AMERICATOWNE Inc. – FORM 10-K – March 22, 2016

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K

[X] ANNUAL REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2015
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _____ to ________

 

AMERICATOWNE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

Delaware
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)

000-55206
(COMMISSION FILE NO.)

46-5488722
(IRS EMPLOYEE IDENTIFICATION NO.)

4700 Homewood Court, Suite 100, Raleigh North
Carolina 27609
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(888) 406 2713
(ISS-UER TELEPHONE NUMBER)

– 1 – 

Securities registered under Section 12(b) of
the Exchange Act: None.

 

Securities registered
under Section 12(g) of the Exchange Act: Common Stock (Form 10/A-12(g) dated June 13, 2014).

Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [_] No [X]

 

Indicate by check mark
if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Yes [_] No [X]

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [_]

Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [_]

Indicate by check mark
if disclosure of delinquent filers in response to Item 405 of Regulation S-K (Section 229.405) is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or

Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [X]

 

Indicate by check mark
whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [x]

State the aggregate market
value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s
most recently completed second fiscal year: $2.75/share as of December 31, 2015 based upon the Company’s direct public offering
under its prospectus declared effective on November 5, 2015. There is currently no secondary market for these shares. The number
of shares of the Registrant’s common stock outstanding as of December 31, 2015 (i.e. close of fiscal year) was 25,243,205.

– 2 – 

 AMERICATOWNE,
INC. 2015 FORM 10-K TABLE OF CONTENTS

                                   

PART I  

 

Item 1.
Business
5

Item 2.
Properties
21

Item 3.
Legal Proceedings
21

Item 4.
Mine Safety Disclosures
21

 
 
 

 
PART II
 

 
 
 

Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
22

Item 6.
Selected Financial Data
24

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
25

Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
33

Item 8.
Financial Statements and Supplementary Data
33

Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
33

Item 9A.
Controls and Procedures
33

Item 9B.
Other Information
33

 
 
 

 
PART III
 

 
 
 

Item 10.
Directors, Executive Officers and Corporate Governance
35

Item 11.
Executive Compensation
39

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
41

Item 13.
Certain Relationships and Related Transactions, and Director Independence
43

Item 14.
Principal Accountant Fees and Services
43

 
 
 

 
PART IV
 

 
 
 

Item 15.
Exhibits, Financial Statement Schedules
44

 
 
 

 
SIGNATURES
46

 

– 3 – 

DOCUMENTS INCORPORATED BY REFERENCE

 

The Company incorporates by reference its prospectus
dated October 30, 2015 filed under the Securities Act of 1933.

 

PART I

Special Note Regarding Forward-Looking
Statements

Information included
or incorporated by reference in this Annual Report on Form 10-K contains forward-looking statements. All forward-looking statements
are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance
of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions
and speak only as of the date hereof. Forward-looking statements may contain the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “strategy,”
“plan,” “may,” “will,” “would,” “will be,” “will continue,” “will
likely result,” and similar expressions, and are subject to numerous known and unknown risks and uncertainties. Additionally,
statements relating to implementation of business strategy, future financial performance, acquisition strategies, capital raising
transactions, performance of contractual obligations, and similar statements may contain forward-looking statements. In evaluating
such statements, prospective investors and shareholders should carefully review various risks and uncertainties identified in this
Report, including the matters set forth under the captions “Risk Factors” and in the Company’s other SEC filings. These
risks and uncertainties could cause the Company’s actual results to differ materially from those indicated in the forward-looking
statements. The Company disclaims any obligation to update or publicly announce revisions to any forward-looking statements to
reflect future events or developments.

Although forward-looking
statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statements can only be based
on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties,
and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking
statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those
specifically addressed under the heading “Risk Factors Related to Our Business” below, as well as those discussed elsewhere
in this Annual Report on Form 10-K. Readers are urged not to place undue reliance on these forward-looking statements, which speak
only as of the date of this Annual Report on Form 10-K. We file reports with the Securities and Exchange Commission (“SEC”).
You can read and copy any materials we file with the SEC at the SEC’s Public Reference Room, 100 F. Street, NE, Washington, D.C.
20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains an Internet site (https://www.sec.gov/) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC, including us.

– 4 – 

We disclaim any obligation
to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date
of this Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout
the entirety of this Annual Report, which attempt to advise interested parties of the risks and factors that may affect our business,
financial condition, results of operations and prospects.

ITEM 1. BUSINESS

As with any business
plan that is aspirational in nature, there is no assurance we will be able to accomplish all of our objectives or that we will
be able to meet our financing needs to accomplish our objectives.

Mission

“AmericaTowne is
to be a world-class, globally respected and profitable company, providing value to its customers, the environment and the lives
of the people we service.” Although this statement is forward-looking, the Company has already made strides in facilitating
relationships intended to advance its mission.

The Company’s aim is
to increase US export and employment by providing upper and middle-income consumers in China and elsewhere with “Made In The
USA” goods and services allowing customers to experience the United States’ culture and lifestyle. In achieving this objective,
our focus is on four initiatives:

(1) 
  The development of a United States International Trade Center in Meishan Ningbo China and elsewhere with employees and/or
independent contractors focusing on advancing our initial business objective, which is to be the “go-to” place for all
things “Made In The USA.”

(2)    The
development of upwards of 20 AmericaTowne communities in China with each community consisting of upwards of 50 United States based
companies, and upscale hotels, villas, children theme parks, senior care, wellness and educational facilities – all based upon
United States culture and lifestyle.

(3)    The
development of an internet platform in Chinese to complement (1) and (2), above, focusing on importing “Made In The USA”
goods and services to China through internet sales.

(4) 
  The development of Trade Center operations in the United States and internationally to support and advance the
above-referenced initiatives.

– 5 – 

These initiatives
are admittedly aspirational in nature. Our intent is to accomplish the majority, if not all, of our initiatives, but there is
no assurance we will or that our financing needs to meet our initiatives will be met.

The Company currently
has 23 exporters in our export program. In addition, Manhattan Institute of Management and six institutions associated with Student
Resource USA (Capella University, Walden University, Western Governors University, Northcentral University, Belhaven University
and National University) are represented in our education export initiative. Our intention is to bring the United States International
Trade Center in Meishan Ningbo China online in 2016. We expect to complete our initial trade operations with our exporters in 2016.
In addition, our office in Raleigh, North Carolina is operational, recently expanded and serves as our base and model for our two
Export Trade Centers in Pennsylvania and seventeen other export Trade Center Support Service Centers planned in the United States,
one Center in Nairobi Kenya and other locations. We are planning to develop and expand our operations in Raleigh to a larger complex
that will house exporters from the US, Africa, and China.

Though we are planning
to develop US Trade Centers in seventeen locations in the US and its territories we have no operations in these locations at this
time and we may never have operations in these locations. Internationally, along with our Center in Nairobi Kenya, we plan on developing
and operating Support Trade Centers in Dakar Senegal, and the Kinshasa Democratic Republic of Congo. Though we are completing preliminary
work in setting up these locations, none are operational and they may never be operational.

The AmericaTowne Community
planned in China and our Internet operations with Chinese websites planned are not yet operational. While we plan to have robust
operations in the United States and international locations to support the AmericaTowne concept and trade center, we expect 55%
to 65% of our operations and revenue will come from China.

China’s economy and its
government impact our revenues and operations. While we have an agreement in place with the government in Meishan Ningbo China
to operate the United States International Trade Center in Meishan Island China, there is no assurance that we will operate the
center successfully. Additionally, the Company will need government approval in China to operate other aspects of our business
plan. There is no assurance that we will be successful in obtaining approvals from government entities to operate other aspects
of our business plan.

– 6 – 

General Discussion

We plan to earn revenues
and income, and generate cash, by focusing on our four core business operations and initiatives, as set forth above. At this point,
the Company’s revenue is generated from our Service Provider and Exporter Service Agreements. We generate revenues and cash by
servicing these agreements. We work with exporters carefully and focus on our accounts receivable as part of managing our projected
tight liquidity position. Additionally, we work with exporters closely in developing export strategies for the goods and services
they planned to export.

At present, the bulk
of our operations take place at our Raleigh, North Carolina office, which acts as a model for plans for our United States Trade
Center Operations. We are in the process of outfitting our operations in Meishan, China. We have hired two full-time managers to
operate the facilities located at Meishan and other locations in China, selected our first exporters, and the products we plan
to export. Additionally, we are working with the Meishan Port Authorities to ensure that our operational procedures are in compliance
with various import laws at Meishan.

Our short-term operational
objectives are to develop our exporter pipeline, grow revenues and increase operations and facilities in the United States while
bringing our facility online in Meishan, China. Our focus currently is on enhancing our exporter base, including working with state
export agencies to identify exporters as well as sources of goods and services made in the United States that are in demand in
China. Along with increasing our United States operations, we are hoping to identify additional key staff in the United States
and China that can help us implement our plan. While we feel optimistic about meeting the challenges as well as the opportunities
before us, there is no assurance that we will be able to meet the challenges or take advantage of opportunities we perceive are
available.

To achieve its long-term
objectives, the Company intends on shifting its revenue stream from a United Stated-based to a China-based stream by fully operating
all planned activities at the planned Meishan trade center, and activities within our AmericaTowne complexes and Chinese-based
internet sites. Each of the Company’s four core initiatives presents challenges, risks, and opportunities.

We believe that we see
positive trends in the export area. Additionally, the Company plans to pursue opportunities in export not often thought of as an
“exported commodity. Along with our planned core AmericaTowne communities, trade centers in the United States and China, and
Internet operations, the Company plans on pursuing opportunities that are traditionally not thought of as an export commodity.

There is no assurance
we will be able to pursue these opportunities successfully. Additionally, our short and long-term liquidity position is impacted
by the success we achieve in implementing our plans. We do plan on pursuing the full range of available funding opportunities.
Additionally, we expect to help those in our exporting program with funding opportunities and various programs that may be available
to them in the private community, and at the state and national level within the United States.

– 7 – 

Additionally,
going forward we expect to take advantage of the various export tax laws that will help our cash flow position as well as assist
our exporters with their growth. There is no assurance that our plans will be successful. There will be cost to bring all of the
planned facilities online in China, including the costs involved with the Trade Center in Meishan, China. While we do have a plan
to cover these costs, there can be no assurance that our plan will be successful. While we have discussed the possibility of outside
investments in various forms, there are no agreements in place or any assurance that they will be realized in the future.

The uncertainty of implementing
our business plan in China and the various laws and policies in China and how they may impact our Company going forward is real.
There is no assurance that we will be able to navigate the laws and policies at the national or local level that will allow us
to achieve objectives outlined in our business plan. Though our results of operations thus far have been effective, there can be
no assurance that we will obtain the same results going forward.

Business Developments in Fiscal Year
2015

In fiscal year 2015,
the Company entered into Exporter Services Agreements with nineteen (19) exporters. By comparison, the Company had entered into
six (6) Exporter Services Agreements in fiscal year 2014. The general scope of the Exporter Services Agreements is discussed in
more detail, below, in subsection (A). In fiscal year 2015, the Company did not enter into any Licensing, Lease and Use Agreements
(“Licensing Agreements”). The general scope of the Licensing Agreements is discussed in more detail, below, in subsection
(B). By comparison, the Company had entered into two (2) Licensing Agreements in fiscal year 2014.

In fiscal year 2015,
the Company entered into Employment Agreements with eight (8) senior employees. The terms of the agreements vary following arms-length
negotiations between the parties. To the extent the Company has sufficient cash flow and capital, the Company may elect to include
money compensation for services of its employees. Subsequent action by the Company following the close of its 2015 fiscal year
have been disclosed in filings between January 5, 2015 up to the present and are incorporate herein.

   
(A) The Exporter Services Agreement

The AmericaTowne Platform
consists or will consist of exhibition, showroom and display facilities, support office(s) and staff located in the United States
and China, and the platform consists or will consist of a buyer’s network, and online websites either directly owned by AmericaTowne
or in a partnership with third-parties in order to support the exhibition center, showroom and network to market imported goods
and services to consumers in China.

– 8 – 

The AmericaTowne Platform
works in conjunction with the Sample and Test Market Program. Under this program, the customer will be provided with access to
and participation in a program whereby the Company will exercise its experience, expertise and training in assessing the customer’s
market acceptance and demand of the customer’s products or services in China (and perhaps other locales depending on the Company’s
findings). The customer will work in conjunction with the Company is arranging for the delivery of the customer’s samples or examples
of products or services to the AmericaTowne Platform, and if deemed strategically beneficial by the Company, the customer may send
specific videos, brochures and other promotional material to explain, show, and demonstrate the products or services features to
the Chinese consumer and or wholesale customers. The customer agrees to be responsible for those costs associated with packaging,
shipping and other reasonable and commercially acceptable costs in sending the samples to the AmericaTowne Platform, including
where applicable, Value Added Tax (VAT) or custom costs.

Upon receipt of samples,
brochures, and other promotional and marketing materials, the Company will be responsible for displaying the customer’s goods and
services on its online portal, and/or exhibition and showroom facilities in China, as well as marketing the customer’s products
through marketing channels. The Company, in conjunction with any representative of the customer, will exercise commercially reasonable
discretion in determining how the customer’s products and services are exhibited in the AmericaTowne Platform. The Company will
use its best efforts to match the customer with an end buyer of its products or services. The customer agrees that there is no
assurance that a demand for its product will exist or an end buyer will be found.

The Sample and Test Market
Program allows the customer an opportunity to (i) test the demand and market for its products and service by exhibiting it products
or service in the AmericaTowne Platform, and (ii) receive follow-on orders for its products or services, if a demand and buyers
exist, without expending normal costs for exporting. The customer has one year from the effective date under the Exporter Services
Agreement to participate in the Sample and Test Market Program. Afterwards, provided no transaction has occurred in the AmericaTowne
Platform, the customer agrees to pay a fee equal to 25% of the original Service Fee within thirty days to extend the customer’s
participation. To the extent this fee is not paid, the customer’s participation and membership in the Sample and Test Program terminates.
In the event of termination, the Company and customer agree that the balance of the Exporter Services Agreement would remain in
full force and effect.

– 9 – 

Provided that the Company
concludes that the Sample and Test Market Program has resulted in market demand and target consumers for the customer’s goods and
services, the Company will notify the customer within a commercially reasonable time of its opinions, conclusions and recommendations,
and in turn, provide services associated with its Accepted Market Program. Under this program, the Company will advise the customer
in the negotiation of price, and terms and conditions of sale of its goods and/or services. The Company will assist the customer
in all phases of the exporting process, including but not limited to, labeling and preparation for exporting, customs inspection
and clearance, shipping, warehousing, and payment. The Company, if deemed necessary, will propose the form and substance of purchase
orders to be presented to the target buyer setting forth, amongst other things, terms and conditions of sale, costs, and payment
to the customer (or its assignee or designee) with the Company being responsible for currency exchange into United States dollars.

Under the Accepted Market
Program, the Company anticipates advising the customer of the various components of the selling price including, but not limited
to, normal product costs, shipping costs, other related expenses, and customs and VAT. The customer will make the final determination
of its sale price offered to the buyer. The Company will advise the customer on available incentives and accommodations as a result
of the Company operating out of a Bonded Port Zone in China, such as, but not limited to, making the determination that the buyer
assumes VAT and customs costs by including such costs in the price of the product or service, and reduced warehousing and logistics
product costs in China. From time to time state and federal agencies will have marketing and promotional programs to assist small
businesses in exporting their products and services. The Company will work with the customer where warranted, to take advantage
of the various funding, grants and promotional opportunities available.

In certain cases, special certification will
be required from the appropriate authorities in China, prior to export of the customer’s goods and/or services in conjunction with
a buyer’s purchase order. In such a case, the Company will assist the customer in securing the proper certification. The customer
will be responsible for all costs of such certification. Prior to any such certification action, the Company will advise the customer,
and the customer will have the sole discretion to determine if a certification is to be obtained, and understand if such certification
is obtained, the customer, or its assignee or designee, is ultimately responsible for the costs of certification.

 

    (B) The Licensing, Lease
and Use Agreement

 

The general intent behind the Licensing Agreement
is for the Company to license its intellectual property to the customer and a right to lease a future physical location to conduct
its business in China for the consideration stated therein. The Licensing Agreement incorporates as exhibits the approved licensed
intellectual property to be used by the customer at the Authorized Location, the proposed site for the Authorized Location (which
in the case of Landmark is yet to be determined), the consideration to be paid by the customer associated with the Authorized Location,
a preliminary financing budget, and a source and use schedule.

– 10 – 

 

For the consideration
set forth in the Licensing Agreement, the Company grants to the customer a license and lease right to operate one business unit
on the proposed, anticipated and intended location in China (defined as the “Authorized Location”), The granting of this
right by the Company does not constitute a representation, warranty, or guarantee by the Company that the customer’s business can
be successfully operated at the Authorized Location. The consideration paid by the customer associated with the Authorized Location
is in addition to any other payment obligations of the customer set forth in the Licensing Agreement, or where applicable, the
Exporter Services Agreement discussed in subsection (A), above.

Provided the customer
is in full compliance with all provisions of the Licensing Agreement, any and all other agreements between the Company and the
customer (i.e. the Exporter Services Agreement, if applicable), and has provided the agreed upon written notice, the customer has
the option to renew the business operations at the Authorized Location for successive periods of ten years upon the payment to
the Company of a renewal fee in an amount $25,000, and the execution of any standard business operation’s agreement used by the
Company at the time of the written notice.

Provided the customer
is in full compliance with all of its payment and performance obligations under the Licensing Agreement, and any other agreements
related to its performance hereunder, and any and all applicable laws and regulations, the Company agrees that it will not operate,
or permit any other entity or person to operate any similar or like business as the customer within the AmericaTowne location in
which the Authorized Location is situated. The Company has acknowledged that the Authorized Location is currently not ready for
occupancy. The customer acknowledges and agrees that the consideration paid under the Licensing Agreement is for, in part, site
development and construction services, expenses, fees and costs incurred by the Company in building the Authorized Location exclusively
for the benefit of the customer, subject to the terms and conditions of the Licensing Agreement.

The parties agree that
the occupancy by the customer post-construction shall be considered a leasehold interest with the Company being the lessor and
the customer as the lessee. The parties agree to execute a lease agreement consistent with the terms of Section 3 of the Licensing
Agreement within thirty days of the Company securing all applicable permits, licenses and necessary authorization from the proper
regulatory agency approving the construction of the specific AmericaTowne site in which the Authorized Location is to be situated.
Unless otherwise negotiated, the parties agree that the term of the lease shall coincide with the balance of the “Term”
under the Licensing Agreement, as defined under Section 1 of the Licensing Agreement. For example, to the extent the Company provides
notification to the customer that the AmericaTowne site has been approved for construction and there is a balance of fourteen years
left on the Licensing Agreement at the time of the notification, the customer agrees that the term under the corresponding lease
shall be fourteen years.

– 11 – 

Unless otherwise
negotiated, the lease price shall be the average square meter of leased space for businesses at the location to be determined
as stated by published and/or stated lease rates at the specific location at the time the customer provides notice to the Company.
The lease shall contain such terms and provisions as are reasonably acceptable to the Company and, at the Company’s sole option,
shall be subleased to third-parties provided that the subtenant acknowledges in writing that its obligations under the Licensing
Agreement are equally primary to the customer (i.e. a sublease versus an assignment of lease), and that the Company may be entitled
to adequate collateral to secure payment and performance by the subtenant and the customer, jointly and severally.

The Company shall provide
the customer with a budget and funding plan for the Authorized Location, and the customer’s business start-up, based on the Company’s
experience and expertise in conducting business within the particular locale (the “Financing Budget”). The parties agree
that the approval of the Financing Budget does not guarantee success of actually securing the necessary financing or in the overall
success of the business. The parties agree to the preliminary Financing Budget, and will agree to an updated Financing Budget within
sixty days prior to construction of the Authorized Location. Upon agreement of all terms and conditions of an updated Financing
Budget, the parties shall mutually execute a “Final Financing Budget,” which can be amended or modified only by a writing
signed by the parties. The parties acknowledge that the Final Financing Budget might alter or modify their respective rights, duties
and obligations, and if so, such modification will be memorialized in writing signed by the parties. Absent a writing, the Licensing
Agreement is to be interpreted, as a whole, consistent with the Final Financing Budget and the alterations or modifications caused
by the Final Financing Budget.

The Company agrees to
provide to the customer plans and specifications for the AmericaTowne location in which the Authorized Location shall be constructed
within a commercially reasonable period of time. The plans and specifications will reflect the Company’s requirements, recommendation
and suggestions for dimensions, exterior design, interior design and layout, decor, building materials, equipment, fixtures, furniture,
and signs, which shall all be designed after business facilities typically found in the United States of America. Promptly after
being provided with the plans and specifications, the customer shall submit any requested changes and/or comments to the plans
and specifications, and the Company reserves the right to accept or reject such recommendations in order to (i) ensure continuity
of appearance within the AmericaTowne site, (ii) ensure capacity for the type, size, scope and adequacy of any machinery and equipment
utilized by the Licensee, and (iii) ensure that the recommendation is within the Final Financing Budget.

– 12 – 

The Company agrees that
it shall be solely responsible for construction, and in securing the proper licenses, permits, and certificates required for all
construction of the Authorized Location, and for building the Authorized Location in accordance with the highest building standards
consistent with the intent of the AmericaTowne concept. The Company further agrees that it will be responsible for equipping and
finishing the Authorized Location in a commercially reasonable period of time and in a manner consistent with securing occupancy
for the customer.

The rights granted to
the customer under the Licensing Agreement, and more specifically, rights related to the Authorized Location cannot be transferred
to any other location without the prior written approval of the Company. If the customer has operated its business for less than
twelve months from the “Effective Date” and requests relocation to an alternative AmericaTowne site, the customer must
set forth its reasons for requesting the relocation in writing to the Company, and its requested relocation plan, along with a
proposed timeline of relocation. The Company reserves the right to approve the relocation. To the extent the Company agrees to
the relocation, the customer agrees that the relocation does not alter, impair or modify its duties and obligations under the Licensing
Agreement, unless otherwise set forth in an amended agreement in the same form and substance as the Licensing Agreement. The customer
agrees to pay the Company a nonrefundable design and set up fee for the preparation of a design for the Licensee’s new location
based on current market conditions at the time of the request for and implementation of the relocation.

AmericaTowne is
to be a world class, globally-respected and profitable company providing value to its customers, the environment and the lives
of the people we service.

The Company is in the
process of planning and developing the AmericaTowne and AmericaStreet concept. The concept allows American style communities to
be built in China. It is anticipated that the AmericaTowne community will be planned on 50-plus acres consisting of small businesses,
hotel, villas, senior care facilities, a theme park and performing arts center – all located on specific acreage in China depicting
the American lifestyle and the American experience.

Through AmericaTowne,
the Company’s goal is to provide unique one-of-a-kind communities for people in China to go spend their leisure time all fashioned
after the American way, business, and lifestyle. In short, the focus of AmericaTowne is to bring “a slice of Americana to
China.”

– 13 – 

The Company plans to
develop communities and conduct business operations within China using “Made in America” goods and services within five
core areas: 1) small business operations (including 50 United States based businesses that will be either franchises, joint venture
partners or individual operators); 2) a hotel with the development, construction, management and ownership through the Company
or an entity under the control of the Company; 3) approximately 50 villas with the construction, management, leasing, timeshare
and sales through the Company or an entity under the control of the Company; 4) a theme park and performing arts center with the
development, construction, management, ownership and operations through the Company or an entity under the control of the Company;
and 5) senior care facilities with the development, construction, management, ownership and operations through the Company or an
entity under the control of the Company. All components of AmericaTowne are expected to be similar in style, decor and business
operations typically found in the United States.

AmericaTowne is targeted
at the middle to upper income consumer in China. The Company believes that this type of consumer in China desires goods and services
from the United States, but also the experiences of American culture and lifestyle. The Company believes that by providing this
target consumer with unique “Made in America” experiences, it will meet its business model’s needs and growth strategy.
In addition, the business model offers United States based small businesses a complete ecosystem for their businesses. For those
businesses that would not typically seek to export because of various reasons, AmericaTowne will strive to offer those businesses
a complete support system that will allow them to market their products and services in China.

The revenue streams from
the Company’s business operations align themselves with the five core business components set forth above, and provides eight potential
revenue streams, if not more, as follows: 1) licenses and or franchise fees for businesses that set-up shop and operate within
AmericaTowne as well as businesses that desire to export their goods and services to China through AmericaTowne; 2) franchise,
joint venture and partnership arrangements with United States based businesses residing in and operating within AmericaTowne; 3)
revenue from villa sales, rentals, timeshare and leasing; 4) hotel, leasing and or operational revenues and sales; 5) theme park
and performing art center operations, sales and or leasing; 6) senior care facilities, operations and or sales; 7) export sales,
marketing and license fees; and 8) franchise and license fees for United States support locations.

Mr. Perkins, the creator
of the AmericaTowne concept, has extensive experience in business in China involving operations, construction, marketing, consumer
behavior, finance and exporting. Mr. Perkins has experience as a co-chairman of a Foreign Invested Partnership in China that focused
on real estate development and laid much of the foundation for the concepts behind AmericaTowne. The Company intends on continuing
to use the management systems and services provided by Yilaime. The Company intends on evaluating and assessing potential management
service agreements with Yilaime whereby Yilaime would provide valuable services to the Company in effectuating and facilitating
the business model associated with AmericaTowne.

– 14 – 

Between November 15,
2015 and December 18, 2015, Dr. Wang visited several locations in China and met with local government officials and private businesses
concerning establishing areas for AmericaTowne and AmericaStreet. Mr. Perkins followed-up visiting proposed locations and facilities
between December 26, 2015 and January 3, 2016.

The Company will promptly
file a Form 8-K upon execution of a materially definitive agreement associated with the acquisition of land and/or rights in China
for placement of its first AmericaTowne location. It is anticipated that the location will be within a 100 miles of a Tier I or
II city that the Company believes has the right economic and consumer base to support the AmericaTowne concept. See http://sme.amcham-shanghai.org/faq/what-meant-first-tier-second-tier-and-third-tier-cities
(American Chamber of Commerce in Shanghai). Any location selected requires the cooperation of the local government and approval
of the local and provincial planning and zoning boards. Though the Company has submitted plans, it does not yet have all required
approvals from the applicable boards.

The Company’s Strategy

The Company’s primary
business strategy is to develop a position as a leader in supplying quality “Made in the USA” goods and services to middle,
upper middle, and upper income consumers in China. The Company seeks to create market share in the rapidly growing middle and upper
income population demographic with a focus on tourism, exports, and senior care. The Company believes China’s economy is robust.
People in China are prospering making more money and are looking for more places to go to enjoy leisure and tourism. Today and
in the foreseeable future, in China, the Company believes the demand for leisure activities is outstripping the supply.

As set forth above, the
Company’s objective is to provide unique one-of-a-kind communities for people in China to spend their leisure time. The Company’s
current planning committee is concentrating its efforts on securing land between 50 and 165 acres, and to chart out land up to
50 unique American small businesses, a 5-star hotel, 50 villas, a theme park, performing arts center, and a senior care facility
all fashioned after the American way, business, and lifestyle. The aforementioned businesses will bring a slice of America to China.
The Company believes the communities will offer authentic goods, products and services that are “Made in the USA.” The
company is in the process of identifying United States based businesses looking to locate their operations and conduct business
in AmericaTowne, and to take advantage of the key Chinese demographic.

We believe that AmericaTowne
will help China counter its tourist deficit, satisfy China’s increasing need to import United States based goods and meet the growing
demand for senior living facilities (all of which are discussed in more detail below). As a dual and added value, the Company believes
AmericaTowne will provide export opportunities and jobs in China and America. Furthermore, AmericaTowne supports America’s national
initiative to improve the balance of trade by exporting goods and services carrying the “Made in the USA” tag.

– 15 – 

    
(i)   Tourism

AmericaTowne meets the
challenge of helping China reduce its tourist deficit by keeping more Chinese citizens at home to enjoy a slice of America. In
short, instead of an economy based upon manufacturing and exporting products to other countries, the Company believes that China’s
focus has now changed to internal domestic consumption. The Company believes that China’s government is ramping up the demand for
its citizens to buy and use consumer products. At the same time, the Chinese government is emphasizing stability and improving
its citizen’s quality of life.

The Company believes
leisure and tourism are cornerstones of China’s long-term plans. Additionally, the Company believes that the demand by Chinese
consumers for “Made in America” goods and services are high. Most important, the Company believes that the target Chinese
consumer is sophisticated and focused on goods and services, but also the experiences that those goods and services bring. The
Company believes that providing an AmericaTowne community with support services model after the American lifestyle will provide
those experiences.

 
    (ii)    Exporting

According to Forbes’
Major Trends In China: The Next 10 Years, China will account for 36% of global growth in consumer spending during this period (http://www.forbes.com/sites/jackperkowski/2012/11/27/major-trends-in-china-the-next-10-years/).
The Company believes that over the next ten years, global spending on consumer goods is expected to increase by $4.8 trillion,
from $7.3 trillion in 2010 to $12.1 trillion in 2020. In 2013, United States exports to China reached $120 billion, according to
the US-China Business Council, making it the third-largest export market for United States goods behind Canada and Mexico, our
neighbors and NAFTA partners. United States exports to China have grown faster than exports to any other major United States trading
partner.

From 2005 to 2014, United
States’ exports to China increased 198%.1 That rate is greater than growth to any of the other top ten US export markets,
including the two largest US trading partners, Canada (47 percent growth) and Mexico (102 percent growth). With its large population,
rapidly growing middle class, and long list of infrastructure goals, China will continue to be a major export market for United
States goods and services. (US-China Business Council, US Exports to China 2005-2014 https://www.uschina.org/reports/us-exports/national).

FN 1. See http://www.chinabusinessreview.com/senior-care-in-china-challenges-and-opportunities/;
see also http://www.exim.gov/news/export-import-bank-report-congress-aggressive-unregulated-financing-foreign-competitors-costing;?
https://docs.google.com/viewer?url=http%3A%2F%2Fwww.exim.gov%2Fsites%2Fdefault%2Ffiles%2Fnewsreleases%2FEx-Im-Bank-2013-Competitiveness-Report-to-Congress-Complete.pdf

– 16 – 

 
    (iii)    Senior Care

A component of the Company’s
business is designed to take advantage of market conditions by constructing, developing and operating either through partnership
or independently senior care facilities in China. “There is no stronger brand in the world than ‘Made in America,’ according
to USA Export-Import Bank Chairman and President Fred P. Hochberg. We want to build on this and provide a slice of Americana in
the fastest growing economy in the world. As stated by the Chairman and President of the United States Export-Import Bank – Fred
P. Hochberg, “There is no stronger brand in the World that ‘Made in America'”. See “Export-Import Bank Report to
Congress: Aggressive, Unregulated Financing from Foreign Competitors is Costing U.S. Jobs” dated June 25, 2014. The Company
intends on building on this brand and provides a “slice of Americana” in the fastest growing economy in the World.

According to China’s
National Bureau of Statistics, China has roughly 185,000,000 people over the age of 60.1 A 2007 study by the United Nations estimated
that in 2005, there were 16 retired people in China for every 100 workers. The study projected that this ratio will reach 64 elderly
for every 100 workers by 2025. Compare this to the United States, which currently has approximately 20 retirees for every 100 workers
and is projected to have 33 retirees for every 100 workers by 2050. See also “Major Trends in China: The Next 10 Years”
attached hereto.

China’s government funding
only covers 1.6% of seniors in need of care, who cannot otherwise pay for their own care. The World Bank’s standard for developed
nations is 8% coverage. As Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People’s Congress
stated last year, this translates to a need for an additional 3,400,000 hospital and nursing home beds dedicated to senior care
over the next five years alone. Clearly, the need for senior care facilities is outstripping the supply.

According to China’s
National Bureau of Statistics, China has roughly 185 million people over the age of 60. A 2007 study by the United Nations estimated
that in 2005, there were 16 retired people in China for every 100 workers. The study projected that this ratio will reach 64 elderly
for every 100 workers by 2025. Compare this to the United States, which currently has approximately 20 retirees for every 100 workers
and is projected to have 33 retirees for every 100 workers by 2050.

China’s government funding
only covers 1.6% of seniors in need of care, who cannot otherwise pay for their own care. The World Bank’s standard for developed
nations is 8 percent coverage. As Li Jianguo, vice chairman and general secretary of the Standing Committee of the National People’s
Congress, stated last year, this translates to a need for an additional 3.4 million hospital and nursing home beds dedicated to
senior care over the next five years alone. Clearly, the need for senior care facilities is outstripping the supply.

– 17 – 

Gap in Small and Mid-Size
Businesses

In June of 2013, the
Commerce Department reported that exports hit a record high for one month of $191.1 billion-up 3.2% from June of 2012. As a result
of imports falling, the United States trade deficit shrank 22.4% to its lowest monthly level since October 2009.Small and medium-sized
companies account for 98% of United States’ exporters, but represent less than one-third of the known export value of United States’
goods’ exports. In 2010, there were over 293,000 identified U.S. exporters – 269,269 of which were small or medium-sized.

The Company believes
a market clearly exists; yet most small businesses do not have the resources including time, money and knowledge to enter the export
market. A goal of AmericaTowne is to provide United States based small businesses with a support system that will allow them to
flourish without undue worry of conducting business from afar. The Company believes that AmericaTowne provides some United States
based businesses with a safety net, an entire team of businesses working together all focused on the same objective – to sell Americana
to the Chinese consumer.

Keys to Success

In order to meet its
goals and objectives, and to achieve short-term and long-term success, the Company must develop significant cooperative agreements
with key partners, including local governments in the United States and China, a business developer and United States based entrepreneurs
and businesses. The Company must continue to develop and utilize cutting edge technology and commit to research and development
of its brand and market presence. It must dedicate financial resources and executive time towards establishing world-class marketing
programs and procedures designed exclusively with the Chinese consumer in mind. As stated above, the Company must continue to be
dedicated to building and operating AmericaTowne centers to meet the growing demand by citizens for more leisure and tourism opportunities.

As part of his ongoing
market analysis, over the past five years, at the invitation of China city mayors and other government officials in China, our
Chief Executive Officer, Mr. Perkins lived and worked in China, researching and studying consumer trends, and helping to develop
import, tourist and leisure projects for the Chinese consumer. While in China, Mr. Perkins had the opportunity to work with local
government officials, city mayors and Provincial Governments, and mid-size and large Chinese companies. The formation of the Company
and the contribution of assets by Yilaime were the byproduct of Mr. Perkins’ work dating back to 2009 and 2010 by the privately-held
and Chinese-based Development Center Foreign Invested Partnership, which he owned and co-chaired. This early partnership did much
of the work paving the way for much of the Company’s current business plans.

– 18 – 

As part of his
market research efforts, Mr. Perkins visited the United States Ex-Im Bank in Washington, D.C., and attended a United States Ex-Im
Bank National Conference to learn exporting rules and financing requirements. Additionally, the AmericaTowne concept was presented
to the United States Ex-Im Bank, which provided a Letter of Interest for AmericaTowne, Mr. Perkins coordinated the initial draft
of the business plan and proposed actions with a representative of the United States Small Business Administration with expertise
in both exporting and finance, who in turn, reviewed the Company’s business plan and provided suggestions and directions for implementing
the plan. It is this level of involvement and dedication that is necessary to continue developing market awareness and success.

The Company must also
continue to stick to its core principles of delivering superb and unique products and services at the lowest possible cost while
still maintaining the highest quality – the quality accustomed to United States’ goods and services. As an international operation
operating on opposite ends of the World, the Company must maintain a strong dual-economic strategic plan and implement financial
controls in the United States and China. Finally, the Company will need to aggressively pursue adequate funding to implement these
keys to success and in the continued development of attractive programs in providing the Chinese consumer with the “Made in
the USA” experience.

Financial Objectives

The Company seeks to
achieve commercial success in its initial AmericaTowne location. The Company seeks to validate its work through the success of
its products and services. The Company’s revenues of $1,259,541 realized and earned through December 31 2015, and a Letter of Interest
from US Ex-Im Bank are an initial step towards this effort. The Company also seeks to develop a robust line of additional AmericaTowne
products including licensing and franchising fees for additional project locations in the near future and to become financially
sustainable.

Sourcing and Fulfillment

To complete the initial
AmericaTowne, the Company expects a collaborative effort between small businesses owners in the United States looking for expansion
opportunities in China. The Company through its relationship with Yilaime will contract with these businesses providing unique
goods and services carrying the “Made in the USA” label. These select businesses will team with local counterparts to
supply, source and operate the core businesses that are a part of AmericaTowne.

– 19 – 

Competition

Our competitive position
within the tourism, export and senior care industry are affected by a number of factors. There are barriers to entry that make
it difficult for entrants into the industry, including, but not limited to the socio-political environment in China.

In reviewing market conditions,
the Company determined that although there is no known structure or operations existing within Mainland China similar to AmericaTowne,
the concept could be duplicated. The challenge for competitors whose business originates from China would be to identify and provide
business owners and operators, as well as goods and services that would provide a unique American experience in one location, under
one roof, and receive the support of the local government in providing “authentic American goods.”

It has been Management’s
experience that at the local level mayors and other government officials have concerns about the authenticity of both the concept
and the goods and services that would originate from America. Therefore, operators from America that provide goods and services
especially from America’s small businesses have a competitive advantage.

Builders and developers
focusing on tourism and quality of life components are regionally based, and most focus on operations in what are called (based
on demographics and other criteria) Tier 2, Tier 3 and Tier 4 Cities. Competitors that appear to be doing exceptionally well it
seems have designed internal management, finance and control systems that work well in the United States and China.

Though Management is
aware of “Disney” typed operations and ventures in China that focuses on themed leisure activities, AmericaTowne focus
is on business operations in three specific areas and providing an experience unique to America. To date Management is not aware
of similar businesses or concept operating within Mainland China.

In Management’s opinion
based upon its analysis, and research over three and a half year period direct competition and the intensity of that competition
will depend upon the specific sector. Management believes that competition from other businesses and communities in some specific
sectors will be intense. For example, Management expects to receive stiff competition in the real estate sector specifically in
developing villas. On the other hand, Management expects to receive moderate to little competition in developing its senior care
and business communities.

The key competitors within
the real estate sector as reflected in SEC filings consist of seven companies operating within China. However, there are considerably
more developers operating within the industry. Of the competitors, we focused on two are listed on NASDAQ (China HGS Real Estate
Inc. (HGSH) and China Housing & Land Development, Inc. (CHLN)) and two or listed on the New York Stock exchange (Xinyuan Real
Estate Co., Ltd (XIN), and IFM Investments Limited (CTC)); the other three are listed on OTCB.

– 20 – 

All have the advantage
of being from China and may have better competitive balances because of this. All may receive various support and perceived benefits
that are afforded to companies that are “home grown.” Additionally, all appear to focus on regional and or Tier II, III
and IV cities. On the other hand, AmericaTowne focuses on Tier I, II, and III cities were the competition for development could
be both keen and at times restricted to a larger degree by the Central Government than smaller Tier locations. AmericaTowne will
have to adapt to a system that its competitors have been operating all of their existence virtually. Additionally, most of the
competition will not only have more experience but be better capitalized. As we develop our business model further, we expect additional
competitors to service and the competitive picture to become clearer.

Tax Exempt Status
for Certain Export Transactions

Because AmericaTowne
focuses on providing “Made in the USA” goods and services to China and elsewhere, a portion of the Company’s activities
will involve not only development but also exporting. To take advantage of favorable United States tax rates on dividend distributions
or to direct a steady flow of cash distributions for shareholders of corporate exporters, the Company has identified and work with
Perkins-Hsu Export Corporation, a Nevada corporation that is qualified as an Interest Charge – Domestic International Sales Corporation
(“IC-DISC”) under section 992(a)(1) of the Internal Revenue Code of 1986. Perkins-Hsu Export is an IC-DISC and an affiliate
of the Company, with Mr. Perkins as the majority shareholder and the controlling person. The tax benefits to the Company are accomplished
by allowing the Company to deduct a portion of its export-related income as commissions to the IC DISC. On an individual basis
Federal taxes on the export-related income are deferred until such time as the income is distributed or deemed distributed. Perkins
–Hsu as an IC DISC does not need additional offices, employees, or tangible assets, nor is it required to perform any invoicing
or services. Additionally, with its IC-DISC association, if warranted, the Company may achieve a significant reduction in taxes
on the first $10,000,000 in revenues.

ITEM 2. PROPERTIES

We currently lease an
office at the address set forth above. We believe that this space will be sufficient for our initial needs, although as funding
and revenues become available, and the Company’s operations grow, we anticipate finding other office space as needed.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4. MINE SAFETY
DISCLOSURES.

Not applicable.

– 21 – 

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS

Authorized Capital
Stock

The authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock, par value $.0001 per share, (the “Common Stock”),
of which, as of December 31, 2015, there are 25,243,205 issued and outstanding, and 5,000,000 shares of Preferred Stock, (the “Preferred
Stock”) par value $.0001 per share, of which none have been designated or issued. The following summarized the important provisions
of the Company’s capital stock.

Common Stock

Holders of shares of
common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion from funds legally available. In the event of a liquidation, dissolution
or winding up of the company, the holders of common stock are entitled to share pro rata all assets remaining after payment in
full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable. Holders of common stock
have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the common stock.

Preferred Stock

The Board of Directors
is authorized to provide for the issuance of shares of preferred stock in series and, by filing a certificate pursuant to the applicable
law of Delaware, to establish from time to time the number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof without
any further vote or action by the shareholders. Any shares of preferred stock so issued would have priority over the common stock
with respect to dividend or liquidation rights. Any future issuance of preferred stock may have the effect of delaying, deferring
or preventing a change in control of our Company without further action by the shareholders and may adversely affect the voting
and other rights of the holders of common stock. At present, we have no plans to neither issue any preferred stock nor adopt any
series, preferences or other classification of preferred stock.

– 22 – 

The issuance of shares
of preferred stock, or the issuance of rights to purchase such shares, could be used to discourage an unsolicited acquisition proposal.
For instance, the issuance of a series of preferred stock might impede a business combination by including class voting rights
that would enable the holder to block such a transaction, or facilitate a business combination by including voting rights that
would provide a required percentage vote of the stockholders. In addition, under certain circumstances, the issuance of preferred
stock could adversely affect the voting power of the holders of the common stock. Although the Board of Directors is required to
make any determination to issue such stock based on its judgment as to the best interests of our stockholders, the Board of Directors
could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders
might believe to be in their best interests or in which stockholders might receive a premium for their stock over the then market
price of such stock. The Board of Directors does not at present intend to seek stockholder approval prior to any issuance of currently
authorized stock, unless otherwise required by law or stock exchange rules. We have no present plans to issue any preferred stock.

The description of certain
matters relating to the securities of the Company is a summary and is qualified in its entirety by the provisions of the Company’s
Certificate of Incorporation and By-Laws, copies of which have been filed as exhibits to the Company’s Form 10 filed with the Commission
on May 18, 2014 (and which have been incorporated herein by reference as an exhibit, below).

Dividends

We have not paid any
dividends on our common stock and do not presently intend to pay cash dividends. The payment of cash dividends in the future, if
any, will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent
to consummation of a business combination, if any. The payment of any dividends subsequent to a business combination, if any, will
be within the discretion of our then existing board of directors. It is the present intention of our board of directors to retain
all earnings, if any, for use in our business operations and, accordingly, the board of directors does not anticipate paying any
cash dividends in the foreseeable future.

Securities Authorized
for Issuance under Equity Compensation Plans

In 2015, the Company
entered into Employment Agreements with six (6) employees. Four of these employees were issued shares of restricted common stock
in lieu of compensation in 2015. These employees are as follows:

– 23 – 

Name 
Position 
Date of Employment Agreement 
Stock Issuance

Daniel Gatabaki 
Vice President for Marketing USA and Africa 
August 22, 2015 
450,000 shares of restricted common stock

Yu Wang 
VP of Human Resources and Special Assignments 
August 28, 2015 
477,190 shares of restricted common stock

Qingjin Wang 
Manage of Corporate Operations China 
October 6, 2015 
20,000 shares of restricted common stock

Lindsey Moore 
VP of Marketing USA Eastern Region 
October 7, 2015 
100,000 shares of restricted common stock

Recent Sales
of Unregistered Securities

On January 8, 2015, the
Board of Directors for the Company authorized its Chairman of the Board to execute the Contribution Agreement between the Company
and Yilaime. Pursuant to the terms of the Contribution Agreement, in consideration for the issuance of 750,000 shares of common
stock in the Company to Yilaime, Yilaime is contributing to the operations of the Company certain assets previously acquired by
Yilaime through an agreement with the Ningbo Meishan Free Trade Port Zone Administrative Committee dated April 1, 2014 (the “Meishan
Agreement”). More specifically, the Company, as assignee of Yilaime’s rights under the Meishan Agreement, shall receive certain
incentives, preferential policies and financial support from Meishan in consideration of the Company meeting specific exporting
benchmarks mutually agreed upon by the parties following good faith negotiations. The Meishan Agreement is an exhibit to the Contribution
Agreement, in addition to Meishan’s approval of the contribution and assignment of assets to the Company and ratification of the
Company’s assumption of Yilaime’s duties under the Meishan Agreement filed on Form 8-K on January 13, 2015. The 750,000 shares
of common stock were issued on January 22, 2015.

Issuer Purchases of Equity Securities

See discussion of the Contribution Agreement
under “Recent Sales of Unregistered Securities,” above.

ITEM 6. SELECTED FINANCIAL DATA

As a “smaller reporting
company,” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

– 24 – 

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following
discussion of our financial condition and results of operations together with the audited financial statements and the notes to
the audited financial statements included in this Annual Report on Form 10-K. This discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking
statements.

We qualify as an “emerging
growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure
requirements. For so long as we are an emerging growth company, we will not be required to:

  • have an auditor report on our internal controls
    over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
  • comply with any requirement that may be adopted
    by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report
    providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);
  • submit certain executive compensation matters
    to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and
  • disclose certain executive compensation related
    items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median
    employee compensation.

In addition, Section
107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging
growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not
be comparable to those of companies that comply with such new or revised accounting standards.

– 25 – 

We will remain an “emerging
growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total
annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule
12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates
exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which
we have issued more than $1 billion in non-convertible debt during the preceding three year period. As an emerging growth company,
the company is exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive
compensation and golden parachutes. The Company is an Emerging Growth Company under the JOBS Act of 2012, but the Company has irrevocably
opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(B) of
the JOBS Act.

The Company incorporates
by reference the historical information set forth above, including but not limited to the discussion related to material definitive
agreements under Item 1.01 and completion of acquisition of assets under Item 2.01. In further response, we were originally organized
as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held corporation.

We plan to raise capital
following our recent change in status to an operating entity through the offering of shares of common stock or preferred stock
to investors. We anticipate we will need to pursue capital to fund our operations over the next twelve months. We believe we will
be able to raise the necessary capital to carry out our business plan, but there is no assurance that we will be able to do so.

Overview

As a result of the Contribution
Agreement, the Company acquired all rights, title and interest in and to AmericaTowne and AmericaStreet images, signatures, business
plans, studies, analyses, likenesses and goodwill appurtenant thereto. The Company acquired certain rights of publicity in the
trademark and registration of AmericaTowne, and the name, image, likeness, signature and other elements of AmericaTowne persona
and identity. The Company acquired all rights, title and interest in any derivative or joint development programs using the intellectual
property contributed under the Contribution Agreement, plus all historical contacts, business relationships, business expectancies,
references and any other actual or perceived business interests in China. Using these assets, the Company procured those agreements
set forth in Item 1.01 (i.e. the Exporter Services Agreement and the Licensing, Lease and Use Agreement).

– 26 – 

In fiscal year 2015,
the Company achieved $1,259,541 in revenue. We can make no assurances that we will find commercial success in any of our products.
We also rely upon the Service Agreement with Yilaime NC, November 11, 2014 Form 8K, under Item 15(a)(3) 10.8, for revenues. We
are a new company and thus have very limited experience in sales expectations and forecasting. We also have not fully discovered
any seasonality to our business as we began operations for the first quarter of 2016. We intend on relying on Yilaime for operational
support. If we cannot achieve independent commercial success, we may need to continue to rely on Yilaime for support. If Yilaime
at any time decides to alter or change materially our arrangement, we could experience a material adverse effect on the Company.

Results of Operations through December
31, 2015

Our operating results are summarized as follows:

  
 For the Year Ended December 31, 2015  
 April 22 (inception) through
December 31, 2014  

Revenues 
$1,259,541  
$244,034 

Cost of Revenues 
$126,197  
$52,113 

Gross Profit 
$1,133,344  
$191,921 

Operating Expenses 
$995,339  
$147,939 

Provision for income taxes 
$26,950  
$15,394 

Net Income 
$107,658  
$28,588 

Revenues

During fiscal year 2015,
the Company had sales of $1,259,541, compared to 2014 sales of $244,034. Our sales consisted of $1,059,541 in primarily Export
Service Agreements, and $200,000 in Services to related parties for Operation fees. The Cost of Revenues to related parties were
$126,197. The $1,059,541 in revenue was from nineteen (19) exporters, and two Trade Center Operations. Compared to 2014, our revenues
increased $1,015,507 or 416%. The increase is due to implementing our business plan focusing on increasing exporters in our program.

Pursuant to the Company’s
Service Agreement with Yilaime, Yilaime paid the Company $200,000 in fiscal year 2015 for an “Operations Fee”. In 2014,
the Company had paid an Operations Fee of $50,000. The Operations Fee stems from the agreement between Yilaime and the Company
whereby Yilaime acts as the Company’s exclusive representative. In 2015, the Operations Fee increased by $150,000 or 300%.
The Operations Fee is not related to costs of revenues.

– 27 – 

The related costs of
revenues of $126,197 were costs associated with the Service Provider Agreement with Yilaime. The cost of revenues increased by
$74,084 or 142%. The increase in the Operations Fee and costs of revenue were due to a full year worth of operations implementing
our business plan.

We can make no assurances
that we will find commercial success in any of our revenue producing contracts. We are a new company and thus have very limited
experience in sales expectations and forecasting. We also have not fully discovered any seasonality to our business as we began
operations in the first quarter of 2016.

Operating Expenses

Our expenses for the
period through December 31, 2015 are outlined in the table below:

  
 December 31, 2015  
 April 22 (inception) through
December 31, 2014 

General and administrative 
$889,202  
$82,626 

Professional fees 
$106,137  
$65,313 

Total operating expenses 
$995,339  
$147,939 

Our operating expenses
are largely attributable to office, rent and professional fees related to our reporting requirements as a public company and preparing
our Registration Statement on Form S-1, and implementing our business plan. Compared to 2014, our operating expenses increased
$847,400 or 573%. The increase is due to implementing our business model beyond startup.

Net Income

As a result of our operations,
for 2015, the Company reported net income after provision for income tax of $107,658. Compared to 2014, our net income increased
$79,070 or 277%. The increase is due to starting our marketing strategy to increase exporters.

Liquidity and Capital
Resources

Working Capital

– 28 – 

 

  
 December 31, 2015  
 April 22 (inception) through
December 31, 2014 

Current Assets 
$1,503,180  
$160,179 

Current Liabilities 
$171,697  
$46,475 

Working Capital 
$1,331,483  
$113,704 

We have working
capital of $1,331,483 on December 31, 2015. Compared to December 31, 2014, our working capital increased $1,217,779 or 1,071%.
The increase is due to effectively implementing our marketing, growth and equity sales plans.

Cash Flow

  
 December 31, 2015  
 April 22 (inception) through
December 31, 2014 

Net cash provided by (used in) operating activities 
($79,968) 
$16,403 

Cash used in investing activities 
$20,346  
$—   

Cash provided by financing activities 
$725,574  
$—   

Increase (Decrease) in cash 
$625,260  
$16,403 

Cash Provided
by Operating Activities

Compared to 2014, increase
in cash used in operating activities in 2015 is mainly due to increase in accounts receivable.

Cash Used in Investing
Activities

We spent $20,346 on fixed
assets for 2015.

Cash Provided by Financing
Activities

Compared to 2014, our
cash used in financing activities increased $725,547. The increase is due to proceeds from issuance of common stock in 2015.

As
of December 31, 2015, the Company had sufficient amount of cash to operate its business at the current level for the next twelve
months, but insufficient cash to achieve our business goals and initiatives set forth above. To address the cash situation, the
Company continues to manage its cash accounts and receivables closely.

– 29 – 

To date, we have
been able to meet all of our account payable obligations within a five to ten day window. If required, we can extend this window
to improve our cash flow position. Additionally, we have a plan to increase sales. There is no assurance that we will be able
to maintain this level of operations.

The success of our business
plan beyond the next twelve months is contingent upon us growing our business, keeping costs down, increasing revenue and obtaining
additional equity and/or debt financing. We intend to fund operations through our pro-active efforts to monitor receivables, and
debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other
cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds
at this time. There is no assurance that such additional financing will be available to us on acceptable terms, or at all or that
our receivable plan will be effective in the future.

Plan of Operation
and Cash Requirements

The Company anticipates
that its expenses over the next twelve months will be approximately $1,500,000 as described in the table below. These estimates
may change significantly depending on the nature of our business activities and our ability to raise capital from our shareholders
or other sources.

  
  
Estimated

  
Potential 
Expenses

Description 
Completion Date 
($)

Trade Center Operations 
12 months 
 550,000 

Salaries 
12 months 
 100,000 

Utility expenses 
12 months 
 50,000 

Investor relations costs 
12 months 
 100,000 

Marketing expenses 
12 months 
 350,000 

Professional fees 
12 months 
 150,000 

Other administrative expenses 
12 months 
 200,000 

Total 
  
 1,500,000 

Our other administrative
expenses for the year will consist primarily of transfer agent fees, bank and interest charges and general office expenses. The
professional fees are related to our regulatory filings throughout the year and include legal, accounting and auditing fees.

– 30 – 

Based on our planned
expenditures, we will require approximately $1,500,000 to proceed with our business plan over the next twelve months. If we secure
less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will
be forced to proceed with a scaled back business plan based on our available financial resources.

We intend to raise the
balance of our cash requirements for the next twelve months from private placements, shareholder loans or possibly a registered
public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such
efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any third-party
to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will
be acceptable to us.

Even though we plan to
raise capital through equity or debt financing, we believe that the latter may not be a viable alternative for funding our operations,
as we do not have sufficient tangible assets to secure any such financing. We anticipate that any additional funding will be in
the form of equity financing from the sale of our common stock. At the close of 2015, we are considering financing arrangements
for our common stock. However, the arrangements are not final and we cannot provide any assurance that we will be able to raise
sufficient funds from the sale of our common stock to finance our operations. In the absence of such financing, we may be forced
to abandon our business plan.

Quantitative and Qualitative Disclosures
about Market Risk

We have not utilized
any derivative financial instruments such as futures contracts, options and swaps, forward foreign exchange contracts or interest
rate swaps and futures. We believe that adequate controls are in place to monitor any hedging activities. We do not have any borrowings
and, consequently, we are not affected by changes in market interest rates. We do not currently have any sales or own assets and
operate facilities in countries outside the United States and, consequently, we are not affected by foreign currency fluctuations
or exchange rate changes. Overall, we believe that our exposure to interest rate risk and foreign currency exchange rate changes
is not material to our financial condition or results of operations.

Off-Balance Sheet
Arrangements

We have not entered into any off-balance sheet
arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

– 31 – 

Critical Accounting
Policies

Our financial statements
and related public financial information are based on the application of accounting principles generally accepted in the United
States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting
principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect
supplemental information contained in our external disclosures including information regarding contingencies, risk and financial
condition.

We believe our use of
estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates
on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results
may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates
made during the preparation of our financial statements.

We believe the following
is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant
accounting policies, as described in our financial statements in the Summary of Significant Accounting Policies, be read in conjunction
with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Revenue Recognition

The Company recognizes
revenue at the date of delivery to customers when a formal arrangement exists, the price is fixed or determinable, the delivery
is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company’s Revenue
Recognition policy is provided in detail at Note 2, page F11 of the Financial Statements.

Income Taxes

The Company accounts
for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the asset and liability
method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

– 32 – 

Under ASC 740, a tax
position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in
a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that
is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not”
test, no tax benefit is recorded. The adoption had no effect on the Company’s consolidated financial statements.

Recent Accounting
Pronouncements

The Company does not
expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations,
financial position, or cash flow.

Contractual Obligations

As a “smaller reporting
company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “smaller reporting
company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.

Please see the financial
statements beginning on page F-1 located elsewhere in this annual report on Form 10-K and incorporated herein by reference.

ITEM 9. CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There are not and have
not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial
statement disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

Under the supervision
and with the participation of our management, including our principal executive officer and the principal financial officer, we
are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures,
as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered
by this report. Disclosure controls and procedures means that the material information required to be included in our Securities
and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified
in SEC rules and forms relating to our company, particularly during the period when this report was being prepared.

– 33 – 

 

Based on this evaluation,
our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls
and procedures as of December 31, 2015 were not effective to ensure that the information required to be disclosed by our company
in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is
accumulated and communicated to our company’s management, including our principal executive officer and principal financial officer,
to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective
was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative
of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient
written policies and procedures for accounting and financial reporting with respect to the requirements and application of both
United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates
that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

We plan to take steps
to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly
report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses,
we plan to implement the following changes during our fiscal year ending December 31, 2016, subject to obtaining additional financing:
(i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii)
adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above
are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are
unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within
our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty
and that breakdowns can occur because of simple error or mistake.

No events occurred requiring
disclosure under Item 304 of Regulation S-K during the subject fiscal year. This annual report does not include a report of management’s
assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting
firm due to a transition period established by rules of the Securities and Exchange Commission for new public companies.

ITEM 9B. OTHER INFORMATION

Not applicable.

– 34 – 

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS,
AND CORPORATE GOVERNANCE

The following table contains information concerning
our directors and officers as of December 31, 2015.

Directors and Executive Officers

 

Name 
 Age  
Position

Alton Perkins 
 64  
President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors

Xianghai Lin 
 39  
Vice President China Operations

Mabiala T. Phuati 
 55  
Senior Vice President Worldwide Operations

Dr. Yu Wang 
 61  
Senior Vice President for Human and Export Technical Compliance

Dr. Daniel K. Gatabaki 
 64  
Vice President for Marketing USA and Africa

Lindsey Moore 
 28  
Vice President for Marketing USA Eastern Region

Qingjun Wang 
 35  
Manager of Corporate Operations China

Biographical Information
for Alton Perkins, Age 62, Chairman of the Board of Directors, President, Chief Executive Officer, Chief Financial Officer and
Secretary

Mr. Perkins currently
serves as President, Chief Executive Officer and Chairman of the Board of Directors of Yilaime and Yilaime’s related entity doing
business in North Carolina. Mr. Perkins is a former decorated Air Force Officer and Missile Launch Officer with 22 years of military
service who graduated from the University of Southern Illinois with a B.S. in Business Administration and a M.B.A. from the University
of North Dakota. From 1988 through 1997 he held CEO positions with start-up companies in the Jet Fuels, Defense Contracting, construction,
business consulting and development, and real estate industries. From 1997 through 2009, Mr. Perkins served as the CEO and Chief
Technology Officer for Internet, childcare operations, media, and realty development companies. From 2009 to present, Mr. Perkins
has served as Chairman of Yilaime and its related entity. Mr. Perkins has expertise in conducting business in China. Living and
working in China studying Chinese consumer habits, working with Chinese entrepreneurs and government agencies, he developed the
AmericaTowne and AmericaStreet concept.

– 35 – 

In addition to serving
as Co-Chair of Yilaime Foreign Invested Partnership in China an entity focused on real estate development, he served as a Chief
consultant to a major Chinese Chemical Company responsible for funding and technology transfer; he coordinated business with USA
based auditors, DOW Chemical and USA Exim Bank. Mr. Perkins is subject to a Desist and Refrain Order dated March 21, 2008 issued
by the State of California’s Business, Transportation and Housing Agency, Department of Corporations. Mr. Perkins has been in compliance
with the Order since issuance. The Order is not related in any manner with respect to the Company or its related parties. To the
extent the Order was entered, there is no restriction on Mr. Perkins from engaging in an offering in the State of California provided
he complies with the appropriate disclosures and laws.

Biographical Information
for Xianghai Lin, Age 38, Vice President

Mr. Xianghai Lin, a Chinese
citizen residing in China is responsible for the Corporation’s operations in China. From 2010 to 2012 Mr. Lin served as Director
of Marketing and Investments for Yilaime Corporation’s Foreign Invested Partnership in China. Mr. Lin was a lead executive in helping
to develop the AmericaTowne and AmericaStreet concept. Mr. Lin serves as the Company’s Managing Director for all operations in
China. Prior to working with Yilaime Corporation, Mr. Lin was the Assistant Managing Director for one of China’s largest Grocery
Chains. Mr. Lin has expertise in product design, marketing and sales. He is responsible for the export Buyer Program and the AmericaTowne
and AmericaStreet Export Support programs in China.

Biographical Information
for Mabiala T. Phuati, Age 55, Vice President

Mr. Mabiala T. Phuati
currently serves as President and Chief Executive Officer of the Yilaime entity doing business in North Carolina. Mr. Phuati is
a retired from the Zaire Government now the Democratic Republic of Congo. Mr. Phuati previously worked at the World Bank, and the
United Nations. His portfolio of work includes: Executive Administrator of the Democratic Republic of Congo Government; Executive
Administrator for United Nations High Commission for Refugees in the Central African Region; World Bank; World Health Organization;
and the State Banking Commission for the North Carolina Department of Commerce.

After leaving the State
Banking Commission, in 2000, Mr. Phuati served as the President and Chief Executive Officer of Global Development Corporation a
private enterprise where he focused on developing business in Africa in the mining industry. In 2012, Mr. Phuati became Managing
Director of the Yilaime entity doing business in North Carolina. In 2013, Mr. Phuati was promoted to President and Chief Executive
Officer of the Yilaime entity doing business in North Carolina and Vice President of Yilaime.

– 36 – 

Biographical Information
for Dr. Yu Wang, Age 61, Senior Vice President of Human Resources and Export Technical Compliance

Dr. Wang is from China,
and is a resident of the United States. She serves as the Senior Vice President of Human Resources and Export Technical Compliance.
Dr. Wang worked for Duke University for more than twenty years in the field of medical research. Prior to her work at Duke University,
Dr. Wang was an Associate Professor for six years at Tongi University China. After retiring from Duke University in 2013, Dr. Wang
served as the President and Chief Executive Officer of United International Development Inc. (“United Development”),
a private enterprise where she focused on international trade and development. In 2014, Dr. Wang became Managing Assistant Director
in United Development. In late-August 2015, Dr. Wang was appointed to her current Senior Vice President position with the Company.

Biographical Information
for Dr. Daniel Gatabaki, Age 64, Vice President for Marketing USA and Africa

Dr. Gatabaki is 63 years
old. He is a native of Kenya, and a resident of the United States. He is responsible for the Corporation’s development of
operations in Africa. Dr. Gatabaki earned a Bachelor of Education degree from University of Nairobi and Master of International
Affairs, Master of Economics and Ph.D. degrees from Ohio University. In addition to holding a number of Associate and Assistant
faculty positions at the college level, Dr. Gatabaki comes to the Company from Behavioral Health Care, where since 2011 he has
been a President and Chief Executive Officer of Canaan Care Homes, LLC, an entity focusing on catering to residential homes for
intellectually and developmentally disabled adults in Wake County, North Carolina.

Biographical Information
for Lindsey Moore, Age 28, Vice President for Marketing USA Eastern Region

Ms. Moore received a
juris doctor degree from North Carolina Central University School of Law in Durham, North Carolina in 2015, and a Bachelor of Science
degree in Business Administration from William Peace University in 2011. While studying law, she was an honors student ranking
in the top 10 percent of her class. From 2013 to 2014 Ms. Moore completed internships with two law firms and the Trial Court Administrator’s
Office in Raleigh, North Carolina. Additionally, from 2009- 2011, Ms. Moore worked in marketing and advertising for the International
Festival of Raleigh and as a life insurance agent with Liberty National Life Insurance Company.

– 37 – 

Biographical Information
for Qingjun Wang, Age 35, Manager of Corporate Operations China

Mr. Wang, a citizen and
resident of China has a bachelor’s degree in business from Peking University, China. Since 2010, Mr. Wang has worked in the
medical field in China as well as a general manager in the export business. Mr. Wang is a certified translator and his responsibilities
with the Company include developing business initiatives in China focusing on auto sales, education initiatives, export sales,
and marketing. Mr. Wang also is responsible for matching exporters with buyers in China.

The Board of Directors and Committees

As of the date of this Report, we had no independent
directors. We anticipate appointing independent directors as required in the future.

Audit Committee

As of the date of this
Report, we do not have an Audit Committee. We intend to establish an Audit Committee of the Board of Directors, which will consist
of independent directors, of which at least one director will qualify as a qualified financial expert as defined in the regulations
of the SEC. The Audit Committee’s duties would be to recommend to our Board of Directors the engagement of independent auditors
to audit our consolidated financial statements and to review our accounting and auditing principles. The Audit Committee would
review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors,
if any, and independent public accountants, including their recommendations to improve the system of accounting and internal control.
The Audit Committee would at all times be composed exclusively of directors who are, in the opinion of our Board of Directors,
free from any relationship that would interfere with the exercise of independent judgment as a committee member and who possess
an understanding of financial statements and generally accepted accounting principles. As of the date of this Report, we did not
have an audit committee financial expert, in light of our size, although we intend to review this issue as the Company grows, especially
as the Company implements an Audit Committee.

Compensation Committee

As of the date of this
Report, we do not have a Compensation Committee. We intend to establish a Compensation Committee of the Board of Directors. The
Compensation Committee would review and approve our salary and benefits policies, including compensation of executive officers.
The Compensation Committee would also administer any stock option plans that we may adopt and recommend and approve grants of stock
options under such plans.

– 38 – 

Nominating and
Corporate Governance Committee

As of the date of this
Report, we do not have a Nominating and Corporate Governance Committee. We intend to establish a Nominating and Corporate Governance
Committee of the Board of Directors to assist in the selection of director nominees, approve director nominations to be presented
for stockholder approval at our annual meeting of stockholders and fill any vacancies on our Board of Directors, consider any nominations
of director candidates validly made by stockholders, and review and consider developments in corporate governance practices.

Compliance with
Section 16(A) of the Securities Exchange Act of 1934

Section 16(a) of the
Securities Exchange Act of 1934, as amended (“Section 16(a)”), requires our Directors and executive officers, and persons
who beneficially own more than ten percent of a registered class of our equity securities (collectively, “Section 16 reporting
persons”), to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other
equity securities. Section 16 reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a)
forms they file. Based upon reports provided to the Company, all Section 16 reporting persons filed timely reports on Form 3 and/or
Form 4 in fiscal year 2015.

Code of Ethics

As of the date of this
Report, we do not have a formal, written code of conduct (“Code of Ethics”) within the specific guidelines promulgated
by the SEC, although we intend to adopt a Code of Ethics.

ITEM 11. EXECUTIVE
COMPENSATION

It is the intention of
the Company to establish nominating committees, audit committees, compensation committees and protocols and procedures associated
with annual and special meetings of shareholders (to the extent not addressed in the enclosed Bylaws).

Since we do not have
an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees
are performed by our director. The Board of Directors has not established an audit committee and does not have an audit committee
financial expert, nor has the Board established a nominating committee. The Board is of the opinion that such committees are not
necessary since AmericaTowne is an early exploration stage company and has only seven directors, and to date, such directors have
been performing the functions of such committees. Thus, there is a potential conflict of interest in that our director and officer
has the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management
decisions.

– 39 – 

The Company issued 477,198
shares of common stock to Mr. Phuati in fiscal year 2015 in consideration of his services. To the extent the Company has sufficient
cash flow and capital, the Company may elect to include money compensation to Mr. Phuati for his services. Similarly, the Company
issued 5,100,367 shares of common stock to Mr. Perkins’ designee – Alton & Xiang Mei Lin Perkins Family Trust, in consideration
of his services, and options were exercised for another 1,000,000 shares pursuant to his employment agreement. In addition, the
Company issued 450,000 shares of restricted common stock to Dr. Gatabaki; 477,190 shares of restricted stock to Dr. Wang, 100,000
restricted shares to Lindsey Moore and 20,000 restricted shares to Qingjun Wang, respectively, under their respective Employment
Agreements.

The Company has adopted
an Employee Stock Option Plan, but no shares have been registered or issued. The Company has not yet adopted retirement, pension,
or profit sharing programs for the benefit of directors, officers or other employees, but our officers and directors may recommend
adoption of one or more such programs in the future. The Company paid $1.00 to Mr. Perkins in compensation for 2015. The Company
paid compensation to other officers as follows:

Employee 
 Compensation 

Mabiala T. Phuati 
$10,403.75 

Yu Wang 
$3,000.00 

Daniel Gatabaki 
$7,805.00 

Lindsey Moore 
$7,895.00 

Qingjun Wang 
$300.63 

The Company does
not have a standing compensation committee, audit committee, nomination committee, or committees performing similar functions.
We anticipate that we will form such committees of the Board of Directors once we have a full Board of Directors.

Retirement Plan

The Company does not
currently have any retirement plan, but we expect to adopt one in the near term.

Compensation of Directors
During Period Ended December 31, 2015.

None.

Audit Committee Financial Expert

The Company does not have an audit committee
financial expert.

– 40 – 

ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The table set forth in
this subsection lists, as of January 1, 2016, the number of shares of common stock of our Company that are beneficially owned by
(i) each person or entity known to our company to be the beneficial owner of more than 5% of the outstanding common stock; (ii)
each officer and director of our company; and (iii) all officers and directors as a group.

Information relating
to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each
person using “beneficial ownership” concepts under the rules of the SEC. Under these rules, a person is deemed to be
a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting
of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also
deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within sixty days.
Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed
to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below,
each person has sole voting and investment power.

The percentages below
are calculated based on 25,243,205 shares of our common stock issued and outstanding as of December 31, 2015. As part of their
employment agreement, all key employees retain an option to purchase shares of common stock of the Company. We do not have any
other outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.

– 41 – 

 

Name of Beneficial Owner (1) Named Executive Officers 
 Amount and Nature of Beneficial Ownership  
 Percent (%) of Common Stock 

Alton Perkins (2) 
 23,466,426  
 92.96%

Mabiala T. Phuati 
 477,198  
 1.89%

Yu Wang 
 477,190  
 1.89%

Daniel K. Gatabaki 
 457,273  
 1.81%

Lindsey Moore 
 100,000  
 0.40%

Qingjun Wang 
 20,000  
 0.08%

  
 24,998,087  
 99.0%

(1)
The above table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable. Unless otherwise indicated, beneficial ownership is determined
in accordance with the Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, and includes voting or investment
power with respect to the shares beneficially owned.

(2) Chairman of the Board,
President, Chief Executive Officer, Chief Financial Officer and Secretary.

(3) Mr. Perkins is the
majority shareholder of Yilaime. Mr. Perkins is also the Trustee of the Alton & Xiang Mei Lin Perkins Family Trust. These two
entities are the holders of the majority of issued and outstanding shares of common stock in the Company.

B. Significant Employees

We are dependent on the
experience, knowledge, skill and expertise of our President, CEO, CFO, Secretary and Chairman of the Board – Alton Perkins. The
loss of Mr. Perkins could materially and adversely affect our future business efforts. Our success depends in substantial part
upon the services, efforts and abilities of Mr. Perkins, and our two related entities – Yilaime and Yilaime NC. We do not currently
carry key-man life insurance on Mr. Perkins or any of our officers and have no present plans to obtain this insurance.

C. Family Relationships

There are no family relationships
among directors, executive officers, or persons nominated or chosen by the issuer to become directors or executive officers.

– 42 – 

D. Involvement in
Certain Legal Proceedings

There have been no events
under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of
the ability and integrity of any director, executive officer, promoter or control person of Registrant during the past five years.

Nominating Committee

We have not adopted any
procedures by which security holders may recommend nominees to our Board of Directors.

Audit Committee

The Board of Directors
acts as the audit committee.

Our officers and director
do not receive any compensation for services rendered to the Company since inception, have not received such compensation in the
past, and is not accruing any compensation pursuant to any agreement with the Company. No remuneration of any nature has been paid
for or on account of services rendered by a director in such capacity. Our CFO and our outside directors intend to devote no more
than (25) twenty five hours per week to our affairs. Our officers and directors will not receive any finder’s fee, either directly
or indirectly, as a result of any efforts to implement our business plan outlined herein.

ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS

As set forth above, the
Company has engaged in, and anticipates that it will continue to engage in, related party transactions with Yilaime. The Company
believes that maintaining a relationship with Yilaime will enhance its prospects of success and facilitate additional benefits
for its shareholders.

ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES

Audit Fees

The aggregate fees billed
by the Company’s auditors, Yichien Yeh, CPA for professional services rendered for the audit of our annual financial statements,
review of our quarterly financial statements or services that are normally provided in connection with statutory and regulatory
filings for the year ending December 31, 2015 was $32,000.

Audit Related Fees

There were no fees billed
for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements
for the year ending December 31, 2015.

– 43 – 

Tax Fees

There were no fees billed
for professional services for tax compliance, tax advice, tax planning for the year ending December 31, 2015.

All Other Fees

There were no fees billed
for other products and services for the year ending December 31, 2015.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES

15(a)(1). Financial Statements

Public Accounting Firm are filed as part of
this Annual Report:

15(a)(3). Financial Statement Schedules.

None.

– 44 – 

 Exhibit  
Exhibit Description 
Filed herewith 
 Form  
 Period Ending  
 Exhibit  
Filing Date

 3.1  
Certificate of Incorporation 
  
 10-12G  
    
 31.1  
5/8/2014

 3.2  
By-Laws 
  
 10-12G  
    
 3.2  
5/8/2014

 3.3  
Specimen Stock Certificate 
  
 10-12G  
    
 4.1  
5/8/2014

 10.1  
Employee Stock Option Plan of AmericaTowne, Inc. dated January 8, 2015 
  
 8-K  
    
 10.2  
1/13/2015

 10.2  
Contribution Agreement January 8, 2015 – Meishan (Yilaime) 
  
 8-K  
    
 10.1  
1/13/2015

 10.3  
Exporters Services Agreement dated January 8, 2015 (Leah) 
  
 8-K  
    
 10.4  
1/13/2015

 10.4  
Exporters Services Agreement dated January 8, 2015 (World Class) 
  
 8-K  
    
 10.3  
1/13/2015

 10.5  
Exporters Services Agreement dated January 30, 2015 (SOCOOTRA) 
  
 8-K  
    
 10.2  
2/5/2015

 10.6  
Exporters Services Agreement dated June 21, 2015 (Community and Global) 
  
 8-K  
    
 10.1  
6/24/2015

 10.7  
Exporters Services Agreement dated June 29, 2015 (USA Africa) 
  
 8-K  
    
 10.3  
7/9/2015

 10.8  
Exporters Services Agreement dated June 29, 2015 (International Consulting) 
  
 8-K  
    
 10.2  
7/9/2015

 10.9  
Exporters Services Agreement dated June 29, 2015 (Chariot Group) 
  
 8-K  
    
 10.1  
7/9/2015

 10.1  
Exporters Services Agreement dated June 30, 2015 (KCC Construction) 
  
 8-K  
    
 10.4  
7/9/2015

 10.11  
Exporters Services Agreement dated June 30, 2015 (Canaan Care) 
  
 8-K  
    
 10.5  
7/9/2015

 10.12  
Exporters Services Agreement dated July 30, 2015 (Landmark Auto Sales) 
  
 8-K  
    
 10.1  
7/31/2015

 10.13  
Exporters Services Agreement dated August 18, 2015 (Hi-Esteem) 
  
 8-K  
    
 10.1  
8/20/2015

 10.14  
Employment Agreement November 25, 2014 (Perkins) 
  
 10-KA  
    
 10.12  
8/27/2015

 10.15  
Employment Agreement November 25, 2014 (Phuati) 
  
 10-KA  
    
 10.13  
8/27/2015

 10.16  
Exporter Services Agreement dated August 26, 2015 (LFTE USA Agreement) 
  
 8-K  
    
 10.1  
9/8/2015

 10.17  
Exporter Services Agreement dated August 28, 2015 (Lion Agreement) 
  
 8-K  
    
 10.2  
9/8/2015

 10.18  
Memorandum of Understanding Agreement dated August 28, 2015 (Student Resource USA Agreement) 
  
 8-K  
    
 10.3  
9/8/2015

 10.19  
Employment Agreement – Dr. Daniel K. Katabaki dated August 26, 2015 
  
 8-K  
    
 10.4  
9/8/2015

 10.20  
Employment Agreement – Dr. Yu Wang dated August 28, 2015 
  
 8-K  
    
 10.5  
9/8/2015

 10.21  
Exporters Services Agreement dated September 28 2015 (MAS) 
  
 8-K  
    
 10.1  
9/28/2015

 10.22  
Exporters Services Agreement dated October 01 2015 (MAS) 
  
 8-K  
    
 10.1  
10/1/2015

 10.23  
Employment Agreement – Ms Lindsey Moore dated October 7, 2015 
  
 8-K  
    
 10.1  
10/9/2015

 10.24  
Employment Agreement – Mr. Qingjun Wang dated October 12, 2015 
  
 8-K  
    
 10.1  
10/15/2015

 10.25  
Exporters Services Agreement dated November 5, 2015 (Love Your Wool) 
  
 8-K  
    
 10.1  
11/5/2015

 10.26  
Exporters Services Agreement dated November 7, 2015 (Stintson) 
  
 8-K  
    
 10.1  
11/12/2015

 10.27  
Exporters Services Agreement dated November 9, 2015 (REHOBOTH) 
  
 8-K  
    
 10.2  
11/12/2015

 10.28  
Employment Agreement – Mr. Juan Mendez dated December 17, 2015 
  
 8-K  
    
 10.1  
12/17/2015

 10.29  
Exporters Services Agreement dated December 19, 2015 (MILLENIA) 
  
 8-K  
    
 10.1  
12/24/2015

 10.30  
Service Provider Trade Center Agreement dated December 19, 2015  (Samuel Muli) 
  
 8-K  
    
 10.2  
12/24/2015

 10.31  
Service Provider Trade Center Agreement dated December 19, 2015  (Raphael Mutava Kimulu) 
  
 8-K  
    
 10.3  
12/24/2015

 31.1  
Certifications
of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section
302 of the Sarbanes-Oxley Act of 2002


    
    
    
 

 32.1  

 Certifications of the
Chief Executive Officer and Chief Financial Officers Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002

 

 

    
    
    
 

 101.INS  
XBRL Instance File 

    
    
    
 

 101.SCH  
XBRL Schema File 

    
    
    
 

 101.DEF  
XBRL Definition File 

    
    
    
 

 101.LAB  
XBRL Label File 

    
    
    
 

 101.PRE  
XBRL Presentation File 

    
    
    
 

– 45 – 

(b) The following documents are filed as
part of the report:

1. Financial Statements: Balance Sheet, Statement
of Operations, Statement of Stockholder’s Equity, Statement of Cash Flows, and Notes to Financial Statements.

SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

AMERICATOWNE, INC.

By: /s/ Alton Perkins
Alton Perkins
Chairman of the Board, President, Chief Executive
Officer, Chief Financial Officer, Secretary
Dated: March 22, 2016

– 46 – 

 

 

Report of Independent Registered Public Accounting Firm 
 F-2 

  
   

Financial Statements: 
   

  
   

Balance Sheet as of December 31, 2015 
 F-3 

  
   

Statement of Operations through December 31, 2015 
 F-4 

  
   

Statement of Stockholders’ Deficit through December 31, 2015 
 F-5 

  
   

Statement of Cash Flows through December 31, 2015 
 F-6 

  
   

Notes to Financial Statements 
 F-7 

 

– 1 – 

 

PUBLIC
ACCOUNTING FIRM

To the Board of Directors
and Stockholders of AMERICATOWNE Inc.

We have audited the accompanying
balance sheets of AMERICATOWNE Inc. as of December 31, 2015 and 2014, and the related statement of operations, stockholders’ equity,
and cash flows for the year ended December 31, 2015 and the period from April 22, 2014 (inception) through December 31, 2014. AMERICATOWNE
Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit
in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial position of AMERICATOWNE Inc. as of December
31, 2015 and 2014, and the results of operations and cash flows for the year ended December 31, 2015 and the period from April
22, 2014 (inception) through December 31, 2014 in conformity with accounting principles generally accepted in the United States
of America.

/s/Yichien Yeh, CPA

Yichien Yeh, CPA

Oakland Gardens, New York

February 22, 2016

-F- 2 – 

AMERICATOWNE Inc.
Balance Sheets

 
December
31 2015
December
31 2014

ASSETS
 
 

Current Assets
 
 

Cash and cash equivalents
$641,663
$16,403

Accounts receivable, net
823,144
143,132

Accounts receivable, net – related parties
35,779
 

Pre Payment-Current
2,594  
          644

Total Current Assets
$1,503,180  
$160,179

 
 
 

Prepayment-non current
8,161
8,808

Property, plant and equipment, net
18,357

Goodwill
40,331
40,331

Investments
3,860
          –

TOTAL ASSETS
1,573,889
$209,318

 
 
 

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 

Current Liabilities
 
 

Accounts payable and accrued expenses
$121,408
$26,539

Deferred revenues-current
4,542
4,542

Notes payable
10,000
 

Income tax payable
35,747
15,394

Total Current Liabilities
$171,697
46,475

Deferred Revenues Non-Current
$58,521
          63,062

Total Liabilities
$230,218
          109,537

 
 
 

Commitments & Contingencies
 
 

Shareholders’ Equity
 
 

Preferred stock, $0.0001 par value; 5,000,000 shares authorized;
 
 

none issued and outstanding
 
 

Common stock, $0.0001 par value; 100,000,000 shares authorized,
 
 

25,243,205 and 18,577,565 shares issued and outstanding
2,524
1,858

Additional paid-in capital
2,438,099
1,432,533

Deferred compensation
(1,233,198)
(1,363,198)

Retained Earnings
136,246
28,588

Shareholders’ Equity
1,343,671
99,781

Total Liabilities and Shareholders’ Equity
$1,573,889
$209,318

 

See Notes to Financial Statements

– 3 – 

 

AMERICATOWNE Inc. 

Statement of Operations

  

 
For the Year Ended
April 22 (inception)

 
December 31, 2015
through December 31, 2014

 
 
 

Revenues
 
 

Sales
$1,059,541
$194,034

Service-related parties
200,000
50,000

 
1,259,541
244,034

Cost of Revenues-Related Parties
126,197
52,113

Gross Profit
1,133,344
191,921

 
 
 

Operating Expenses
 
 

General Administrative
889,202
82,626

Professional fees
106,137
65,313

Total operating expenses
995,339
147,939

Income from operations
138,005
43,982

Other Expenses
 
 

Interest
3,397
 

Provision for income taxes
26,950
15,394

Net Income
$107,658
$28,588

Net Loss per share – basic and diluted
$0.005
$0.002

Weighted average shares outstanding – basic and diluted
21,777,024
12,299,405

See Notes to
Financial Statements

  

-F- 4 – 

 

AMERICATOWNE Inc.
Statements of Stockholders’ Equity

April 22, 2014 (Inception) through December
31, 2015

 

  
  
  
  
  
Additional 
  
  
Total

  
 Preferred Stock  
    
 Common Stock  
    
 Paid-In   
 Retained   
 Deferred   
 Stockholders’ 

  
 Shares  
 Amount  
 Shares  
 Amount  
 Capital  
 Earnings  
 Compensation  
 Equity 

  
    
    
    
    
    
    
    
   

Shares Issued for Services 
 —    
 —    
 10,000,000  
$1,000  
$2,119  
$—    
$—    
$3,119 

  
    
    
    
    
    
    
    
   

Shares Issued for Assets 
 —    
 —    
 3,000,000  
 300  
 (300) 
 —    
 —    
 —   

  
    
    
    
    
    
    
    
   

Application of Push-Down Accounting 
 —    
 —    
 —    
 —    
 36,881  
 —    
 —    
 36,881 

  
    
    
    
    
    
    
    
   

Shares Issued for Compensation 
 —    
 —    
 5,577,565  
 558  
 1,393,833  
 —    
 (1,394,391) 
 —   

  
    
    
    
    
    
    
    
   

Amortization of Deferred Compensation 
 —    
 —    
 —    
 —    
 —    
 —    
 31,193  
 31,193 

  
    
    
    
    
    
    
    
   

Net Income for the Period 
 —    
 —    
 —    
 —    
 —    
 28,588  
 —    
 28,588 

  
    
    
    
    
    
    
    
   

Balance, December 31, 2014 
 —    
 —    
 18,577,565  
$1,858  
$1,432,533  
$28,588  
$(1,363,198) 
$99,781 

  
    
    
    
    
    
    
    
   

Shares issued for Intangibles 
 —    
 —    
 750,000  
 75  
 (75) 
 —    
 —    
 —   

  
    
    
    
    
    
    
    
   

Shares Issued for Investments 
 —    
 —    
 3,616,059  
 362  
 3,498  
 —    
 —    
 3,860 

  
    
    
    
    
    
    
    
   

Shares Issued for Proceeds 
 —    
 —    
 1,252,391  
 125  
 740,449  
 —    
 —    
 740,574 

  
    
    
    
    
    
    
    
   

Shares Issued for Compensation 
 —    
 —    
 1,047,190  
 105  
 261,693  
 —    
 (261,798) 
 —   

  
    
    
    
    
    
    
    
   

Amortization of Deferred Compensation 
 —    
 —    
 —    
 —    
 —    
 —    
 391,798  
 391,798 

  
    
    
    
    
    
    
    
   

Net Income for the Period 
 —    
 —    
 —    
 —    
 —    
 107,658  
 —    
 107,658 

  
    
    
    
    
    
    
    
   

Balance, December 31, 2015 
 —    
 —    
 25,243,205  
$2,524  
$2,438,099  
$136,246  
$(1,233,198) 
$1,343,671 

 

 

See Notes to Financial Statements

-F- 5 – 

 

AMERICATOWNE Inc.
Statement of Cash Flows

 
 
For the Year Ended
 
April 22 (inception)

 
 
December 31, 2015
 
through December 31, 2014

 
 
 
 
 

Operating Activities:
 
 
 
 

Net income 
$
107,658
$
28,588

   Adjustments to reconcile net income to net cash provided by operations
 
 

Depreciation
 
1,989
 
 –   

Notes issued for expenses
 
25,000
 
 –   

Shares issued for services
 
 –   
 
3,119

Stock Compensation
 
391,798
 
31,193

Push-down accounting application
 
 –   
 
(3,450)

Bad debt provision
 
84,767
 
12,368

Changes in operating assets and liabilities:
 
 
 
 

   Accounts receivable, net
 
(800,556)
 
(155,500)

   Prepayment
 
(1,303)
 
(9,452)

   Accounts payable and accrued expenses
 
94,867
 
26,539

   Deferred revenues
 
(4,541)
 
67,604

   Income tax payable
 
20,353
 
15,394

Net cash provided by (used in) operating activities
 
(79,968)
 
16,403

 
 
 
 
 

Investing Activities:
 
 
 
 

Purchase of fixed assets
 
(20,346)
 
 –   

Net cash used in Investing activities
 
(20,346)
 
 –   

 
 
 
 
 

Financing Activities:
 
 
 
 

Repayment of notes payable
 
(15,000)
 
 –   

Proceeds from issuance of common stock
 
740,574
 
 –   

Net cash provided by financing activities
 
725,574
 
 –   

 
 
 
 
 

Increase in cash and cash equivalents
 
625,260
 
16,403

Cash and cash equivalents at beginning of period
 
16,403
 
 –   

Cash and cash equivalents at end of period
$
641,663
$
16,403

 
 
 
 
 

Supplemental disclosure of cash flow information
 
 
 
 

Interest paid
$
638
$
 –   

Income taxes paid
$
6,597
$
 –   

See Notes to Financial
Statements

-F- 6 – 

 AMERICATOWNE
Inc.

Notes to Financial Statements
(Unaudited)

NOTE 1. ORGANIZATION
AND DESCRIPTION OF BUSINESS

AmericaTowne, Inc. (the
“Company”) was incorporated under the laws of the State of Delaware on April 22, 2014. The Company exited shell status
on March 3, 2015. The Company is engaged in exporting and consulting in the exporting of American made goods, products and services
to China and Africa through strategic relationships in China and in the United States, which is referred to internally by the Company
as the “AmericaTowne Platform”. The Company’s forward-looking vision is to create a physical location called AmericaTowne
in China that incorporates business selling the “American experience” in housing, retail, senior care and entertainment.
The Company’s Registration Statement on Form S-1/A went effective on November 6, 2015.

As with any business
plan that is aspirational in nature, there is no assurance we will be able to accomplish all of our objective or that we will be
able to meet our financing needs to accomplish our objectives.

Mission

“AmericaTowne is
to be a world-class, globally respected and profitable company, providing value to its customers, the environment and the lives
of the people we service.” This statement is a forward-looking statement; however, the Company has already made strides in
facilitating relationships intended to advance its mission.

The Company’s aim is
to provide upper and middle-income consumers in China with “Made In The USA” goods and services allowing customers to
experience the United States’ culture and lifestyle. In achieving this objective, our focus is to create a $2.4 billion enterprise
through on four initiatives:

(1) The development of
a United States International Trade Center in Meishan Ningbo China with employees and/or independent contractors focusing on advancing
our initial business objective, which is to be the “go-to” place for all things “Made In The USA.”

(2) The development of
upwards of 20 AmericaTowne communities in China with each community consisting of upwards of 50 United States based companies,
and upscale hotels, villas, children theme parks, senior care and educational facilities – all based upon United States culture
and lifestyle.

(3) The development of
an internet platform in Chinese to complement (1) and (2), above, focusing on importing “Made In The USA” goods and services
to China through internet sales.

-F- 7 – 

(4) The
development of Trade Center operations in the United States and internationally to support and advance the above-referenced
initiatives.

These initiatives are
admittedly aspirational in nature. Our intent is to accomplish the majority, if not all, of our initiatives, but there is no assurance
we will or that our financing needs to meet our initiatives will be met.

The Company
currently has 23 exporters in our export program. Our intention is to bring the United States International Trade Center in
Meishan Ningbo China online in 2016. We expect to complete our initial trade operations with our exporters in 2016. In
addition, our office in Raleigh, North Carolina is operational and serves as our base and model for our export Trade Center
operations planned in the United States and other locations. The AmericaTowne Community planned in China and our Internet
operations with Chinese websites planned are not yet operational. While we plan to have robust operations in the United
States and international locations to support the AmericaTowne concept and trade center, we expect the bulk of our operations
and revenue will come from China.

China’s economy and its
government impact our revenues and operations. While we have an agreement in place with the government in Meishan Ningbo China
to operate the United States International Trade Center in Meishan Island China, there is no assurance that we will operate the
center successfully. Additionally, the Company will need government approval in China to operate other aspects of our business
plan. There is no assurance that we will be successful in obtaining approvals from government entities to operate other aspects
of our business plan.

The Company is in the
development phase and intends to be in the business set forth in the forward-looking statements herein. As such, the Company is
not subject to all risks inherent in the establishment of a start-up business enterprise.

-F- 8 – 

NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

Accounting Method

The Company’s financial
statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31.

Use of Estimates

The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments
necessary in order to make the financial statements not misleading have been included. Actual results could differ from those estimates.

Financial Instruments

The carrying amount reported in the balance
sheet for cash, accounts receivable, accounts payable, accrued expenses, interest payable and short-term notes payable approximate
fair value because of the immediate or short-term maturity of these financial instruments.

Cash Equivalents

The Company considers
all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit
Risk

Financial instruments
that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents.
The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. However, management
believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in
which those deposits are held.

-F- 9 – 

Property, Plant, and
Equipment

Property, plant and equipment
are initially recognized recorded at cost. Gains or losses on disposals are reflected as gain or loss in the period of disposal.
The cost of improvements that extend the life of plant and equipment are capitalized. These capitalized costs may include structural
improvements, equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred.

Depreciation for financial
reporting purposes is provided using the straight-line method over the estimated useful lives of the assets:

Office equipment
5 years

For the year ended December
31, 2015, depreciation expense is $1,989.

Investments

Investments primarily
include cost method investments. On December 31, 2015, the carrying amount of investments is $3,860. There are no identified events
or changes in circumstances that may have a significant adverse effect on fair value of the investment as of December 31, 2015.

Income Taxes

Income taxes are provided
in accordance with Statement of Financial Accounting Standards ASC 740 Accounting for Income Taxes. A deferred tax asset or liability
is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax
expense (benefit) results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.

The Company was
established under the laws of the State of Delaware and is subject to U.S. federal income tax and Delaware state income tax.
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of
assets and liabilities that will result in future taxable or deductible amounts and are based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred income tax assets to the amount expected to be realized. On December 31, 2015,
there are no deferred tax assets and liabilities. The Company accrued $26,950 income tax for the year ended December 31,
2015. The Company had $35,747 of income tax liability as of December 31, 2015.

For the year ended December
31, 2015, statutory U.S tax rate is 26% based on the Company’s pre-tax net income in 2015. The Company’s 2015 effective
income tax rate is 20%. The difference is due to over accrual of income tax in 2014.

– 10 – 

 

Earnings per Share

In February 1997, the
FASB issued ASC 260, “Earnings per Share”, which specifies the computation, presentation and disclosure requirements
for earnings (loss) per share for entities with publicly held common stock. ASC 260 supersedes the provisions of APB No. 15, and
requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the
provisions of ASC 260 effective (inception).

Basic earnings and net
loss per share amounts are computed by dividing the net income by the weighted average number of common shares outstanding. Diluted
earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.

Segment Information

The standard, “Disclosures
about Segments of an Enterprise and Related Information”, codified with ASC 280, requires certain financial and supplementary
information to be disclosed on an annual and interim basis for each reportable segment of an enterprise. The Company believes that
it operates in business segment of marketing and sales in China while the Company’s general administration function is performed
in the United States. On December 31, 2015, all assets and liabilities are located in the United States where the income and expense
has been incurred since inception to December 31, 2015.

Impact of New Accounting
Standards

The Company does not
expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations,
financial position, or cash flow.

Pushdown Accounting
and Goodwill

Pursuant to applicable
rules (FASB ASC 805-50-S99) the Company used push down accounting to reflect Yilaime Corporation’s purchase of 100% of the shares
of the Company’s common stock. Richard Chiang, the Company’s prior sole shareholder entered into an agreement to sell an aggregate
of 10,000,000 shares of the Company’s common stock to Yilaime Corporation effective upon the closing date of the Share Purchase
Agreement dated June 26, 2014. Richard Chiang executed the agreement and owned no shares of the Company’s common stock. This transaction
resulted in Yilaime Corporation retaining rights, title and interest to all issued and outstanding shares of common stock in the
Company.

– 11 – 

The purchase cost for
the agreement was $40,000. The Company used $40,000 as a new accounting basis for its net assets. Since there were no assets on
the company’s books on June 26, 2014, to make the company’s net assets $40,000, the Company recorded $40,331 in goodwill ($40,331-$331=$40,000;
$331 was a liability due to a related party). Therefore, in recognizing push down accounting, the Company’s net asset increased
by the amount reflected by Goodwill.

Revenue Recognition

The Company’s revenue
recognition policies comply with FASB ASC Topic 605. Revenue is recognized when persuasive evidence of an arrangement exists, delivery
has occurred, the price is fixed or determinable, collectability is reasonably assured, and there are no significant subsequent
obligations for the Company to assume.

Prior to an agreement,
the Company assesses whether collectability from the potential customer is reasonably assured. The Company reviews the customer’s
financial condition, which is an indicator of both its ability to pay, and, in turn, whether or not revenue is realizable.

The ability to pay is
an important criterion for entrance into an agreement with the customer. If management believes that the potential customer does
not have the ability to pay, normally an agreement is not entered into with the customer.

If, at the outset an
arrangement is entered into and the Company determines that the collectability of the revenue amount from the customer is questionable,
management would not recognize revenue until it receives the amount due or conditions change so that collectability is reasonably
assured. If collectability is reasonably assured at the outset of an arrangement, but subsequent changes in facts and circumstances
indicate collection from the customer is no longer probable, the amount is recorded as bad debt expense.

There are two primary
customer agreements currently offered to the Company’s customers – (a) Licensing, Lease and Use Agreement (“Licensing Agreement”),
and (b) Exporter Services Agreement (“Exporter Agreement”).

(a) Licensing, Lease
and Use Agreement

For the License, Lease
and Use Agreement, the Company reflects revenue recognition over the course of the term.

(b)
Exporter Services Agreement.

For services provided
in the Exporter Service Agreement, the Company has two primary types of services called the Service Fee and Transaction Fee. Additionally,
under certain circumstances, the Company may charge an Extension Fee. The customer under the Exporter Services Agreement is defined
in this section as the “Exporter.”

-F- 12 – 

The Service Fee

Upon signing the Exporters
Agreement, the Exporter is provided with services consisting of eight related components including: 1) market analysis; 2) review
of proposed goods and services; 3) expectations for supply and demand in the market; 4) conducting export business in China; 5)
information on financing; 6) information on the export tax savings programs; 7) international trade center assistance; and 8) selecting
and assigning a tax saving company. All eight components of the Service Fee are delivered as one deliverable upon the signing or
shortly thereafter of the Exporter Service Agreement with the exporter. The Company completes the earnings process upon the signing
the Exporter Service Agreement since the one service fee deliverable has been delivered and we have no further obligations. Revenue
is not recognized until the completion of these eight components and the Company has no further obligations.

The Transaction Fee

During this process,
the Exporter’s goods and services are tested in the market, buyers or identified, deals or negotiated and the exporter products
and services are delivered, and payment is made. The Transaction Fee is normally a percentage of each transaction.

The Transaction Fee process
includes the Exporter’s participation in three programs: 1) the Sample and Test Market Program; 2) Market Acceptance Program; and
3) Export Delivery Action. In the Sample and Test Market Program, an Exporter’s products and services are tested in the market;
sources of goods and services are confirmed; price indications are confirmed; and an Exporter and buyer match occurs. In the Market
Acceptance Program, the export deal is identified and negotiated. Finally, in the Export Delivery Action, the goods are shipped
and delivered and payment is made. The Company does not recognize revenue until completion of these three programs and the Company
has no further obligations.

Throughout the life of
the Exporter Agreement, the Company expects Exporters to complete multiple transactions. Each transaction is a separate and independent
process.

The Extension Fee

The Extension Fee is
an independent accounting unit. The Extension Fee is a fee charged to those Exporters who in rare cases for whatever reason fail
to avail themselves of the Transaction Process. The Exporter has one-year to participate in the Sample and Test Market Program.
Afterwards, provided no transaction has occurred and the Exporter agrees to pay a fee equal to 25% of the original Service fee
within thirty (30) days (the “Extension Fee”), the Exporter may continue the Transaction Process. If the Extension Fee
is not paid, the Exporter’s participation and membership in the Sample and Test Program terminates. In the event of termination,
the balance of any prior fees is still due and payable.

-F- 13 – 

Provided that the Exporter
agrees to pay the Extension Fee and continues with the Transaction Process, at the end of the Transaction Process and the last
Transaction Fee deliverable is made, the Transaction Fee Process is completed. Upon completion, the Company has no further obligations,
revenue is recognized, and the Exporter is invoiced for both the Extension Fee and the Transaction Fee.

After the Exporter pays
the Extension Fee, if no transaction has occurred for sixty (60) calendars days, the Company is exempt from any obligation to provide
further Transaction Process services and it recognizes revenue of the Extension Fee.

The Company recognizes
revenue on a gross basis.

We have gross presentation
for services provided by Yilaime, a contractor to the Company prior to the consummation of an arrangement.

In accordance with ASC605-45-45,
the gross basis to recognize revenue applies since the Company is the primary obligor in the arrangement.

The Company expects to
realize revenue for export funding and support, and franchise and license fees for United States support locations, and education
initiatives. Additionally, if and when the Company further develops AmericaTowne, revenues would be expected to be recognized for
(a) villa sales, rentals, timeshare and leasing; (b) hotel leasing and or operational revenues and sales; (c) theme park and performing
art center operations, sales and/or leasing; and (d) senior care facilities, operations and or sales.

The Company does not
provide unconditional right of return, price protection or any other concessions to its customers.

There were no sales returns
and allowances from inception to December 31, 2015.

Valuation of Goodwill

We assess goodwill for
potential impairments at the end of each fiscal year, or during the year if an event or other circumstance indicates that we may
not be able to recover the carrying amount of the asset. In evaluating goodwill for impairment, we first assess qualitative factors
to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting
unit is less than its carrying amount. If we conclude that it is not more likely than not that the fair value of a reporting unit
is less than its carrying value, then no further testing of the goodwill assigned to the reporting unit is required. However, if
we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform
a two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment to
be recognized, if any.

-F- 14 – 

In the first step of
the review process, we compare the estimated fair value of the reporting unit with its carrying value. If the estimated fair value
of the reporting unit exceeds its carrying amount, no further analysis is needed. If the estimated fair value of the reporting
unit is less than its carrying amount, we proceed to the second step of the review process to calculate the implied fair value
of the reporting unit goodwill in order to determine whether any impairment is required. We calculate the implied fair value of
the reporting unit goodwill by allocating the estimated fair value of the reporting unit to all of the assets and liabilities of
the reporting unit as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting
unit’s goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss for that excess amount. In allocating
the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit, we use industry and
market data, as well as knowledge of the industry and our past experiences.

We base our calculation
of the estimated fair value of a reporting unit on the income approach. For the income approach, we use internally developed discounted
cash flow models that include, among others, the following assumptions: projections of revenues and expenses and related cash flows
based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount
rates. We base these assumptions on our historical data and experience, third-party appraisals, industry projections, micro and
macro general economic condition projections, and our expectations.

We have had no goodwill
impairment charges for the period from April 22, 2014 (inception) through December 31, 2015, and as of December 31, 2015, the estimated
fair value of each of our reporting units exceeded its’ respective carrying amount by more than 100 percent based on our models
and assumptions.

-F- 15 – 

 

NOTE 3. ACCOUNT
RECEIVABLES

The nature of the net
accounts receivable for December 31, 2015 in the amount of $858,923 are for Export Service Agreements with 24 exporter receivable
balances. The Company’s allowance for bad debt is $92,405, which provides a net receivable balance of $858,923.

Accounts’ receivable
are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollected
amounts through a charge to earnings and a credit to an allowance for bad debts based on its assessment of the current status of
individual accounts. Balances that are still outstanding after management has used reasonable collection efforts are written off
through a charge to the allowance for bad debts and a credit to accounts receivable.

Accounts receivable consist
of the following:

  
 December 31  
 December 31 

  
 2015  
 2014 

Accounts receivable 
$913,666  
$155,500 

Accounts receivable- related parties 
 37,662  
   

Less: Allowance for doubtful accounts 
 (92,405) 
 (12,368)

Accounts receivable, net 
$858,923  
$143,132 

Bad debt expense was
$92,405 and $12,368 for the fiscal year ended December 31, 2015 and for the period from April 22, 2014 (inception) through December
31, 2014, respectively.

Allowance for bad
debt policy

Our bad debt policy is
determined by the Company’s periodic review of each account receivable for reasonable assurance of collection. Factors considered
are the exporter’s financial condition, past payment history if any, any conversations with the exporter about the exporter’s financial
conditions and any other extenuating circumstances. Based upon the above factors the Company makes a determination whether the
receivable are reasonable assured of collection. Based upon our review if required we adjust the allowance for bad debt. As of
December 31, 2015 and 2014, based upon our limited history, our allowance for bad debt is just above bad debt we anticipate will
be written off for the year.

NOTE 4. NOTES PAYABLE

The $25,000 promissory note was issued to Mr.
Xianghai Lin, General Manager of Operations in Meishan Island China, for cost of startup operations Mr. Xianghai Lin may incur
on behalf of the Company.

-F- 16 – 

 

The note bears a 5% annual interest rate and
its principal and accrued interest are due on December 31, 2015. After the maturity date, the interest rate will increase to 10.5%.
This Note is secured by the personal guarantee of Alton Perkins, Chairman of the Company.

 

On December 31, 2015, unpaid principle for
the note is $10,000 and interest expense for the year ended December 31, 2015 is $935.

 

NOTE 5. SHAREHOLDER’S
EQUITY

The Company incorporates
by reference all prior disclosures for the period identified herein. See Part II, Item 6. The stockholders’ equity section of the
Company contains the following classes of capital stock as of December 31, 2015:

  • Common stock, $ 0.0001 par value: 100,000,000
    shares authorized; 25,243,205 shares issued and outstanding
  • Preferred stock, $ 0.0001 par value: 5,000,000
    shares authorized; but not issued and outstanding.

NOTE 6.
STOCK BASED COMPENSATION

On November 25, 2014,
the Company entered into an Employment, Lock-Up and Options Agreement with Mabiala T. Phuati to serve as the Company’s Vice President
Worldwide Operations effective retroactively to November 15, 2014. The term of the agreement is one year with an option held by
the Company to extend employment for another year. The Company has agreed to issue 477,198 shares of common stock to Mr. Phuati
in consideration of his services during the term, and to the extent the Company has sufficient cash flow and capital, the Company
may elect to include money compensation to Mr. Phuati for his services.

The Company entered into
a similar agreement on November 21, 2014 with Alton Perkins to serve as the Chairman of the Board, President, Chief Executive Officer,
Chief Financial Officer and Secretary. The term of Mr. Perkins’ agreement is five years with the Company retaining an option to
extend in one-year periods. In consideration for Mr. Perkins’ services, the Company issued to his designee, the Alton & Xiang
Mei Lin Perkins Family Trust, 5,100,367 shares of common stock. Additionally, on November 19, 2015, pursuant to the employment
agreement Mr. Perkins on behalf of the Perkins Family Trust exercised the option 1,000,000 shares of commons stock The Company
may elect in the future to include money compensation to Mr. Perkins or his designee for his services provided there is sufficient
cash flow.

Additionally, in 2015,
the following employees were awarded common shares pursuant to their employment lock-up agreement with various terms and options
Dr. Wang 477,190 common shares; Dr. Gatabaki 450,000; Ms. Moore 100,000; and Mr. Wang 20,000. Additionally, where warranted by
cash flow the Company may elect to include money compensation for employees.

– 17 – 

For the year ended December
31, 2015 and the period from April 22, 2014 (inception) through December 31, 2014, $391,798 and $31,193 in stock compensation was
charged to operating expenses, respectively and $1,233,198 and 1,363,198 was recorded as deferred compensation on December 31,
2015 and 2014, respectively.

NOTE 7. RELATED
PARTIES TRANSACTIONS

Yilaime Corporation,
a Nevada corporation (“Yilaime”) and Yilaime Corporation of NC (“Yilaime NC”) are related parties to the Company.
Yilaime is a “Control Party” to AmericaTowne because it has title to greater than 50% of the issued and outstanding shares
of common stock in the Company. Alton Perkins is the majority shareholder and controlling principal of Yilaime, Yilaime NC, Perkins
DISC and the Company. Mr. Perkins directs all major activities and operating policies of each entity. The common control may result
in operating results or a financial position significantly different from that, which would have been obtained if the enterprises
were autonomous. Further, pursuant to ASC 850-10-50-6 the Company lists and provides details for all material Related Party transactions
so that readers of the financial statements can better assess and predict the possible impact on performance.

Nature of Related Parties’
Relationship

On October 8, 2014, the
Company entered into the Stock Exchange Agreement with Yilaime NC. Pursuant to the terms of the Stock Exchange Agreement, in consideration
for the issuance of 3,616,059 shares of common stock in the Company to Yilaime NC, Yilaime NC conveyed 10,848,178 shares of its
restricted common stock to the Company. The intent of the parties in executing and performing under the Stock Exchange Agreement
is to effectuate tax-free reorganization under Section 368 of the Internal Revenue Code of 1986. The Company issued the 3,616,059
shares of common stock to Yilaime NC on May 14, 2015. As result of receiving 10,848,178 shares of issued and outstanding common
stock in Yilaime (4.5% of issued and outstanding), the Company record $3,860 investment in use of Cost Method.

The Company authorized
Yilaime NC to transfer 3,616,059 of these shares pursuant to the Company’s effective registration statement on Form S-1/A on
November 5, 2015.

The Company entered into
a Service Provider Agreement with Yilaime on October 27, 2014 (the “Service Agreement”) wherein certain “Export
Funding and Support Services” and “Occupancy Services,” as defined therein, are provided to the Company in consideration
for a fee. In addition to these fees, Yilaime has to pay an Operations Fee to the Company for exclusive rights. Mr. Perkins is
the Chief Executive Officer of the Company and is the majority shareholder and controlling person of Yilaime. The Company recognizes
and confirms the requirements in ACS 850-10-50-6 to disclose all related party transactions between the Company and Yilaime, and
any other related party transactions and or relationships.

The Company also leased
office space from Yilaime NC for $1,800/month.

-F- 18 – 

Pursuant to ASC 850-10-50-6,
the Company makes the following transaction disclosures for twelve months ending December 31, 2015:

Operating Statement Related
Party Transactions (for twelve months ending December 31, 2015 and April 22 2014 inception through December 31, 2014)

(a) $200,000 and $50,000
in revenues for Yilaime’s exclusive agreement with the Company;

(b) $126,197 and $52,113
in expenses under costs of revenues paid to Yilaime for services pursuant to the Service Agreement;

(c) $15, 300 and $5,400
for general and administrative expenses for rent expenses the Company paid to Yilaime towards its lease agreement;

(d) $180,961 and $0 for
Commission and Fees paid to Perkins Hus Export Corporation pursuant to its qualification as an Interest Charge – Domestic International
Sales Corporation (“IC-DISC”); and

(e) $393,390 and $0 for
general and administrative operating expenses recorded as stock compensation for Mr. Perkins, Mr. Phuati, Dr. Wang and Gatabaki,
Mr. Wang, and Ms. Lindsey’s respective employment agreements.

Balance Sheet Related
Party Transactions (on December 31, 2015 and 2014)

(a) $35,779 and $0 net
account receivables Yilaime owes to the Company;

(b) $3,860 and $0 investment
under assets associated with the Stock Exchange Agreement; and

(c) $1,233,198 and $1,363,198
as deferred compensation pursuant to respective employment agreements.

Other Related Party Transactions

On January 8, 2015, the
Board of Directors for the Company authorized its Chairman of the Board to execute the Contribution Agreement between the Company
and Yilaime. Pursuant to the terms of the Contribution Agreement, in consideration for the issuance of 750,000 shares of common
stock in the Company to Yilaime, Yilaime is contributing to the operations of the Company certain assets previously acquired by
Yilaime through an agreement with the Ningbo Meishan Free Trade Port Zone Administrative Committee dated April 1, 2014 (the “Meishan
Agreement”). More specifically, the Company, as assignee of Yilaime’s rights under the Meishan Agreement, shall receive certain
incentives, preferential policies and financial support from Meishan in consideration of the Company meeting specific exporting
benchmarks mutually agreed upon by the parties following good faith negotiations.

– 19 – 

NOTE 8. COMMITMENT

As stated in Note 4 above,
the Company has entered a business agreement to establish operations in Meishan Island, China. The Company paid $25,000 in 2015,
and is committed to paying $75,000 starting on or before December 31, 2016 for the related start-up cost to the individual who
is responsible for establishing operations in Meishan Island, China.

(1) Yilaime Corporation
is not to be confused with Yilaime Corporation in North Carolina. However, with each corporation, Alton Perkins is a control person.

-F- 20 – 

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