combinations

Impairment of Long-Lived Assets

Profits Interests

F-46

During the years ended December 31, 2014 and 2013, the Company included $6,363,520 and $4,300,561, respectively, in compensation and benefits representing the allocation of profits interests to Class B members.

Income Taxes

The Company’s subsidiaries are not taxable entities for U.S. federal income tax purposes. As such, the Company does not directly pay federal income tax. Taxable income or loss, which may vary substantially from the net income or net loss reported in our consolidated statements of comprehensive income, is includable in the federal income tax returns for each member. The holder of the Company’s preferred units is taxed based on distributions received, while holders of common units are taxed on their proportionate share of the Company’s taxable income. Therefore, no provision or liability for federal or state income taxes has been made for those entities.

TCPC files tax returns with the Canada Revenue Agency and the Tax and Revenue Administration of Alberta.

On November 12, 2012, a letter from the Minnesota Department of Revenue was received notifying the Company that TCP’s 2009, 2010, and 2011 returns were under review by the Department. The final audit report was issued by the Department on May 29, 2013. The results of the final audit had no impact on the financial position or results of operations of the Company.

On October 24, 2013 a letter from the Minnesota Department of Revenue was received notifying the Company that TCP has been selected for a sales and use tax audit. The period under audit was July 1, 2010 through September 30, 2013. The final audit report was issued by the Department on January 7, 2014. The results of the final audit had no impact on the financial position or results of operations of the Company.

On October 24, 2013 a letter from the Canada Revenue Agency (“CRA”) was received notifying the Company that refund requests for the years 2009-2011 submitted by TCE on June 3, 2013 have been referred to the Non-Resident Audit Division for further review. On April 22, 2014 a letter from the CRA was received noting that an adjustment made to our account.

On January 6, 2014, TCPH received a notice from the Internal Revenue Service notifying that the Company’s 2012 return was under review. On July 31, 2014, the Company was informed by the IRS that its 2012 return was accepted with no adjustments.

New Accounting Pronouncements

In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will eliminate all industry-specific guidance and replace all current U.S. GAAP guidance on the topic. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact on the Company’s consolidated financial statements.

F-47

In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This ASU clarifies the applicable guidance for the release of the cumulative translation adjustment for entities that cease to hold a controlling financial interest in a subsidiary or group of assets within a foreign entity when the subsidiary or group of assets is a nonprofit activity or a business and there is a cumulative translation adjustment balance associated with that foreign entity. The standard also affects entities that lose a controlling financial interest in an investment in a foreign entity by sale or other transfer event and those that acquire a business in stages. Under the new guidance, the cumulative translation adjustment is released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. The adoption of the standard on January 1, 2014 did not have a material impact on the Company’s financial statements.

Cash

The Company deposits its un-restricted cash in financial institutions. Balances, at times, may exceed federally insured limits.

Restricted cash on our balance sheet at December 31, 2014 and 2013 was $1,319,371 and $320,188, respectively. At December 31, 2014, all restricted cash was posted as security in connection with certain litigation in the Canadian courts. See “Note 19- Commitments and Contingencies”.

	December 31,		December 31,
	2014		2013
Credit requirement	$	4,817,881	$	2,185,175
Available credit		16,169,271		8,299,273
Cash in trading accounts	$	20,987,152	$	10,484,448

F-48

Accounting for Derivatives and Hedging Activities

The following table lists the fair values of the Company’s derivative assets and liabilities as of December 31, 2014 and 2013:

	Fair Value
	Asset Derivatives		Liability Derivatives

At December 31, 2014
Designated as cash flow hedges:
Energy commodity contracts	$	15,732	$	(879,140	)
Not designated as hedging instruments:
Energy commodity contracts		2,350,662		(2,556,862	)
FTR positions, net		1,435,819		–
Total derivative instruments		3,802,213		(3,436,002	)
Cash deposits in collateral accounts		20,620,941		–
Cash in trading accounts, net	$	24,423,154	$	(3,436,002	)

At December 31, 2013
Designated as cash flow hedges:
Energy commodity contracts	$	417,310	$	(60,695	)
Not designated as hedging instruments:
Energy commodity contracts		717,606		(757,828	)
Total derivative instruments		1,134,916		(818,523	)
Cash deposits in collateral accounts		10,168,055		–
Cash in trading accounts, net	$	11,302,971	$	(818,523	)

As of December 31, 2013, we had hedged the cost of 32,760 MWh (approximately 32% of expected 2014 electricity purchases for the customers receiving service from us as of that date) and $356,614 of the net gain on the effective portion of the hedge was deferred and included in AOCI. This entire amount was reclassified to cost of energy sold by December 31, 2014.

The following table summarizes the amount of gain or loss recognized in AOCI or earnings for derivatives designated as cash flow hedges for the periods indicated:

	Gain (Loss) Recognized in AOCI			Income Statement Classification	Gain (Loss) Reclassified from AOCI
Year Ended December 31, 2014
Cash flow hedges	$	(1,128,514	)	Cost of energy sold	$	91,508

Year Ended December 31, 2013
Cash flow hedges	$	685,936		Cost of energy sold	$	247,290

F-49

	Foreign Currency			Cash Flow Hedges			Available for Sale Securities			Total
Balance - December 31, 2012	$	539,311		$	(82,032	)	$	–		$	457,279

Other comprehensive income (loss) before reclassifications		(201,303	)		685,936			5,767			490,400
Amounts reclassified from AOCI		–			(247,290	)		–			(247,290	)
Net current period other comprehensive income (loss)		(201,303	)		438,646			5,767			243,110
Balance - December 31, 2013	$	338,008		$	356,614		$	5,767		$	700,389

Other comprehensive income (loss) before reclassifications		661,033			(1,128,514	)		11,116		$	(456,365	)
Amounts reclassified from AOCI		–			(91,508	)		(5,767	)		(97,275	)
Net current period other comprehensive income (loss)		661,033			(1,220,022	)		5,349			(553,640	)
Balance - December 31, 2014	$	999,041		$	(863,408	)	$	11,116		$	146,749

Accounts Receivable

Accounts receivable – trade consists of receivables from both our wholesale trading and retail segments. Wholesale trading receivables represent net settlement amounts due from a market operator or an exchange while those from retail include amounts resulting from sales to end-use customers.

	December 31,		December 31,
	2014		2013
Wholesale trading	$	515,999	$	168,953
Retail energy services - billed		1,158,019		944,100
Retail energy services - unbilled		720,228		202,156
Accounts receivable - trade	$	2,394,246	$	1,315,209

As of December 31, 2013, there were two individual accounts in the Company’s retail energy services segment with receivable balances greater than 10% that aggregated 87% of total consolidated accounts receivable. The Company believes that any risk associated with these concentrations would be minimal, if any.

Notes Receivable

The note receivable at December 31, 2013 consisted of $140,000 advanced to DEG on November 25, 2013. The note bore interest at 8.00% and was payable in monthly installments on the last day of each month. The note was repaid on January 2, 2014 upon closing of the acquisition of DEG.

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Marketable Securities

The following table shows the cost and estimated fair value of available-for-sale securities at December 31, 2014 and 2013:

	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
At December 31, 2014
U.S. equities	$	299,836	$	11,116	$	–		$	310,952
Money market fund		634		–		–			634
Total	$	300,470	$	11,116	$	–		$	311,586

At December 31, 2013
U.S. equities	$	224,415	$	5,836	$	–		$	230,251
International equities		25,047		–		(69	)		24,978
Money market fund		775		–		–			775
Total	$	250,237	$	5,836	$	(69	)	$	256,004

For the years ended December 31, 2014 and 2013, the Company had sales of securities and realized a gain of $65,655 and zero, respectively, and recognized no impairment charges.

The following table shows the gross unrealized losses on, and fair value of, securities positions by the length of time such assets were in a continuous loss position as of December 31, 2014 and 2013:

	Less than Twelve Months
	Gross Unrealized Losses			Fair Value
At December 31, 2014
International equities	$	–		$	–

At December 31, 2013
International equities	$	(69	)	$	24,978

Fair Value Measurements

“Level 1 inputs” are quoted prices in active markets for identical assets or liabilities.

“Level 2 inputs” are inputs other than quoted prices that are observable either directly or indirectly for the asset or liability.

“Level 3 inputs” are unobservable inputs for which little or no market data exists.

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From time to time, the Company may engage third parties such as appraisers, brokers, or investment bankers to assist management in its valuation and classification of financial instruments.

There have been no changes in the methodologies used since December 31, 2013.

The following table presents certain assets measured at fair value on a recurring basis as of the dates indicated:

	Level 1		Level 2		Level 3		Total
December 31, 2014
Cash in trading accounts, net	$	19,551,333	$	–	$	–	$	19,551,333
FTR positions, net		–		–		1,435,819		1,435,819
Marketable securities		311,586		–		–		311,586
Investment in convertible notes		–		–		1,604,879		1,604,879

December 31, 2013
Cash in trading accounts, net	$	10,484,448	$	–	$	–	$	10,484,448
Marketable securities		256,004		–		–		256,004
Mortgage note receivable		–		–		353,504		353,504

There were no transfers during the year ended December 31, 2014 between Levels 1 and 2.

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Level 3 Assets

The following table reconciles beginning and ending Level 3 fair value financial instrument balances for the years ended December 31, 2014 and 2013:

Fair Value Measurement Using Significant Unobservable Inputs (Level 3)

Balance - December 31, 2012	$	–
Total gains and losses:
Included in other comprehensive income		–
Included in earnings		–
Purchases		353,504
Transfers into Level 3		–
Transfers out of Level 3		–
Balance - December 31, 2013		353,504
Total gains and losses:
Included in other comprehensive income		–
Included in earnings		1,435,819
Purchases		1,604,879
Transfers into Level 3		–
Transfers out of Level 3*		(353,504	)
Balance - December 31, 2014	$	3,040,698

Gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held as of December 31, 2014	$	1,435,819

* - Reflects foreclosure on mortgage note and transfer of land received to "Land held for development"; see "Note 12 - Land Held for Development; Mortgage Receivable".

Valuation Techniques and Sensitivity of Level 3 Fair Values

The following table describes the valuation techniques used to measure the fair value of the Company’s Level 3 assets at December 31, 2014.

Type of Level 3 Asset	Fair value at December 31, 2014	Valuation Techniques	Unobservable Inputs	Range of Inputs
FTRs	$ 1,435,819	Mark-to-model	Forward congestion prices	$(7.35) to $24.18 per MWh
Investment in convertible notes	$ 1,604,879	Private equity component: Discounted cash flow and market multiples for both comparable publicly traded companies and merger and acquisition transactions	Future cash flows	various
			Component costs of capital	6.92 to 12.80% for debt, 19.15% for equity
			Target capital structure	33% debt, 67% equity
			Marginal tax rate	40%
			Weighted average cost of capital	14.47%
			Price/sales ratio	0.71x to 3.80x
			Price/earnings ratio	17.08x to 49.19x
			Price/cash flow ratio	7.36x to 14.32x
			Price/assets ratio	1.69x
			Price/book ratio	1.37x to 3.23x
			Price/EBITDA ratio	6.48x
		Debt component: Comparable credits	Credit margins	3.00% to 10.27%
		Debt component: Comparable credits	Deferred financing costs	2.00% to 4.00%
		Embedded option: Black-Scholes option valuation model	Current stock price	$0.00 to $0.01/share
			Option exercise price	$0.01/share
			Risk-free rate	0.10%
			Stock price volatility	100%
			Time to expiration	5 years

Changes in the inputs listed above would have a direct impact on the fair values of the above instruments. For example, the significant unobservable input used in the fair value measurement of the FTRs is the price of forward congestion. Increases or decreases in the market price proxy values assumed would result in significantly higher or lower fair values. Further, an increase or decrease in the estimated current price of the embedded option incorporated into the convertible notes would increase or decrease the fair value of the investment

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Financial Transmission Rights

FTRs are derivative financial instruments that entitle the holder to a stream of revenues, or require them to pay charges, based on the differences in day-ahead market marginal congestion cost (“MCC”) across transmission paths. FTRs are specified by a source (the start of the transmission path), a sink (the end of the path), a time period measured in hours, and a number of megawatts. FTRs may be acquired by us in monthly, annual, or long term auctions conducted by certain ISOs and are initially recorded using the auction clearing price less cost, that is, zero.

After initial recognition, the carrying values of FTRs are periodically adjusted to fair value using a mark-to-model methodology, which we believe approximates market. Note that there is generally not a liquid market for FTRs. Our FTR valuation model is:

Fair Value = (Market Price Proxy- Trade Price) x Volume x Funding Discount

Where:

Market Price Proxy (in $/MWh) = 30 day average of the hourly MCC at the source minus the hourly MCC at the sink;

Trade Price (in $/MWh) = the price paid for the FTR;

Volume (in MWh) = remaining volume of the position;

Funding Discount (a percentage) = the lowest level of funding of FTRs by the ISO in the last 12 months, applied only to the total positive fair value across all positions, not to an individual transaction.

Investment in Convertible Notes

As of December 31, 2014, the Company had an investment of $1,604,879 (principal and accrued interest of $1,500,000 and $104,879, respectively) in the Series C Convertible Promissory Notes of Ultra Green Packaging, Inc. (the “C Notes” and “Ultra Green”, respectively). See also “Note 13 – Convertible Promissory Note” for additional information.

As no public market exists for any of the securities of Ultra Green, including its C Notes, management considers its investment to be a Level 3 financial instrument to be carried at book value which management believes approximates fair value, until circumstances otherwise dictate. Each quarter, management performs a valuation of the underlying common equity and the security using generally accepted methods to value the obligations of private companies to determine if impairment to its carrying value exists.

Property, Equipment, and Furniture

Property, equipment, software, furniture, and leasehold improvements consisted of the following at December 31:

	2014			2013
Equipment and software	$	857,952		$	735,326
Furniture		304,791			291,958
Land		150,000			–
Building		137,958			–
Leasehold improvements		197,102			192,561
Property, equipment, and furniture, gross		1,647,803			1,219,845
Less: accumulated depreciation		(885,274	)		(715,547	)
Property, equipment, and furniture, net	$	762,529		$	504,298

Depreciation expense was $169,727 and $186,267 for the years ended December 31, 2014 and 2013, respectively.

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10.

Intangible Assets

The fair value of these intangible assets was based on significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820. The fair value of the service contract was based on the replacement price and will be amortized over twenty-three months, its useful life, using the straight-line method. Customer relationships were valued using a variation of the income approach. Under this approach, the present value of expected future cash flows resulting from the relationships is used to determine the fair value which will be amortized over a three year period using the straight-line method.

Effective January 1, 2013, in connection with the sale of his units to Timothy S. Krieger, the Company’s founder, Chairman, Chief Executive Officer, and controlling member, the Company entered into a non-competition agreement with David B. Johnson, a current director of the Company valued at $500,000, to be amortized and paid in equal installments over 24 months.

	December 31,			December 31,
	2014			2013
Other intangibles	$	714,658		$	160,000
Non-competition agreement		500,000			500,000
Less: accumulated amortization		(945,509	)		(354,022	)
Intangible assets, net	$	269,149		$	305,978

Total amortization of intangible assets for the years ended December 31, 2014 and 2013 was $591,487 and $319,348, respectively and is included in other general and administrative expenses.

11.

Deferred Financing Costs

Prior to the May 10, 2012 effective date of its Notes Offering, the Company incurred certain professional fees and filing costs associated with the offering totaling $393,990. The Company has capitalized these costs and amortizes them on a monthly basis over the weighted average term of the Notes sold, exclusive of any expected renewals.

	December 31,			December 31,
	2014			2013
Deferred financing costs	$	428,990		$	393,990
Less: accumulated amortization		(187,246	)		(56,431	)
Deferred financing costs	$	241,744		$	337,559

Total amortization of deferred financing costs for the year ended December 31, 2014 and 2013 was $130,815 and $51,420, respectively and is included in other general and administrative expenses.

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12.

Land Held for Development; Mortgage Receivable

On December 18, 2013, the Company bought a defaulted note secured by a first mortgage on certain real property from Bremer Bank, National Association with the intention of foreclosing and thereby obtaining title to the land. As of December 31, 2013, land held for development totaled $110,477, consisting of one single family lot. Also as of the same date, the carrying value of the mortgage totaled $353,504 and consisted of the purchase price of $340,000 of principal and $13,504 of accrued interest. On April 21, 2014, the foreclosure on the mortgage note was completed. Consequently, the note was cancelled and the land received was reclassified to “land held for development” and as of December 31, 2014, land held for development totaled $953,462.

13.

Convertible Promissory Note

On March 20, 2014, the Company invested $1,000,000 in a privately placed Convertible Promissory Note (the “B Note”) issued by Ultra Green Packaging, Inc. (“Ultra Green”). On each of June 4 and June 18, 2014, the Company loaned Ultra Green $50,000, for a total of $100,000, in the form of short term, unsecured promissory notes (the “Short Term Notes”), each with a maturity date of July 31, 2014. On July 2, 2014, the Company invested $400,000 in C Notes as described below. Effective as of the same date, the principal of the Short Term Notes was also converted into C Notes, and on November 10, 2014, the Company converted its B Notes to C Notes. As of December 31, 2014, the principal amount of, and accrued interest on, the C Notes owned by the Company was $1,500,000 and $104,879, respectively for a total of $1,604,879.

Ultra Green develops, manufactures, and markets “ecopaper” products made from wheat straw, bamboo, or sugarcane fibers and bioplastic products made from cornstarch. Ultra Green’s ecopaper and bioplastic products are certified as biodegradable and sustainable, and are compostable in about 160 days. Ultra Green is privately held and was not profitable for the year ended December 31, 2014.

On June 19, 2014, the Board of Directors of Ultra Green authorized an offering of Convertible Promissory Notes convertible into Series C Preferred Stock, the terms of which are more fully described below (the “C Notes” and “Series C Preferred”, respectively). The C Notes will mature on December 31, 2019 and bear interest at a fixed rate of 10% per annum. Interest will accrue until June 30, 2015, at which time all accrued and unpaid interest will become due and payable. Thereafter, interest will be due and payable on a quarterly basis.

The outstanding principal and accrued interest on the C Notes may be converted into shares of Ultra Green’s Series C Preferred Stock on their maturity date at the option of the Company at an initial conversion price of $1.00 per share, as adjusted. In addition, at any time prior to or at maturity and upon the affirmative vote of the holders of 66.625% of the aggregate outstanding principal amount of the C Notes, all of the C Notes will convert into shares of Series C at the conversion price of $1.00 per share. The Series C shall have voting rights on an “as-converted” basis, voting with the common stock on any matter presented to the shareholders of the Company for their action or consideration at any shareholder meeting, or by written consent in lieu thereof. Finally, each share of Series C is convertible into 100 Ultra Green common shares for an initial conversion price of $0.01 per share.

The C Note offering closed on November 10, 2014 with $9,155,302 of notes sold. As of December 31, 2014, excluding options and warrants for 5,390,000 shares with exercise prices in excess of $0.50, Ultra Green had 1,119,130,554 fully diluted common and common-equivalent shares outstanding. Assuming no additional issuances of common or common-equivalents to others, conversion of its C Notes into common shares, and the exercise of the option described above, the Company would own 200,000,000 common shares or 17.87% of the fully diluted shares outstanding.

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14.

Debt

Notes payable by the Company are summarized as follows:

	December 31, 2014		December 31, 2013
Demand and Revolving Debt
Payable to ABN AMRO	$	–	$	–
Payable to Royal Bank of Canada		–		–
Revolving note payable to Maple Bank		1,105,259		–
Subtotal		1,105,259		–

Term Debt
Note payable to John O. Hanson		–		200,000
Mortgage note payable to Security State Bank		224,568		–
Mortgage note payable to Lakeview Bank		119,976		–
Construction note payable to American Land & Capital		184,975		–
Renewable unsecured subordinated notes		17,653,128		9,984,826
Subtotal		18,182,647		10,184,826
Total	$	19,287,906	$	10,184,826

Notes payable by maturity are summarized as follows:

	December 31, 2014		December 31, 2013
Demand and Revolving Debt
Demand	$	–	$	–
2016		1,105,259		–
Subtotal		1,105,259		–

Term Debt
2014		–		5,122,596
2015		7,546,627		–
Current maturities		7,546,627		5,122,596

2015		–		1,266,590
2016		2,648,150		772,250
2017		2,869,383		549,140
2018		2,642,972		2,297,250
2019		1,213,227		177,000
2020 & thereafter		1,262,288		–
Long term debt		10,636,020		5,062,230
Subtotal		18,182,647		10,184,826
Total	$	19,287,906	$	10,184,826

ABN-AMRO Margin Agreement

As of December 31, 2014 and 2013, there were no borrowings outstanding under the Margin Agreement and the Company was in compliance with all covenants.

F-57

RBC Line of Credit

As of December 31, 2014, there were no borrowings outstanding under the RBC Line and the Company was in compliance with all terms and conditions.

Maple Bank Revolver

On October 14, 2014, REH, TSE, and DEG entered into a Credit Agreement with the Toronto, Ontario branch of Maple Bank GmbH (the “Maple Agreement” and “Maple Bank”), expiring October 31, 2016. The Maple Agreement provides the Company’s retail energy services businesses with a revolving line of credit of up to $5,000,000 in committed amount secured by a first position security interest in all of the assets, a pledge of the equity of such companies by TCPH, and certain guarantees. Availability of loans is keyed to advance rates against certain eligible receivables as defined. Any loans outstanding bear interest at an annual rate equal to 3 month LIBOR, subject to a floor of 0.50%, plus a margin of 6.00%. In addition, the Company is obligated to pay an annual fee of 1.00% of the committed amount on a monthly basis and a monthly non-use fee of 1.00% of the difference between the committed amount and the average daily principal balance of any outstanding loans. The Company is also subject to certain reporting, affirmative, and negative covenants.

As of December 31, 2014, there was $1,105,259 outstanding under the Maple Agreement and the Company was in compliance with all covenants.

John O. Hanson

On September 1, 2006, April 1, 2008, and April 8, 2011, TCP and its predecessor entered into certain borrowing arrangements with John O. Hanson, all accruing interest at an annual rate of 20%. As of December 31, 2011, the total amount owed to Mr. Hanson was $2,945,000. Effective January 31, 2012, TCP sold new issue redeemable preferred units to Mr. Hanson for a purchase price of $2,745,000, paid by conversion of debt, and Mr. Hanson became a related party. Effective July 1, 2012, Mr. Hanson’s preferred units in TCP were exchanged for preferred units issued by the Company with identical financial rights and terms. As a result of these transactions, as of December 31, 2012, the Company owed Mr. Hanson $200,000 and he owned 496 redeemable preferred units with a book value of $2,745,000. On June 28, 2013, Mr. Hanson sold the redeemable preferred units to Mr. Krieger, and consequently, he was no longer a related party. On March 25, 2014, the Company repaid Mr. Hanson’s $200,000 note in full.

Security State Mortgage

On June 16, 2014, Cyclone purchased a single family home in Garrison, Minnesota for use as a corporate retreat (the “Garrison Property”) for a purchase price of $285,000, paid with $57,000 of cash and the proceeds of a $228,000 note (the “Security State Mortgage”) advanced by the Security State Bank of Aitkin (“Security State Bank”) and secured by a first mortgage. The loan is payable in 239 equal installments of $1,482 due on the 16^th of each month beginning on July 16, 2014 and one irregular installment of $1,482 due on June 16, 2034 (the “maturity date”). The note bears interest at an annual rate equal to the prime rate as published from time to time by The Wall Street Journal plus 0.75%, subject to a floor of 4.75%. Whenever increases occur in the interest rate, Security State, at its option and with notice to the Company, may: (a) increase Cyclone’s payments to insure the loan will be paid off by the maturity date; (b) increase Cyclone’s payments to cover accruing interest; (c) increase the number of Cyclone’s payments; or (d) continue the payments at the same amount and increase Cyclone’s final payment. The loan may be prepaid in whole or in part at any time without penalty.

As of December 31, 2014, Cyclone was in compliance with all terms and conditions of the Security State Mortgage.

F-58

Lakeview Bank Mortgage

On December 23, 2014, via an assignment and assumption agreement between Cyclone and Kenyon Holdings, LLC (“Kenyon”), a related party, Cyclone took ownership of a 10 acre parcel of undeveloped land located at 170xx Texas Avenue, Credit River Township, Minnesota and assumed a note secured by a mortgage on the property and owed to Lakeview Bank (the “Lakeview Bank Mortgage”). Kenyon is owned by Mr. Krieger and Keith W. Sperbeck, the Company’s Vice President of Operations. The Lakeview Bank Mortgage bears interest at the highest prime rate reported as such from time to time by The Wall Street Journal. Interest only is payable monthly on the 25^th and the note matures on April 30, 2015. The loan may be prepaid in whole or in part at any time without penalty.

As of December 31, 2014, there was $119,976 outstanding under the Lakeview Bank Mortgage and the Company was in compliance with all terms and conditions of the loan.

American Land and Capital Construction Loans

On November 21, 2014, American Land and Capital, LLC (“American Land”) and Cyclone entered into four construction loan agreements, each for a committed amount of $205,000 or $820,000 in total (the “Construction Loans”). Each commitment is secured by a mortgage on a lot (numbers 1, 2, 3, and 4) in Block 1 of Fox Meadows 3^rd Addition and is personally guaranteed by Mr. Krieger. Fox Meadows is a townhouse development located in Lakeville, Minnesota in which Cyclone owns 35 attached residential building sites. Proceeds of the Construction Loans will be used to construct the first four spec/model homes on Cyclone’s Fox Meadows property. Draws on the Construction Loans bear interest at the higher of: (a) 6.50% or (b) the prime rate as reported from time to time by The Wall Street Journal plus 3.00%. Interest only is payable monthly on the 10^th and the notes mature on May 21, 2015. The loans may be prepaid in whole or in part at any time without penalty.

As of December 31, 2014, there was $184,975 outstanding under the American Land Construction Loans and the Company was in compliance with all terms and conditions of the agreements.

Renewable Unsecured Subordinated Notes

The Company made interest payments during the years ended December 31, 2014 and 2013 of $1,304,701 and $443,367, respectively. Total accrued interest on the Subordinated Notes at December 31, 2014 and 2013 was $849,913 and $354,094, respectively.

F-59

As of December 31, 2014, the Company had $17,653,128 of its Subordinated Notes outstanding as follows:

Initial Term	Principal Amount		Weighted Average Interest Rate
3 months	$	486,472		11.06	%
6 months		230,450		8.27	%
1 year		5,255,047		12.40	%
2 years		2,805,332		13.19	%
3 years		3,196,847		14.45	%
4 years		802,385		14.81	%
5 years		3,799,605		15.97	%
10 years		1,076,990		14.56	%
Total	$	17,653,128		13.82	%

Weighted average term		36.5 mos

15.

Leases

The Company leases vehicles and office equipment under several agreements that expire between 2015 and 2019 as well as its office space, key terms of the leases for which are summarized below.

Location	Expiration Date			Square Footage		Monthly Rent
Lakeville, Minnesota*		12	/31/2017		10,730	$	11,113
Cherry Hill, New Jersey		12	/31/2015		175		400
Tulsa, Oklahoma*		2	/28/2016		1,800		3,750
East Windsor, New Jersey		9	/30/2016		1,150		2,374
Newtown, Pennsylvania		12	/31/2017		1,711		2,400
Chandler, Arizona*		7	/31/2019		2,712		4,068
Total					18,278	$	24,105
____________________________
* See Note 18. Related Party Transactions

Total lease expense was $443,193 and $450,069 for the years ended December 31, 2014 and 2013, respectively.

Future minimum lease payments under the Company’s lease agreements are as follows:

Years Ended December 31,	Amount
2015	$	329,000
2016		277,000
2017		244,000
2018		62,000
2019		34,000
Total	$	946,000

16.

Defined Contribution 401(k) Savings Plan

Substantially all employees are eligible to participate in the Company’s 401(k) Savings Plan (the “Savings Plan”). Employees may make pre-tax voluntary contributions to their individual accounts up to a maximum of 50% of their aggregate compensation, but not more than currently allowable Internal Revenue Service limitations. Employee participants in the Savings Plan may allocate their account balances among 14 different funds available through a third party custodian. The Savings Plan does not require the Company to match employee contributions, but does permit the Company to make discretionary contributions. No discretionary contributions have been made.

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17.

Ownership

Effective January 31, 2012, TCP sold 496 of its new issue redeemable preferred membership units (the “redeemable preferred”) to John O. Hanson for a purchase price of $2,745,000, paid by conversion of certain notes payable to him. The redeemable preferred incorporated a distribution of $45,750 per month, was not convertible, and had no corporate governance rights. Effective July 1, 2012, the redeemable preferred membership units issued by TCP were exchanged for redeemable preferred issued by the Company with identical rights and terms. Effective June 28, 2013, Mr. Krieger purchased all of the outstanding redeemable preferred membership units from Mr. Hanson. Concurrently with the purchase, Mr. Krieger and the Company exchanged the redeemable preferred for 496 new Series A preferred units (the “Series A preferred”) and the redeemable preferred was cancelled. The Series A preferred is not redeemable, callable, or convertible, is non-voting with respect to elections to the Company’s Board of Directors, is senior to the Company’s common equity units with respect to rights in liquidation, and is entitled to distributions out of legally available funds in the amount of $92.25 per unit per month.

The ownership of the Company’s equity as of December 31, 2014 is as presented below:

	Series A Preferred				Common
	Units held		Percent of class		Units held		Percent of class
Timothy S. Krieger		496		100.00%		4,935		99.50%
Summer Enterprises, LLC		–		0.00%		25		0.50%
Total		496		100.00%		4,960		100.00%

18.

Related Party Transactions

Interest expense associated with notes payable to related parties was $31,550 for the year ended December 31, 2013. There were no notes payable to related parties at December 31, 2014.

The building in which the Company leases its Lakeville, Minnesota office space is owned by Kenyon and on January 1, 2013, the Company and Kenyon entered into a five year lease expiring December 31, 2017 for 11,910 square feet at a monthly rent of $12,264. On September 25, 2014, the lease was amended to reduce the square footage to 10,730 and monthly rent to $11,113. For rent, real estate taxes, and operating expenses, the Company paid Kenyon $235,000 and $227,200 for the years ended December 31, 2014 and 2013, respectively.

Effective January 1, 2013, in connection with the purchase of David B. Johnson’s units by Mr. Krieger, the Company entered into a non-competition agreement with Mr. Johnson, a current governor and former member of the Company, pursuant to which the Company is obligated to pay Mr. Johnson $500,000 in 24 equal monthly installments of $20,833 each. The total amount paid pursuant to the agreement during the years ended December 31, 2014 and 2013 was $250,000.

On March 5, 2013, CEF entered into a 36 month lease for 1,800 square feet of office space in Tulsa, Oklahoma with the Brandon J. and Heather N. Day Revocable Trust at a monthly rent of $3,750. Mr. Day is an employee of CEF, a second-tier subsidiary of the Company. Total rent paid for the year ended December 31, 2014 and 2013 was $45,000 and $41,250, respectively.

In connection with the Company’s initial investment of $1.0 million in Ultra Green (see “Note 13 – Convertible Promissory Note”), Ultra Green paid a 10% commission to Cedar Point Capital, LLC, a registered broker dealer (“Cedar Point”). David B. Johnson, a governor of the Company, is the sole owner of Cedar Point. No commissions were paid on the Company’s follow-on investments.

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19.

Commitments and Contingencies

FERC Settlement

On November 14, 2014, TCE agreed to a settlement regarding the Investigation and the NAV. The settlement required TCE to pay $978,186 plus interest of $128,827 as disgorgement of profits and $2,500,000 as a civil penalty, for a total of $3,607,013. On December 30, 2014, FERC formally accepted the settlement and on December 31, 2014, TCE paid $500,000 to MISO as disgorgement and beginning with the second quarter 2015, TCE shall pay the remainder in 16 equal quarterly installments, first to MISO as disgorgement until it is fully paid, and thereafter to the Treasury in satisfaction of the penalty. The Company further agreed to implement certain procedures to improve compliance. Failure to comply with the terms and conditions will be deemed a violation of the final order and may subject the Company to additional action.

Former Employee Litigation

F-62

In 2013, the former employees brought applications to amend their pleadings to include as additional defendants certain TCPC U.S. affiliates (“Twin Cities USA”). One of the former employees proceeded with the application and the others were adjourned. The application that proceeded went forward on April 29 and 30, 2013. In a decision dated January 31, 2014, the Court of Queen’s Bench dismissed the applications to add additional defendants but allowed certain refinements to the pleadings. Thereafter the Company and TCPC consented to an amendment of pleadings of the other employees consistent with the Court’s ruling.

PJM Resettlements

On July 9, 2012, several parties filed a petition for review of the May 11, 2012 FERC order with the District of Columbia Circuit of the U.S. Court of Appeals and certain subsidiaries of TCPH filed motions to intervene in the proceeding. In an order issued August 6, 2013, the Court remanded to FERC for further consideration the issue of recoupment of refunds that had previously been directed by FERC. The Court found that FERC’s orders failed to explain why refund recoupment was warranted and therefore its recoupment directive was found to be arbitrary and capricious.

PJM Up To Congestion Fees

F-63

Currently, under PJM’s Tariff and Operating Agreement, UTCs are treated differently under its FTR forfeiture rule than are INCs and DECs, two other types of virtual transactions. Further, INCs and DECs are subject to uplift charges, but UTCs are not. In Docket No EL14-37-000, FERC noted that should any uplift be charged UTCs, it would apply such back to the date that notice of the proceeding was published in the Federal Register (September 8, 2014), thus setting a “refund effective date”. From the refund effective date to December 31, 2014, the Company traded about 1,750,000 MWh of UTCs in PJM and recorded $807,000 of associated revenues.

Although the Company’s UTC trading activity exposes it to potential uplift charges, none have been billed as the investigation is still pending. Further, TCPH has not established any reserves for such as management is uncertain as to the probability, amount, and timing of the actual payment, if any, that might be due.

Letter of Credit

On June 24, 2014, the Company’s restricted cash balance of $320,188 was returned by the City of Lakeville and a letter of credit in favor of Cyclone was issued by Vermillion State Bank for the same amount. The note evidencing the letter of credit calls for maximum advances of up to $320,188, bears interest at an annual rate of 5.25%, is secured by a mortgage on the property being developed and the guaranty of Cyclone, and matures on demand. As of December 31, 2014 the Company was in compliance with all terms and conditions of the letter of credit.

Guarantees

In the ordinary course, the Company provides guarantees of the obligations of TCP, SUM, and CEF with respect to their participation in certain ISOs. As of December 31, 2014, such guarantees were in an unlimited amount for PJM, an unlimited amount for NYISO, up to $2,000,000 for MISO, and up to $5,000,000 for ERCOT.

On April 25, 2014, the Company entered into a guaranty of the obligations of DEG of up to $1,000,000 (plus any costs of collection or enforcement) in favor of Noble.

On November 5, 2014, the Company entered into two separate guaranties of the obligations of TSE and DEG of up to $500,000 (plus any costs of enforcement or collection) in favor of Shell Energy North America L.P.

Legal fees, if any, related to commitments and contingencies are expensed as incurred.

F-64

20.

Segment Information

The Company has three business segments used to measure its business activity – wholesale trading, retail energy services, and diversified investments:

Wholesale trading activities earn profits from trading financial, physical, and derivative electricity in wholesale markets regulated by the FERC and the CFTC.

On July 1, 2012, the Company began selling electricity to residential and small commercial customers.

Trading profits and sales are classified as “foreign” or “domestic” based on the location where the trade or sale originated. For the years ended December 31, 2014 and 2013, all such transactions were “domestic”. Furthermore, the Company has no long-lived assets in foreign jurisdictions.

Certain amounts reported in prior periods have been reclassified to conform to the current period’s presentation.

F-65

Information on segments for the year ended December 31, 2014 is as follows:

	Wholesale Trading		Retail Energy Services			Diversified Investments			Corporate, Net of Eliminations			Consolidated Total
Year Ended December 31, 2014
Wholesale trading	$	36,894,702	$	1,717,242		$	–		$	–		$	38,611,944
Retail energy services		–		11,229,476			–			–			11,229,476
Revenues, net		36,894,702		12,946,718			–			–			49,841,420
Costs of retail electricity sold		–		11,440,672			–			–			11,440,672
Retail sales and marketing		–		324,948			–			–			324,948
Compensation and benefits		19,196,234		391,931			–			2,134,154			21,722,319
Professional fees		686,643		876,488			2,200			921,725			2,487,056
Other general and administrative		7,720,546		1,314,991			108,938			(3,050,632	)		6,093,843
Trading tools and subscriptions		902,364		386,349			2,765			41,326			1,332,804
Operating costs and expenses		28,505,787		14,735,379			113,903			46,573			43,401,642
Operating income (loss)	$	8,388,915	$	(1,788,661	)	$	(113,903	)	$	(46,573	)	$	6,439,778
Capital expenditures	$	15,773	$	738,615		$	185,529		$	127,388		$	1,067,305

At December 31, 2014
Identifiable Assets
Cash - unrestricted	$	1,296,294	$	288,436		$	5,925		$	806,645		$	2,397,300
Cash in trading accounts		19,642,215		1,344,937			–			–			20,987,152
Accounts receivable - trade		501,182		1,878,247			–			14,817			2,394,246
Marketable securities		–		–			–			311,586			311,586
Prepaid expenses and other assets		127,209		159,543			30,943			211,224			528,919
Total current assets		21,566,900		3,671,163			36,868			1,344,272			26,619,203
Property, equipment and furniture, net		80,048		99,068			1,000			582,413			762,529
Intangible assets, net		–		269,149			–			–			269,149
Deferred financing costs, net		–		31,354			–			210,390			241,744
Cash - restricted		1,319,371		–			–			–			1,319,371
Land held for development		–		–			953,462			–			953,462
Investment in convertible notes		–		–			1,604,879			–			1,604,879
Total assets	$	22,966,319	$	4,070,734		$	2,596,209		$	2,137,075		$	31,770,337

Identifiable Liabilities and Equity
Accounts payable - trade	$	369,840	$	803,124		$	25,215		$	345,924		$	1,544,103
Accrued expenses		–		678,456			–			3,539			681,995
Accrued compensation		3,601,282		–			–			–			3,601,282
Accrued interest		–		–			–			849,913			849,913
Revolver		–		1,105,259			–			–			1,105,259
Senior notes		–		–			304,952			7,116			312,068
Subordinated notes		–		–			–			7,234,559			7,234,559
Obligations under settlement agreement		582,565		–			–			–			582,565
Total current liabilities		4,553,687		2,586,839			330,167			8,441,051			15,911,744
Senior notes		–		–			–			217,451			217,451
Subordinated notes		–		–			–			10,418,569			10,418,569
Obligations under settlement agreement		2,524,448		–			–			–			2,524,448
Total liabilities		7,078,135		2,586,839			330,167			19,077,071			29,072,212
Investment in subsidiaries		7,835,842		7,527,746			2,489,529			(17,853,117	)		–
Series A preferred equity		–		–			–			2,745,000			2,745,000
Common equity		7,053,301		(5,180,443	)		(223,487	)		(1,842,995	)		(193,624	)
Accumulated other comprehensive income		999,041		(863,408	)		–			11,116			146,749
Total members' equity		15,888,184		1,483,895			2,266,042			(16,939,996	)		2,698,125
Total liabilities and equity	$	22,966,319	$	4,070,734		$	2,596,209		$	2,137,075		$	31,770,337

F-66

Information on segments for the year ended December 31, 2013 is as follows:

	Wholesale Trading		Retail Energy Services			Diversified Investments			Corporate, Net of Eliminations			Consolidated Total
Year Ended December 31, 2013
Wholesale trading	$	25,091,983	$	213,740		$	–		$	–		$	25,305,723
Retail energy services		–		7,479,775			–			–			7,479,775
Revenues, net		25,091,983		7,693,515			–			–			32,785,498
Costs of retail electricity sold		–		7,760,674			–			–			7,760,674
Retail sales and marketing		–		493			–			–			493
Compensation and benefits		13,762,348		194,486			–			2,008,229			15,965,063
Professional fees		275,508		225,439			–			1,172,507			1,673,454
Other general and administrative		7,314,319		868,266			13,060			(5,342,128	)		2,853,517
Trading tools and subscriptions		849,959		41,291			–			31,506			922,756
Operating costs and expenses		22,202,134		9,090,649			13,060			(2,129,886	)		29,175,957
Operating income (loss)	$	2,889,849	$	(1,397,134	)	$	(13,060	)	$	2,129,886		$	3,609,541
Capital expenditures	$	32,567	$	62,308		$	784,169		$	180,224		$	1,059,268

At December 31, 2013
Identifiable Assets
Cash - unrestricted	$	1,988,248	$	285,419		$	–		$	916,828		$	3,190,495
Cash in trading accounts		8,581,233		1,903,215			–			–			10,484,448
Accounts receivable - trade		168,952		1,146,257			–			–			1,315,209
Note receivable		–		140,964			–			–			140,964
Marketable securities		–		–			–			256,004			256,004
Prepaid expenses and other assets		87,499		19,728			–			135,255			242,482
Total current assets		10,825,932		3,495,583			–			1,308,087			15,629,602
Equipment and furniture, net		79,404		66,251			–			358,643			504,298
Intangible assets, net		–		55,978			–			250,000			305,978
Deferred financing costs, net		–		–			–			337,559			337,559
Cash - restricted		–		–			320,188			–			320,188
Land held for development		–		–			110,477			–			110,477
Mortgage receivable		–		–			353,504			–			353,504
Total assets	$	10,905,336	$	3,617,812		$	784,169		$	2,254,289		$	17,561,606

Identifiable Liabilities and Equity
Accounts payable - trade	$	353,907	$	415,804		$	–		$	265,933		$	1,035,644
Accrued expenses		–		666,959			–			16,597			683,556
Accrued compensation		299,439		–			–			–			299,439
Accrued interest		–		–			–			359,758			359,758
Notes payable		–		–			–			200,000			200,000
Subordinated notes		–		–			–			4,922,596			4,922,596
Obligations under non-competition agreement		–		–			–			250,000			250,000
Total current liabilities		653,346		1,082,763			–			6,014,884			7,750,993
Subordinated notes		–		–			–			5,062,230			5,062,230
Total liabilities		653,346		1,082,763			–			11,077,114			12,813,223
Investment in subsidiaries		10,344,700		2,178,435			784,169			(12,969,296	)		–
Series A preferred equity		–		–			–			2,745,000			2,745,000
Common equity		–		–			–			1,302,994			1,302,994
Accumulated other comprehensive income		338,008		356,614			–			5,767			700,389
Total members' equity		10,344,700		2,535,049			784,169			(8,915,535	)		4,748,383
Total liabilities and equity	$	10,998,046	$	3,617,812		$	784,169		$	2,161,579		$	17,561,606

F-67

21.

Unaudited & Restated Quarterly Financial Information

Presented below is a summary of selected unaudited quarterly financial information for the year ended December 31, 2014, including restated results for the periods ended June 30 and September 3014 as described below.

	Quarters Ended
	Mar 31, 2014		Jun 30, 2014			Sep 30, 2014
	As Reported		As Restated			As Restated			Dec 31, 2014

Wholesale trading revenue, net	$	27,021,725	$	4,304,660		$	1,414,252		$	5,871,307
Retail electricity revenue		2,912,526		2,226,834			2,988,460			3,101,656
Total revenues		29,934,251		6,531,494			4,402,712			8,972,963

Operating income (loss)		12,312,038		3,566			(4,638,278	)		(1,237,548	)
Income (loss) before income taxes		11,856,791		(725,513	)		(5,270,693	)		(2,081,401	)
Net income (loss)		11,856,791		(725,513	)		(5,270,693	)		(2,081,401	)
Net income (loss) attributable to common		11,719,523		(862,781	)		(5,407,961	)		(2,218,669	)
Comprehensive income (loss)		11,755,349		(590,223	)		(4,872,127	)		(3,067,455	)

Overview and Background

After review of the valuation of its open FTR positions in its wholesale trading book during the fourth quarter of 2014, the Company determined that corrections to certain previously reported unaudited interim financial statements were necessary.

FTRs are Level 3 derivatives that must be reported on the balance sheet at fair value. However, each entity must develop, validate, and test its own valuation models for these instruments, since, unlike the valuation models for options, for example, there are no generally accepted models for FTRs. The Company completed the model development, testing, and validation process during the fourth quarter of 2014. See also “Note 8 – Fair Value Measurements”.

Effects of Restatement

Since the Company only began trading FTRs in May 2014, no other reporting periods or financial statements have been affected other than those identified below. The Company has restated its:

Consolidated balance sheets as of June 30 and September 30, 2014;

Consolidated statements of comprehensive income for the three month periods ended June 30 and September 30, 2014;

Consolidated statements of comprehensive income and cash flows for the six months ended June 30, 2014; and

Consolidated statements of comprehensive income and cash flows for the nine months ended September 30, 2014.

F-68

The table below presents the effect of the adjustments related to the restatement of our previously reported financial statements at and for the periods ended June 30, 2014:

	As Restated			As Previously Reported			Dollar Change
At June 30, 2014
Consolidated balance sheet
Cash in trading accounts	$	20,001,517		$	17,539,656		$	2,461,861
Total current assets		26,592,504			24,130,643			2,461,861
Total assets		31,149,568			28,687,707			2,461,861
Common equity		9,086,656			6,624,795			2,461,861
Total members' equity		12,565,893			10,104,032			2,461,861
Total liabilities and members' equity		31,149,568			28,687,707			2,461,861

Three Months Ended June 30, 2014
Consolidated statement of comprehensive income
Wholesale trading revenue, net	$	4,304,660		$	1,842,799		$	2,461,861
Total revenues		6,531,494			4,069,633			2,461,861
Operating income (loss)		3,566			(2,458,295	)		2,461,861
Income (loss) before income taxes		(725,513	)		(3,187,374	)		2,461,861
Net income (loss)		(725,513	)		(3,187,374	)		2,461,861
Net income (loss) attributable to common		(862,781	)		(3,324,642	)		2,461,861
Comprehensive income (loss)		(590,223	)		(3,052,084	)		2,461,861

Six Months Ended June 30, 2014
Consolidated statement of comprehensive income
Wholesale trading revenue, net	$	31,326,385		$	28,864,524		$	2,461,861
Total revenues		36,452,933			33,991,072			2,461,861
Operating income		12,315,602			9,853,741			2,461,861
Income before income taxes		11,131,278			8,669,417			2,461,861
Net income		11,131,278			8,669,417			2,461,861
Net income attributable to common		10,856,742			8,394,881			2,461,861
Comprehensive income		11,165,126			8,703,265			2,461,861

Consolidated statement of cash flows
Net income	$	11,131,278		$	8,669,417		$	2,461,861
Increase (decrease) in trading accounts and deposits		(4,644,695	)		(7,106,556	)		2,461,861

F-69

The table below presents the effect of the adjustments related to the restatement of our previously reported financial statements at and for the periods ended September 30, 2014:

	As Restated			As Previously Reported			Dollar Change
At September 30, 2014
Consolidated balance sheet
Cash in trading accounts	$	19,838,518		$	16,513,373		$	3,325,145
Total current assets		25,837,344			22,512,199			3,325,145
Total assets		30,713,291			27,388,146			3,325,145
Common equity		3,125,045			(200,100	)		3,325,145
Total members' equity		7,002,848			3,677,703			3,325,145
Total liabilities and members' equity		30,713,291			27,388,146			3,325,145

Three Months Ended September 30, 2014
Consolidated statement of comprehensive income
Wholesale trading revenue, net	$	1,414,252		$	550,968		$	863,284
Total revenues		4,402,712			3,539,428			863,284
Operating income (loss)		(4,638,278	)		(5,501,562	)		863,284
Income (loss) before income taxes		(5,270,693	)		(6,133,977	)		863,284
Net income (loss)		(5,270,693	)		(6,133,977	)		863,284
Net income (loss) attributable to common		(5,407,961	)		(6,271,245	)		863,284
Comprehensive income (loss)		(4,872,127	)		(5,735,411	)		863,284

Nine Months Ended September 30, 2014
Consolidated statement of comprehensive income
Wholesale trading revenue, net	$	32,740,637		$	29,415,492		$	3,325,145
Total revenues		40,855,645			37,530,500			3,325,145
Operating income		7,677,324			4,352,179			3,325,145
Income before income taxes		5,860,585			2,535,440			3,325,145
Net income		5,860,585			2,535,440			3,325,145
Net income attributable to common		5,448,781			2,123,636			3,325,145
Comprehensive income		6,292,999			2,967,854			3,325,145

Consolidated statement of cash flows
Net income	$	5,860,585		$	2,535,440		$	3,325,145
Increase (decrease) in trading accounts and deposits		(2,434,389	)		(5,759,534	)		3,325,145

F-70

22.

Subsequent Events

From January 1 to March 25, 2015, the Company sold additional Subordinated Notes totaling $2,391,400 with a weighted average term of 31.4 months and bearing a weighted average interest rate of 13.75%.

On January 26, 2015, Cyclone closed on the purchase of a single family home located in New Prague, Minnesota for a price of $198,650, paid in cash. Cyclone intends to spend approximately $60,000 on remodeling the property. When remodeling is complete, the property will be offered for rent, anticipated to be during the spring of 2015.

On March 3, 2015 the board approved a resolution authorizing a distribution to members of $4,000,000. The distribution was paid to members on March 18, 2015.

The Company has evaluated subsequent events occurring through the date that the financial statements were issued.

F-71

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below are expenses expected to be incurred in connection with the issuance and distribution of the securities registered hereby. With the exception of the Securities and Exchange Commission registration fee and the FINRA filing fee, the amounts set forth below are estimates and actual expenses may vary considerably from these estimates depending upon how long the notes are offered and other factors:

Securities and Exchange Commission registration fee	$	6,918
FINRA filing fee		none
Accounting filing fee and expenses		60,000
Blue Sky fees and expenses		45,000
Legal fees and expenses		250,000
Printing expenses		240,000
Trustee's fees and expenses		20,000
Administrative outsourcing fee		250,000
Advertising fees		1,660,000
Miscellaneous		15,000
Total	$	2,546,918

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Minnesota law, a Minnesota limited liability company may eliminate or limit the personal liability of a governor (which we call directors) of the limited liability company for monetary damages for breach of the director’s duty of care as a director, provided that the breach does not involve certain enumerated actions, including, among other things, intentional misconduct or knowing and culpable violation of the law, acts or omissions which the director believes to be contrary to the best interests of the company or its members or which reflect an absence of good faith on the director’s part, and the violation of good faith and fair dealing. The registrant’s board of directors believes that such provisions have become commonplace among major companies and are beneficial in attracting and retaining qualified directors, and the registrant’s Operating Agreement includes such provisions. It is the position of state securities commissions (or agencies) and the Securities and Exchange Commission that indemnification in connection with a violation of the securities laws is against public policy and void.

The registrant’s Operating Agreement also imposes a mandatory obligation upon the registrant to indemnify any director or officer to the fullest extent authorized or permitted by law, including under circumstances in which indemnification would otherwise be at the discretion of the registrant.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The offer, sale and issuance of the securities in connection with the equity awards and sale described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering. The recipients of the registrant's securities acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued. There was no general solicitation in connection with these transactions, as securities of the registrant were only made available to the four new executive officers of Aspirity and a former executive officer of Aspirity, and each of the recipients of securities had adequate access, through employment, business or other relationships to information about us.

Part II-1

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The exhibits listed below are filed as a part of this registration statement.

Exhibit Number		*Description “()” indicates compensatory plan or agreement.**
2.1		Agreement and Plan of Reorganization, dated November 14, 2011, as amended December 20, 2011 (incorporated by reference to Exhibit 2.1 to the Registrant’s Form S-1 filed February 10, 2012)
3.1(i)		Amended and Restated Articles of Organization (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed July 15, 2015)
3.1(ii)		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K filed July 15, 2015)
3.2		Form of Amended and Restated Operating Agreement ***
4.1(i)		Form of First Supplemental Indenture (amending Indenture dated as of May 10, 2012) ***
4.1(ii)		Indenture dated as of May 10, 2012 ***
4.2		Form of Notes ***
4.3		Form of Note Confirmation ***
4.4		Form of Subscription Agreement ***
4.5		Paying Agent Agreement (incorporated by reference to Exhibit 4.5 to the Registrant’s Form S-1/A filed March 30, 2012)
5.1		Opinion of Stinson Leonard Street LLP ***
10.1		Employment Agreement dated June 16, 2013 between Twin Cities Power Holdings, LLC and Wiley H. Sharp III(*)(incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed June 20, 2013)
10.2		First Amendment to Employment Agreement dated December 19, 2014 between Twin Cities Power Holdings, LLC and Wiley H. Sharp III(*)(incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed December 23, 2014)
10.3		Form of Indemnification Agreement between the Company and each of Timothy Krieger, David Johnson, Wiley H. Sharp III, Mark Cohn, William M. Goblirsch, Paul W. Haglund, Scott Lutz and Jeremy E. Schupp (incorporated by reference to Exhibit 10.5 to the Registrant’s Form S-1 filed February 10, 2012)
10.4		Office Sublease, dated June 4, 2015, between Bell State Bank & Trust and Twin Cities Power Holdings, LLC (incorporated by reference to Exhibit 10.2 to the Registrant's Form 8-K filed July 20, 2015)
10.5		Form of Amended Outsourcing Agreement between Twin Cities Power Holdings, LLC and Redwater LLC ***
10.6		Term Loan Agreement, dated July 1, 2015, between Krieger Enterprises LLC and Aspirity Financial LLC ***
10.7		Springing Equity Pledge Agreement, dated July 1, 2015, between Timothy S. Krieger and Aspirity Financial LLC ***
10.8		Secured Promissory Note, dated July 1, 2015, between Krieger Enterprises, LLC and Aspirity Financial LLC ***
10.9		Equity Interest Purchase Agreement, dated June 1, 2015, between Twin Cities Power Holdings, LLC and Angell Energy, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q/A filed August 17, 2015)
10.10		Secured Promissory Note, dated June 1, 2015, between Twin Cities Power Holdings, LLC and Angell Energy, LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q/A filed August 17, 2015)
10.11		Security and Guarantee Agreement, dated June 1, 2015, made by Twin Cities Power, LLC, Angell Energy, LLC, Summit Energy, LLC, and Michael Angell in favor of Twin Cities Power Holdings, LLC (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 10-Q/A filed August 17, 2015)
10.12		First Amendment to Equity Interest Purchase Agreement, dated September 2, 2015, by and among Angell Energy, LLC and Krieger Enterprises, LLC, a wholly-owned subsidiary of Aspirity Holdings LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed September 5, 2015)
10.13		Amended and Restated Secured Promissory Note executed by Angell Energy, LLC in favor of Krieger Enterprises, LLC on September 2, 2015 (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed September 5, 2015)
21		List of subsidiaries of the registrant ***
22.1		Form of Noteholder Solicitation Cover Letter dated June 2, 2015 (incorporated by reference to Exhibit 22.1 to the Registrant’s Form 8-K filed June 2, 2015)
22.2		Frequently Asked Questions dated June 2, 2015 (incorporated by reference to Exhibit 22.2 to the Registrant’s Form 8-K filed June 2, 2015)
22.3		Solicitation of Votes from Holders of the Renewable Unsecured Subordinated Notes of Twin Cities Power Holdings, LLC dated June 2, 2015 (incorporated by reference to Exhibit 22.3 to the Registrant’s Form 8-K filed June 2, 2015)
22.4		Form of Ballot dated June 2, 2015 (incorporated by reference to Exhibit 22.4 to the Registrant’s Form 8-K filed June 2, 2015)
23.1		Consent of Baker Tilly Virchow Krause, LLP
23.2		Consent of Stinson Leonard Street LLP (incorporated by reference to Exhibit 5.1)
24.1		Powers of Attorney (included on signature page)
25.1		Statement of Eligibility of Trustee ***
101.INS*		XBRL Instance Document
101.SCH*		XBRL Schema Document
101.CAL*		XBRL Calculation Linkbase Document
101.DEF*		XBRL Definition Linkbase Document
101.LAB*		XBRL Labels Linkbase Document
101.PRE*		XBRL Presentation Linkbase Document

____________________

*** Previously filed

Part II-2

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to governors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a governor, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such governor, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement, or the most recent post-effective amendment thereof, which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered, if the total dollar value of securities offered would not exceed that which was registered, and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5)

That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

Part II-3

(i)

Any preliminary prospectus or prospectus of an undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by an undersigned registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of an undersigned registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

The undersigned registrant hereby undertakes that:

(1)

For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

(2)

For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Part II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment to registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Golden Valley, State of Minnesota, on November 4, 2015.

Aspirity Holdings LLC (formerly known as Twin Cities Power Holdings, LLC)

/s/ Timothy S. Krieger

Timothy S. Krieger

Chief Executive Officer

Each person whose signature appears below appoints Timothy S. Krieger and Wiley H. Sharp III, and each of them, each of whom may act without the joinder of the other, as his true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement and any Registration Statement (including any amendment thereto) for this offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or would do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute and substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this amendment to registration statement has been signed by the following persons in the capacities and the dates indicated.

Signature	Title	Date


/s/ Timothy S. Krieger	Chairman of the Board of Directors and Chief	November 4, 2015
Timothy S. Krieger	Executive Officer (Principal Executive Officer)

/s/ Mark A. Cohn	Director	November 4, 2015
Mark A. Cohn

/s/ Wiley H. Sharp III	Vice President and Chief Financial Officer	November 4, 2015
Wiley H. Sharp III	(Principal Financial and Accounting Officer)

/s/ William M. Goblirsch	Director	November 4, 2015
William M. Goblirsch

/s/ Paul W. Haglund	Director	November 4, 2015
Paul W. Haglund

/s/ David B. Johnson	Director	November 4, 2015
David B. Johnson

Part II-5

ASPIRITY HOLDINGS LLC - FORM S-1/A - November 4, 2015

Attached files

ASPIRITY HOLDINGS LLC Reports