Business Plan Prepared by Advanced Asset Management A Limited Liability Company Advanced Asset Management Page 1 of 28 Advanced Asset Management Property Acquisition Business Plan Table of Contents 1. INTRODUCTION 2. SUMMARY 3. MISSION, STRATEGIES & OBECTIVES 4. PRESENT STATUS 5. PRODUCT / SERVICE DESCRIPTION 6. PROILE OF TARKET MARKETS 7. MARKETING STRATEGIES & SALES PLANS 8. OPERATIONAL PLANS 9. MANAGEMENT & ADMNISTRATION 10.FINANCIAL PROJECTIONS 11.FUNDING REQUIREMENTS & USE OF PROCEEDS 12.IMPLEMENTATION 13.CONCLUSION Advanced Asset Management 3 3 5 9 11 12 15 18 22 24 28 28 29 Page 2 of 28 1. INTRODUCTION Advanced Asset Management, a Pennsylvania Limited Liability Company based in Lebanon, Pennsylvania composed this business plan for the purposes of outlining this business enterprise for the benefit of potential investors in order to raise capital to fund continuing operations and to take advantage of identified investment opportunities for the Company. Professional advisors assisting in the formation and continuing operations of Advanced Asset Management are listed as follows: Auditors – To Be Determined Legal Counsel – George Christianson Esq. Tax Consultation – To Be Determined Investor Relations – Advanced Asset Management Others may be added for consultation as the business requirements evolve. For further detailed information, contact: Ray Bishop 155 Club Terrace Lebanon, PA 17042 (717)-270-6018 This document is confidential and has been made available to the individual to whom it is addressed strictly on the understanding that its contents will not be disclosed or discussed with any third parties except for the individual’s own professional advisors. Investment in new and small businesses carries high risks as well as the possibility of high rewards. It is highly speculative and potential investors should be aware that no established market exists for the trading of shares in private companies. Prospective investors are advised to verify all material facts and to take advice from professional financial advisors before entering into any commitments. This plan is strictly for information only and does not constitute a prospectus or an invitation to subscribe for shares. Projections in the plan have been compiled by the promoters for illustrative purposes and do not constitute profit forecasts. The eventual outcome may be more or less favorable than that portrayed. 2. SUMMARY Advanced Asset Management, a Pennsylvania corporation with headquarters in Lebanon, Pennsylvania and is a Real Estate Management and Investment Company incorporated to maintain, rehabilitate, acquire and utilize properties throughout the United States that will best Advanced Asset Management Page 3 of 28 enhance overall shareholder value in the company. Advanced Asset Management, started in January of 2010 has been successfully developing business relationships with national financial institutions, national asset management companies as well as local foreclosure representatives to secure, maintain, rehabilitate and assist in the disposition of foreclosed and distressed properties throughout central Pennsylvania including Lebanon, Dauphin, Berks, Lancaster, York, Schuylkill, Northumberland, Montour, Luzerne, and Carbon Counties. Advanced Asset Management intends to take advantage of current real estate market opportunities identified by the Company through current business dealings as well as the federal, state and local tax climates for its shareholders by utilizing ongoing operations, acquiring, developing and holding a portfolio of net assets that will ultimately provide a continual stream of residual, on-going profits that can be returned to individual shareholders in the form of increasing net asset values of company shares as well as an on-going stream of the highest practical dividends, while retaining sufficient funds necessary to maintain the company’s competitive advantages in investment opportunities as they present themselves. Real estate investments in the form of raw land will be made when the ability to harvest renewable resources, lease farmland, take advantage of existing government programs, sell mineral and energy rights, develop residential or commercial properties for sale or as rental properties, partition holdings for sale or other similar strategies that will enable Advanced Asset Management to take advantage of attractive market opportunities. It is expected that funds generated from the execution of many of these strategies will enable Advanced Asset Management to significantly reduce assumed debt quickly while the execution of other continuing strategies such as harvesting of timber or farm products will enable Advanced Asset Management to further minimize and eventually eliminate any remaining debt. Ultimately, it is expected these assets will position the company to receive significant long-term residual income that will enhance shareholder value by increasing net asset holdings while improving dividend distributions. Advanced Asset Management will additionally acquire assets that allow the company to take advantage of opportunities in existing developed residential and commercial properties that have significantly depressed values due to current market conditions but present potential future turnover opportunities at increased prices when market conditions rebound. It is anticipated that these properties could be leased in the interim periods to cover maintenance, taxes and other operating costs. It is also possible that many of these properties could remain in the asset portfolio of Advanced Asset Management when it makes sound business sense. Ultimately, it is expected the majority of Advanced Asset Management’s portfolio of assets will contain a well balanced mix of properties that contain a significant supply of renewable natural Advanced Asset Management Page 4 of 28 resources that can be harvested, properties that offer intrinsic values from the sale of mineral or energy rights as well as some limited holdings in developed residential and commercial rental properties, such as apartments, strip malls, storage units, office complexes and other yet to be identified commercial properties when it makes good business sense. The portfolio will also contain properties that Advanced Asset Management will develop or enter into joint venture opportunities resulting in additions to the net assets or profitable liquidation for developed properties. Further, the company will expand its interests and activity in commercial enterprises that are on the periphery of the company’s primary business focus on a limited scale and only when it makes prudent business sense. The primary activity of the management of Advanced Asset Management will be to seek investment opportunities that can be added to and contribute toward the primary goals of the company, which are to create a portfolio of net asset holdings that will increase overall shareholder value and provide realizable residual income streams for the company that in turn can be distributed to shareholders in the form of on-going dividends. While the primary long-term objectives of the management team of Advanced Asset Management is to provide significant residual income streams to shareholders in the form of dividends, the Company additionally seeks to enhance shareholder value through the appreciation of the net asset value of the company and also seeks to build an enterprise that will sustain itself well into the future. Management believes these goals are not mutually exclusive, but does provide the caveat that Advanced Asset Management will likely yield little or no dividends from inception through the early years of the company’s life cycle until management believes that dividend distribution will pose little or no risk to the sustainability of the company. 3. MISSION, STRATEGIES & OBJECTIVES 3.1 Mission Statement Advanced Asset Management will acquire properties and build a portfolio that will enable the company to provide an ongoing continuing stream of income in the form of dividends and build equity value for long term shareholders of the company while exercising all business dealings, whether internally or externally, to the highest possible ethical standards. Further, management and staff of the Company will perform their obligations in a fiduciary and responsible manner with an entrepreneurial spirit for all shareholders of the company, while maintaining an atmosphere of levity and a strong sense of family for all employees. Advanced Asset Management Page 5 of 28 3.2 Values Management and staff of Advanced Asset Management will strive to maintain the following seven values while performing the day-to-day responsibilities expected of them. All property acquisitions, developments and dispositions will be handled to the most beneficial long-term interests of all shareholders of the Company. All clients, customers and employees of the Company will be treated with respect and dignity at all times. All business enacted by the Company will be performed to the highest possible fair and ethical standards The development or utilization of any of the Company’s properties will be performed in a manner that will be as environmentally friendly as possible. Advanced Asset Management will take an active role in enhancing the local communities in which it does business and will encourage all employees to participate. All employees of the Company will be compensated fairly for their relative positions and in a manner that will allow them to provide adequately for their families. The working environment of Advanced Asset Management will be an atmosphere of levity and family to make the company an enjoyable place for employees to work and clients to do business. 3.3 Strategies 3.3.1 Acquisitions Advanced Asset Management will acquire properties that will be beneficial to the long-term strategic objectives of the company at costs that management believes is at or below current fair market values or that have significant marketable potential. Acquisitions could be enacted utilizing any of the following or other not yet identified techniques to take advantage of market opportunities as they present themselves. Utilize a combination of shares of the company as currency or allow the original property owner to hold the mortgage for the company (as opposed to a financial institution) in addition to a portion of cash held in the accounts of Advanced Asset Management to purchase properties when the opportunity proves beneficial to the company. This strategy will also provide several attractive benefits to a selling client as well as to the company .1 In addition to a significant lump sum cash payout, these clients will hold shares in Advanced Asset Management that will provide long-term ongoing income and potentially reduce their immediate and long-term tax obligations. This strategy will give the Company a local Advanced Asset Management Page 6 of 28 shareholder and potential advisor with a vested interest in the successful utilization and development of his former property. .2 Acquire properties that possess a significant mineral or energy access rights that can be sold or are attractive to government programs that can be exercised, thereby offsetting large portions of or perhaps the entire purchase price of the property. Acquire properties that have significant ongoing harvest potential, through timbering or farming. The Company would use proceeds generated from the harvests to reduce debt, provide distributions to shareholders, capitalize further acquisitions or fund ongoing operations. Acquire developed commercial properties that offer significant opportunities for ongoing rental income or turnover when local real estate markets rebound. Acquire residential properties, either distressed or foreclosed, that offer significant equity and provide opportunities for ongoing rental income. Acquire properties that have significant development potential, either by partitioning for sale, development for commercial or residential sale or to create rental holdings for the company. Opportunities divided and sold in partitions provide potential income to the company that exceeds the potential income to the company if the properties were to be disposed en masse. In other words, the sum of the parts would be worth more than the whole. Leverage the equity of existing holdings to acquire properties that have potential opportunities that fit with the long-term strategy of the company. 3.3.2 Holdings, Development & Dispositions Advanced Asset Management will acquire, hold, develop or dispose properties that will be beneficial to the long-term strategic objectives of the company at operational costs that management believe either possesses long-term growth potential or will provide significant continuing income streams to the company, or perhaps even both. Each or any combination of the following strategies, as well as those not yet identified could be used as opportunities become available. It is expected the holdings of the company will consist of an appropriate balanced combination of land that can be developed and sold for market prices that exceed acquisition costs; land that can be harvested of natural renewable resources and finally, rental or commercial properties that will yield significant on-going revenue streams to the company. It is also expected that the acquisition of distressed and foreclosed residential properties will provide the Company with equity, ongoing income in the form of rental payments and will increase the net asset value of the company overtime by holding these properties until the current economic climate improves. Advanced Asset Management Page 7 of 28 Acquire properties that have significant ongoing harvest and on-going income generation potential. .1 Timbering rights would be sold to appropriate customers and each harvested area would then be replanted with trees that could be harvested at some future date. .2 Advanced Asset Management could further harvest what remains from timbering operations by creating and selling mulch and firewood from the perspective harvesting bark and timber remnants. The mulch and firewood would be transported to appropriate locations for sale to residential and commercial clients. .3 Land that could be farmed would be leased to local farmers for their utility until it became beneficial to the Company for other disposition. Acquire properties that have significant development potential. .1 Properties that could be developed for commercial, governmental or residential sale. .2 The Company will enter into joint ventures with local developers or commercial enterprises to develop and sell the company’s properties when it proves advantageous to do so to the company. .3 Advanced Asset management will develop properties into commercial or residential units when the opportunity presents itself, therefore providing ongoing rental income to the company. These could include any combination of the following, or other opportunities not yet identified. .3.1 Apartment units or complexes .3.2 Storage units .3.3 Commercial office space .4 Advanced Asset Management will partition holdings and sell them as commercial or residential building lots when opportunities arise. Take advantage of other strategic business extensions that have a close association with the overall business strategy of Advanced Asset Management but are not directly involved with the asset holding strategy defined in this business plan. Each enterprise will be evaluated on its own merits to determine if it should be a subsidiary of Advanced Asset Management or an entirely separate company sponsored by and having a close relationship to Advanced Asset Management. A few examples of such opportunities for the business extensions include: .1 Spin-offs from the developments created under the main business enterprise .1.1 Real estate brokerage .1.2 Rental lease Management Company .1.3 Land Transfer Company Spin-offs from the timber harvests created under the main business enterprise .1 Mulch and firewood retail outlets Development of 55+ adult retirement communities where Advanced Asset Management will hold the land rights, the homeowner will own the home but pay the company a “lot fee”. Advanced Asset Management Page 8 of 28 3.4 Objectives 3.4.1 Income Generation The primary long-term strategic objective of Advanced Asset Management will be to create and hold an inventory of net assets in the form of properties that generate continuing streams of income to the company and increase shareholder value. The management of the company will use the initial intrinsic marketable value of the properties to minimize the debt of the holdings at the time of acquisition, and then develop the potential of the property to create and maintain the income stream to the company. Further, the income streams generated will be divided for use into three major segments: Retained earnings that can be used to fund further acquisitions and developments Fund the continuing operations of the company, including the attraction and retention of employees that prove vital to the organization. Distribution to shareholders in the form of a combination of on-going dividends or special annually announced dividend distributions when deemed appropriate. The current expectation is that early in the life of the company, all generated income will be used to fund acquisitions and the continuing operations of the company. In time, management expects the segmentation to include distributions to shareholders in the form of dividends. As the holdings of net assets in the Company expands, it is further expected the retained earnings requirement will level, allowing the dividend distribution to shareholders to grow exponentially, eventually attaining double digit percentages in relation to the invested dollar. 4. PRESENT STATUS 4.1. Background There is currently no knowledge of any broad based company or enterprise that is in place to take advantage of and utilize similar strategies as those outlined in this business plan for Advanced Asset Management. The landscape is dotted with small individual property owners that do take advantage of a small number of these strategies when they present themselves as being relevant to their existing holdings. In many instances, these individual property owners have several separate holdings in their portfolios, but they are typically local and somewhat isolated. Additionally, there are many other REIT companies. Typically these REIT companies only execute one type of property investment. It is believed that using a combination of the strategies set forth in this proposal will make Advanced Asset Management’s Land Enterprise a truly unique Real Estate Investment Company. Advanced Asset Management Page 9 of 28 4.2 Progress To Date In January 2010, Advanced Asset Management was established as a Mortgage Field Services company, specializing in the rehabilitation and maintenance of abandoned and foreclosed properties for financial institutions, primarily located in its home county of Lebanon, Pennsylvania. In short order the number of services offered to its clients encompassed every aspect of securing, maintaining, inspecting and contracting. The range of clients have also exploded over a short amount of time, from initially serving local REO agents for institutions such as Wells Fargo and Sovereign Bank to working with national clients such as Cityside Management Corp, White Van RES, Five Brothers Mortgage Field Services and Field Asset Services whose clientele includes VA, FHA, HUD, City Bank, JP Morgan Chase, Bank of America, US Bancorp and numerous other national banking institutions. As of January 2013 Advanced Asset Management has grown into one of the regions fastest growing mortgage field services companies now servicing not only Lebanon county, but also Dauphin, Berks, Lancaster, Schuylkill, Montour, Northumberland, Luzerne and Carbon counties. Management believes that utilizing good-working relationships with Asset Management Companies as well as local REO representatives in conjunction with its intricate knowledge of construction and rehabilitation lends itself incredibly well at pinpointing optimal investment opportunities before the general public becomes aware. Management also believes that its knowledge of the current economic climate, especially within the housing sector, lends itself well to the acquisition and disposition of assets in a well-timed manner. Management is actively seeking out potential properties that fit the characteristic profile of the company’s business strategy and has identified several potential properties in Pennsylvania, West Virginia, Missouri, Tennessee, Georgia, Kentucky and North Carolina that fit requisite requirements. These efforts have been to confirm the viability of the proposed business plan. In addition to seeking out and identifying prospective properties, management is actively researching and identifying existing and proposed government programs and how they may impact the acquisition strategy of the Company. Lastly, the management is also researching utility expansion strategies to determine the geographical likelihood these tactical moves may have on obtaining access privileges. Additionally, management of the Company has been investigating development opportunities in the locality of its home offices including: One or two high-rise apartment home structures that would be built on a site overlooking the Lebanon Valley Area. The structures are anticipated to be up to fifteen stories, with each floor in each building housing two, fifteen hundred to two thousand square foot apartment homes. The top floors of each building are expected to house penthouse type apartments. All of the apartment homes would be sold to prospective owners who would then pay Advanced Asset Management a maintenance fee for snow removal, building Advanced Asset Management Page 10 of 28 maintenance and lawn care. The ground floors would possibly house parking garages for the owners, with exterior parking for visitors. The buildings would have high security with key pass entry. The buildings might also include amenities such as a convenience store, a swimming pool and recreational facilities and a fitness center. Quite possibly, these facilities could be made available to the public for a fee. Two small groups of townhouses that would be built on the outskirts of the city of Lebanon, Pennsylvania in two separate locations. These would be designed for construction and sale at a profit to the company. The target market would be single individuals or newlyweds who are purchasing their first home or young families looking to upgrade from a starter home. The price range is expected to be in the neighborhood of $135,000 to $175,000. Several distressed and foreclosed properties have been located within the area of service of Advanced Asset Management at a substantial discount to fair market value. These distressed and foreclosed properties have met a number of requisite requirements such as desirability of the surrounding area, home qualities, rehabilitation work required, net asset value once the property has been rehabilitated as well as the health of the local economy. These properties, once acquired and rehabilitated will have an average of 30-50% equity. Management feels that an equity target after rehabilitation and acquisition expenses of between 30-50% is obtainable given the Company’s experience in this industry. A storage unit complex that would be built on a busy highway adjoining Lebanon with a neighboring city. The location of the complex is adjacent to a four hundred acre parcel that is currently under residential development that will include several hundred units. The immediate area has undergone significant residential construction in recent years and so it is anticipated that sixty to eighty storage units would not only be easy to rent initially, but would be relatively easy to keep rented for many years. 5. PRODUCT / SERVICES DESCRIPTION Initially and depending on the acquired land holdings, Advanced Asset Management will offer a combination of harvestable hardwoods for commercial applications such as furniture and housing trim as well as evergreens that would be used for the construction and heating industry. Although the recent real estate housing boom is taking a pause, the anticipated growth in the overall population should restore this growth pattern to its most recent past, thus increasing demand and associated prices for the timber and resources that Advanced Asset Management will be making available. Where practical, the company will reforest harvested lands with appropriate saplings. Hardwoods can take well over twenty years to restore and so will make those opportunities much longer to realize. The upside however, is that hardwoods command significantly higher prices, in some cases by a factor of as much as ten times, and as a result, can offset the lost opportunity cost associated with the length of harvest realization time. Softer woods, such as southern pine for the construction industry can grow much faster with harvests occurring every ten to fifteen years. Advanced Asset Management Page 11 of 28 In addition to the harvesting of timber for the housing industry, Advanced Asset Management will take advantage of the waste generated by the timber harvest operations by gathering all the sizeable tree cuttings and further sizing them into marketable firewood. The bark and smaller pieces will be ground into mulch. Both products will be transported to larger population centers and sold to commercial clients or delivered to retail outlets that are owned and operated by Advanced Asset Management. As the company expands, it will add other residual income generating properties to its portfolio of net asset holdings. These will likely include but not be limited to an assortment of rental properties such as residential and commercial rental units such as apartments, offices and storage units. As noted previously, when the opportunity is beneficial to the company, properties will be developed or disposed. Details of the execution of these strategies will be available on a case-by-case basis when appropriate. One recently discovered opportunity for long-term receivables as well as ongoing rental income will be to acquire distressed or foreclosed properties that meet the Company’s requirements, rehabilitate them to a habitable and desirable status and become the mortgage holder to individuals who meet reasonable requirements. On a case-by-case basis, these homes will be inhabited by potential purchases that are otherwise unable to obtain a mortgage through conventional means. In a set number of years after origination of the mortgage, the prospective purchaser will have the home appraised and will seek a conventional mortgage based on the current fair market value of the home. This conventional mortgage will enable the homeowner to purchase the home and balloon the Company out of its asset at a significant profit. Under this scenario, the homeowner will care and treat the home as if it was theirs, maintaining and improving as they see fit. 6. PROFILE OF TARGET MARKETS 6.1. Market analysis The United States has seen significant population growth in the last one hundred years, having registered 300 million citizens in October of 2006, with the last 100 million coming since 1967. The rate is expected to increase considerably and the next 100 million is expected to be added sometime around 2040, which is less than thirty years away. This population growth will create enormous pressure on current infrastructure needs and also create intensified demand for land, energy, housing and services. More than half of the current population resides within fifty miles of the Atlantic, Pacific, Gulf and Great Lakes coastlines on just a fifth of the country’s land mass and over the last twenty years, and incredible 1/7 acres of land has been developed for every person added to the population. If that rate continues, over the next twenty years, 170 million acres of land will be developed in the United States. These expected increases in population coupled with the anticipated increases in energy costs will necessitate Advanced Asset Management Page 12 of 28 an introspective look at how and why land is developed and perhaps create unique new and exciting development opportunities in small town urban America. Despite the crippling economic decline in the housing industry since 2008, the homebuilding industry has seen unprecedented growth over the last decade in almost every area of the country, some more than others. Due to the anticipated population expansions, the homebuilding economic woes are expected to be short lived since interest rates have reduced to attractive levels and also since the overall population and associated housing and commercial infrastructure needs are expected to continue to increase. It is anticipated that over 70 million additional housing units will be needed over the next three decades. The current brief respite of economic growth within the housing industry provides a remarkable well-timed opportunity for Advanced Asset management to launch the execution of its acquisition strategy. The current short-term slowing demand places Advanced Asset Management in a position to use its competitive advantages to better negotiate more favorable acquisition pricing. As the housing industry resumes its growth patterns going forward, the company will then be well positioned to provide the resources to fuel a significant and profitable portion of that growth. Additionally, as the need for housing and commercial infrastructure increases, Advanced Asset Management will take advantage of this growth opportunity by developing both residential rental units to retain in the portfolio of the company as well as other individual units that will be developed for sale to residential consumers. The company will attempt to acquire lands that are just beyond the current development reaches where it will have a more favorable pricing power and then strategically use the resources of the property until the urban sprawl reaches it, thus naturally increasing its market value. This will allow the company to further leverage its competitive advantages by possibly developing commercial properties for lease or sale as well. Decades long political turmoil in the Middle East coupled with the recent and anticipated future escalations in the price of oil due to increasing worldwide demand, most notably from southeast Asia, and every decreasing worldwide supplies should cause a renewed interest in the energy resources within the borders of the United States that will grow exponentially, as we are currently seeing in the fracking and natural gas boom. Favorable timing of the strategies herein will allow the Company to use its competitive advantages to not oily acquire land, but to also take advantage of the energy thirst of the country through the sale of exploration and right-of-way access privileges that will be required to support that thirst. The Company will acquire lands that can fulfill the current exploration or access needs of energy or utility companies or that are strategically located geographically so as to fulfill anticipated future needs. Management of Advanced Asset Management expects that the increased regulations on financial institutions as well as the increased scrutiny an individual meets while attempting to gain a mortgage approval will naturally lead to individuals searching for privately held mortgages as well as rental properties. This combination will allow Advanced Asset Management to command a premium interest rate on privately held mortgages for its own properties. Advanced Asset Management will not finance mortgages for homes that the Company does not already possess. Advanced Asset Management Page 13 of 28 Lastly, Advanced Asset Management fully expects to utilize otherwise idle lands in short-term situations by leasing them to local farming cooperatives and then negotiate a portion of the income that is generated from that effort for the benefit of the Company. Going forward, the increase in population will naturally necessitate an accompanying increase in the need for farm products. Additionally increased prices in oil should also drive increased demand for farm products that have the economic potential to offset the rising cost of oil, such as corn that is used to manufacture ethanol. While no one can foretell the future direction of the energy policy, management of Advanced Asset Management fully anticipates that demand for these products will continue to increase, perhaps exponentially. Therefore, management of Advanced Asset Management fully expects that leasing idle lands in support of farming efforts will always be an available and profitable option. 6.2 Customer Base Advanced Asset Management’s expected customer base will typically be dynamic and constantly changing depending on the operations being undertaken by the Company. Customers are anticipated to include but not be limited to the following: Harvestable Timber Local Sawmills Mulch and Firewood Local commercial retail outlets for residential and commercial applications. Direct sales to residential and commercial property owners Government Programs Federal government agencies State government agencies Local government agencies Mineral and Energy Rights Utility companies requiring electrical power or natural gas access or rights of way privileges Energy companies, such as coal, oil or natural gas that are seeking exploration or mineral rights Energy companies seeking renewable energy sources Companies that are engaged in the mining of semi-precious or precious metals, such as copper or silver that are seeking exploration or mineral rights Farming Leasing Rights Local farmers, partnerships or cooperatives seeking additional land to utilize for farming activities. Their products would then be sold to clients within the local communities.] Development Property Families or individuals seeking residential rental housing Advanced Asset Management Page 14 of 28 Individuals seeking private mortgages Individuals looking for storage space Small business owners seeking commercial office, manufacturing or storage space. Developers seeking land for residential or commercial development. 7. MARKETING STRATEGIES & SALES PLANS Initially, the Company will execute most of the sales and marketing activities required with the assistance of appropriate consultants when required. This will be the most efficient use of the Company’s available and necessary resources until the volume and scope of activities necessitate the addition of key individuals to assist in more dedicated and specific roles. Management of Advanced Asset Management does not feel that in the early stages of the company’s growth it is in the best interest of the company to be directly involved in marketing and retailing its products to the final consumer. Towards that end, in years one, two and perhaps even three, management will instead seek to become a supplier of its products for other retailers and to utilize specialized resources that it can hire on a contractual and as-needed basis. 7.1. Government Programs Taking advantage of available Government Programs is anticipated to primarily be a research activity and then a continuation through completion of submittal of all the necessary associated paperwork and applications. In many instances, it is expected that relationships with local, state and federal public offices and representatives will likely have to occur prior to, or in parallel to any property acquisition activities of Advanced Asset Management. While not a traditional sales and marketing activity, the effort utilized while developing these relationships to the company’s competitive advantage will require many of the skills traditionally required of seasoned sales and marketing professionals. It is anticipated that application for continuation of Government programs will have to be submitted on a fairly regular basis, perhaps as frequently as annually. Therefore, the importance of the development and continuation of these relationships cannot be minimized. 7.2. Sale of Mineral and Energy Rights Similar to taking advantage of available government programs, the sale of mineral and energy rights will also require significant research, and like the government programs, will likely have to occur prior to, or in parallel to any property acquisition activities by the Company. Additionally, while these contracts will be to non-governmental enterprises, it is anticipated that similar relationships with local, state and federal public officials will have to be nurtured because of the potential environmental impact to the local regions. It is expected that in many cases, much of the Advanced Asset Management Page 15 of 28 governmental relationships will be developed not only be Advanced Asset Management, but also by contracting company, depending on the nature of the privileges involved. In contrast to government programs though, it is expected Advanced Asset Management will negotiate long-term contracts for the sale of mineral rights and energy access rights-of-way primarily to publicly traded companies, but which may include some private companies as well. In addition, it is expected that in many instances, these sales will be a permanent right to the contracting company and is expected to last into perpetuity as long as certain conditions are met. These contracts will then be included in the deeds of the involved properties so that any future disposition by Advanced Asset Management would require the new owners to honor and likely also receive the benefits of that contract. 7.3. Leasing of Farming Rights Advanced Asset Management will seek out and negotiate long-term contacts with farmers and farming cooperatives that are local to properties that are held in the portfolio of the company. Although the company will seek out and negotiate long-term contracts for these categories, the company fully expects to retain the rights of renewal of the contracts on a year over year basis. This will permit Advanced Asset Management to retain the flexibility to take advantage of development or disposition opportunities as they emerge. Again, the leasing of farming rights is not expected to require a traditional marketing and sales strategy, but rather, a development of relationships with local farmers and farm cooperatives. 7.4. Timbering and Related Activities Advanced Asset Management will seek out and negotiate long-term timbering contracts with sawmills that are local to properties that are held in the portfolio of the Company. While these contracts will be long-term relationships, none will be written into the property’s deed as “in perpetuity”. Also, while anticipated to be long-term relationships, it is still expected Advanced Asset Management will retain the year over year renewal rights to these contracts. This will permit the Company to have the nimble flexibility to take advantage of development and disposition opportunities that may arise. Negotiations of these contracts are not expected to require a traditional marketing strategy. Sales of the timbering rights, however, will likely require the development of relationships with not only the management of the contracted sawmills but also local, state and federal public government officials to ensure the Company’s adherence to local zoning laws and state and federal environmental impact legislation. Advanced Asset Management Page 16 of 28 As a supplier of mulch and firewood products produced by Advanced Asset Management from the residuals of the timbering harvests, Advanced Asset Management will also seek out and develop long-term contracts with local companies who provide landscaping supplies and services. While long-term, the Company will again retain year over year renewal rights to allow Advanced Asset Management to take advantage of development and disposition opportunities that present themselves. Going forward, as the market opportunities for Advanced Asset Management evolves for these products; the company may develop retail outlets under the Company name to take advantage of the natural product lines that will be available to them. 7.4.1. Commercial and Residential Rental and Disposition Properties The initial primary business focus of Advanced Asset Management will be acquisition, rehabilitation and sale or rental of foreclosed and distressed properties. Advanced Asset Management will handle management of any of the commercial and residential rental activities. Additionally, the Company will provide its own rehabilitation work. It is expected that any of these rental activities in years one, two or three will be relatively small in scale. However, as the size and net asset values of properties increase so will the size of rental operations performed by the Company. A primary factor in the success of this business venture, and what sets Advanced Asset Management apart in particular is to acquire properties which the Company already services. Currently, Advanced Asset Management is able to enter into properties which have been abandoned by property owners and assess, secure and repair these properties prior to finalized foreclosure proceedings. This process will enable Advanced Asset Management to become extremely familiar with rehabilitation needs and will provide accurate costs. Individual investors seeking to purchase foreclosed and distressed properties have no such access and will essentially be taking a “shot in the dark” in regards to repair costs. 7.4.2. Subsidiary Businesses The structure, sales and marketing strategies of any significant subsidiary business that Advanced Asset Management becomes engaged in will be defined as those business opportunities become available. Size and scope of those operations will likely determine how those businesses are managed. Initially, it is likely they will fall under the management of the Company’s management team in that is in place at that time. As the size and scope of those businesses evolve, it is anticipated that management of Advanced Asset Management will create distinct subsidiary companies, each with their own management team that will report directly to the primary officers of the Company. Without having a specific business enterprise in mind, it is impossible to structure or even provide a rough outline of a marketing strategy or sales plan. Advanced Asset Management Page 17 of 28 7.7 Commercial Business Enterprises As in subsidiary businesses, the structure, sales and marketing strategies of any significant satellite business that Advanced Asset Management becomes engaged in will be defined as those business opportunities become available. Since the perceived risks associated with these enterprises are higher, it is expected that the majority of these businesses will be wholly owned and managed by others outside the sphere of Advanced Asset Management. The Company’s role will be similar as that of a silent partner, providing financial support and managerial advance as needed, while maintaining a legally distinct and separate relationship. In those rare instances where Advanced Asset Management takes a more direct and influential role in commercial business enterprises, the business will be organized into separate distinct and appropriate subsidiaries with their own management teams that will report directly to the primary officers of Advanced Asset Management. Again, without having a specific business enterprise in mind, it is impossible to structure or even provide a rough outline of a marketing strategy or sales plan for these commercial business enterprises. 7.8 Development & Disposition It is not anticipated that Advanced Asset Management will engage in any major development or disposition activities in the first few years. However, if a compelling opportunity does present itself, any development or disposition of Company property that is undertaken by management may utilize resources outside the company. Outside resources could include but not be limited to building contractors, engineering firms and real estate brokerages as the need determines. As in previous sections, without having a specific development or disposition opportunity in mind, it is impossible to structure or even provide a rough outline of a marketing strategy or sales plan for these commercial business enterprises. 8. OPERATIONAL PLANS 8.1. Mineral and Energy Rights Advanced Asset Management intends to evaluate and acquire land or properties at a value that is less than current or projected market values that present opportunities for harvesting, development or sale. Part of the strategic value of any acquired property will include the availability of mineral and energy rights that could be sold to others. It is the intent of management that the funds raised from the sale of these rights will be used to offset some or perhaps all of the purchase costs of the property. Among other rights, these rights could include: Natural gas pipelines or other utility access Oil and / or natural gas drilling Coal or other resource mining activities Advanced Asset Management Page 18 of 28 With the execution of the sale of mineral and energy rights, it is expected that the Company will retain ownership of the properties along with the farming and associated on-going harvesting rights, which in turn will provide long-term income to the Company. In some, less common circumstances, the Company may also retain and make use of development rights of portions or all of these same properties. Management of the Company anticipates that the population growth in the United States coupled with expected global economic and population growth will not only create significant long-term increases in the strategic value of land for housing and provide business development opportunities, but also should necessitate an increased demand for new or revived energy resources. In addition to the profit potential derived from the development, extraction and transport of new energy resources, it is expected that increased demand will also make existing energy sources that were previously thought to be unprofitable much more attractive to marketers, due to the associated higher prices generated. 8.2 Government Programs Despite the economic strength of the United States, the country has always adopted a policy supporting agriculture rather than industry, particularly agricultural farming activities. Part of the value of any property acquired by Advanced Asset Management could also include the availability of Federal or State programs that place strategic value for these governments that are in the best interests of the overall population. As these programs are uncovered or enacted, Advanced Asset Management will research and acquire properties that can take advantage of these opportunities allowing the company to acquire properties, again, at costs significantly lower than local market values. The intent of the company will be to utilize these properties to generate cash flow for the Company, while taking advantage of any appropriate and available government programs to minimize or eliminate assumed debt incurred during the acquisition. An example of a typical government program that could potentially be taken advantage of by Advanced Asset Management would be when the government pays an annual stipend to a property owner so that he does not grow a particular crop on his property. This allows natural market forces to maintain stable and profitable market price levels for the remaining farmers that are unable or unwilling to take advantage of these programs. The intent of the government is to reserve the use of that property for development by providing an environment of profitability for all participants. The stipend would be available in the near-term to discourage the farming of that crop because to do so would upset the delicate existing market balance, due to a lack in current demand, which in turn would cause existing property owners to undergo severe economic hardship. Without the government program, the longterm result could be devastating. When demand eventually increases, there potentially would be insufficient farm opportunities remaining. Federal and state governments typically sue this and numerous other similar strategies to stabilize profitable market prices of farm products. For instance, government has maintained low milk prices through price restrictions for many years and during this time has subsequently provided economic assistance to dairy farmers to ensure continued farming activities. Additionally, the federal government Advanced Asset Management Page 19 of 28 restricts the importation of cane sugar in order to maintain stable and profitable price levels for sugar beet farmers in the western United States, allowing them to remain in business for future demands. 8.3 Timbering and Related Activities One of the primary activities of the Company will be to acquire land or properties at a value that is less than current market values that present opportunities for harvesting of timber for commercial and residential use. The Company will increase the cash flow of the Company through the sale of timbering rights of these properties utilizing the proceeds to initially minimize or eliminate debt and then to further provide long-term income to shareholders of the Company. As these lands are harvested, the Company will re-plant seedlings to replenish future supplies. As a future business extension, Advanced Asset Management can further take advantage of the profit potential from residuals left behind by the contracted timbering companies through the creation of a subsidiary that will manufacture, transport and distribute firewood and bark mulch to more densely populated residential and commercial customers. Again, with the anticipated growth in population and increase in energy prices, both of these byproducts are expected to experience significant growth opportunities for the Company. Where it makes good business sense, the Company will also create company-owned point of sale business for these operations. The Company will then likely add other similar products, such as lawn and garden supplies, landscaping and lawn maintenance services, etc. 8.4 Leasing of Farming Rights Where it makes good business sense, the Company will lease portions of its holdings to local farming enterprises on an annual basis. This strategy will be utilized for net holdings of the Company when the targeted strategies of the Company are unavailable. For instance, these properties could be: Adjacent portions of timbering tracts that is not practical to grow into timber Properties where mineral and energy rights have been sold and further development or use is being evaluated or delayed to the future Holdings that the Company believes have long-term intrinsic development potential, but are not practical to develop near-team. 8.5 Rental Properties Part of the Company’s planned net holdings will include residential and commercial rental properties that have either been acquired from a pool of existing available properties or have been developed exclusively by the Company or through a joint venture with local developers. It is expected that all the rental properties within the Company’s net holdings will have minimal risk, yet offer significant yield and appreciation opportunities to the Company. In addition to other rental opportunities not yet identified, it is expected that these properties could include any combination of the following. Advanced Asset Management Page 20 of 28 Residential apartment buildings or complexes Vacation rental properties Commercial office buildings or complexes Storage unit complexes Government subsidized housing units 8.6 Subsidiary Businesses As the size and scope of net holdings in rental, residential and commercial properties expands or as development opportunities evolve, Advanced Asset Management will further take advantage of the profit potential of this important segment of property holdings through the creation of subsidiaries or by developing business relationships with separate, company sponsored enterprises to when it makes good business sense to do so. Although not an exclusive list, these business extensions could include any, all or none of the following: Real estate brokerage and rental management services Mortgage and financial services Construction or development building contractor Landscaping design and architectural engineering services 8.7 Commercial Properties & Businesses Looking towards the future and when it makes extremely good business sense, the Company will create individual subsidiaries or enter into relationships that can take advantage of unique business opportunities in carefully selected markets. These particular businesses could have somewhat increased levels of risk, but provide significant income opportunities for the Company. To minimize risk to the Company in these circumstances, Advanced Asset Management would likely own the properties and lease them to select clientele but in some cases could be a primary sponsor or stakeholder. These business segments could include but not be limited to: Restaurants Retail outlets Urban re-development of commercial properties in small to mid-size towns and cities Renewable energy facilities 8.8 Development & Disposition An important portion of Advanced Asset Management’s overall business strategy is to take advantage of market opportunities to develop or dispose of significant parcels of the Company’s holdings. With the anticipated future growth in America’s population, the need for individual residential rental housing, Advanced Asset Management Page 21 of 28 retail outlets and strategically placed commercial properties for goods and services to support the growing population is expected to experience considerable, though, gradual growth. To take advantage of these important opportunities, a large part of Advanced Asset Management’s strategy is to acquire property that will not only provide the potential for cash flow and significant ongoing income from the strategies outlined previously, but to acquire property that is also strategically positioned to take advantage of these future development and disposition opportunities. Whichever makes the most strategic business sense, the Company will either develop these properties utilizing its own architectural engineering and construction subsidiaries, enter into relationships with existing local contractors or partition segments or all of the property into building lots that would be sold. 9. MANAGEMENT & ADMINISTRATION Currently, the management of the Company consists of Mr. Ray Bishop and Mr. Jason Bishop. The current management will conduct all business of the Company utilizing the services of appropriate consultants where necessary. It is not anticipated that additional employees will be added to the company until the second year of initiation of Advanced Asset Management’s Land Enterprise. At that time, an administrative assistant and other key individuals will likely be added to handle paperwork and help direct business activities. It is anticipated that the following organizational outline of senior management will be in place with several if not all positions filled by the end of year three. Some positions herein will remain as consultant positions until which time the management of the Company determines that it is more beneficial to the Company to fill these positions directly. Also by the end of year four, management of the Company expects to move its residency to a Company owned office in the Lebanon, Pennsylvania area. CEO President & COO CFO VP Regulatory Legal Counsel Investor Relations Director of Acquisitions & Land Use Director of Administration Documentation Director Engineering & Architectural HR Director Environmental Advanced Asset Management Page 22 of 28 Ray Bishop Mr. Ray Bishop’s background and experience lends itself well to the management of the Company, bringing over thirty years’ experience in Sales, Investor Relations, Real Estate Development, Construction and Business Development. During his career, Mr. Ray Bishop has created and further developed several of his own private business enterprises in building and masonry construction and real estate in Pennsylvania, Florida and Colorado. His pervasive and unique sales approach and construction background provides significant expertise to the Company so as to evaluate opportunities and then further develop the associated properties to realize and finally sell the full potential of their inherent value to prospective clients. As a stockbroker, Mr. Ray Bishop has developed the intimate knowledge and expertise required to direct corporate management in the requirements to not only increase shareholder value, but also to provide the insight, guidance and contacts needed for the company’s expected exponential growth and future stock offerings. Mr. Ray Bishop has previously been involved with the Initial Public Offering as well as the growth and appreciation of the shareholder value of numerous startup companies. Jason Bishop Jason began his career by working independently as a consultant with The Ephraim Group, eventually becoming their foremost business analyst while evolving his career into strategic partnering and intellectual property management. While at The Ephraim Group, Jason successfully represented and sold biotechnology to clients worth $20 million. Since his tenure at The Ephraim Group, Jason most notably gained international and domestic interest for managed intellectual technologies from companies such as iKobo, S&B Worldwide, GEA Farm Technologies and ACCSOL Dairy. Jason also serves as Advanced Asset Management’s COO. Through his direct efforts Advanced Asset Management reached a peak of maintained assets totaling over $10 million. Jason’s business relationships with national asset companies as well as with financial institution foreclosure representatives serve as an invaluable asset to the Company. Advanced Asset Management Page 23 of 28 10. FINANCIAL PROJECTIONS 10.1. Key Assumptions The following assumptions were utilized while preparing the four-year financial projections. For the first 18 months of execution of this business proposal, management of the Company will focus solely on acquiring distressed and foreclosed properties to quickly build an asset base and net equity. Management believes that this specific business aspect lends itself best to the current business model of Advanced Asset Management. Mineral and energy rights as well as existing government programs that might apply to any one particular property holding are impossible to predict without being actively involved in that specific property. The financial projections for the sale of mineral or energy rights as well as funds generated from taking advantage of existing or proposed government programs that are portrayed could vary widely in both the size and timing of execution. Therefore, the portrayed financial projections are very conservative estimates. Residential properties acquired by the Company are estimated to have an average equity value of 25%. Additionally, the Company will seek out investment properties that offer debt payment to income ratios of 1:2. Rental income based on $800 monthly. Leasable farmland price per acre is assumed at $100 per year per acre. For the purposes of this analysis, income taxes have been estimated at 40% of earnings and all depreciation has been calculated based on a forty-year life of depreciable property. Operating expenses include ongoing operations including subcontractor payments, materials etc. Operating expenses include rehabilitation expenses for rental and residential disposition properties. It is expected to purchase and rehabilitate one rental property per quarter for years 1 through 4. It is expected to identify, purchase, rehabilitate and dispose of one residential property per half for the first year, eventually ramping up to one home per four months. It is assumed that by year 4, the Company will use its assets to purchase raw land. The resources that were previously directed towards acquiring rental properties will be focused on obtaining land assets. 10.2 Four-Year Financial Projections Figure 2 shows the projected four-year financial projections for Advanced Asset Management Advanced Asset Management Page 24 of 28 Figure 2 Description 1st Year 2nd Year 3rd Year 4th Year Total $150,000 $150,000 Sales: Mineral Rights Renewable Harvesting Residential Developments Rental Property $38,400 $76,800 $115,200 $115,200 $345,600 $220,000 $100,000 $358,400 $330,000 $125,000 $531,800 $330,000 $150,000 $595,200 $330,000 $175,000 $770,200 $1,210,000 $1,760,000 $2,255,600 $160,000 $220,000 $220,000 $220,000 $820,000 $1,000 $60,000 $1,000 $135,000 $1,000 $145,000 $5,000 $155,000 $8,000 $495,000 $221,000 $356,000 $366,000 $380,000 $1,323,000 $137,400 $175,800 $229,200 $550,200 $932,600 $50,000 $55,000 $60,000 $70,000 $235,000 $5,000 $10,000 $15,000 Commercial Property Residential Sales Ongoing Operations Total Sales: Cost of Sales: Acquisitions Development Engineering, Permitting, Etc. Operations Total Cost Sales Gross Profit: of Operating Expenses: Marketing Promotions Administration & Research Development Travel & Total Operating Expenses Operating Income EBITDA Depreciation & Amortization Earnings Before Income Taxes Income Taxes @ 40% Net Earnings $50,000 $55,000 $65,000 $80,000 $250,000 $87,400 $120,000 $164,200 $470,200 $682,600 $87,400 $120,000 $164,200 $470,200 $682,600 $52,440 $72,480 $96,520 $282,120 $409,560 $52,440 $72,480 $96,520 $282,120 $409,560 Advanced Asset Management Page 25 of 28 10.3 Four-Year Projected Balance Sheets Figure 3 shows the projected four-year balance sheets for Advanced Asset Management Figure 3 1st Year 2nd Year 3rd Year 4th Year $500,000 $52,440 $250,000 $72,480 $250,000 $96,520 $250,000 $20,000 $23,500 Total Current Assets $543,500 $20,000 $23,500 $345,940 $20,000 $20,000 $23,500 Description 1 Current Assets Cash and Deposits Carry over Infusion Receivables Equipment Capital 2 $23.500 $365,980 Other Assets Inventories (timber) Land $140,000 $250,000 3 Commercial 4 holdings Residential 5 Holdings Property Property $224,800 $450,000 $674,800 $674,400 $768,300 $891,840 $1,040,760 $1,454,420 $112,400 $224,800 $112,400 $224,800 $337,200 $100,000 $437,200 $779,440 $815,960 $1,017,220 Total Other Assets Total Assets Current Liabilities6 Mortgages Accounts Payable Income Taxes Total Liabilities Long Liabilities Current Term Mortgages Privately held mortgages Total Long Term Liabilities Total Net Assets $768,300 1 Obligations less than twelve months Equipment assets is a variable number in years 2 through 4 for the purposes of net assets of the Company, owned by the Company. 3 At cost assuming no appreciation in market value 4 At cost 5 At cost 6 Assumed obligations for ten years @ 8% per annum 2 Advanced Asset Management Page 26 of 28 10.4 Key Metrics Analysis Figure 4 shows the four-year projections of key measurable for Advanced Asset Management Figure 4 1st Year Outstanding 2,000,000 2nd Year 2,000,000 3rd Year 2,000,000 4th Year 2,000,000 $0.38 $0.39 $0.41 $0.51 $1.00 $1.00 $1.00 $1.00 Description Total Shares: Net Earnings (loss) per Share: Total Cash per 7 Share Book Value per Share8 10.5 Four-Year Projection Sensitivity Analysis The primary characteristics identified as having the most significant risk implications and associated impact to the profitability and growth of Advanced Asset Management are shown in the following abbreviated financial projection tables. Each table assumes other factors remain as originally projected, and the impact that a variance to each significant control variable has the potential four-year total earnings for Advanced Asset Management. 10.5.1 Acquisition Costs Advanced Asset Management’s prospects will be very dependent on the availability and associated acquisition costs of properties that fit the profile of assets required to meet the long—term objectives of the company. In addition, real estate markets have been extremely volatile in parts of the country. Further troubles in the economy should further cool the demand for real estate to the benefit of the Company. Realistically, if costs are significantly higher than expected, it could negatively impact the ability to take advantage of market opportunities. 10.5.2 Sale of Mineral and Energy Rights The demand and subsequent sale of Mineral and/or Energy Rights is subject to the whims and fancies of market forces that are not within the direct control of the Company. Additionally, the markets for these products have a very limited customer base, which could adversely affect 7 8 Cash value paid in dividends calculated against liquid and non liquid assets of company Cost per share Advanced Asset Management Page 27 of 28 negotiations and could also negatively affect the timely development and execution of the sales contracts of Mineral and/or Energy Rights. Management of the Company expects that any diversification into the sale of Mineral and / or Energy Rights would be well after the established asset base of the Company, somewhere after year 5. Financial projections are not provided for this business aspect because any numbers given herein could be greatly different than actual future numbers. 10.5.3 Renewable Harvests Demand and sale prices for the renewable resources that are projected to be within the portfolio of the Company’s assets is expected to continue to increase over time, making long term harvesting products, such as timber a very profitable enterprise, but all of the products in the Company’s portfolio will essentially be commodities having no brand identity, and as such they will be subject to short term spot demand and pricing. The term Renewable Harvest refers to items such as timbering and farm operations. 10.5.4 Combined Sensitivity Analysis A worst-case scenario for years 1-4 combines the effects of greater than anticipated acquisition costs for rental properties, depressed pricing for rental agreements, increased costs of rehabilitation as well as lowered equity in real estate assets. 11. FUNDING REQUIREMENTS & USE OF PROCEEDS Initially, Advanced Asset Management seeks a minimum capital requirement of $500,000 to fund the proposed on-going operations for the first two to four years of the Company. Out of the total authorized amount of 2,000,000 shares, each invested dollar will receive one share of the Company. Funds raised will be utilized to: Discover, evaluate and acquire properties below fair market value that have the characteristics identified by the Company that will enable minimization or elimination of all assumed acquisition debt. Initially help cover necessary expenses for the on-going operations of the Company. These will likely include but not be limited to travel and equipment. 12. IMPLEMENTATION Upon the raising of initial capital, Advanced Asset Management will begin to acquire properties identified by management that have the necessary characteristics of business opportunities that support the goals of the Company outlined previously. Advanced Asset Management Page 28 of 28 As net asset holdings increase, debt is reduced or eliminated, and the company begins to realize relevant positive cash flow, it is expected that Management in Advanced Asset Management will declare either an on-going dividend distribution, or a special, on time dividend distribution that would be part of a program of special dividends that are declared on an annual basis, or some combination thereof, sometime prior to the end or year two. Additionally, the Company expects that some of the land acquisitions in year 4 will entail opportunities for shareholders to enjoy as part of ownership in the Company. These opportunities may include, but not be limited to: Vacation opportunities in rural areas where the Company acquires land with habitable dwellings Hunting opportunities on privately held Company land Naturally, the nature and opportunity depends on the availability of such acquisitions and the viability of these benefits to shareholders. Management believes that all shareholders are to be treated equally, regardless of the amount of shares held. Therefore, if these opportunities arise for the shareholders of the Company, they will become available on a first-come-first serve basis. Guidelines of usage will be on a per-case basis. 13. Conclusion The funds raised from investors as a result of this business plan for Advanced Asset Management will allow the Company to acquire strategic properties that the company will utilize to generate cash flow in order to minimize or eliminate any debt that was incurred during the acquisitions. As the business develops, the Company will use the cash flow generated from these net holdings to take advantage of other opportunities as discussed previously that fit the business strategy of Advanced Asset Management. Further, management will utilize its competitive edge by taking advantage of currently well-established business relationships with financial institutions, national foreclosure management companies and local real estate owned sales agents to acquire properties before the general public becomes aware of their presence. Management believes that utilizing non-conventional mortgage options will help to motivate current owners of foreclosed and distressed properties without taking the time and effort to sell to the general public. Additionally, the well-established contracting and foreclosure rehabilitation experience of the Company will ensure accurate cost and value estimates as well as quick turn-around time from acquisition to Company utilization. Lastly, Advanced Asset Management will own a continually growing inventory of a diverse mix of nearly debt free, minimally taxed assets requiring little maintenance that are anticipated to provide on-going income streams to the Company. Going forward, Advanced Asset Management’s accumulation of net asset holdings and the anticipated growth in the value of these net assets is therefore expected to Advanced Asset Management Page 29 of 28 increase the market value of each share of company stock, providing long-term growth for all shareholders. Advanced Asset Management Page 30 of 28
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