UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
May 12, 2015
(Original Filing Date)
May 28, 2015
(Amended Filing Date)
July 31, 2015 (Second Amended Filing Date)
October 20, 2015
(Third Amended Filing Date)
AMERICATOWNE, INC.
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
Delaware | 000-55206 | 46-5488722 |
(State of Incorporation) | (Commission File No.) | (IRS Employer ID No.) |
4700 Homewood Court, 353 E. Six Forks Road Suite 100 Raleigh, North Carolina 27609 (888) 406-2713 (Principle Executive Office) | Alton Perkins 4700 Homewood Court, 353 E. Six Forks Road Suite 100 Raleigh, North Carolina 27609 (888) 406-2713 (Agent for Service) | |
With copies to: Anthony R. Paesano Paesano Akkashian, PC 7457 Franklin Road Bloomfield Hills, Michigan 48301 Tel: (248) 796-6886 Fax: (248) 796-6885 |
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Approximate date of proposed sale to the public: As soon as practicable and from time to time after the effective date of this Registration Statement.
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. [x]
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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one):
-- Large accelerated filer
-- Non-accelerated filer (Do not check if a smaller reporting company)
-- Accelerated filer
-- Smaller reporting company [x]
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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 hereafter 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 such Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE CHART
Common Stock Par Value $0.0001 | Amount (1) | Proposed Maximum Registered Per Share (2) | Proposed Maximum Offering Price (3) | Fee Amount (4) |
Selling Shareholders | 22,943,624 (5) | $2.75 | $63,094,966 | $6,442.57 |
Direct Public Offering | 8,000,000 | $2.75 | $22,000,000 | $2,556 |
(1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
(2) There is no current market for the securities and the price at which the shares are being offered has been arbitrarily determined by the Company and used for the purpose of computing the amount of the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.
(3) Estimated for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The shares to be sold by the Selling Stockholders will be sold at a fixed price to be determined prior to effectiveness of this Registration Statement. Any increased fees will be paid prior to effectiveness.
(4) Amended fee amount, as of October 21, 2015, has been paid with the filing of this amendment. The Company paid the original fee of $666.51 with its initial filing based on the rate prior to October 1, 2015. The Company increased the Share Price of the Selling Shareholders from $.25 to $2.75 with this amendment, a difference of $2.50. Using the filing fee rate effective on October 1, 2015, the filling fees for the Selling Shareholders increased by $5,776.06 (22,943,624 x 2.50 x 0.0001007) for a total combined fee of $6,442.57. (4) Fee paid with initial filing. No additional fee due at this time.
(5) These shares do not include the 3,806,367 shares of common stock issued to the Company's treasury for issuance under the Company's Employment Stock Option Plan (the "ESOP"). The Company anticipates seeking registration of these shares on Form S-8. These shares also do not include the 3,047,190 2,000,000 shares of common stock subject to the rights of Alton Perkins, and Mabiala T. Phuati, Dr. Daniel K. Katabaki, Dr. Yu Wang, Lindsey Moore, and Qingjun Wang under their respective Employment, Lock-Up and Options Agreement, as discussed herein. These shares have a par value of $0.0001.
THE REGISTRANT HEREBY RESERVES THE RIGHT TO AMEND 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 SECTION 8(A), MAY DETERMINE.
THIS REGISTRATION STATEMENT AND THE PROSPECTUS THEREIN COVER THE REGISTRATION OF 30,943,624 SHARES OF COMMON STOCK.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION ("SEC") IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
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PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED OCTOBER___,_________, 2015 AMERICATOWNE, INC.
30,943,624 SHARES OF COMMON STOCK ITEM 501 AND ITEM 502 OF REGULATION S-K
This preliminary prospectus relates to the registration of 22,943,624 shares of our common stock at $2.75 0.25 per share by seventy-five (75) shareholders identified herein as the "Selling Shareholders" or singularly as a "Selling Shareholder." On April 24, 2015, the Board of Directors authorized Yilaime Corporation of NC, Inc. ("Yilaime NC"), a Selling Shareholder herein and holder of title to 3,616,059 shares of common stock being registered herein, to transfer (a) 1,791,942 fractional shares of common stock to 69 shareholders as part of a restructuring of Yilaime NC, and (b) 1,824,107 fractional shares to Yilaime Corporation, Inc. ("Yilaime"). The Board of Directors approved these transfers as being in the best interests of the Company. In addition, this preliminary prospectus relates to the registration of 8,000,000 shares of our common stock at $2.75 per share for our direct public offering. All shares being registered have a par value equal to $0.0001.
The Selling Shareholders intend on selling offering their respective shares for the fixed at a price of $2.750.25 per share for until such time the Company's common stock is listed on national securities exchange or is quoted on the duration of OTC Bulletin Board (or successor); after which, the offering, Selling Shareholders may sell their shares at prevailing market or privately negotiated prices, including, but not limited to, transactions that may take place by ordinary broker's transactions, privately-negotiated transactions or through sales to one or more dealers for resale. The Selling Shareholders are deemed to be statutory underwriters.
Neither the Company nor the Selling Shareholders has a current arrangement or agreement with any underwriters, broker-dealers or selling agents for the sale of the shares subject to this Prospectus. If the Company or any Selling Shareholder enters into such an arrangement or agreement, the shares of such Selling Shareholder will be sold through such licensed underwriter(s), broker-dealer(s) and/or selling agent(s).
The common stock registered herein is being offered by the Company on a "best efforts" basis. The common stock will be offered commencing on the date of this prospectus until all shares are sold (the "Offering Period").
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AmericaTowne may hold a closing at any time after subscriptions have been received and accepted for the entire 30,943,624 shares of common stock, and after other conditions to closing have been satisfied (the "Closing"). No public market currently exists for the securities being offered. There is no minimum number of shares of common stock that must be sold by us to proceed, and we will retain the proceeds from the sale of any shares of the common stock. The sale of the common stock is being conducted on a self-underwritten, best efforts basis, which means our management, will attempt to sell the common stock.
This preliminary prospectus will permit our President and Chief Executive Officer, Alton Perkins, to sell the common stock directly to the public, friends, family members and business acquaintances with no commission or other remuneration. Mr. Perkins will not sell any of his shares. Mr. Perkins will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934.
Selling Shareholders | Offering Price | Underwriting Discounts; Commissions | Net Proceeds |
Per Share | $2.75 | None | $2.75 |
Total | $2.75 | None | $63,094,966 |
Direct Public Offering | Offering Price | Underwriting Discounts; Commissions | Net Proceeds |
Per Share | $2.75 | None | $2.75 |
Total | $2.75 | None | $22,000,000 |
AmericaTowne is an "emerging growth company," as defined in the Jumpstart Our Business Startups Act. Investing in our common stock involves a high degree of risk. You should purchase shares only if you can afford a complete loss of your investment. See "Prospectus Summary and Risk Factors" starting on page 5.
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.
There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stock is not traded on any exchange or on the over-the-counter market. After the effective date of this prospectus, AmericaTowne intends to have a market maker file an application with the Financial Industry Regulatory Authority ("FINRA") for our common stock to be eligible for trading on the appropriate United States trading exchange. We do not yet have a market maker who has agreed to file such an application; however, the Company intends on retaining the services of Spartan Securities Group, Ltd. located at 15500 Roosevelt Boulevard, Suite 303 in Clearwater, Florida 33760, or a similar market maker, upon the effectiveness of this Form S-1. There can be no assurance that our common stock will ever be quoted on a stock exchange or a quotation service or that any market for our stock will develop.
Any funds that we raise from our offering will be immediately available for our use and will not be returned to investors. We do not have any arrangements to place the funds received from our offering of the common stock in an escrow, trust or similar account. Accordingly, if we file for bankruptcy protection or a petition for involuntary bankruptcy is filed by creditors against us, your funds associated with the common stock will become part of the bankruptcy estate and administered according to the bankruptcy laws. If a creditor sues us and obtains a judgment against us, the creditor could garnish the bank account and take possession of the subscriptions. As such, it is possible that a creditor could attach your subscription, which could preclude or delay the return of money to you. If that happens, you will lose your investment and your funds will be used to pay creditors.
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Neither the SEC nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. Investing in our common stock involves a high degree of risk. Before buying any of our common stock, you should carefully read the discussion of material risks of investing in our common stock in the section titled "Risk Factors" in this prospectus. AmericaTowne may use this prospectus to offer the common stock from time to time.
As set forth in this prospectus, AmericaTowne has previously issued common stock on a restricted basis to certain entities in consideration of assuming significant start-up expenses for the benefit of the company. For as long as this stock is "restricted" within the meaning of Rule 144(a)(3) under the Securities Act, AmericaTowne will, to the extent required, furnish to any shareholder, or to any prospective purchaser designated by such shareholder, upon request of such shareholder, financial and other information described in paragraph (d)(4) of Rule 144A with respect to AmericaTowne to the extent required in order to permit such shareholder to comply with Rule 144A with respect to any resale of their stock, unless during that time, AmericaTowne is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or is exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act and no such information about AmericaTowne is otherwise required pursuant to Rule 144A.
Until ninety business days after the effective date of this prospectus, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
This Prospectus is dated October May ___, 2015
Table of Contents
Item | Page |
Summary | 7 |
Description of Business | 7 |
Legal Matters | 15 |
Risk Factors | 22 |
Forward-Looking Statements | 22 |
Indemnification of Directors and Officers | 28 |
Use of Proceeds | 35 |
Determination of Offering Price | 35 |
Description of Securities | 39 |
Experts | 39 |
Management's Discussion and Analysis of Financial Condition and Results of Operations | 39 |
Market for Common Equity and Related Stockholder Matters | 47 |
Legal Proceedings | 47 |
Directors, Executive Officers, Promoters and Control Persons | 49 |
Executive Compensation | 50 |
Security Ownership of Certain Beneficial Owners and Management | 50 |
Certain Relationships and Related Transactions | 51 |
Disclosure of Commission Position of Indemnification for Securities Act Liabilities | 51 |
Where You Can Find More Information | 52 |
Financial Statements | 55 |
Table of Exhibits | 55 |
Signatures | 55 |
You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the Common Stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any Common Stock in any circumstances in which such offer or solicitation is unlawful. Neither the delivery of this prospectus nor any sale made in connection with this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus or that the information contained by reference to this prospectus is correct as of any time after its date.
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PROSPECTUS SUMMARY AND RISK FACTORS
This prospectus contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
AMERICATOWNE, INC.
As with any business plan that is aspirational in nature, there is no assurance we will be able to accomplish all of our objectives or that we will be able to meet our financing needs to accomplish our objectives.
Mission
"AmericaTowne is to be a world class, globally respected and profitable company, providing value to its customers, the environment and the lives of the people we service." This statement is a forward-looking statement; however, the Company has already made strides in facilitating relationships intended to advance its mission.
The Company's aim is to provide upper and middle-income consumers in China with "Made In The USA" goods and services allowing customers to experience the United States culture and lifestyle. In achieving this objective, our focus is on four initiatives:
(1) The development of a United States International Trade Center in Meishan Ningbo China with employees and/or independent contractors focusing on advancing our initial business objective, which is to be the "go-to" place for all things "Made In The USA."
(2) The development of upwards of 20 AmericaTowne communities in China with each community consisting of upwards of 50 United States based companies, and upscale hotels, villas, children theme parks, senior care and educational facilities - all based upon United States culture and lifestyle.
(3) The development of an internet platform in Chinese to complement (1) and (2), above, focusing on importing "Made In The USA" goods and services to China through internet sales.
(4) The development of franchise operations in the United States and internationally to support and advance the above-referenced initiatives.
These initiatives are admittedly aspirational in nature. Our intent is to accomplish the majority, if not all, of our initiatives, but there is no assurance we will or that our financing needs to meet our initiatives will be met.
The Company currently has 21 exporters in our export program. In addition, Manhattan Institute of Management and six institutions associated with Student Resource USA (Capella University, Walden University, Western Governors University, Northcentral University, Belhaven University and National University) are represented in our education export initiative. Our intention is to bring the United States International Trade Center in Meishan Ningbo China online in 2015. We expect to complete our initial trade operations with our exporters in 2015. In addition, our office in Raleigh, North Carolina is operational, recently expanded and serves as our base and model for eight other export Trade Center Support Service Centers planned in the United States and other locations. Although we are planning to develop US Trade Centers in Richmond Virginia, Chicago Illinois, New York City New York, Las Vegas Nevada, Los Altos California, Dallas Texas, Seattle Washington, and Santo Domingo Dominican Republic we have no operations in these locations at this time and we may never have operations in these locations. Internationally, we plan on developing and operating Support Trade Centers in the Nairobi Kenya, Dakar Senegal, and the Kinshasa Democratic Republic of Congo. Although we are completing preliminary work in setting up these locations, none are operational and they may never be operational. The AmericaTowne Community planned in China and our Internet operations with Chinese websites planned are not yet operational. While we plan to have robust operations in the United States and international locations to support the AmericaTowne concept and trade center, we expect 55% to 65% of our operations and revenue will come from China.
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China's economy and its government impact our revenues and operations. While we have an agreement in place with the government in Meishan Ningbo China to operate the United States International Trade Center in Meishan Island China, there is no assurance that we will operate the center successfully. Additionally, the Company will need government approval in China to operate other aspects of our business plan. There is no assurance that we will be successful in obtaining approvals from government entities to operate other aspects of our business plan.
We expect to conduct a large part of our business operations and receive a significant portion of our revenues from operations in China. Accordingly, our results of operations and prospects are subject, to a large extent, to any economic, political or legal developments in China. Our business may be impacted by various factors including but not limited to changes in foreign exchange regulations; changes in regulations and laws that affect foreign investments; requirements for us to operate subsidiaries or related companies within China; changes in rules and regulations at the national and local level that impact construction; lifestyle businesses, foreign trade; education programs; private investments; export laws, lax laws; internet operations; and requirements to purchase and occupy land.
China's economy differs from the economies of most developed countries in many aspects, including: political structure; degree of government involvement; degree of development; level and control of capital reinvestment; control of foreign exchange; and the allocation of resources.
China's economy has been transitioning from a centrally planned economy to a more market-oriented economy. For more than two decades, China's government has implemented economic reform measures emphasizing the utilization of market forces in the development of the China's economy. Although we believe these reforms will have a positive effect on China's overall and long-term growth, we cannot predict whether changes in the China economic, political and social conditions, laws, regulations and policies will have any adverse effect on our current or future business, financial condition or results of operations.
Additionally, during most business operations we will require the approval of the Chinese government to operate. While to date we have had favorable responses from various government agencies in developing our business plan, there is no assurance that such support and cooperate will continue.
Corporate History
The Company was originally incorporated in Delaware on April 22, 2014. On June 18, 2014, the Company's sole shareholder, officer and director, Richard Chiang, entered into an agreement to sell an aggregate of 10,000,000 shares of the Company's common stock to Yilaime Corporation, a Nevada corporation ("Yilaime"). Effective upon the closing date of the Share Purchase Agreement, June 26, 2014, Richard Chiang executed the agreement and owned no shares of the Company's stock. This transaction resulted in Yilaime retaining rights, title and interest to all issued and outstanding shares of common stock in the Company. The "AmericaTowne, Inc." symbol and tradename were registered with the United States Patent and Trademark Office on October 30, 2012. This registration is current. The Company currently employs 12 people.
Yilaime proceeded to appoint its sole shareholder, Alton Perkins, as Chairman of the Board of Directors. Immediately following the election of Mr. Perkins to the Company's Board of Directors, Mr. Perkins, acting as the sole Director of the Company, accepted the resignation of Richard Chiang as the Company's President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors. The Board of Directors proceeded to appoint Mr. Perkins as President, Chief Executive Officer, Chief Financial Officer and Secretary. The Board of Directors further appointed Xianghai Lin and Mabiala T. Phuati as Vice Presidents of the Company with duties and obligations to be set forth by the Board of Directors at a later date. The biographical information for these officers were previously disclosed by the Company on its June 26, 2014 Form 8-K.
Following a series of additional filings, all of which are incorporated herein by reference, the Company entered into a Contribution Agreement with Yilaime on August 11, 2014 (the "Contribution Agreement"). Pursuant to the terms of the Contribution Agreement, in consideration for the issuance of 3,000,000 shares of common stock in the Company to Yilaime, Yilaime agreed to contribute to the operations of the Company certain assets previously acquired by Yilaime through an Intellectual Property Assignment Agreement between Mr. Perkins, as Assignee, and Yilaime, as Assignor (attached as Exhibit A to the Assignment Agreement). The intent of the parties in executing and performing under the Contribution Agreement was to effectuate the tax-free transfer of assets into the Company pursuant to Section 351 of the United States Tax Code.
On August 28, 2014, the Company entered into an Exporter Services Agreement with Bamyline Services, LLC, a North Carolina limited liability company doing business in Wake Forest, North Carolina ("Bamyline"). A copy of the executed Exporter Services Agreement was attached as an exhibit by the Company on its September 23, 2014 Form 8-K. Under the terms of the Exporter Services Agreement, during the two-year term of the agreement, in consideration for a one-time service fee of $52,000 and a transaction fee of 5% paid to the Company, Bamyline is granted access to and benefits derived from the Company's proprietary AmericaTowne Platform, Sample and Test Market Program, and if applicable, Accepted Market Program (described below). The general scope of the Exporter Services Agreement is discussed in more detail, below, in subsection (A).
On August 28, 2014, the Company entered into a Licensing, Lease and Use Agreement (the/a "Licensing Agreement") with Grandeur on Demand, LLC, a North Carolina limited liability company doing business in Knightdale, North Carolina ("Grandeur"), and another Licensing Agreement with Landmark Motors Corporation, a North Carolina corporation doing business in Raleigh, North Carolina ("Landmark") on August 29, 2014. A copy of the Grandeur and Landmark Licensing Agreements was attached as an exhibit by the Company on its September 23, 2014 Form 8-K. Under the terms of each Licensing Agreement, during the fifteen-year term of the agreement, in consideration for the payment of the Licensing Fee, Source and Use Schedule and Royalty Fee (all defined under Section 4 of the Licensing Agreement), Grandeur and Landmark are granted licenses to use the Company's intellectual property rights, trade secrets, products and ideas, trade and service marks such as AmericaTowne® and AmericaStreet™, and other confidential and proprietary services (collectively referred to herein as the "Licensed Methods").
In addition to licensing the use of the Licensed Methods, the Company has granted to Grandeur and Landmark a lease right to operate its business at an "Authorized Location," which is defined under Section 2 of the Agreement, for the consideration set forth in Section 3 of the Agreement. No authorized location has yet been determined under the Exporter Services Agreements. The general scope of the Exporter Services Agreement is discussed in more detail, below, in subsection (B).
On October 8, 2014, the Company entered into a Stock Exchange Agreement with Yilaime Corporation of NC, a North Carolina corporation ("Yilaime NC") (the "Stock Exchange Agreement"). A copy of the Stock Exchange Agreement was disclosed in a Form 8-K filing on October 10, 2014. Although executed on October 8, 2014, the Stock Exchange Agreement is effective as of October 13, 2014 in order to allow for sufficient time to process the exchange of stock. The stock has since been exchanged. Pursuant to the terms of the Stock Exchange Agreement, in consideration for the issuance of 3,616,059 shares of common stock in the Company to Yilaime NC, Yilaime NC conveyed 10,848,178 shares of its restricted common stock. Between August 28, 2014 and the date of this Prospectus, the Company has entered into 2 Licensing, Lease and Use Agreements and 19 Exporter Service Agreements. The Company is a service provider to exporters of "Made in the USA" good and services to China through these two primary forms of agreement. Under the Licensing, Lease and Use Agreement, the Company licenses its intellectual property to the customer and a right to lease a future physical location to conduct its business in China. For the consideration set forth in the Licensing Agreement, the Company grants to the customer a license and lease right to operate one business unit on the proposed, anticipated and intended location in China.
Under the Exporter Services Agreement, the Company represents to the customer that it is in the process of preparing the AmericaTowne Platform. This platform will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States and China, and the platform will provide a buyer's network, and online websites either directly owned by AmericaTowne or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods and services to consumers in China. The AmericaTowne Platform will provide the customer with access to and participation in a program whereby the Company will exercise its experience, expertise and training in assessing the customer's market acceptance and demand of the customer's products or services in China (and perhaps other locales depending on the Company's findings). In short, the Company is focused on increasing USA exports to China and elsewhere.
The Company's aim is to provide upper and middle-income consumers in China with "Made In The USA" goods and services allowing customers to experience the United States' culture and lifestyle.As set forth above, these 3,616,059 shares of common stock have been transferred in fractional shares to the Selling Shareholders defined herein.
There are barriers to entry that make it difficult for entrants into the industry, including, but not limited to the socio-political environment in China. Although the Company provides different types of services and intends on providing a variety of products through its contractual relationships, the key notable competitors are China HGS Real Estate Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN), and Xinyuan Real Estate Co., Ltd (XIN), and IFM Investments Limited (CTC). As we develop our business model further, we expect additional competitors to service and the competitive picture to become clearer.
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Our principal supplier of potential exporters is Yilaime, a related party to the Company. On October 27, 2014, the Company entered into a Service Provider Agreement with Yilaime (the "Service Agreement"). A copy of the Service Agreement was disclosed in a Form 8-K filing on October 28, 2014. Pursuant to the terms of the Service Agreement, the Company and Yilaime have agreed to an exclusivity relationship over the next five years with Yilaime retaining an option right on five more years. In consideration of the mutual compensation set forth in the Service Agreement, Yilaime has agreed to provide on an exclusive basis "Export Funding and Support Services" and "Occupancy Services," as these terms are defined therein. Yilaime has also agreed to a covenant not to compete, an agreement not to circumvent, confidentiality and mutual indemnification and hold harmless. As for the consideration under the Service Agreement, the Company and Yilaime have agreed to the following compensation schedule:
(a) For those services identified as "Export Funding and Support Services," the Company has agreed to pay Yilaime a fee equal to 1.0% of the gross value of all funds, insurance, loans and or guarantees charged and collected from those businesses participating or contracting with the Company; and
(b) For those services identified as "Occupancy Services," the Company has agreed to pay Yilaime a fee equal to 10% of any and all licenses, leases, occupancy expenses, and association, sponsorship or exporting fees, and any revenues benefiting AmericaTowne procured through Yilaime's efforts. In addition, Yilaime has agreed to pay the Company an exclusive operations fee (the "Operations Fee"). Yilaime has acknowledged under the Service Agreement that it made a prior payment of the Operations Fee to the Company in the amount of $25,000 paid on September 23, 2014, and further acknowledged receipt of an invoice for the Operations Fee for the October 2014 to December 2014 quarter in the amount of $25,000 due by or before October 31, 2014.
The Company and Yilaime agreed that the next Operations Fee shall be invoiced in the amount of $25,000 on January 1, 2015 and due March 30, 2015, and then on the first day of the following third month during the term thereafter, i.e. every quarter, to be invoiced by AmericaTowne (hereinafter referred to as the "Quarterly Fee"). The Parties have agreed that the Quarterly Fee will be paid in four equal installments as follows after February 29, 2016: (a) $150,000 for the time period covering March 1, 2016 to February 28, 2017; (b) $200,000 for the time period covering March 1, 2017 to February 28, 2018; (c) $250,000 for the time period covering March 1, 2018 to February 28, 2019; and (d) $250,000 for the time period covering the remainder of the Term and, if applicable, the Option Term (as these terms are defined therein). On October 28, 2014, the Company entered into the following two agreements: (a) Exporter Services Agreement with Nadia Emhirech and/or her assigns (the "Nadia Agreement"), and (b) Exporter Services Agreement with Janssen's Farms Incorporated, a North Carolina corporation (the "Janssen's Agreement"). A copy of the Nadia Agreement and the Janssen's Agreement were disclosed in a Form 8-K filing on October 30, 2014.
Under the terms of the Nadia Agreement and the Janssen's Agreement, the Company is to earn the consideration set forth in each agreement in providing the customers access to the AmericaTowne Platform and in the customers' participation in the Sample and Test Market Program, and the Accepted Market Program provided that the Company concludes that the Sample and Test Market Program has resulted in market demand and target consumers for the customers' respective goods and services.
The Company has represented in the Nadia Agreement and the Janssen's Agreement that the AmericaTowne Platform consists or will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States and China, and the platform consists or will consist of a buyer's network, and online websites either directly owned by AmericaTowne or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods and services to consumers in China.
The consideration paid to the Company under the Nadia Agreement and the Janssen's Agreement differs slightly from similar customer agreement. More specifically, with respect to the Nadia Agreement, the Company has agreed to accept a promissory note from the customer in the amount of $36,000 in consideration of the Service Fee under Section 6 of the Nadia Agreement. The first payment under this note was made on October 18, 2014 (in advance of execution of the agreement) to be followed by twenty-three additional payments equal to $1,500 with no interest unless there is a default by the borrower. With respect to the Janssen's Agreement, the Company has agreed to accept $50,000 as the Service Fee under Section 6 of the Janssen's Agreement paid as follows: (a) $10,000 upon execution, (b) $20,000 paid in forty-five days after execution, and (c) $20,000 paid in ninety days after execution.
On November 6, 2014, the Company entered into the Exporter Services Agreement with World Empowerment Import and Export, LLC, a North Carolina limited liability company ("World Empowerment")(the "World Power Agreement"). A copy of the World Power Agreement was disclosed in a Form 8-K filing on November 13, 2014.
Under the terms of the World Empowerment Agreement, the Company is to earn consideration set forth therein in providing World Empowerment access to the AmericaTowne Platform and in World Empowerment's participation in the Sample and Test Market Program, and the Accepted Market Program provided that AmericaTowne concludes that the Sample and Test Market Program has resulted in market demand and target consumers for the customers' respective goods and services.
AmericaTowne has represented in the World Empowerment Agreement that the AmericaTowne Platform consists or will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States and China, and the platform consists or will consist of a buyer's network, and online websites either directly owned by AmericaTowne or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods and services to consumers in China.
The consideration paid to the Company under the World Empowerment Agreement consists of a Service Fee and a Transaction Fee. The Service Fee paid to the Company equals $30,000 (payable over a term) for services provided by the Company in the AmericaTowne Platform, Sample and Test Market Program, and if applicable, Accepted Market Program. The Transaction Fee equals 5% for each transaction between World Empowerment and any end buyer facilitated by the Company.
On November 25, 2014, the Company entered into an Employment, Lock-Up and Options Agreement with Mabiala T. Phuati to serve as the Company's Vice President Worldwide Operations effective retroactively to November 15, 2014. The term of the agreement is one year with an option held by the Company to extend employment for another year. The Company has agreed to issue 477,198 shares of common stock to Mr. Phuati in consideration of his services during the term, and to the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Mr. Phuati for his services.
In addition to restrictions under the 1933 Securities Act, Mr. Phuati has agreed to specific lock-up provisions. He has agreed not to dispose or convey greater than ten-percent (10%) of the shares between the first day after the first year after issuance and the conclusion of the second year after issuance, and he shall not dispose or convey greater than twenty percent (20%) of the shares between the conclusion of the first year up to and after the first day of the third year after issuance. These lock-up periods terminate immediately prior to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1 (or its then equivalent) under the 1933 Securities Act, pursuant to which the aggregate price paid for the public to purchase of stock is at least $10.00, or on the third anniversary of the date of the agreement, whichever occurs first.
The Company entered into a similar agreement on November 21, 2014 with Alton Perkins to serve as the Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer and Secretary. The term of Mr. Perkins' agreement is five years with the Company retaining an option to extend in one-year periods. In consideration for Mr. Perkins' services, the Company has agreed to issue to his designee, the Alton & Xiang Mei Lin Perkins Family Trust, 5,100,367 shares of common stock. The Company may elect in the future to include money compensation to Mr. Perkins or his designee for his services provided there is sufficient cash flow.
In addition to restrictions under the 1933 Securities Act, Mr. Perkins has agreed to specific lock-up provisions. He has agreed not to dispose of or convey greater than five-percent (5%) of the shares and or any shares under his control for his personal benefit between the first day after the first year after issuance and the conclusion of the second year after issuance. He has agreed not to dispose or convey greater than fifteen percent (15%) of the shares and or any shares under his control for his personal benefit between the conclusion of the first year up to and after the first day of the third year after issuance, and not to dispose of or convey greater than twenty percent (20%) of the shares and or any shares under his control for his personal benefit between the conclusion of the first year up to and after the first day of the fourth year after issuance. Subject to restrictions as an insider under the 1933 Securities Act, the lock-up provisions set forth herein shall terminate immediately prior to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1 (or its then equivalent) under the 1933 Securities Act, pursuant to which the aggregate price paid for the public to purchase of stock is at least $10.00, or on the fifth anniversary of the date of the agreement, whichever occurs first.
Mr. Phuati and Mr. Perkins, or their respective designees or assignees, each retain an option to purchase up to 1,000,000 shares of common stock of the Company at any time prior to the conclusion of the first year of the Agreement, i.e. prior to 365 days after execution of the Agreement, at a price of $0.50 per share. Prior to issuing the shares under their respective options, Mr. Phuati and Mr. Perkins agree that any agreement between the Company and their respective entities or affiliates must be satisfied. The Chairman of the Board must certify that these funds have been paid. The shares purchased under this option shall be considered subject to all rights and restrictions set forth in the schedule attached to their respective agreements. The shares under the Employment Agreements have been issued through the Company's transfer agent, Action Stock Transfer. Mr. Phuati's and Mr. Perkins' respective employment agreements were disclosed by the Company on its November 26, 2014 Form 8-K.
On August 26, 2015, the Company entered into an Employment, Lock-Up and Options Agreement with Dr. Daniel K. Katabaki to serve as the Company's Vice President for Marketing USA and Africa. After a three-month probation, the term of the agreement is one year with an option held by the Company to extend employment for another year. The Company has agreed to issue 450,000 shares of common stock to Dr. Katabaki in consideration of his services during the term. The shares will be issued at a later date. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Dr. Katabaki for his services.
On August 28, 2015, the Company entered into an Employment, Lock-Up and Options Agreement with Dr. Yu Wang to serve as the Company's Senior Vice President for Human and Export Technical Compliance. The term of the agreement is one year with an option held by the Company to extend employment for another year. The Company has agreed to issue 477,190 shares of common stock to Dr. Wang in consideration of her services during the term. The shares will be issued at a later date. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Dr. Wang for her services.
On October 7, 2015, the Company entered into an Employment, Lock-Up and Options Agreement (the "Agreement") with Ms. Lindsey Moore to serve as the Company's Vice President for Marketing USA Eastern Region. After a three-month probation, the term of the Agreement is three years with an option held by the Company to extend employment for another year. The Company has agreed to issue 100,000 shares of common stock to Lindsey Moore in consideration of her services during the term following her three-month probation period. Additionally, the Company has agreed to provide Ms. Moore options to acquire up to 100,000 shares of stock for each year she is employed by the Company for up to five years. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Ms. Moore for her services.
On October 12, 2015, the Company entered into an Employment, Lock-Up and Options Agreement (the "Agreement") with Mr. Qingjun Wang to serve as the Company's Manager of Corporate Operations China. After a three-month probation, the term of the Agreement is three years with an option held by the Company to extend employment for another year. The Company has agreed to issue 20,000 shares of common stock to Mr. Wang in consideration of his services during the term following his three-month probation period. Additionally, the Company has agreed to provide Mr. Wang options to acquire up to 20,000 shares of stock for each year he is employed by the Company for up to five years. To the extent the Company has sufficient cash flow and capital, the Company may elect to include money compensation to Mr. Wang for his services.
Subsequent action by the Company following the close of its 2014 fiscal year have been disclosed in filings between January 8, 2015 up to the present and are incorporate herein.
(A) The Exporter Services Agreement
The AmericaTowne Platform consists or will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States and China, and the platform consists or will consist of a buyer's network, and online websites either directly owned by AmericaTowne or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods and services to consumers in China.
The AmericaTowne Platform works in conjunction with the Sample and Test Market Program. Under this program, the customer will be provided with access to and participation in a program whereby the Company will exercise its experience, expertise and training in assessing the customer's market acceptance and demand of the customer's products or services in China (and perhaps other locales depending on the Company's findings). The customer will work in conjunction with the Company is arranging for the delivery of the customer's samples or examples of products or services to the AmericaTowne Platform, and if deemed strategically beneficial by the Company, the customer may send specific videos, brochures and other promotional material to explain, show, and demonstrate the products or services features to the Chinese consumer and or wholesale customers. The customer agrees to be responsible for those costs associated with packaging, shipping and other reasonable and commercially acceptable costs in sending the samples to the AmericaTowne Platform, including where applicable, Value Added Tax (VAT) or custom costs.
Upon receipt of samples, brochures, and other promotional and marketing materials, the Company will be responsible for displaying the customer's goods and services on its online portal, and/or exhibition and showroom facilities in China, as well as marketing the customer's products through marketing channels. The Company, in conjunction with any representative of the customer, will exercise commercially reasonable discretion in determining how the customer's products and services are exhibited in the AmericaTowne Platform. The Company will use its best efforts to match the customer with an end buyer of its products or services. The customer agrees that there is no assurance that a demand for its product will exist or an end buyer will be found.
The Sample and Test Market Program allows the customer an opportunity to (i) test the demand and market for its products and service by exhibiting it products or service in the AmericaTowne Platform, and (ii) receive follow-on orders for its products or services, if a demand and buyers exist, without expending normal costs for exporting. The customer has one year from the effective date under the Exporter Services Agreement to participate in the Sample and Test Market Program. Afterwards, provided no transaction has occurred in the AmericaTowne Platform, the customer agrees to pay a fee equal to 25% of the original Service Fee (in the case of Bamyline, it would equal $13,000) within thirty days to extend the customer's participation, To the extent this fee is not paid, the customer's participation and membership in the Sample and Test Program terminates. In the event of termination, the Company and customer agree that the balance of the Exporter Services Agreement would remain in full force and effect.
Provided that the Company concludes that the Sample and Test Market Program has resulted in market demand and target consumers for the customer's goods and services, the Company will notify the customer within a commercially reasonable time of its opinions, conclusions and recommendations, and in turn, provide services associated with its Accepted Market Program. Under this program, the Company will advise the customer in the negotiation of price, and terms and conditions of sale of its goods and/or services. The Company will assist the customer in all phases of the exporting process, including but not limited to, labeling and preparation for exporting, customs inspection and clearance, shipping, warehousing, and payment. The Company, if deemed necessary, will propose the form and substance of purchase orders to be presented to the target buyer setting forth, amongst other things, terms and conditions of sale, costs, and payment to the customer (or its assignee or designee) with the Company being responsible for currency exchange into United States dollars.
Under the Accepted Market Program, the Company anticipates advising the customer of the various components of the selling price including, but not limited to, normal product costs, shipping costs, other related expenses, and customs and VAT. The customer will make the final determination of its sale price offered to the buyer. The Company will advise the customer on available incentives and accommodations as a result of the Company operating out of a Bonded Port Zone in China, such as, but not limited to, making the determination that the buyer assumes VAT and customs costs by including such costs in the price of the product or service, and reduced warehousing and logistics product costs in China. From time to time state and federal agencies will have marketing and promotional programs to assist small businesses in exporting their products and services. The Company will work with the customer where warranted, to take advantage of the various funding, grants and promotional opportunities available.
In certain cases, special certification will be required from the appropriate authorities in China, prior to export of the customer's goods and/or services in conjunction with a buyer's purchase order. In such a case, the Company will assist the customer in securing the proper certification. The customer will be responsible for all costs of such certification. Prior to any such certification action, the Company will advise the customer, and the customer will have the sole discretion to determine if a certification is to be obtained, and understand if such certification is obtained, the customer, or its assignee or designee, is ultimately responsible for the costs of certification.
(B) The Licensing, Lease and Use Agreement
The general intent behind the Licensing Agreement is for the Company to license its intellectual property to the customer and a right to lease a future physical location to conduct its business in China for the consideration stated therein. The Licensing Agreement incorporates as exhibits the approved licensed intellectual property to be used by the customer at the Authorized Location, the proposed site for the Authorized Location (which in the case of Landmark is yet to be determined), the consideration to be paid by the customer associated with the Authorized Location, a preliminary financing budget, and a source and use schedule.
For the consideration set forth in the Licensing Agreement, the Company grants to the customer a license and lease right to operate one business unit on the proposed, anticipated and intended location in China (defined as the "Authorized Location"), The granting of this right by the Company does not constitute a representation, warranty, or guarantee by the Company that the customer's business can be successfully operated at the Authorized Location. The consideration paid by the customer associated with the Authorized Location is in addition to any other payment obligations of the customer set forth in the Licensing Agreement, or where applicable, the Exporter Services Agreement discussed in subsection (A), above.
Provided the customer is in full compliance with all provisions of the Licensing Agreement, any and all other agreements between the Company and the customer (i.e. the Exporter Services Agreement, if applicable), and has provided the agreed upon written notice, the customer has the option to renew the business operations at the Authorized Location for successive periods of ten years upon the payment to the Company of a renewal fee in an amount $25,000, and the execution of any standard business operation's agreement used by the Company at the time of the written notice.
Provided the customer is in full compliance with all of its payment and performance obligations under the Licensing Agreement, and any other agreements related to its performance hereunder, and any and all applicable laws and regulations, the Company agrees that it will not operate, or permit any other entity or person to operate any similar or like business as the customer within the AmericaTowne location in which the Authorized Location is situated. The Company has acknowledged that the Authorized Location is currently not ready for occupancy. The customer acknowledges and agrees that the consideration paid under the Licensing Agreement is for, in part, site development and construction services, expenses, fees and costs incurred by the Company in building the Authorized Location exclusively for the benefit of the customer, subject to the terms and conditions of the Licensing Agreement.
The parties agree that the occupancy by the customer post-construction shall be considered a leasehold interest with the Company being the lessor and the customer as the lessee. The parties agree to execute a lease agreement consistent with the terms of Section 3 of the Licensing Agreement within thirty days of the Company securing all applicable permits, licenses and necessary authorization from the proper regulatory agency approving the construction of the specific AmericaTowne site in which the Authorized Location is to be situated. Unless otherwise negotiated, the parties agree that the term of the lease shall coincide with the balance of the "Term" under the Licensing Agreement, as defined under Section 1 of the Licensing Agreement. For example, to the extent the Company provides notification to the customer that the AmericaTowne site has been approved for construction and there is a balance of fourteen years left on the Licensing Agreement at the time of the notification, the customer agrees that the term under the corresponding lease shall be fourteen years.
Unless otherwise negotiated, the lease price shall be the average square meter of leased space for businesses at the location to be determined as stated by published and/or stated lease rates at the specific location at the time the customer provides notice to the Company. The lease shall contain such terms and provisions as are reasonably acceptable to the Company and, at the Company's sole option, shall be subleased to third-parties provided that the subtenant acknowledges in writing that its obligations under the Licensing Agreement are equally primary to the customer (i.e. a sublease versus an assignment of lease), and that the Company may be entitled to adequate collateral to secure payment and performance by the subtenant and the customer, jointly and severally.
The Company shall provide the customer with a budget and funding plan for the Authorized Location, and the customer's business start-up, based on the Company's experience and expertise in conducting business within the particular locale (the "Financing Budget"). The parties agree that the approval of the Financing Budget does not guarantee success of actually securing the necessary financing or in the overall success of the business. The parties agree to the preliminary Financing Budget, and will agree to an updated Financing Budget within sixty days prior to construction of the Authorized Location. Upon agreement of all terms and conditions of an updated Financing Budget, the parties shall mutually execute a "Final Financing Budget," which can be amended or modified only by a writing signed by the parties. The parties acknowledge that the Final Financing Budget might alter or modify their respective rights, duties and obligations, and if so, such modification will be memorialized in writing signed by the parties. Absent a writing, the Licensing Agreement is to be interpreted, as a whole, consistent with the Final Financing Budget and the alterations or modifications caused by the Final Financing Budget.
The Company agrees to provide to the customer plans and specifications for the AmericaTowne location in which the Authorized Location shall be constructed within a commercially reasonable period of time. The plans and specifications will reflect the Company's requirements, recommendation and suggestions for dimensions, exterior design, interior design and layout, decor, building materials, equipment, fixtures, furniture, and signs, which shall all be designed after business facilities typically found in the United States of America. Promptly after being provided with the plans and specifications, the customer shall submit any requested changes and/or comments to the plans and specifications, and the Company reserves the right to accept or reject such recommendations in order to (i) ensure continuity of appearance within the AmericaTowne site, (ii) ensure capacity for the type, size, scope and adequacy of any machinery and equipment utilized by the Licensee, and (iii) ensure that the recommendation is within the Final Financing Budget.
The Company agrees that it shall be solely responsible for construction, and in securing the proper licenses, permits, and certificates required for all construction of the Authorized Location, and for building the Authorized Location in accordance with the highest building standards consistent with the intent of the AmericaTowne concept. The Company further agrees that it will be responsible for equipping and finishing the Authorized Location in a commercially reasonable period of time and in a manner consistent with securing occupancy for the customer.
The rights granted to the customer under the Licensing Agreement, and more specifically, rights related to the Authorized Location cannot be transferred to any other location without the prior written approval of the Company. If the customer has operated its business for less than twelve months from the "Effective Date" and requests relocation to an alternative AmericaTowne site, the customer must set forth its reasons for requesting the relocation in writing to the Company, and its requested relocation plan, along with a proposed timeline of relocation. The Company reserves the right to approve the relocation. To the extent the Company agrees to the relocation, the customer agrees that the relocation does not alter, impair or modify its duties and obligations under the Licensing Agreement, unless otherwise set forth in an amended agreement in the same form and substance as the Licensing Agreement. The customer agrees to pay the Company a nonrefundable design and set up fee for the preparation of a design for the Licensee's new location based on current market conditions at the time of the request for and implementation of the relocation.
On January 5, 2014, the Company approved an Employee Stock Option Plan (the "ESOP"). The Company retains in its treasury a total of 3,806,376 shares of its common stock for purposes of issuance under the ESOP. These shares are referred to herein as the "ESOP Shares". The ESOP Shares are not being registered herein. The ESOP will be administered by a committee entitled the "AmericaTowne ESOP Committee" and shall consist of two members, appointed by the Board of Directors, who at the time of implementation of the ESOP is Alton Perkins and Mabiala T. Phuati. The committee shall meet from time to time in its discretion, and may employ such legal, accounting and other staff as the committee may determine are necessary to properly discharge it duties. The board of directors of the corporation shall be entitled to review all actions of the ESOP committee except that the Board of Directors may not increase the number of options which may be granted to an employee by the committee, or to grant options to employees not selected by the ESOP committee. The committee may from time to time grant options; provided, however, that all such options shall be subject to the following conditions: (a) that the purchase price of the shares of stock shall be 100% of the fair market price of the stock on the date that the options are granted, (b) the stock option shall be exercised no later than twelve months after issuance, (c) in the event of the termination of the employee due to death or disability, that the option may be exercised no more than six months after the date of death or disability, (d) in the event of the termination of the employee for any other reason, that no option may be exercised more than three months from the date of such termination, (e) the aggregate fair market value of the options granted herein shall not exceed $400,000 per fiscal year; however, any sums not used shall carry forward to subsequent fiscal years, and the value of the options granted shall be determined as of the date that each option is granted, and (f) adopt and enforce such other regulations or policies as may be required for the options to qualify as incentive stock options under the Internal Revenue Code.
The plan may be amended or discontinued by the Board of Directors at any time. The following amendments shall require the approval by the majority of shareholders: (a) the change in the maximum number of shares of common stock, which may be sold under the plan (except for those related to recapitalization as described above), and (b) the requirements for eligibility in the plan or the benefits accruing to the beneficiaries under the plan. No amendment or modification shall be entered into which will operate adversely on the tax effects of previous options.
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In addition to restrictions under the 1933 Securities Act, Dr. Daniel K. Katabaki, Dr. Yu Wang, Lindsey Moore and Qingjun Wang have agreed to specific lock-up provisions once their respective shares of common stock are issued by the Company. They have agreed not to dispose or convey greater than ten-percent (10%) of their respective shares between the first day after the first year after issuance and the conclusion of the second year after issuance, and they shall not dispose or convey greater than twenty percent (20%) of the shares between the conclusion of the first year up to and after the first day of the third year after issuance. These lock-up periods terminate immediately prior to the consummation of the first firm commitment underwritten public offering to an effective registration statement on Form S-1 (or its then equivalent) under the 1933 Securities Act, pursuant to which the aggregate price paid for the public to purchase of stock is at least $10.00, or on the third anniversary of the date of the agreement, whichever occurs first.
The Company has issued, and has outstanding, 22,943,624 shares of restricted common stock, all of which is being registered under this registration statement as shares owned by the Selling Shareholders. Of the outstanding shares, on May14, 2015, the Company issued Yilaime NC transferred 3,615,059 shares to Yilaime NC of the Company stock (acquired under the Stock Exchange Agreement). The on October 8, 2014) to 70 Selling Shareholders, upon effectiveness of this registration will receive the 3,615,059 shares as part of a corporate restructuring of Yilaime. In addition to the shares associated with the Selling Shareholders, which carry the fixed pricing of $2.75/share during the duration of the offering, the Company is registering out of its treasury a total of 8,000,000 shares of common stock with direct offering price of $2.75/share pursuant to the terms of the Prospectus. The options on the 2,927,190 shares of common stock associated with the aforementioned employment agreements are not being registered herein.
As a preface to the subsequent disclosures herein, the Company represents that certain statements in this filing are not historical facts, but rather "forward-looking statements." These forward-looking statements are subject to risks and uncertainties that are beyond our control. Although management believes that the assumptions underlying the forward looking statements included in this filing are reasonable, they do not guarantee our future performance, and actual results could differ from those contemplated by these forward looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment.
To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. In the light of these risks and uncertainties, there can be no assurance that the results and events contemplated by the forward-looking statements contained in this filing will in fact transpire. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.
Factors that might cause or contribute to such differences include, but are not limited to, those discussed in "Risk Factors" contained in this report. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Except as required by law, we expressly disclaim any obligation to update publicly any forward-looking statements for any reason after the date of this report, to conform these statements to actual results, or to changes in our expectations. You should, however, review the factors and risks we describe in the reports we will file from time to time with the United States Securities and Exchange Commission (the "SEC") after the date of this report.
AmericaTowne is to be a world class, globally-respected and profitable company providing value to its customers, the environment and the lives of the people we service.
Pursuant As noted above, pursuant to the rights granted to the Company under its Contribution Agreement, the Company is in the process of planning and developing the AmericaTowne® and AmericaStreet concept. The concept allows American style communities to be built in China. It is anticipated that the AmericaTowne community will be planned on 50-plus acres consisting of small businesses, hotel, villas, senior care facilities, a theme park and performing arts center - all located on specific acreage in China depicting the American lifestyle and the American experience.
Through AmericaTowne, the Company's goal is to provide unique one-of-a-kind communities for people in China to go spend their leisure time all fashioned after the American way, business, and lifestyle. In short, the focus of AmericaTowne® is to bring "a slice of Americana to China."
The Company plans to develop communities and conduct business operations within China using "Made in America" goods and services within five core areas: 1) small business operations (including 50 United States based businesses that will be either franchises, joint venture partners or individual operators); 2) a hotel with the development, construction, management and ownership through the Company or an entity under the control of the Company; 3) approximately 50 villas with the construction, management, leasing, timeshare and sales through the Company or an entity under the control of the Company; 4) a theme park and performing arts center with the development, construction, management, ownership and operations through the Company or an entity under the control of the Company; and 5) senior care facilities with the development, construction, management, ownership and operations through the Company or an entity under the control of the Company. All components of AmericaTowne are expected to be similar in style, decor and business operations typically found in the United States.
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AmericaTowne is targeted at the middle to upper income consumer in China. The Company believes that this type of consumer in China desires goods and services from the United States, but also the experiences of American culture and lifestyle. The Company believes that by providing this target consumer with unique "Made in America" experiences, it will meet its business model's needs and growth strategy. In addition, the business model offers United States based small businesses a complete ecosystem for their businesses. For those businesses that would not typically seek to export because of various reasons, AmericaTowne will strive to offer those businesses a complete support system that will allow them to market their products and services in China.
The revenue streams from the Company's business operations align themselves with the five core business components set forth above, and provides eight potential revenue streams, if not more, as follows: 1) licenses and or franchise fees for businesses that set-up shop and operate within AmericaTowne as well as businesses that desire to export their goods and services to China through AmericaTowne; 2) franchise, joint venture and partnership arrangements with United States based businesses residing in and operating within AmericaTowne; 3) revenue from villa sales, rentals, timeshare and leasing; 4) hotel, leasing and or operational revenues and sales; 5) theme park and performing art center operations, sales and or leasing; 6) senior care facilities, operations and or sales; 7) export sales, marketing and license fees; and 8) franchise and license fees for United States support locations.
Mr. Perkins, the creator of the AmericaTowne concept, has extensive experience in business in China involving operations, construction, marketing, consumer behavior, finance and exporting. Mr. Perkins has experience as a co-chairman of a Foreign Invested Partnership in China that focused on real estate development and laid much of the foundation for the concepts behind AmericaTowne. The Company intends on continuing to use the management systems and services provided by Yilaime. The Company intends on evaluating and assessing potential management service agreements with Yilaime whereby Yilaime would provide valuable services to the Company in effectuating and facilitating the business model associated with AmericaTowne.
The Company states that the need for Chinese government approval of its principal products and services is based upon China's economy and the extent to which the government impacts our revenues and operations. While the Company has an agreement in place with the government in Meishan Ningbo China to operate the United States International Trade Center in Meishan Island China, there is no assurance that it will operate the center successfully. Additionally, the Company will need government approval in China to operate other aspects of the business plan. There is no assurance that it will be successful in obtaining approvals from government entities to operate other aspects of the business plan. The Company is engaged in confidential negotiations with local government officials in China to secure a location that will serve as the initial AmericaTowne complex. The Company will promptly file a Form 8-K upon execution of a materially definitive agreement. It is anticipated that the location will be within a 100 miles of a Tier I or II city that the Company believes has the right economic and consumer base to support the AmericaTowne concept. See http://sme.amcham-shanghai.org/faq/what-meant-first-tier-second-tier-and-third-tier-cities (American Chamber of Commerce in Shanghai). Any location selected requires the cooperation of the local government and approval of the local and provincial planning and zoning boards. Though the Company has submitted plans, it does not yet have all required approvals from the applicable boards. Management and local government officials have agreed that the Company will first focus on completing the build out of Meishan Trade Center before finalizing negotiations for the AmericaTowne Complex.
The results of the Company's operations and prospects are subject, to a large extent, to any economic, political or legal developments in China. The business may be impacted by various factors including but not limited to changes in foreign exchange regulations; changes in regulations and laws that affect foreign investments; requirements for the Company to operate subsidiaries or related companies within China; changes in rules and regulations at the national and local level that impact construction; lifestyle businesses, foreign trade; education programs; private investments; export laws, lax laws; internet operations; and requirements to purchase and occupy land. Furthermore, China's economy differs from the economies of most developed countries in many aspects, including: political structure; degree of government involvement; degree of development; level and control of capital reinvestment; control of foreign exchange; and the allocation of resources. China's economy has been transitioning from a centrally planned economy to a more market-oriented economy. For more than two decades, China's government has implemented economic reform measures emphasizing the utilization of market forces in the development of the China's economy. Although the Company believes these reforms will have a positive effect on China's overall and long-term growth, it is unpredictable whether changes in the China economic, political and social conditions, laws, regulations and policies will have any adverse effect on the current or future business, financial condition or results of operations.
The Company's Strategy
The Company's primary business strategy is to develop a position as a leader in supplying quality "Made in the USA" goods and services to middle, upper middle, and upper income consumers in China. The Company seeks to create market share in the rapidly growing middle and upper income population demographic with a focus on tourism, exports, and senior care. The Company believes China's economy is robust. People in China are prospering making more money and are looking for more places to go to enjoy leisure and tourism. Today and in the foreseeable future, in China, the Company believes the demand for leisure activities is outstripping the supply.
As set forth above, the Company's objective is to provide unique one-of-a-kind communities for people in China to spend their leisure time. The Company's current planning committee is concentrating its efforts on securing land between 50 and 165 acres, and to chart out land up to 50 unique American small businesses, a 5-star hotel, 50 villas, a theme park, performing arts center, and a senior care facility all fashioned after the American way, business, and lifestyle. The aforementioned businesses will bring a slice of America to China. The Company believes the communities will offer authentic goods, products and services that are "Made in the USA." The company is in the process of identifying United States based businesses looking to locate their operations and conduct business in AmericaTowne, and to take advantage of the key Chinese demographic.
We believe that AmericaTowne will help China counter its tourist deficit, satisfy China's increasing need to import United States based goods and meet the growing demand for senior living facilities (all of which are discussed in more detail below). As a dual and added value, the Company believes AmericaTowne will provide export opportunities and jobs in China and America. Furthermore, AmericaTowne supports America's national initiative to improve the balance of trade by exporting goods and services carrying the "Made in the USA" tag.
(i) Tourism
AmericaTowne meets the challenge of helping China reduce its tourist deficit by keeping more Chinese citizens at home to enjoy a slice of America. In short, instead of an economy based upon manufacturing and exporting products to other countries, the Company believes that China's focus has now changed to internal domestic consumption. The Company believes that China's government is ramping up the demand for its citizens to buy and use consumer products. At the same time, the Chinese government is emphasizing stability and improving its citizen's quality of life.
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The Company believes leisure and tourism are cornerstones of China's long-term plans. Additionally, the Company believes that the demand by Chinese consumers for "Made in America" goods and services are high. Most important, the Company believes that the target Chinese consumer is sophisticated and focused on goods and services, but also the experiences that those goods and services bring. The Company believes that providing an AmericaTowne® community with support services model after the American lifestyle will provide those experiences.
(ii) Exporting
According to Forbes' Major Trends In China: The Next 10 Years, China will account for 36% of global growth in consumer spending during this period (http://www.forbes.com/sites/jackperkowski/2012/11/27/major-trends-in-china-the-next-10-years/). The Company believes that over the next ten years, global spending on consumer goods is expected to increase by $4.8 trillion, from $7.3 trillion in 2010 to $12.1 trillion in 2020. In 2013, United States exports to China reached $120 billion, according to the US-China Business Council, making it the third-largest export market for United States goods behind Canada and Mexico, our neighbors and NAFTA partners. United States exports to China have grown faster than exports to any other major United States trading partner.
From 20052004 to 20142013, United States' exports to China increased 198255%. That rate is greater than growth to any of the other top ten United States' export markets, including the its two largest US trading partners, Canada (47 percent 59% growth) and Mexico (102 percent 108% growth). With its large population, rapidly growing middle class, and long list of infrastructure goals, China will continue to be a major export market for United States goods and services. (US-China Business Council, US Exports to China 2005-2014; https://www.uschina.org/reports/us-exports/national; www.uschina.org/reports/us-exports/national-2013
(iii) Senior CareA component of the Company's business is designed to take advantage of market conditions by constructing, developing and operating either through partnership or independently senior care facilities in China. "There is no stronger brand in the world than "Made in America," according to USA Export-Import Bank Chairman and President Fred P. Hochberg. We want to build on this and provide a slice of Americana in the fastest growing economy in the world. As stated by the Chairman and President of the United States Export-Import Bank - Fred P. Hochberg, "There is no stronger brand in the World that "Made in America". See "Export-Import Bank Report to Congress: Aggressive, Unregulated Financing from Foreign Competitors is Costing U.S. Jobs" dated June 25, 2014. The Company intends on building on this brand and provides a "slice of Americana" in the fastest growing economy in the World. According to China's National Bureau of Statistics, China has roughly 185,000,000 people over the age of 60.1 A 2007 study by the United Nations estimated that in 2005, there were 16 retired people in China for every 100 workers. The study projected that this ratio will reach 64 elderly for every 100 workers by 2025. Compare this to the United States, which currently has approximately 20 retirees for every 100 workers and is projected to have 33 retirees for every 100 workers by 2050. See also "Major Trends in China: The Next 10 Years" attached hereto. China's government funding only covers 1.6% of seniors in need of care, who cannot otherwise pay for their own care. The World Bank's standard for developed nations is 8% coverage. As Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People's Congress stated last year, this translates to a need for an additional 3,400,000 hospital and nursing home beds dedicated to senior care over the next five years alone. Clearly, the need for senior care facilities is outstripping the supply. According to China's National Bureau of Statistics, China has roughly 185 million people over the age of 60. A 2007 study by the United Nations estimated that in 2005, there were 16 retired people in China for every 100 workers. The study projected that this ratio will reach 64 elderly for every 100 workers by 2025. Compare this to the United States, which currently has approximately 20 retirees for every 100 workers and is projected to have 33 retirees for every 100 workers by 2050. China's government funding only covers 1.6% of seniors in need of care, who cannot otherwise pay for their own care. The World Bank's standard for developed nations is 8 percent coverage. As Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People's Congress, stated last year, this translates to a need for an additional 3.4 million hospital and nursing home beds dedicated to senior care over the next five years alone. Clearly, the need for senior care facilities is outstripping the supply.1
FN1 - See www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/;
see also http://www.exim.gov/news/export-import-bank-report-congress-aggressive-unregulated-financing-foreign-competitors-costing;
https://docs.google.com/viewer?url=http%3A%2F%2Fwww.exim.gov%2Fsites%2Fdefault%2Ffiles%2Fnewsreleases%2FEx-Im-Bank-2013-Competitiveness-Report-to-Congress-Complete.pdf
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Gap in Small and Mid-Size Businesses
In June of 2013, the Commerce Department reported that exports hit a record high for one month of $191.1 billion-up 3.2% from June of 2012. As a result of imports falling, the United States trade deficit shrank 22.4% to its lowest monthly level since October 2009.Small and medium-sized companies account for 98% of United States' exporters, but represent less than one-third of the known export value of United States' goods' exports. In 2010, there were over 293,000 identified U.S. exporters - 269,269 of which were small or medium-sized.
The Company believes a market clearly exists; yet most small businesses do not have the resources including time, money and knowledge to enter the export market. A goal of AmericaTowne® is to provide United States based small businesses with a support system that will allow them to flourish without undue worry of conducting business from afar. The Company believes that AmericaTowne provides some United States based businesses with a safety net, an entire team of businesses working together all focused on the same objective - to sell Americana to the Chinese consumer.
Keys to Success
In order to meet its goals and objectives, and to achieve short-term and long-term success, the Company must develop significant cooperative agreements with key partners, including local governments in the United States and China, a business developer and United States based entrepreneurs and businesses. The Company must continue to develop and utilize cutting edge technology and commit to research and development of its brand and market presence. It must dedicate financial resources and executive time towards establishing world-class marketing programs and procedures designed exclusively with the Chinese consumer in mind. As stated above, the Company must continue to be dedicated to building and operating AmericaTowne centers to meet the growing demand by citizens for more leisure and tourism opportunities.
As part of his ongoing market analysis, over the past five years, at the invitation of China city mayors and other government officials in China, our Chief Executive Officer, Mr. Perkins lived and worked in China, researching and studying consumer trends, and helping to develop import, tourist and leisure projects for the Chinese consumer. While in China, Mr. Perkins had the opportunity to work with local government officials, city mayors and Provincial Governments, and mid-size and large Chinese companies. The formation of the Company and the contribution of assets by Yilaime were the byproduct of Mr. Perkins' work dating back to 2009 and 2010 by the privately-held and Chinese-based Development Center Foreign Invested Partnership, which he owned and co-chaired. This early partnership did much of the work paving the way for much of the Company's current business plans.
As part of his market research efforts, Mr. Perkins visited the United States Ex-Im Bank in Washington, D.C., and attended a United States Ex-Im Bank National Conference to learn exporting rules and financing requirements. Additionally, the AmericaTowne concept was presented to the United States Ex-Im Bank, which provided a Letter of Interest for AmericaTowne filed on a Form 8 on September 23, 2014. Although no loan application has been submitted management is under the impression that subject to meeting Ex-Im Bank's standard underwriting requirements, there is a possibility of loans, and other funding including working capital and insurance. Going forward, we plan on working with Ex-Im to seek insurance and funding for exporters. There is no assurance that funding and or insurance will be obtained. Further there is no assurance that Congress will continue to fund the Exim Bank program or that funding will be available to help implement our plan. Mr.(as set forth above and as attached hereto at Item 9.01), Mr. Perkins coordinated the initial draft of the business plan and proposed actions with a representative of the United States Small Business Administration with expertise in both exporting and finance, who in turn, reviewed the Company's business plan and provided suggestions and directions for implementing the plan. It is this level of involvement and dedication that is necessary to continue developing market awareness and success. It should be noted, however, that due to a lapse in Ex-Im Bank's authority, as of July 1, 2015, the Bank is not able to process applications or engage in new business until further notice.
The Company must also continue to stick to its core principles of delivering superb and unique products and services at the lowest possible cost while still maintaining the highest quality - the quality accustomed to United States' goods and services. As an international operation operating on opposite ends of the World, the Company must maintain a strong dual-economic strategic plan and implement financial controls in the United States and China. Finally, the Company will need to aggressively pursue adequate funding to implement these keys to success and in the continued development of attractive programs in providing the Chinese consumer with the "Made in the USA" experience.
Financial Objectives
The Company seeks to achieve commercial success in its initial AmericaTowne location. The Company seeks to validate its work through the success of its products and services. Since inception, the Company's first revenues of $804,755 315,166 realized and earned through 30 June November of 2015, 21 participants in its export program, seven institutions in the education export initiative 2014, and a Letter of Interest from US Ex-Im Bank are an initial step towards this effort. The Company also seeks to develop a robust line of additional AmericaTowne products including licensing and franchising fees for additional project locations in the near future and to become financially sustainable. It should be noted, however, that due to a lapse in Ex-Im Bank's authority, as of July 1, 2015, the Bank is not able to process applications or engage in new business until further notice.
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Sourcing and Fulfillment
To complete the initial AmericaTowne, the Company expects a collaborative effort between small businesses owners in the United States looking for expansion opportunities in Africa and China. The Company through its relationship with Yilaime will contract with these businesses providing unique goods and services carrying the "Made in the USA" label. These select businesses will team with local counterparts to supply, source and operate the core businesses that are a part of AmericaTowne.
Competition
Our competitive position within the tourism, export and senior care industry are affected by a number of factors.
There are barriers to entry that make it difficult for entrants into the industry, including, but not limited to the socio-political environment in China.
In reviewing market conditions, the Company determined that although there is no known structure or operations existing within mainland China similar to AmericaTowne®, the concept could be duplicated. The challenge for competitors whose business originates from China would be to identify and provide business owners and operators, as well as goods and services that would provide a unique American experience in one location, under one roof, and receive the support of the local government in providing "authentic American goods."
It has been Management's experience that at the local level mayors and other government officials have concerns about the authenticity of both the concept and the goods and services that would originate from America. Therefore, operators from America that provide goods and services especially from America's small businesses have a competitive advantage.
Builders and developers focusing on tourism and quality of life components are regionally based, and most focus on operations in what are called (based on demographics and other criteria) Tier 2, Tier 3 and Tier 4 Cities. Competitors that appear to be doing exceptionally well it seems have designed internal management, finance and control systems that work well in the United States and China.
Though Management is aware of "Disney" typed operations and ventures in China that focuses on themed leisure activities, AmericaTowne focus is on business operations in three specific areas and providing an experience unique to America. To date Management is not aware of similar businesses or concept operating within Mainland China.
In Management's opinion based upon its analysis, and research over three and a half year period direct competition and the intensity of that competition will depend upon the specific sector.
Management believes that competition from other businesses and communities in some specific sectors will be intense. For example, Management expects to receive stiff competition in the real estate sector specifically in developing villas. On the other hand, Management expects to receive moderate to little competition in developing its senior care and business communities.
The key competitors within the real estate sector as reflected in SEC filings consist of seven companies operating within China. However, there are considerably more developers operating within the industry. Of the competitors, we focused on two that are listed on NASDAQ (China HGS Real Estate Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN)) and two or listed on the New York Stock exchange (Xinyuan Real Estate Co., Ltd (XIN), and IFM Investments Limited (CTC).)); the other three are listed on OTCB.
All have the advantage of being from China and may have better competitive balances because of this. All may receive various support and perceived benefits that are afforded to companies that are "home grown." Additionally, all appear to focus on regional and or Tier II, III and IV cities. On the other hand, AmericaTowne focuses on Tier I, II, and III cities were the competition for development could be both keen and at times restricted to a larger degree by the Central Government than smaller Tier locations. AmericaTowne will have to adapt to a system that its competitors have been operating all of their existence virtually. Additionally, most of the competition will not only have more experience but be better capitalized.
As we develop our business model further, we expect additional competitors to service and the competitive picture to become clearer.
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Tax Exempt Status for Certain Export Transactions
Because AmericaTowne will focus on providing "Made in the USA" goods and services to China, a portion of the Company's activities will involve not only development but also exporting. To take advantage of favorable United States tax rates on dividend distributions or to direct a steady flow of cash distributions for shareholders of corporate exporters, the Company has directed its legal counsel to assess the acquisition of Perkins-HSU Export Corporation ("Perkins-Hsu"), a Nevada corporation that is qualified as an Interest Charge - Domestic International Sales Corporation ("IC-DISC") under section 992(a)(1) of the Internal Revenue Code of 1986. The tax benefits to shareholders can be accomplished by allowing shareholders to defer the tax on a portion of export-related income that is accumulated within the IC DISC, versus distributed to the IC DISC shareholders. Federal taxes on the export-related income are deferred until such time as the income is distributed or deemed distributed. In the event the Company acquires Perkins-Hsu or another IC-DISC entity, the Company would not need additional offices, employees, or tangible assets, nor would it be required to perform any invoicing or services. Additionally, as an IC-DISC, if warranted, the Company may achieve a significant reduction in taxes on the first $10,000,000 in revenues.
Contractual Relationships with Customers
In conducting its business, AmericaTowne relies primarily on the following two types of contractual arrangements with its customers: (a) Exporter Services Agreement and (b) Licensing, Lease and Use Agreement. Although these agreements may be modified by the parties in the normal course of negotiations, the general terms and conditions presented by the Company to the customer are set forth above.
Employees
As of October 15 April 24, 2015, the Company employed a total of twelve three people. The Company considers its relationship with its employees to be stable, and anticipates growing its workforce.
Facilities and Logistics
The Company is headquartered at 4700 Homewood Court 353 East Six Forks Road, Suite 100, 270 in Raleigh, North Carolina 27609.
Legal Matters
Mr. Perkins is subject to a Desist and Refrain Order dated March 21, 2008 (the "Order") issued by the State of California's Business, Transportation and Housing Agency, Department of Corporations. Mr. Perkins has been in compliance with the Order since issuance. The Order is not related in any manner with respect to the Company or its related parties. To the extent the Order was entered, there is no restriction on Mr. Perkins from engaging in an offering in the State of California provided he complies with the appropriate disclosures and laws. The Company is not aware of any similar orders in any other jurisdiction. Except as disclosed above, none of our officers nor directors, promoters or control persons have been involved in the past ten years in any of the following:
(a) Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
(b) Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
(c) Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
(d) Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Trading Market
Currently, there is no trading market for the securities of the Company. The Company intends to initially apply for admission to quotation of its securities on the OTC Bulletin Board as soon as possible, which may be while this offering is still in process. There can be no assurance that the Company will qualify for quotation of its securities on the OTC Bulletin Board. See "RISK FACTORS" and "DESCRIPTION OF SECURITIES".
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Common Stock Offering by Selling Shareholders | |
The maximum number of shares identified herein as common stock held by Selling Shareholders that can be sold under this offering is 22,943,624. The offering will terminate twelve months from the date of this Prospectus unless earlier fully subscribed or terminated by the Company. | |
The Offering By Selling Shareholders | |
Common Stock Offered By Selling Shareholders (1) | 22,943,624 shares of common stock |
Common Stock Outstanding Before the Offering | 22,943,624 shares of common stock |
Common Stock Outstanding After the Offering | 22,943,624 shares of common stock |
Terms of the Offering | The Selling Shareholders may sell their shares at the fixed price of $2.75 during the duration of the offering. |
Termination of the Offering | This Offering will terminate twelve months after the effective date of the registration statement associated with this Prospectus. |
Use of Proceeds | The Company will not receive any proceeds from the sale of the shares offered by the Selling Shareholders. |
Risk Factors | The investment in the shares offered hereby involves a high degree of risk and should not be purchased by any investor who cannot afford the loss of their entire investment. |
The above-referenced offering represents the number of shares outstanding as of the date of this Prospectus. The Company is not receiving proceeds from the sale of the shares offered by the Selling Shareholders. In the event the Selling Shareholders are successful in the sale of the shares at $2.75 | |
Direct Public Offering of Common Stock | |
The maximum number of shares identified herein as common stock subject to the Company's "best efforts" direct public offering is 8,000,000. | |
The Direct Public Offering | |
Common Stock Offered Through Direct Offering | 8,000,000 shares of common stock |
Common Stock Outstanding Before the Offering | 22,943,624 shares of common stock |
Common Stock Outstanding After the Offering | 30,943,624 shares of common stock |
Terms of the Offering | $2.75 per share |
Use of Proceeds | Our direct public offering of 8,000,000 shares of common stock is being made on a self-underwritten basis and there is no minimum number of shares of common stock that must be sold in order for the offering to proceed. The net proceeds to AmericaTowne from the sale of up to 8,000,000 shares offered through the offering price of $2.75 per share (total of $22,000,000) will vary contingent upon the success of AmericaTowne's sales efforts. It is the Company's intention to use proceeds raised through this prospectus |
Risk Factors | The investment in the shares offered hereby involves a high degree of risk and should not be purchased by any investor who cannot afford the loss of their entire investment. |
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Use of Funds from Public Offering: Provided that funds are raised in the Direct Offering at between the 25 - 100% levels, funds raised will be allocated as reflected in the Funds Use Table
Funds Use Table 100%
Estimated Use of Proceeds | Amount | China | US | Totals | Percent |
Deposits for Land Use Rights (a) | $6, | $6, | $6, | 28.7% | |
US Trade Center Operations - Meishan Ningbo (b) | $1,500,000 | $1,500,000 | $1,500,000 | 6.8% | |
Legal, Accounting, & Other Professional Fees | $300,000 | $20,000 | $280,000 | $300,000 | 1.4% |
Marketing & Advertising | $150,000 | $50,000 | $100,000 | $150,000 | 0.7% |
Operational Expenses (c) | $716,426 | $216,426 | $500,000 | $716,426 | 3.3% |
Franchise Acquisitions (d) | $4 | $4 | $4 | 18.2% | |
Registered Capital Reserves (e) | $1,500,000 | $1,500,000 | $1,500,000 | 6.8% | |
US Trade Centers in 8 US Locations (f) | $5,200,000 | $5,200,000 | $5,200,000 | 23.6% | |
Export Funding (g) | $1,000,000 | $1,000,000 | $1,000,000 | 4.5% | |
Working Capital & Reserves | $1,327,310 | $827,310 | $500,000 | $1,327,310 | 6.0% |
Total | $22,000,000 | $10,420 | $11,580 | $22,000,000 | 100% |
Percent | 47 | 53 | 100% | ||
Notes: | |||||
(a) Rights required to obtain land for AmericaTowne - 40 year lease, for a location. | |||||
(b) Meishan Ningbo, China Trade Center Startup, Operations, and Staff advocates. Responsible for identifying buyers for US made goods and services and operations of the Trade Center in China. | |||||
(c) Staff Operations and Salaries. | |||||
(d) Funds used to acquire franchise rights and licenses as well as furniture, equipment, and other to operate select US franchises in AmericaTowne. | |||||
(e) Required by Regs in China to Operate. | |||||
(f) Operations of 8 US Trade facilities throughout the US. Purpose is to source US made goods and services, and to identify and recruit exporters, and small businesses to operate within the US Trade Center in Meishan, and AmericaTowne in China. This includes Internet Operations of 3 Sites in Chinese. One Site specifically designed for business to business customers directly linked to US Trade Center Operations; and one site designed for the affluent consumer interested in select high end goods; and one site for the average or middle income consumer. | |||||
(g) Funds used to support Exporter's funding and sourcing goods and services. | |||||