Skip to main content
Summary of Our Findings

Summary of Our Findings – American Industrial Brands

By November 8, 2023No Comments

Phased Investment

AIB is offering its EB-5 investors a phased investment opportunity, enabling them to initially contribute $480,000 and pay the remaining $400,000 within 6 months. This unique EB-5 investment structure reduces the financial burden on EB-5 investors by allowing the payments to be made in installments.

I-526E Denial Refund

There will be an “I-526E Denial Refund” in place to safeguard EB-5 investors in case of a denial. This refund policy mandates that if an EB-5 investor’s I-526E petition or the Project’s I-956F application is denied, the NCE will return the EB-5 investor’s capital contribution. The “I-526E Denial Refund” serves as a distinctive feature of this offering, ensuring an additional layer of security for EB-5 investors and their capital.

Visa Set Aside

The Project is eligible as a high-unemployment targeted employment area (TEA) Project. The Reform & Integrity Act of 2022 (RIA 2022) introduced substantial benefits for investors in TEA Projects. Investments in high-unemployment TEAs are entitled to a 10% set-aside of all EB-5 visas and may provide EB-5 investors, including those from countries facing visa backlog (China, India, and Vietnam), with an immediately available visa upon approval of their petition. This provision eliminates the need for these EB-5 investors to wait for several years to obtain an available visa.

Secured Contracts

The JCE has successfully secured contracts with prominent and well-established customers, including Briggs, Menard’s, and Clayton Homes, as well as a national wholesaler for the production of private-label brands. Notably, a significant portion of the facility’s production capacity, specifically 50%, has already been pre-sold to the aforementioned companies. These signed contracts and the resulting demand are essential in achieving the projected production levels outlined in the financial projections. Additionally, the secured contracts offer assurance regarding the production volume and sales that the JCE is expected to realize.

American-Made

The JCE’s manufactured products possess a competitive advantage by proudly bearing the label “Made in the USA.” Presently, a significant 80% of bathroom fixtures sold in the U.S. are manufactured overseas. The industry is experiencing growing demand for domestically produced products, and U.S. government contracts often prioritize and, in some cases, require American suppliers. This scenario presents a distinct advantage for the JCE, as they are among only a handful of domestic manufacturers in this industry capable of meeting such demands.

Modernized Manufacturing

The manufacturing process and production flow have been meticulously organized and developed to achieve an efficient and increased production capacity. The entire facility is equipped with automated robotic systems that handle all tasks and processes, eliminating the necessity for human labor in both production and final assembly stages. Advanced injection molding techniques, combined with automated manufacturing processes and on-site assembly machines, enable large-scale production. The utilization of state-of-the-art robotics and modern machinery allows for the creation of finished products in substantial quantities, with fast turnaround times, exceptional quality, uniformity, and relatively low labor and material costs.

Brand Names

The JCE sells its products under the “Coast” brand, as well as other private label brands, to wholesale and retail customers both domestically and internationally. The Coast brand has a rich history spanning over 70 years and holds numerous registered trademarks and patents. American Industrial Brands acquired Coast’s intellectual property and tooling in 2008, and it was subsequently licensed to the JCE in 2021. Apart from the Coast brand, the JCE offers a white labeling program, enabling retailers and bathroom fixture wholesalers to have their own brand name embossed on the products. Management anticipates that this program will eventually become one of the primary revenue drivers for the business. Additionally, AIB holds licenses for five legacy product brand names in the kitchen and bath categories.

Government Support

The Project is utilizing funds from the New Markets Tax Credit Program (NMTC). The NMTC Program offers tax credits as an incentive for private investment in distressed communities, promoting community development and economic growth. In 2018, the NMTC was utilized as part of the purchase of the original facility. With the additional investment required for the final phase of production, the Project meets the criteria to access these incentives, which can provide up to $7.2 million in funding. This funding option proves to be affordable for the Project.

Strong Demand

There is a strong demand for high-quality bathroom and sanitary fixtures, primarily driven by the recovery of the real estate industry, the preference of real estate developers for premium brand name products in their projects, and the need to replace older and less efficient fixtures. The JCE, benefiting from its strong brand names, is well-positioned to leverage this trend. The bathroom fixtures and sanitary ware industry is mature, characterized by consistent demand and an annual growth rate of 2.6%.

Management Experience

Due to the offshoring of the majority of bathroom fixtures manufacturing, there is a scarcity of expertise in the U.S. domestic market when it comes to designing and installing production lines and equipment for such facilities. As a result, the JCE possesses a competitive advantage in the U.S. market due to their expertise in designing and installing production lines and equipment. This expertise allows them to produce high-quality and affordable products domestically.

Strategic Location

This location reduces shipping costs and distribution timelines as it can reach over 80% of the U.S. population within one day of freight delivery. The Project’s location in Indiana offers the advantage of lower shipping costs compared to foreign competitors when targeting U.S. markets.

This section discusses the risks that are unique to this offering. For an overview of risks that are generally present in the industry, similar offerings and with the EB-5 program, refer to the Private Placement Memorandum.

Competitive Risk

There is intense competition in the manufacturing and sale of bathroom fixtures. JCE’s competitors have well-established reputations and compete with JCE in multiple product categories. Increased competition may reduce JCE’s profitability by lowering sales, decreasing gross profits, or forcing it to increase spending on advertising or marketing.

Sales Contracts and Manufacturing Yields

Future growth and success are dependent on securing sales contracts and achieving the projected yields.

Growth Contingent on Economic Cycle

The historical annual growth rate of the sanitaryware industry is approximately 2.6% per year. As a mature industry, its growth rate is anticipated to align with that of the overall economy. In the event of a significant economic downturn in the U.S., this could adversely affect business operations.

Construction Delays

The Project depends on the successful completion of plant improvements. Cost overruns or delays may impact timely creation of required jobs, and financial results.

Job Creation

While the business is expected to create more than the required jobs, the job creation estimates are based on revenues, so any material variances in the projected revenues will impact job creation estimates.

Illiquid Investment

The limited liability company interests are highly illiquid as they cannot be readily sold.

Limitation of General Partner/Manager Liability

The Manager shall not be liable to the EB-5 investor for any loss or liability incurred in connection with the affairs of the NCE so long as such loss or liability did not result from willful misconduct or gross negligence.

Limited Rights to Participate in Management

Although the EB-5 investors will participate in policy-making and certain decisions as expressly provided in the Operating Agreement, EB-5 investors will not make decisions with regard to the management and operations of the NCE.

No Assurance of Visa

There are no assurances that an EB-5 immigrant investor will be able to gain I-526E petition approval, an immigrant visa or unconditional lawful permanent resident status.

Proving Lawful Source of Funds

As part of the I-526E petition, an EB-5 investor must present to USCIS clear documentary evidence of the source of the funds invested. An EB-5 investor may be unable to present evidence that USCIS considers sufficient to show the legitimate source of the investment funds.

USCIS May Change Adjudication Standards

USCIS may change its policies, adjudication standards or interpretations of the law without notice and in a manner that may jeopardize an EB-5 investor’s immigration petition.

Material Change Following I-526E petition may have Adverse Affects

If there is material change in the Project documents after filing of an I-526E petition, EB-5 investors may be required to re-file their I-526E petition.

No Tax Opinion Offered

The NCE plans to function as a limited liability NCE that is not publicly traded and is subject to partnership taxation for U.S. federal income tax purposes. No tax opinion is offered. EB-5 investors should consult with their own tax advisors.

  • Private Placement Memorandum dated December 14, 2022

  • Business Plan dated December 15, 2022

  • American Industrial Brands, LLC Operating Agreement dated September 30, 2021

  • American Industrial Brands, LLC Certified Certificate of Formation dated June 3, 2021

  • American Industrial Brands, LLC IRS Letter Assigning FEIN dated May 13, 2021

  • Subscription Agreement Regulation S & Regulation D (Unexecuted)

  • Expedite Request Letter for National Interest dated September 26, 2022

  • AIB Fund Administration Agreement & Escrow Agreement dated December 22, 2023

  • Coast OEM Agreements & Selling Agreements & PNC dated September 30, 2021

  • Other Loan and Debt Agreements

  • AIB Tax Credits Report dated March 14, 2018

  • Inaugural Update & Management Representation Letter on AIB Project Status dated October 07, 2022

  • AIB Historical Financial Statements – December 31, 2021, December 31, 2020, and December 31, 2019

  • AIB Partial Industry Research dated November 28, 2022

  • AIB Summary of Insurance Coverage and Material Exposures dated September 02, 2022

  • Management Service Agreement of Briggs & Coast OEM – dated May 14, 2018

  • Manufacturing Agreement of Briggs Plumbing Products, LLC & Coast OEM, LLC dated January 1, 2018

  • General Assignment of Contract Rights – Patriots & Coast EOM dated March 12, 2018

  • AIB Manufacturing Agreement – Gerber Plumbing Fixtures, LLC and Patriot Porcelain, LLC dated June 25, 2013

  • AIB Manufacturing Agreement – Niagara Conservation Corp. and Patriot Porcelain, LLC dated June 26, 2013

  • AIB Purchasing Agreement & Home Depot Contract dated August 13, 2014

  • AIB Universal Rundle TM License Agreement dated August 27, 2021

  • Operating Agreement of Coast RE LLC dated March 12, 2018

  • Coast Re LLC Certified Certificate of Officer dated September 30, 2021

  • PNC Agreements of Coast OEM dated November 28, 2022

  • AIB Certificate of Formation dated October 4, 2022

  • AIB IRS Letter Assigning FEIN dated October 1, 2021

  • American Industrial Brands Fund 1, LLC Operating Agreement dated October 6, 2022

  • American Industrial Brands Fund 1, LLC Operating Agreement dated December 26, 2022

  • American Industrial Brands Fund 1, LLC Certificate of Formation (DE) dated October 4, 2022

  • American Industrial Brands Fund 1, LLC IRS Letter Assigning FEIN dated November 2, 2022

  • American Industrial Brands Fund 1, LLC Certified Certificate of Formation dated December 01, 2022

  • American Industrial Brands Fund 1, LLC IRS Letter Assigning FEIN dated December 01, 2022

  • Smith Central Regional Center Approval Letter (I-924) dated July 23, 2020

  • Regional Center and Immigration Compliance Policy dated July 12, 2020

  • Confirmation of Regional Center Sponsorship for AIB dated November 21, 2022

  • Various Bad Actor reports

  • Market research and online articles not listed here