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United States, Ok... Preferred Partner "Company: First Latin Clearing (FLC) was founded in January 2001 by a team of payment technology specialists with first-hand experience and in-depth knowledge of international e-Commerce, electronic payment-processing and related regulations. The Company was formed to address the growing needs of Latin American-based e-Businesses. First Latin Clearing is seeking US$375,000 in seed capital to secure local office space, implement a localized payment system, and solicit major merchants operating in Latin America. Opportunity: Payment-processing is an essential infrastructure service required for collecting secure funds online in real-time for the B2C and B2B paradigms for e-Commerce. It is the foundation of an industry estimated to reach US$7 trillion by 2004 Worldwide. - Latin America B2C: 119% CAGR over next 4 years -13 million Latin American Internet users -30 million Latin American Internet users by 2003 -200+ million credit cards in Latin America alone -1.5 million Visa & M/C merchants in Latin America alone (physical stores) -We combine local banks + First Data + Offshore processing -Pricing in 170 currencies, settlement in 26 including Peso & Reale· Strong US Services: In the US, online payment-processing is at an advanced stage of development. First Data Corporation (NYSE: FDC), the largest US processing firm, processes approximately 5 billion credit card transactions per year. These include nearly all the US dollar-denominated, online credit card transactions. As a result, e-Commerce merchant approval, transaction processing, and funds clearing are as efficient as traditional merchant card processing. Online processing rates are generally low (2-4%) and funds settlement turnaround time is short (48 hrs). Non-US Service Gap: Outside the US, online payment-processing services differ in service level from very poor or non-existent to approaching a US equivalent. Latin American markets are smaller yet culturally similar; therefore businesses conduct business across geopolitical boundaries to improve profitability. However, e-Commerce in Latin American is faced with many obstacles, making it difficult to accomplish cross-border e-Commerce transactions. Currently, for e-Merchants wishing to embrace e-Commerce in Latin America - whether locally based or foreign companies coming in – they are forced to set up separate banking relationships in every market in which they wish to transact. For each currency required they must work with an appropriate e-Commerce enabled bank in that particular country (if one is available). This in turn means, many times unnecessarily, complying with local business and financial regulations – having to incorporate in each country and comply with the necessary tax and trade laws. Worst of all, e-Merchants are forced to interface with each of the different payment systems. With processing volume relatively low, processing rates in Latin American markets are high (up to 5%) and funds settlement turnaround time is long (e.g. 60 days in Brazil). FLC Solution: First Latin Clearing will provide an economical platform, which e-Merchants in the United States and Latin America can use to rapidly enter new markets, significantly decrease their product’s time-to-market, and increase long term profitability. The foundation of this platform and our core business is a global multi-currency payment processing system for the Latin American market, which operates as a gateway to the local banking infrastructure, North America’s First Data (FDR) clearing infrastructure and several key offshore banking institutions. With this gateway e-Merchants can process credit card transactions in over 170 currencies, at US-competitive rates and settlement times, without losing local merchant banking benefits and eliminating FOREX charges occurring in today’s cross-border transactions. To achieve this FLC will use acquiring banks located in a tax neutral jurisdiction, where laws (called Segregated Account) allow the establishment of a “virtual corporation.” In these jurisdictions FDR enabled banks are not restricted to a single currency, giving e-Merchants the capability to transact and settle in the currencies of their choice. No longer needing a local bank in every market means no longer having to incorporate in every country. No longer needing to incorporate in every country enables e-Merchants to pay taxes based on their “nexus of business activity” as opposed to their corporate presence – increasing profitability. This single relationship also reduces integration and administration costs incurred with multiple relationships. In addition to providing payment-processing and consultation services, FLC will develop a turnkey platform of partnerships, the FastTrack Network product, to enable a one-stop-shop for clients wishing to expand into new countries. This provides the entire suite of services required for getting a B2B or B2C solution implemented for each country, including consulting, local system and content development, translation, hosting, online marketing and business logistics services. Marketing Summary: Latin Clearing will position itself as a multi-currency payment gateway with consultation expertise in the area of international incorporation requirements and tax exposure. With the US, EC, and other governing bodies pushing for Worldwide consumption based taxes, but still retaining individual country corporate tax, FLC will be the first e-Merchant solution dedicated to preventing “double” taxation, allowing e-Merchants the corporate and tax planning capability of what only the largest of international companies have been able to accomplish to date (i.e. Dell, Microsoft). Approximately 73% of the total B2C Latin American transaction volume is concentrated in 20 e-Merchants. Because of this high concentration FLC will initially follow a direct marketing and sales strategy targeting these “major” merchants. Later, the Company's sales distribution strategy will be developed through a network of e-Commerce service resellers (ISP’s, hosting providers, merchant aggregators, etc.) and our FastTrack Network product. Financial Summary Experience has shown us the greatest point of failure for a processing startup is an inflated corporate cost structure relative to actual sales – primarily caused by overly optimistic sales projections. To prevent this “misalignment” FLC has conservatively estimated sales and will minimize costs by leveraging merchant banking, processing, payment gateway, and vetting systems already established. First Latin Clearing requires US$375,000 to operate for the first six months, including US$70,000 needed for capital expenditures. After completing several milestones to increase investor confidence and increase pre-money valuation FLC will raise an additional US$650,000. FLC’s revenue model is based on three revenue streams, transaction revenue, which is a small “cut” of transaction volume, consultation revenue, and referral revenue. FLC expects positive EBITDA after 21 months of operation on annualized sales of US$1.2 Million. In the third fiscal FLC expects revenue of US$2 Million with a profit margin of 24% or US$460,000. US$364 Million in transaction volume, representing approximately 5% of the total transaction volume in Latin America, will generate these sales. With our unique positioning FLC will aim for an early market listing to maximize shareholder value. Our Approach: Our management team’s combined international experience with the many challenges of global e-Commerce, especially those pertaining to multi-currency issues, places us in an excellent position to take on one of the latest high-growth regions in e-Commerce, Latin America.Our team members were previously involved in the last frontier, Asia, where they were personally responsible for the first real time credit card transaction in Asia. They worked for pioneering payment-processing firms, such as First Ecom.com (NASD: FECC), Payments Group, E-Kong (Hang Seng: ...
