www.usaexportstochina.com
US Trade & Logistics Centers for
Exports “made in America� Excutive Summary - Business Plan Prepared December 2013
Yilaime Corporation
Contact Information Alton Perkins ap@usaexportstochina.com 888-406-2713 Las Vegas, Nevada 89145, USA
US Trade & Logistics Center for Exports "Made in America"
For every $1.00 invested we expect to return $4.51. Expected Internal Rate of Return of 40.64% Minimum investment $5,000.00 13.5% Preferred Stock offered at $1.00 per share. Stated Dividends payable, along with participation in potential net income, and convertable into common stock. Additionally, Export Tax Credit Pass through on Dividends avialable which reduces taxes on dividends received.
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US Trade & Logistics Center for Exports "Made in America"
1. Executive Summary 1.0 Introduction Powerful forces at home and abroad support the creation, development and operation of a USA based Export Trade Center providing China with “made in the USA” goods and services. Realizing that exports were the key to our nation’s continued development and growth, in 2010, the US Government launched a National Export Initiative to double total U.S. exports in support of 2 million jobs. Today data tells us that exports are one of the rays of hope in moving the Nation out of its recent economic down turn. 1 In June of 2013, the Commerce Department reported, exports hit a record high of $191.1 billion—up 3.2 percent from last June. And because imports fell, the U.S. trade deficit shrank 22.4 percent to its lowest monthly level since October 2009. When America exports more and imports less, it pushes economic growth up. Rising exports bear witness not only to America’s continuing relevance in the rapidly changing global economy, but to the ability of American firms to compete. Shifting economic relationship with China, which is responsible for a huge chunk of the trade deficit, is responsible for much of the upward trend in exports. In June 2013, imports from China fell 2.2 percent from May and exports rose by 4.5 percent. Since the early 2000s exports to China increased nearly 546% and the trend is expected to continue. In addition, to our government’s emphasis on exports, dynamics are taking place in China that impacts exports, jobs and employment here in the US. For example China’s rising middle class, its change from an export to a consumer based economy, and the general demand by China’s consumers for “made in the US” goods and services all serve as strong forces to continue the upward trend for US exports.
1
January 27, 2010 - President Barack Obama announced the National Export Initiative. 1
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US Trade & Logistics Center for Exports "Made in America"
The investment outlined in this Business Plan benefits the US economy by providing fulltime jobs, goods and services, and increases exports.
1.1 Project Description Yilaime Corporation (the Company) an export trading Company, plans to operate US International Export Trade Centers (US Export Trade Centers) in three locations in the USA. The US Export Trade Centers exports "ʺUSA made goods and services"ʺ to China. To take advantage of export opportunities, as well as Federal tax incentives available to exporters, management formed Perkins-Hsu Export Corporation an Interest Charge Domestic International Sales Corporation (IC-DISC). Perkins-Hsu will provide various commission sales and other services to the Company. Additionally, Perkins-Hsu may provide investors and shareholders with a greater return on their investment allowing a reduction in taxes and a significant tax savings on dividends. Strategically located in three Targeted Employment Areas (TEA), the Trade Center works with US small and mid-‐‑size business suppliers (SMEs) exporting goods and services to China. The goods and services exported are targeted at China'ʹs middle and upper income consumer. Plans call for the US Export Trade Center to operate facilities in Richmond, Virginia, Las Vegas, Nevada, and Chicago, Illinois. Plans call for future expansion to North Carolina, California, New York, or other acceptable qualified areas. In implementing this Business Plan, the Company has signed an agreement with the City of Meishan Island Ningbo China to establish and operate a trading company, International AmericaTowne® Branded Trade Center in Meishan. Ningbo Aomeixin Trading Company Ltd. China, and its AmericaTowne® Import Trade Center is a wholly owned foreign enterprise in Meishan, a subsidiary of Yilaime and serves as a distribution point for the Company’s exports to China. Meishan is providing a number of incentives, and accommodations including a 18,000 sq. ft. show room, offices and tax abatements.
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US Trade & Logistics Center for Exports "Made in America"
1.2 Market Potential There are many factors that will influence the success of the US Export Trade Center Project. Trends in the export market, trends in China consumer’s consumption habits, acceptable business practices, and our ability to effectively implementing this Plan, all play a role in determining success. An increase in exports to China means more job opportunities for American workers, farmers, ranchers and service providers, as well as sustained economic growth. According to US and China Competiveness Report by the AmCham Shanghai (American Chinese Chamber of Commerce, Shanghai), capturing an added one percent of the China import market translates to $12.6 billion in more goods and services exported and more than 74,000 U.S. jobs.
1.2.1 Outlook The outlook for the export business in general is exceptional. As the chart below shows exports drive growth and increases in jobs.
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US Trade & Logistics Center for Exports "Made in America"
According to the US Treasury Department as seen by the chart below the turn around in the US economy has been lead by three factors: 1) consumption; 2) private sector investments; and 3) exports.
The upswing in exports is expected to continue upward for the foreseeable future.
1.3 Financial Summary Due to its numerous business advantages, management believes that: 1) the US Export Trade Center will be profitable; 2) investors will achieve a reasonable return on their investment; and 3) as an added bonus, shareholders will participate in the Federal Tax Incentive Program for exporters that will reduce their personal taxes significantly on any dividends and or gains realized.
1.3.1 Investment Summary The Company seeks to develop a US Export Trading Center business in TEAs located in Richmond Virginia, Las Vegas Nevada, and Chicago, Illinois. Plans call for Centers in three other locations. A project timeline, sources and uses of funds for the project, and pro forma financial information are included herein.
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US Trade & Logistics Center for Exports "Made in America"
1.3.2 Funding Objectives The Company would like to obtain funding in the amount of $3,000,000 through a private placement offering of its preferred stock to accredited investors to enable it to obtain the equipment, facilities, additional assets, and staff needed to start operations.
1.3.3 General Assumptions 1. The Founder has invested the necessary capital to bring the Company to this point. 2. Revenue Projections: In accordance with Revenue Assumptions and Revenue Metrics 3. Direct Costs and Allowances: In accordance with Revenue Assumptions and Revenue Metrics 4. Perkins-‐‑Hsu Export Corporation is an Interest Charge-‐‑Domestic International Sales Corporation (IC-‐‑DISC). 5. Perkins-‐‑Hsu provides various commission sales and other services to the Company. 6. The Company and its Sister Company -‐‑ Perkins-‐‑Hsu will participate in the Federal Tax Incentive Program for exporters, which will reduce both the Company’s and owners’, and investors’ personal tax on income, dividends and or gains if realized. 7. Tax burden of 15% after adjusting for IC-‐‑DISC Incentive. 8. Expenses: Advertising: $210,100 Depreciation: $214,499 Interest: 4.5%
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US Trade & Logistics Center for Exports "Made in America"
1.3.4 Project Budget USE of FUNDS Uses of Funds Project Budget - Pre Startup Real Estate Prepaid Expenses (Meishan) Meishan Wholly Owned Enterprise Marketing & Promotion Professional Services (Legal & Accounting) Travel & Accommodations China Office Fees - Advanced & Build out USA Office Operations Insurance Web & Data base development Equipment Art Inventory Trademarks & License Notes Retired Working capital Cash Reserve Total Project Costs
Amount $200,000 $900,000 $490,000 $150,000 $45,000 $40,000 $44,500 $150,000 $4,000 $195,000 $50,000 $560,000 $550,000 $117,551 $1,543,034 $170,915 $5,210,000
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US Trade & Logistics Center for Exports "Made in America"
Real Estate Prepaid Expenses (Meishan) Meishan Wholly Owned Enterprise Marketing & Promotion Professional Services (Legal & Accounting) Travel & Accommodations China OfFice Fees -‐ Advanced & Buildout USA OfFice Operations
Source of Funds Sources of Funds Preferred Stock Investors Allocations and In-Kind Contributions by Meishan Ningbo Equity Invested by Owners Total Amount Received
Amount $3,000,000 $900,000 $1,310,000 $5,210,000
1.3.5 Project Timeline As indicated by the timeline below all employees will be hired within 20 months.
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US Trade & Logistics Center for Exports "Made in America"
1.3.6 Investor Opportunity The potential return on the investment is as follows for: Estimated Potential Internal Rate of Return (IRR) per Preferred Shares. Description
Year 1
Year 2
Year 3
Year 4
Year 5
Totals
Dividend
$0.135
$0.135
$0.135
$0.135
$0.135
$0.675
$0.357
$0.357
$1.90
$1.900
$0.478
$0.586
$1.000
$1.000
$3.87
$4.518
Income Share
2
Conversion Tax Savings
3
$0.027
$0.027
$0.027
$0.027
Original Invest Total IRR
$0.16
$0.16
$0.16
$0.16
40.64%
2
Cumulative paid in year 5 IC-DISC Estimated Tax Savings for Dividends distributed through Perkins-Hsu Export Corporation.
3
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US Trade & Logistics Center for Exports "Made in America"
1.3.7 Financial Plan Financial Highlights Startup Costs The business will need substantial start-‐‑up capital. It is expected that a good portion of the funds required will come from investments and a loan. Sales are expected to start conservatively the first year and increase steadily through the fifth year of operations. Operating income will pay back the start-‐‑up loan over a five-‐‑ year amortization. Cash will be retained in the business to cover cash operating needs as well as future expansion of other Trade Center locations. Dividends and Returns It is expected that starting at the end of year two; other preferred shareholders will be paid dividends annually at a rate of 13.5 percent per annum. Impact of Export Tax Incentive Shareholders as Partners in the Perkins-‐‑Hsu may participate the Federal Tax Incentive Program for Exporters allowing them to receive significant reductions in taxes on dividend payments and or gains realized if any. Collateral Additionally, investors receive a secured position on the assets and real estate of the Company.
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US Trade & Logistics Center for Exports "Made in America"
Exit Strategy At the end of year 5, if all projections are realized, we expect to call the Preferred Shares on or about September 30, 2018, if not sooner, at a price of approximately $4.52 per share. 1. 2. 3. 4. 5.
Annual redeemable stated dividends/share (.135 x 5) Total participation in income, if available, per share Conversion growth into common per share Tax Savings on dividends The return of the original investment on the shares or Possible Total Payout Upon the Call Date
$ .6750 $ .3568 $ 1.9000 $ .5860 $ 1.0000 $ 4.5184
Financial Highlights by Year
1.4 Value Proposition The Company is taking advantage of an export business strategy that is being aggressively pursued by both the Governments of the US and China. The US goal is to spur growth, development and jobs through exports. China’s focus is to increase consumer consumption of its growing middle and upper income citizens. Both of these 4
Estimate - A final accounting will determine the final payout due the Holder upon the Call Date including any accrued interest.
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US Trade & Logistics Center for Exports "Made in America"
policy initiatives are having a synergistic affect causing increased demand in “made in the USA” goods and services. In turn, exports are on the upswing. The Company’s US International Import Trade Operations will be the only one of its kind in existence. As importantly, the Company’s managerial staff has consistent long-‐‑term experience in doing business in China and will oversee operations. It is this experience and the relationships developed by actually going to China to work and learn the customs and business environment that will enable the enterprise to flourish. The key value-‐‑added components to this project are: Job Creation: The project will create not less than 60 jobs in three Counties. Increase in Exports: The project will increase USA exports and increase the number of businesses exporting. Increase in Development and Growth: The project will increase growth in the communities where the TEAs are located.
1.5 Credible Projections Are the Plan’s initial revenue and costs projections creditable? To determine viability of the numbers, we take a look at export data - past, current, and projected, small business activity, as well as changes in demand and income of our target customers in the US and China. First according to International Trade Administration, in 2010, the US exported goods and services valued at $1.3 trillion. Additionally, data tells us that in that year there were approximately 293,000 export companies reporting and of that number 269,269 were classified as small businesses. The Plan draws from these numbers that on aggregate, in 2010, the average revenue for a small business exporting was approximately $1,400,087. Our business model calls for us to work with a number of these businesses.
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US Trade & Logistics Center for Exports "Made in America"
The Plan’s revenue projections call for revenues of $10 million in the first year, with the average revenues per small business customer ranging from $10,000 to $42,020 – considerably less than the $1,400,087 figure. See the table below: Customers 1,000 500 250
Average revenues required $10,505 $20,010 $42,020
Couple these conservative projections, especially early on, with data showing that nearly all states and their small businesses are achieving increases in exports even ranging in the upper hundreds and sometimes 1,000 percent and taking into consideration that in the coming years China’s consumers potential to increase consumption, then these early figures are not only creditable they are, with all things being relatively equal, most likely highly achievable. The same analysis holds true for the costs, margins and net picture as well. According to the Us-China Business Council, in 2012, forty-seven states experienced at least triple-digit export growth to China since 2003, while four of those states experienced quadrupledigit growth. In 2012, thirty states exported more than $1 billion to China, while another 10 states exported more than $500 million. As previously indicated, according to the Council, in the next 10 years, global spending on consumer goods is expected to increase to $12.1 trillion by 2020. China will account for a stunning 36 percent of this growth. Focusing on China, exports, and the increasing trend clearly suggest the Plan is built on a solid foundation and is credible and achievable.
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