EB-5 Feasibility Report · 2015-06-07 · SDEB5 Consulting, MyCityShares LLC Purpose of this...

EB-5 Feasibil ity Report: Nutrit ional Supplement Manufactures, Inc. & Dr. Clark Store, Inc. Expansion Project

Authored by:

Matt Belcher - Principal, SDEB5 Consulting

Travis Hook - Principal, SDEB5 Consulting

For More Information and EB-5 Business Plan

Please Contact Oskar Thorvaldsson

T: 619.591.1277 E: [email protected]

SDEB5 Consulting San Diego, CA 92101 T 415.866.6906 E: [email protected] W: www.SDEB5.com

SDEB5 Consulting MyCityShares, LLC

http://www.SDEB5.com

mailto:[email protected]

SDEB5 Consulting, MyCityShares LLC

Purpose of this document 4

How the project will be scored 4

Project Detail 5

The NSM & DCS Difference 7

SnapShot 7

NSM Management Team 9

Use of Funds 12

Targeted Employment Area (TEA) 14

Job Creation 14

Exit Strategy 15

Capital Stack 16

Direct EB-5 Project Structure 18

EB-5 Timeline 21

Financial Summary 22

NSM Summary and Projections 22

DCS Summary and Projections 23

Market Research 25

Pharmaceutical Industry 25

Strengths, Weaknesses, Opportunity, Threats (SWOT) 26

Conclusion & Final Recommendations 27

EB-5 Feasibility Analysis, December 2015 " 2


Disclaimer: SDEB5 Consulting (SDEB5), a MyCityShares LLC company, is a consultant group. SDEB5 is not a registered broker-dealer or a registered investment adviser. SDEB5 consultants are not lawyers or a law firm and we do not provide legal advice. The securities discussed in this investor deck have not been registered under the Securi-ties Act of 1933 and may not be offered or sold in the United States or to U.S. persons unless the securities are regis-tered under the Act, or an exemption from the registration requirements of the Act is available. The materials in this document are for informational purposes only and not for the purpose of providing legal advice.The opinions ex-pressed in this report are the opinions of the individual author. Every effort has been made to ensure the accuracy of the information supplied in these pages, and to the best of our knowledge. However, we are conscious that there may be unintentional errors or omissions, and we are anxious that any which are discovered should be reported to SDE-B5.com and we will correct them as soon as possible.



Purpose of this document This feasibility study document has been created to detail the findings of SDEB5 Consulting's (SDEB5) analysis of the proposed Nutritional Supplement Manufactures, Inc .(NSM) and Dr. Clark Store, Inc. (DCS) expansion using EB-5 funds.

SDEB5 consulting, a MyCityShares, LLC company is engaged in providing analytics, consulting and guidance to those involved in the EB-5 VISA program. More information can be found at www.SEDB5.com or you can call the company directly at 619.259.0387.

How the project will be scored SDEB5 has used the basis of the Likert scale to score feasibility of this project.

Each major section of the project has scoring based on EB-5 feasibility:

1 - Not Suitable

2 - Not Recommend

3 - Satisfactory

4 - Recommended

5 - Strongly Recommended

Anything less than a ‘3’ SDEB5 suggests that more research should be conducted. Ideally each section should be a ‘3’ or higher. As with any project, those researching should conduct their own analysis with a financial advisor, broker and/or attorney.


http://www.SEDB5.com

Project Detail Nutritional Supplement Manufactures, Inc. or NSM (www.PureNSM.com), and Dr. Clark Store, Inc. or DCS (DrClarkStore.com) hold their principal place of business at 1055 Bay Blvd, Bldg D, Chula Vista, California 91911, and have been manufacturing dietary supplements since 1993.

The following images show the location of the businesses. Red pin indicates location:



http://DrClarkStore.com


First incorporated as Self Health Resource Center, Inc. under the ownership of Geoff Clark the company was focused on creating food supplements without excipients. This approach was ahead of its time and the company gained experience and became a leader in manufacturing without the typical manufacturing aids. This has now become an extremely valuable asset as the public is increasingly realizing the harmful effects and the undesired risk excipients hold.

NSM handles manufacturing of supplements, the factory this company now operates was established in 1993 by Self Health Research Center™ (SHRC). NSM also operates an equipment import company www.EasyXpack.com and laboratory at www.QCtestLab.com. Further it cooperates closely with Pick and Pack America, Inc. for shipping and fulfillment of NSM customer products.

DCS is a brand owner of the trademarked brands, Dr. Clark Store™ and Vitamins Without™ and Dr. Clark Purity and Self Health Resource Center (SHRC). It’s main sales come from DCS website and Amazon Prime sales.

A New Commercial Enterprise (NCE), which will be managing the Job Creating Entities (JCE), NSM and DCS, are currently seeking $1,500,000 in EB-5 financing from 3 EB-5 Investors to fund the purchasing of processing and laboratory equipment, gain Australian Therapeutic Goods Administration (TGA) certifications, increase square footage and expand sales and management teams to become one of the largest worldwide players in contract manufacturing for nutritional supplements, and top sellers of branded supplements on Amazon Prime.

The total project cost is estimated to be $1,801,730. NSM’s expansion project scope anticipates hiring a minimum of 40 full time employees. NSM posted revenues of $1,078,263 for 2013 and $1,719,456 in 2014. Project owners estimate new equipment and staff to NSM will increase revenues to $2,513,554 in 2015, $4,174,929 in 2016 and $7,454,067 in 2017. DCS posted revenues of $2,191,230 for 2013 and $2,421,920 in 2014. DCS is estimated to increase revenues to $2,932,224 in 2015, $3,544,017 in 2016 and $4,282,037 in 2017.

With a successful EB-5 raise and project capitalization, the JCE is in a position to expand and deliver on purchase orders that the company is currently having to turndown due to limited equipment. To clarify, NSM now operates equipment for dry-powder encapsulation,

EB-5 NSM Feasibility Analysis, December 2015 " 6

http://www.QCtestLab.com


liquid formulations and powder mixing and filling, however it lacks equipment for tableting, stick-pack powder filling, soft-gel encapsulation and various packaging options.

The NSM & DCS Difference

SnapShot • Certified by the premium certification body in USA- National Sanitation Foundation

(NSF) to follow US-FDA Good Manufacturing Practices (GMP) Regulations: Part 111- CFR - Code Federal Regulations Title 21

• Clean Labels with No Toxic Fillers – products customers understand and trust

• Experience and Stability – Established 1993, NSM has been a leader in high quality excipient free nutritional manufacturing for decades

• Immediate Communication – NSM prides themselves on keeping the customer in the loop every step of the way, from order to delivery

• Transparency and Honesty – NSM does their best to make sure the customer is more than satisfied with every aspect of their partnership

• Reliability and Efficiency – NSM consistently provides a faster turnaround than industry norms, so the customer can rely on having the product when they need it

• Regulatory Compliance and Liability Insurance – NSM stays ahead of all regulatory changes and requirements, including Prop 65, and are backed up with a five million dollar liability insurance

• In-house Laboratory – Equipped with Inductively Coupled Plasma Mass Spectroscopy (ICP-MS), Fourier Transform Infrared Spectroscopy (FTIR) and microbiology detection equipment

• Metal Scanning – All NSM manufactured batches are checked for metal pollution

• Certified U.S. Food and Drug Administration (FDA) registered

• Low Manufacturing Minimums and High Capacity

• 24 Hour Turnaround On Quotes

• Short Lead Times for All Jobs - Average 3-5 weeks



Project SCORE: - 5 - Strongly Recommended

The NSM and DCS expansion project is strongly recommended for EB-5 purposes as the NCE can create enough real jobs through the JCE to satisfy the program requirement. The product set is attractive and diverse enough so that one product line will not affect the other significantly, should there be drop in demand. The company has a strong track record, strong sales and the expansion is expected to fulfill business orders the company is currently turning down, increasing sales and services offered. Nutritional supplement and vitamin contract manufacturing is well suited for the EB-5 program due to established industry standards for projections, exponential increases in service revenues from investment in equipment for packaging, laboratory, labeling and order fulfillment/drop shipping and hiring of full time employees.


NSM Management Team NSM and DCS are family owned and operated by Oskar Thorvaldsson and Susan Nowak. They have a seven year old daughter and feel privileged to work in the supplement industry.

Oskar Thorvaldsson

NSM, Inc. and DCS, Inc. is lead by Oskar Mar Thorvaldsson. Oskar is a dual citizen of the United States and Iceland. He graduated with his MBA from MIU in Fairfield, Iowa and has always been interested in furthering the use of natural products. In 2001 Oskar started Dr. Clark Store exclusively focused on selling supplements manufactured at the Self Health Resource Center™ (SHRC), at the time operated by Geoff Clark. Following the purchase of SHRC in 2006 Oskar invested in building an in-house company laboratory and additional manufacturing machinery. Shortly thereafter he split off the company and started a contract manufacturing for supplements under the name Nutritional Supplement Manufacturers, Inc. (NSM)

Susan Nowak

Susan received her Bachelors in Accounting from Arizona State University and her career spans over 20 years of experience working in both large and small companies. She was previously instrumental in taking a small medical wellness company public. She went back to school to earn her Master in Clinical Psychology in 1999 and combined with her 9 years experience in HR and Staffing works in a dual role of managing the HR side of the business as well as overseeing the financial side of the company. She has been instrumental in hiring and managing our employees. Susan is also involved in all major strategic decisions.

Manoela Moreira

Manoela Moreira has been instrumental to the success of our companies. She has helped with decision making for over 10 years. Manoela has over 15 years of accounting experience. She joined the company in 2002 and handles our most important accounting functions in addition to overseeing accounts payable with the assistance of Jennifer Valenzuela, in addition she prepares excise tax reports which she communicates to US Government and helps the company prepare books for taxes. Manoela earned her degree in Accounting in Brazil in 2002. Manoela is always eager to learn and has completed




several courses in Cost Accounting, General Accounting, Financial Administration, Tax Law and Fiscal Inspection.

Jennifer Valenzuela

Jennifer is the Operations Manager for DCS and has served as a manager, accountant. She helps coordinate many projects, including new marketing projects on Amazon Prime, European sales efforts, European subsidiaries and she also maintains our computer and phone systems with our IT and phone services amongst other things. Jennifer is extremely skilled manager and handles many of our HR related challenges.

Dylan Barr

Dylan is the Operations Manager for NSM and has been in the industry for 6 years, doing Accounts Payable, Purchasing and Scheduling before his current duties as Operations Manager. Dylan oversees all production projects, making sure that they are done all time and follow strict quality protocols.

Erica Mills

Erica is the Account Executive and has worked in the nutritional supplement manufacturing business for over 7 years. She has served as a customer service representative, purchaser, scheduler and now as an account executive. She has a good grasp on the inner workings of supplement manufacturing.

Carmen Myers

Carmen is in charge of quality control and has worked in the supplement business for over 20 years. She has served as trainer, teacher and public relations specialist. She has been instrumental in enhancing quality control systems, worked in unison with National Sanitation Foundation to maintain our accreditation and continued current Good Manufacturing Practices. Carmen makes sure new products receive meticulous attention to detail and a fail proof 2nd and 3rd analysis by going over related Standard Operating Procedures and Production Records.




The management team of NSM and DCS has over 20 years experience in this field and have shown themselves very capable of delivering quality products while managing the business in a efficient and profitable way.



Use of Funds NSM and DCS will use the raised funds to purchase additional manufacturing and laboratory equipment, raw material, hire personnel and increase square footage of the manufacturing plant. The project owner is committing the full amount of equity, including a personally secured equipment loan and personal funds in each case outlined below. The remaining project cost will be determined by the number of EB-5 investors subscribed.

Use of funds can be deployed as outlined in the three options below, depending on the number of investors subscribed to the project. In each case job creation requirement will be fulfilled and the EB-5 investor’s application timeline met.

The use of funds for each option are detailed below:

Option 1

Option 2

One EB-5 Investor EB-5 Investment Total Investment Percentage of Total EB-5 Investment

Equipment $313,129 $614,859 63%

Inventory $34,001 $34,001 7%

Building Improvement $110,750 $110,750 22%

Administration $42,120 $42,120 8%

TOTAL $500,000 $801,730 62%

Two EB-5 Investors EB-5 Investment Total Investment Percentage of Total EB-5 Investment

Equipment $725,582 $929,714 73%

Inventory $79,428 $102,026 8%


Administration $84,240 $84,240 8%

TOTAL $1,000,000 $1,301,730 77%


Option 3


The use of funds for this project has been scored as a 5 because all option purchases are focused on job creation and that is ultimately what the EB-5 program is designed for. EB-5 funds can be used for non-job creating expenses, such as land, contingencies, and other non-qualifying hard and soft costs (insurance, permits, developer’s fees, etc.) In a direct model with no regional center, funds must be spent by NSM and DCS on operations. This can include salaries, rent, land, construction and working capital. NSM and DCS shall not use EB-5 funds to repay any bad debt, legal, tax or accounting expenses, as these are not allowed under the program regulations. The funds will not be held in “reserves” as the full amount will be spent on the project.

Three EB-5 Investors EB-5 Investment Total Investment Percentage of Total EB-5 Investment

Equipment $960,368 $1,164,500 64%

Inventory $260,402 $275,000 17%


Administration $168,480 $168,480 11%

TOTAL $1,500,000 $1,801,730 83%



Targeted Employment Area (TEA) Projects can qualify for EB-5 TEA certification by demonstrating that they are located within a census tract that is adjacent to 12 or fewer contiguous census tracts with a total average unemployment rate of 150% of the national average, currently 5.8%.

The project is located in census tract 131.03, which qualifies for $500,000 investment in exchange for EB-5 Visa status because the contiguous census tracts identified in the chart and maps above have a combined unemployment average of 12.7%, above required standards.

�

Job Creation

Option 1 One EB-5 Investor

Total Investment Required

(in US dollars)

EB-5 Investment Amount

Direct Jobs Created (35 hrs/week)

Total $801,730 $500,000 12

Option 2 Two EB-5 Investors


(in US dollars)



Total $1,301,730 $1,000,000 23




• Indirect/Induced and part-time jobs will not be counted as this is a Direct EB-5 investment opportunity.


The NSM and DCS expansion project is located in a TEA area, meaning that the minimum investment is reduced to $500,000 per investor. This is an incentive for investors looking to gain permanent residence at the $500,000 level, rather than $1 million for non-TEA projects. As this is a direct EB-5 investment, indirect and induced job creation cannot be counted, however the each project creates sufficient jobs and Option 3 creates 40 full time employees, providing assurance that the minimum 10 job requirement will be met for each investor in each case. The project meets TEA and job creation requirements using direct job creation, regardless of indirect and induced job creation allowed in Regional Center deals.

Exit Strategy The NCE has a clear exit strategy for the investor. There is a clear structure to pay the full loan amount back at the 5 year point, plus pay a percentage each year the monies are borrowed.

The project owner plans to begin repayment after 24 months for the remaining 36 month period. On month 25, the project owner will start EB-5 investor repayment and savings. A single investor ($500,000 loan), shall be paid $5,000 per month for a total of 36 months, $180,000. The project owner will save $2,500 per month for a total of 36 months. $90,000. In month 60 (5 years), the investor shall be paid the remainder of the amount due in full. The project owner will refinance the remaining $237,500 through a bank loan and pay the investor in full, totaling $507,500 per investor. This is a 1.5% non compounding, interest rate.

Option 3 Three EB-5 Investors


(in US dollars)



Total $1,801,730 $1,500,000 40



Additional details on the investment and repayment terms can be obtained by contacting either SDEB5 Consulting, who are acting on behalf of the project owner, or speaking to the project owner directly. This ensures this project complies with US securities rules and regulations.


The exit strategy is strong on the basis of the existing business increasing revenues year on year and existing collateral in the company. The interest rate is 1.5%, in line with traditional EB-5 market interest rates. Investors are paid a portion of their monies during months 25-60 and paid in full at the end of the 60 month term.

Capital Stack The capital stack for this project is relatively simple in terms of EB-5 projects. This is detailed below:

EB-5 Investor Repayment

EB-5 Loan Amount (USD)

Loan Repayment (Month)

Loan Repayment (36 months)

Interest Rate

EB-5 Loan $500,000

Repayment Reserves

$2,500 $90,000

Pay out $5,000 $180,000

Refinanced Debt (60th Month)

$237,500

Total Repayment $507,500 1.5%

Option 3 Amount (USD) Percentage

Equipment Loan $204,132 11%

Developer Equity $97,598 5%

EB-5 Funds $1,500,000 83%

TOTAL $1,801,730 100%




83% of the financing required for Option 3 is from EB-5 Investors. Ideally the percentage could be lower, however this in an existing business with a successful track record and the money used is purely for growth to fulfill purchase orders that the business is currently unable to fulfill. The project owner has outlined three options, should the full amount of investment not be acquired, ensuring the project will fulfill EB-5 Investor requirements at any level. The project owner has also committed the maximum amount of developer equity and personal equipment loan possible in each option, showing his commitment to a successful project.

Equipment Loan Items Loan Amount (USD)

Powder filler $16,400

Encapsulator with tooling $45,158

Heat stamp for labeler $7,000

HPTLC $56,000

Tablet Press ZP17D $9,258

Tablet press tooling (four sets) $3,500

Coating machine $3,588

Deduster $2,000

Pulverizer GF-20B $3,500

Vibrating Sifter XZS-400 $2,500

Granulator YK-60 $1,500

Air Cycle Dryer RXH-5-C $4,200

Pneumatic Crusher JGM-T100 $12,000

Heat tunnels (two sets) $7,000

Liquid 1ML dispenser $5,000

Soap equipment $8,233

Soap smelter (50 gallon) $2,295

Estimated shipping $15,000

TOTAL $204,132



Direct EB-5 Project Structure The EB-5 Program provides that a new commercial enterprise can be used as the basis for the petition of more than one immigrant investor. Each immigrant investor must invest the required amount of capital and each immigrant investor’s investment must result in the required number of jobs. Furthermore, the new commercial enterprise can have owners who are not seeking to enter the EB-5 Program, provided that the source(s) of all capital invested is (or are) identified and all invested capital has been derived by lawful means.

This project will be what is considered a Pooled ‘Direct Investment’ meaning, an investor will invest his/her funds directly into a limited partnership which will be considered the New Commercial Enterprise. The NCE will subsequently loan the money to a wholly owned resource center, this case Source of Health, Inc. (SOH). SOH will then lend the monies to NSM and DCS, the Job Creating Entities as per project plans.


The diagram below outlines this structure:


This is a quality direct EB-5 investment based on the structure and purpose of the loan. The program has three basic requirements: (1) investment in a “new commercial enterprise” (NCE) (2) of at least $1,000,000 (or $500,000 in a TEA) (3) that results in the creation of at least 10 new full-time jobs. Additionally, the investor is required to take an active enough role in the business that he has at least a policy-making position. A skilled


Developer Equity

New Commercial Enterprise (NCE as an LP) Oskar Thorvaldsson as Managing Partner,

EB-5 Investor as General Partner.

EB-5 Funds (at risk)

Job Creating Entity (JCE) Nutritional Supplement

Manufacturer, Inc.

Job Creating Entity (JCE) Dr. Clark Store, Inc.

Wholly Owned Resource Center (Source of Health, Inc. SOH) The principal place of business

lending to wholly owned subsidiaries.



attorney can help minimize investor required involvement through the careful definition of the role they are to play in the business.

NSM and DCS expansion project is a typical pooled direct EB-5 business structure where the EB-5 investor is a general partner in the NCE. This structure treats the EB-5 investment as a loan rather than an equity investment. This is often preferred for both EB-5 investor and EB-5 project owner because there is a clear path of capital repayment, timeline and involvement.

(1) The NCE will qualify as a New Commercial Enterprise, being established after November 29, 1990, (2) with an investment amount of $500,000 each for three EB-5 Investors and (3) the creation of 40 new direct employees. A business set up as a pooled direct EB-5 project by a qualified attorney and EB-5 consultants may have a significantly higher chance of approval than most Regional Center deals. Applications of individual investors can be submitted to USCIS more expediently and thus investors will not have to wait as long for approval. Further, this project does not require “Economic Impact Analysis” since by nature of this type of manufacturing business it creates more than enough direct employment to support the funding needed. This saves money and speeds up the process. The set up of an EB-5 pooled direct project requires significantly less work than that of a Regional Center.


EB-5 Timeline The time to syndicate an offering, obtain approvals and release funds from escrow varies and is often limited by governing bodies. The time line listed below is subject to change.

• All project documents prepared for offering, including but not limited to:

EB-5 Feasibility Study

EB-5 Business Plan (Mater of Ho compliant)

Economic Impact Analysis (not needed in this case)

Private Placement Memorandum/Subscription Document

International Advertising/Marketing Materials

• Marketing EB-5 investment opportunity: Estimated 4 months after start date.

• Legal processing: Estimated 4-6 months after start date.

• I-526’s approved: Estimated 6-12 months after start date.

• All capital released to investment: Estimated 6-12 months after start date.

• Job creation: Estimated 1-12 months after start date

• Investor repayment: Estimated 24 months after start date

• Total return of capital: Estimated 5 years after start date.

Project SCORE: - 5 - Strongly Recommend

Timeline is consistent with a typical pooled direct EB-5 offering. Timelines assumes an experience and responsive EB-5 team and responsive client. Government processing times vary greatly. Processing time may be much shorter if USCIS implements premium processing. Processing time may be longer if USCIS issues Requests for Evidence (RFE). Time varies greatly depending on attractiveness of project and success of marketing agents. In addition time may be reduced if marketing efforts are underway prior to project USCIS pre-approval.



Financial Summary Historical financial statements and projections for NSM and DCS are available upon request.

NSM Summary and Projections

" $1,000,000.00&

$0.00&

$1,000,000.00&

$2,000,000.00&

$3,000,000.00&

$4,000,000.00&

$5,000,000.00&

$6,000,000.00&

$7,000,000.00&

$8,000,000.00&

2011& 2012& 2013& 2014& 2015& 2016& 2017&

Revenue&

Net&Income&

NSM Financial Ratios 2011 2012 2013 2014 2015 2016 2017 Manufacturing Industry

Profitability

Gross Profit Margin 0.56 0.49 0.52 0.49 0.46 0.51 0.58 0.35

Net Profit Margin -0.12 0.05 -0.12 0.02 0.02 0.14 0.24 0.05

Risk

Debt Ratio 1.20 0.99 1.42 1.21 0.97 0.60 0.25 2.2

Liquidity

Current Ratio 0.82 0.99 0.53 0.57 0.56 1.21 3.46 2.5

Quick Ratio 0.47 0.45 0.10 0.05 0.10 0.60 2.64 1.4




DCS Summary and Projections

�

Project SCORE: - 4 - Recommended

The financial feasibility study is designed to objectively create an assessment of the economic viability and marketability of proposed future projects including expansion, improvement and diversification of the existing services. The EB-5 program focuses on project owner ability to create sufficient full time jobs and repay investor full amount within 5 years. Due to the nature of business between NSM and DCS, it is reasonable to use an average of NSM and DCS financial ratios as an estimate of present and future financial

$0.00$

$500,000.00$

$1,000,000.00$

$1,500,000.00$

$2,000,000.00$

$2,500,000.00$

$3,000,000.00$

$3,500,000.00$

$4,000,000.00$

$4,500,000.00$

2011$ 2012$ 2013$ 2014$ 2015$ 2016$ 2017$

Revenue$

Net$Income$

DCS Financial Ratios 2011 2012 2013 2014 2015 2016 2017 Manufacturing Industry

Profitability

Gross Profit Margin 0.52 0.38 0.46 0.49 0.63 0.65 0.68 0.35

Net Profit Margin 0.15 0.01 0.09 0.19 0.14 0.16 0.19 0.05

Risk

Debt Ratio 0.69 0.56 0.43 0.25 0.14 0.09 0.05 2.2

Liquidity

Current Ratio 1.12 1.09 2.88 3.82 7.07 11.55 18.26 2.5

Quick Ratio 0.24 0.20 1.35 2.83 5.97 10.34 16.93 1.4



strength. It must be noted this average is not a weighted average due to differences in company output, and ratios are subject to change.

The $1,500,000 EB-5 loan will be used to improve economies of scale (EOS) and provide in demand niche products/services. EOS are the cost advantages that enterprises obtain due to size, output, or scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output. Project owners estimate new equipment and staff to NSM will increase revenues to $2,513,554 in 2015, $4,174,929 in 2016 and $7,454,067 in 2017. DCS is estimated to increase revenues to $2,932,224 in 2015, $3,544,017 in 2016 and $4,282,037 in 2017.

NSM and DCS will expand general operations and niche services by purchasing new equipment and employing new staff, generating more cash in house and from purchase orders while efficiently managing expense accounts, accounts receivables and inventory improving profitability, risk, liquidity and activity financial ratios, demonstrated in 2015, 2016 and 2017 estimates. We believe the proposed project has the ability to create sufficient full time jobs and repay investor amount within a 5 year period.



Market Research

Pharmaceutical Industry The U.S. Pharmaceutical Industry is defined by the Census Bureau as companies engaged in researching, developing, manufacturing, and marketing drugs and biologicals for human or veterinary use. The key products in this profile include drugs and biologicals. These are intended for the use in diagnosis, cure, mitigation, treatment or prevention of diseases. Chemically derived drugs are produced in pills, tablets, capsules, vials, ointments, powders, solutions and suspensions. The highest revenue class of drugs are those used in treatment of cancers, blood cholesterol, respiratory conditions, digestive disorders, diabetes, hypertension, mental disorders, epilepsy, and autoimmune disorders such as arthritis, blood clots, HIV and anemia. 1

Project SCORE: - 4 - Recommended

The nutritional supplement manufacturing industry is gaining strength, however highly concentrated throughout the globe. The opportunity to become a leading manufacturer of nutritional supplements, without harmful excipients, headquartered in the life science and biotechnology rich region of San Diego County is strong. Economies of scale and continued production of niche products will provide NSM and DCS with a sustainable and competitive edge in the global medicinal and botanical manufacturing industry. Marketing to national and regional concerns, such as desire for a more natural product, will also place NSM and DCS above international competition like Asia producing large quantities with little regulatory oversight. However, the prevalence such manufacturing abroad may prove attractive for foreign nationals seeking EB-5 investment in well-known and understood industries.

http://ita.doc.gov/td/health/PharmaceuticalIndustryProfile2010.pdf1


http://ita.doc.gov/td/health/PharmaceuticalIndustryProfile2010.pdf


Strengths, Weaknesses, Opportunity, Threats (SWOT)

NSM EB-5 SWOT

Strengths

• NSM & DCS history of operations

• NSM & DCS experienced management

• Proper proposed use of EB-5 funds

• Located in a TEA ($500,000 investment)

• 40 full time job creation

• Traditional Pooled Direct EB-5 structure

• In demand natural manufacturing

• San Diego Life Sciences adoption

Weaknesses

• Processing time for investors limited by governing bodies

• No guarantee of full investment amount returned (“at risk” as indicated by USCIS regulations)

• Supplement manufacturing industry domestic and international competition

Opportunity

• Economies of scale (reduce overhead and improve sales)

• Niche products (avoid harmful excipients)

• Satisfy existing purchase orders

Threats

• Evolving investor market trends

• Government regulation changes

• Legal accountability


Conclusion & Final Recommendations

1-Not Suitable 2-Not Recommend 3-Satisfactory 4-Recommended 5-Strongly Recommended

Summary:

• SDEB5 Consulting EB-5 Feasibility study rates “TEA & Job Creation” 5, demonstrating NSM and DCS ability to create sufficient jobs for the project to achieve USCSIS’s requirement of creating 10 jobs per investor on time (thereby granting Green Cards for the investor and their family).

• SDEB5 Consulting EB-5 Feasibility study rates “Exit Strategy” 5 and “Financial Summary” 4, demonstrating NSM and DCS ability to achieve sufficient operational success to enable the project to repay the investment within 5 years.

Next Steps for EB-5 Investors:

Consult an Experienced EB-5 Immigration Attorney

Perform EB-5 Project Due Diligence

Request Private Placement Memorandum

Request EB-5 (Matter of Ho) Business Plan

Section Score

Project Description 5

NSM Management Team 5

Use of Funds 5

TEA & Job Creation 5

Exit Strategy 5

Capital Stack 4

Direct Project Structure 5

EB-5 Timeline 5

Financial Summary 4

Competitive Landscape 4

TOTAL out of 50 47

AVERAGE SCORE (1-5) 4.7



EB-5 Feasibility Report · 2015-06-07 · SDEB5 Consulting, MyCityShares LLC Purpose of this...

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