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recourse promissory note due January 31, 1981.7 The PPM states
in multiple places that the offering involves a high degree of
risk and should be considered only by investors who can afford to
lose their entire investment. Each prospective investor in Sav-
Fuel was required to show that he had a net worth (excluding
home, home furnishings, and automobiles) of at least $250,000 and
one-half of his annual income would be subject to tax in the 49-
percent or higher tax bracket.
The PPM contains assumptions and projections of economic
consequences for the years 1980 to 2005. The PPM made the
following assumptions: (1) Total cash contributed by the
partners would be $1,380,000; (2) Gould consumed 11,011,620
kilowatt hours of electricity and 20,664 units of kilowatt demand
at a total cost of $565,761 for the 12-month period beginning
August 1979 through July 1980; (3) the useful life of the EMS
would be 25 years; (4) the estimated reduction in fuel consumed
by Gould would be 20 percent per year; (5) as a result of the 20
percent estimated reduction, Gould would save $135,000 annually
and Sav-Fuel would receive 50 percent, or $67,500, of this amount
before payment of the 15-percent management fee to CEF; and (6)
the inflation in energy costs was 20 percent per year. On the
7Assuming all 23 units were sold to investors, the total of
the $12,500 payments required by Jan. 31, 1981, equals $287,500,
the same amount as the recourse note due from Sav-Fuel to Nisona
on Feb. 28, 1981.
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