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Business Description

We are a California corporation formed in December 2002. Our principal business address is 255 W. Jullian Street, Suite 600, San Jose, California 95110. We intend to do business under our corporate name, and under the ACFN® name and the American Consumer Financial Network™ name. Our agents for service of process are listed in Exhibit C. A.F.F.A. Inc. (“AFFA”), a California corporation, is our affiliate. AFFA's principal business address is the same as ours. The ACFN® franchise we offer under this disclosure document is modeled after the automated teller machine (“ATM”) business developed and previously operated by AFFA. This business conducts business under the ACFN® name and under the American Consumer Financial Network™ name. AFFA operated a company-owned ATM business from 1996 to 2011, until it transferred its last accounts to franchisee owners. As a result, AFFA no longer owns and operates any company-owned ACFN® businesses. AFFA owns the ACFN® trademark and other “Marks” (as defined below), and has granted us a license us to use certain of the Marks, including the ACFN® trademark, in the operation of the ACFN® franchise system. AFFA does not now and has never in the past offered franchises in any line of business.

Prior Experience

We have been offering ACFN® franchises for sale since February 21, 2003, and act as the franchisor of the ACFN® system. We do not operate ACFN® businesses. We or our affiliates may, however, periodically acquire, own and operate existing ATMs and locations. While we anticipate that we and our affiliates will sell some of these ATMs and locations to new or existing ACFN® franchisees, we or our affiliates may elect to continue to own and operate some of them. If we or our affiliate offer to sell to you any existing ATMs and locations and you elect to purchase those items, you will pay us or our affiliate a Corporate ATM Acquisition Fee and sign our then-current form Purchase Agreement or any other related agreements or documentation that we require. Our current form Purchase Agreement is attached as Exhibit H. Other than as described above, we do not engage in any other business activity and we have no parents, affiliates or predecessors required to be disclosed in this Item

Business Offered

The franchise we offer to you in this disclosure document is the right and license to establish and operate an ACFN® business under the terms and conditions of the ACFN® Franchise Agreement (the “Franchise Agreement”). A copy of our current form Franchise Agreement is attached as Exhibit A. The franchised business you will operate is referred to in this disclosure document as the ACFN® franchise or ACFN® business. You will operate your ACFN FDD - 3/19 GP: 4837-6536-8972 v2 2 ACFN® business using the “Marks” (including the ACFN® trademark), and the “System,” as these terms are defined in Section 1.1 of the Franchise Agreement. ACFN® businesses provide ATM services, financial transaction processing services, and related financial services. You will market ATM services to hotels, retail locations, and other entertainment and travel-based businesses and will install ATMs at those host locations accepting the services and that we have approved. Your franchise will place each ATM on site at no cost to the host location and will perform all services and maintenance required of the ATM. We will monitor the ATMs at all times and notify you that service is required on a specific ATM. The ATMs will be authorized to process transactions for most major ATM networks and will be able to process the vast majority of both debit and credit card transactions. Host businesses will get paid for every surcharged transaction performed at the ATM. You will manage your ATM locations with our support. Under the Franchise Agreement, you may locate and operate multiple ATMs within your Area of Operation (defined below), provided you receive our prior approval of each ATM location that we recommend and you review, or you select, and you meet all of our then-current requirements for operating additional ATMs at the time you desire to begin operating each additional ATM. We manage the ACFN® network of franchisees. You are not required to maintain an office as part of your ACFN® business. You will operate your ACFN® business within a non-exclusive geographic area (the “Area of Operation”) defined in Appendix C to the Franchise Agreement. You must also participate in our Multiple Location Accounts (or MLA) Program, which is designed to facilitate the delivery of ACFN® ATM services to host businesses with multiple locations by subsidizing the underperforming ATMs in locations of that host business with revenues from the better performing ATMs in other locations of the same host business. As of the issuance date of this disclosure document, we have established a referral program for our existing franchisees, subject to certain qualifications. Generally, if an existing franchisee refers a qualified candidate to us with whom we have not had previous communications and we execute a franchise agreement with that candidate within a certain period of time, we will pay the referring franchisee a referral fee we establish. We reserve the right to either modify or cancel this referral program at any time.

Initial Fees

You must pay us a nonrefundable initial franchise fee in the amount of $25,000 before your business opens. As described in Item 10, we may finance up to $10,000 of the initial franchise fee. Except for any part of the initial franchise fee we agree to finance, the initial franchise fee is due when you sign the Franchise Agreement, with any outstanding amount payable in agreed upon equal monthly installments of up to 3 years. The initial franchise fee is not refundable under any circumstances, regardless whether you pay it in full when you sign the Franchise Agreement or whether you elect to have us finance part of the initial franchise fee. The initial franchise fee represents payment to us for the right to use the Marks and System in the development and operation of your ACFN® business during the initial term of the Franchise Agreement, and is in no way payment to us for any services If you are an existing ACFN® franchisee in good standing with us, you qualify to acquire a second or subsequent ACFN® franchise from us, and you agree to sign a separate Franchise Agreement for that franchise, we have the right, at our option, to reduce the initial franchise fee. We do not, however, offer financing for any reduced initial franchise fee. You also must pay us a nonrefundable initial training fee of $995 for your “Managing Owner” (as defined in Item 15) and up to one other person to attend the initial training program. This initial training fee is not refundable under any circumstances. In addition to the initial franchise fee and initial training fee, you must purchase from us a certain number of ATMs (our then-current designated make and model) and related equipment before you begin operating your ACFN® business. This amount will vary depending upon the items you purchase from us. If you purchase one ATM for $4,294 (which includes a low topper sign and economy shipping in the 48 contiguous states) and an extra cash cassette for $495, you will pay us $4,789. If you purchase 3 ATMs for $4,294 each, an extra cash cassette for $495, one ATM cabinet for $995, which includes shipping in the 48 contiguous states, and one wireless unit for one ATM for up to $300, you will pay us $14,672. The cost for these items are not refundable under any circumstances. If you are a new franchisee who enters into a Purchase Agreement with us or our affiliate for the purchase of existing ATMs and locations, you will still pay to us the initial franchise fee and training fee, but instead of the fees described in the preceding paragraph, you will pay to us or our affiliate the Corporate ATM Acquisition Fee we agree upon. The amount of the Corporate ATM Acquisition Fee will vary based upon a number of factors, including the number of ATMs and related equipment being sold, the type, age and condition of these items, the average number of transactions that occur at these ATMs, the purchase price we or our affiliate paid for the ATMs and locations, the host locations for the ATMs, and the terms and conditions of the agreement(s) with the host locations. Because of the number of factors involved, it is difficult for us to provide a meaningful range for these fees. We anticipate, however, that if you were to purchase 3 existing ATMs and locations from us or our affiliate, the amount of the ACFN FDD - 3/19 GP: 4837-6536-8972 v2 5 Corporate ATM Acquisition Fee would exceed the $14,672 amount described in the preceding paragraph. We reserve the right to collect from you a refundable deposit of up to 25% of the applicable Corporate ATM Acquisition Fee before you sign the Purchase Agreement. Once you sign the Purchase Agreement and pay the Corporate ATM Acquisition Fee, it is not refundable. During our 2018 fiscal year (January 1, 2018, to December 31, 2018), new ACFN® franchisees paid us initial fees ranging from $25,995 to $30,784.

Financing

Neither we nor our affiliates guarantee your loans or other obligations, nor receive payments or other consideration for the placing of financing. We may provide financing for qualifying prospective franchisees under our guidelines. We may add, change or delete any financing programs at any time. It is not our current practice or intent to sell, assign, or discount to a third party all or part of any financing arrangement. Except as described below in this Item, as of the issuance date of this disclosure document, neither we nor our affiliates offer directly or indirectly any franchising arrangements to ACFN® franchisees. We may offer you financing of your initial franchise fee through a promissory note with us. A copy of our current form Promissory Note for Initial Franchise Fee (“Note”) is included in Exhibit F. The table below shows the standard terms of our Note. The initial franchise fee is $25,000. In order to assist credit-worthy franchisees to purchase and operate an ACFN® business, we may finance up to $10,000 of the initial franchise fee. We do not offer financing, however, if you pay a reduced initial franchise fee. The financed amount of the initial franchise fee is evidenced by a Note and is payable over a term of 3 years in equal monthly installments with an interest rate of 11.9% per annum, on the unpaid principal. Except as described below, there are no other annual finance charges. We have the right to change the terms, interest rate, and amounts financed. (A copy of our Note is attached in Exhibit F.) (2) If your business is a partnership, corporation or other recognized legal entity, the Note must be guaranteed individually by all partners or shareholders. The Note is secured by a security interest in the Franchise Agreement. (See Exhibit F.) (3) If you do not pay on time, we can charge a late penalty of 18% per annum from the due date. In the case of nonpayment or other default under the Note, we can require immediate payment of all unpaid amounts under the Note, and/or terminate the franchise, and we can also collect our reasonable attorneys' fees and all costs and expenses of collection. We may deduct the full amount of any overdue installment payments directly from any ATM transaction surcharge revenue we collect that is due to the franchisee. (4) Each party that signs the Note, in any litigation arising out of or relating to the Note in which a holder of the Note is an adverse party, waives trial by jury and the right to interpose any defense, set-off or counterclaim of any nature or description. (See Note in Exhibit F.)

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the disclosure document. Financial performance information that differs from that included in Item 19 may be ACFN FDD - 3/19 GP: 4837-6536-8972 v2 38 given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. Possible Results of ACFN® Franchisee Operating 1 ATM, 5 ATMs and 10 ATMs The following 3 tables (first, second and third tables) are presented to demonstrate possible results of an ACFN® franchisee operating 1 ATM, a small network of 5 ATMs, and a larger network of 10 ATMs, based on a combination of variables. The variables include the following: (i) Transactions Per Day; (ii) Total Transactions Per Day; (iii) Transactions Per Month; (iv) Fees Collected; (v) Transaction Fees; (vi) Profit Share; (vii) Administration Fees; and (vii) Estimated Funds. The possible results included in the tables below are solely based on our estimates of the variables, and are not the actual results of any particular ACFN® franchisee or ACFN® ATM. Actual results, as well as the actual amounts used for each of the variables, will vary from franchisee to franchisee, ATM to ATM, area to area, and market to market. To give the information presented in these tables a reasonable basis, however, we used averages based on every ATM surcharge transaction that took place at all operational ACFN® ATMs during our 2018 fiscal year (January 1, 2018, to December 31, 2018) in calculating several of the estimated variables. A detailed description of our estimates and the material assumptions underlying this financial performance representation are included in the notes following the tables.