Benefits of Making Business in The U.S. Virgin Is | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN THE U.S. VIRGIN ISLANDS WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN THE U.S. VIRGIN ISLANDS WWW.MERGERSCORP.COM

4. Country Overview United States Virgin Islands, also called U.S. Virgin Islands, organized unincorporated island territory of the United States, situated at the eastern end of the Greater Antilles, about 40 miles (64 km) east of Puerto Rico, in the northeastern Caribbean Sea. The territory is geographically part of the Virgin Islands group, which also contains its near neighbour, the British Virgin Islands. The territory is composed of three large islands—St. Croix, St. John, and St. Thomas—and about 50 small islets and cays. The capital is Charlotte Amalie, on St. Thomas. Geologically, with the British Virgin Islands, the U.S. Virgin Islands are an extension of the central fault-block mountain ranges of Puerto Rico and are thus part of the Greater Antilles. They are composed of metamorphosed igneous and sedimentary rocks overlain in parts by limestone and alluvium, and they rise off the continental shelf to maximum heights of 1,556 feet (474 metres) at Crown Mountain on St. Thomas, 1,277 feet (389 metres) at Bordeaux Mountain on St. John, and 1,088 feet (332 metres) at Mount Eagle on St. Croix—the largest of the islands, with an area of 84 square miles (218 square km).

5. Executive Summary About three-fourths of the population is black, and between one- tenth and one-fifth is white. English is the official language, but some French is spoken on St. Thomas, and Spanish is spoken on St. Croix among Puerto Rican immigrants. The population is predominantly Christian; Protestants constitute about half and Roman Catholics more than one-fourth of those professing a religion. The population increased rapidly in the mid- to late 20th century, primarily because of substantial immigration from the U.S. mainland, the eastern Caribbean, and Puerto Rico. The infant mortality rate is relatively low for the region, and life expectancy—in years, in the mid-70s for males and the low 80s for females—is about average. Charlotte Amalie, the largest settlement, is the only town with a population of more than 10,000.

6. Introduction – Doing business in The U.S. Virgin Islands The U.S. Virgin Islands economy is based primarily on tourism and other services. The leading sectors in employment are government service; trade, encompassing personal, business, and domestic services including tourism; manufacturing; and finance, real estate, and insurance. The islands have few domestic energy sources and thus have long relied on imported petroleum products to supply most of their needs, especially for electric power generation. To mitigate that problem, the territory made efforts to convert its generators to permit them to utilize propane as well as fuel oils, to increase energy efficiency in the islands, and to develop renewable energy sources. Solar energy plays a small but growing role in the territory’s energy production.

7. Conducting business in The U.S. Virgin Islands US Virgin Islands company formation offers some very favorable tax and liability protection benefits. In fact, Newsweek called the U.S. Virgin Islands ―a made-in-America offshore tax haven.‖ The organized, unincorporated territory of the United States is comprised of the islands of St. Thomas, St. John, and St. Croix. US Virgin Islands incorporation is especially attractive for those seeking business continuity with the United States in a low-tax jurisdiction. Corporations in the U.S. Virgin Islands are governed by the Uniform Limited Liability Company Act of 1998. Under the laws of the U.S. Virgin Islands, corporations are legal entities established by an individual or groups. They are established to conduct particular types of business and transactions. In the U.S. Virgin Islands, corporations exist as separate legal entities from their shareholders, directors, and employees. Corporations may sign contracts, assume liability, sue and be sued in the same manner as individuals.

8. Taxation in The U.S. Virgin Islands Taxes imposed on residents of the Virgin Islands include: • Federal Income Tax (same as US mainland) • Property Tax • Employers are required to remove social security, Medicare and income tax from employee pay. (same as US mainland) There is no state tax in the U.S.V.I. An important factor in Virgin Islands taxation is whether, on the last day of the tax year, you are a bona fide resident of the Virgin Islands. If you are a temporary worker on the last day of the tax year, you may or may not be a bona fide resident of the Virgin Islands. You should contact the Virgin Islands Bureau of Internal Revenue for more information.

9. Trade Tourism, trade, and other aspects of the service economy accounts for nearly 60% of the U.S. Virgin Island's GDP. Most of the territory's food is imported as its agricultural sector is small. The production of rum is a paramount activity in the Virgin Islands and around 8,136.6 million gallons were exported during the 2016 fiscal year. Total Virgin Islands Imports $937 millions of U.S. as of 2019

10. Banking in The U.S. Virgin Islands A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve Act of 1913. The banks are jointly responsible for implementing the monetary policy set forth by the Federal Open Market Committee

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com