First Store Opening in February/March 2005

“Novo York Pizzeria”, to be located in southern Spain.  Attached you will find our Business Plan, or our Non-Disclosure Statement, which must be signed and returned to us, requesting a copy of our Business Plan.  Included in Appendix 2 of the Business Plan is: “Why Spain”, which provides crucial economical information, and one of the reasons why we chose Spain for the bases of our venture. 

We propose the following:

At present, we are currently in need of $40,000 in the form of a note/investment.  We are seeking a Loan in the amount of the $40,000 to be paid back in 60 monthly installments, of $830.34 for (5 years) at an interest rate of 9%.  Along, with the promissory note, we are offering the investor a 25% ownership of the corporation.  The 25% ownership of the corporation would expire, at investors request, after repayment of the original loan in (5 years). 

Please see: *** below! 

Loan Amount: $40,000.00
Interest Rate: 9%
Loan Length: 5 Years          
Payment Frequency: Monthly, 60 monthly payments of $ 830.34

Our current projections estimate at minimal, are that the investor/note holder would stand to make in excess of 140% to 160% earnings on the original investment over the duration of the five years.

The above estimated earnings is based on only one unit in operation, and our business plan is set up to secure two additional units within the first five year span. This would only increase the potential for greater earnings on investment.

The purposes for the funds sought are explained thrually in the Business Plan, (FINANCIAL SITUATIONS/NEEDS), found on Page 4 of the Business Plan.  Basically, the loan will be used for equipment and the first years operating expenses.

Novo York Pizzeria will be set up as an (SL), corporation, a private limited company (sociedad de responsabilidad limitada or SL or SRL).  With laws favoring foreign investors, low taxes, and low costs, Spain has always been attractive to investors.

Except in a few cases, Spanish law permits foreign investment of up to 100 percent of equity. When you incorporate in Spain, you must decide whether to incorporate a public limited-liability company (sociedad anonima, or SA) or a private limited company (sociedad de responsabilidad limitada or SL or SRL). The SA is structured for larger operations the SL for smaller ones. Both offer limited liability.

The main differences are in their capital (10 million pesetas, or US$66,000 vs. half a million, or US$3,300), the number of founding members (three for an SA vs. two for an SL or SRL), flexibility permitted at general meetings, transfer of shares, and management of an SL.

In addition, there are no restrictions on foreign ownership of land. Interest rates are generally low, but when buying new property you must pay the IN.A. (value-added tax), currently 7%. If you decide on a resale property, then you will find that you no longer pay IN.A. but instead you will pay the I.T.P., which is a transfer tax currently at 6 %. At this point Novo York Pizzeria does not intend to purchase property.

The good news is that you have the same rights and privileges as a Spaniard when setting up a business. The bad news is that you can be caught up in the officialdom if you don't know the proper steps to take. In the following highlighted bullets is the correct procedure for starting our business in San Fernando, Cadiz-Spain.  We have acquire the assistance of a law firm, who specializes in turnkey operations.  The attorney’s are set up to handle all Notary fees, tax stamps, registrations with local and federal agencies, and will secure the required bank account in the name of the corporation. The cost of this service will range between $7,500 and $9,500.  The law firm will perform the following:

• Get a certificate of clearance from the Spanish Central Mercantile Register for the use of the name of the new company. This step should precede all others.  

• Obtain positive clearance of the projected investment from the Directorate General of Trade Policy and Foreign Investments (DGPCIE). This procedure does not take more than one month.

• Execute the public dead of incorporation by a notary public. You first stand in person before the notary with the following items: identification, power of attorney (if applicable), evidence of payment and method of contribution (if applicable), evidence of clearance from DGPCIE, a name-clearance certificate, evidence of the investor's non residence in Spain for exchange control purposes, and the form declaring the foreign investment to the DGPCIE's foreigninvestment register. It is also necessary to provide the notary with the company's bylaws.

• Payment of transfer tax. This is a special form that must be filed within a maximum period of 30 days from the act of incorporation.

• Registration in the Mercantile Register. This is the formal registration of the company.

• Registration of the company for the purposes of the business-activities tax. Registration of the company for VAT (value-added tax) purposes.

• Payment of opening license tax.

• Registration of the company for Spanish-social-security and occupational accident insurances purposes, and registration of the employees for social security purposes.

*** All of the above except for set up of SL corporation has been completed.  The current business license is set up as a partnership with the current name of the establishment being "La Ponderosa".  The establishment was previously an eating establishment, with license for liquor and an inside seating capacity of 130 people and an outside covered seating for approximately 100 persons.  The establishment is currently being completely remodeled with new kitchen, new giant windows, bar, physical challenged lavatories and food storage and seating arrangements..  We "Novo York Pizzeria" are in a 50/50 partnership with a local Spaniard, who also owns 3 other establishments in the community.  The building is about 5 years old and is located less than 500 meters from the beach, in a newly developed community within the city limits of San Fernando, Cadiz.

If you need any further information or have questions, please fell free to write us at the above New York address, e-mail: Pizza@BeckettWeb.com, or call us at area code: (315) 331-0253.