In late 2007, it became apparent that there was a specific financial need in Panama. For several months that need was more clearly defined and quantified, in addition to determining the best financial vehicle to serve that need.

This need was not only analyzed from a conceptual and market point of view, but also from a practical point of view. Some private funds were used for a "Hands On" trial. Government Agencies and Private Associations were contacted and met with, and now there is a much better understanding of the scope and depth of the market. During this phase, a number of loans were made as private placements.

Please be aware of the fact that Panama is a "Banking Center," it is not a very aggressive "Financial Center." What is meant by that is, the banks in Panama will handle all of the traditional, International and domestic "banking needs" very aggressively and securely. However, the banks in Panama tend not to go outside of the box when it comes to developing new loan products.

The specific need that has been identified is the need for short term, secured, self-liquidating loans, often referred to as "Gap Loans." Short term is defined as 45 to 75 days.

In the construction trades there are many good, small sub-contractors who lack sufficient capital to make it through the time necessary for the inspections, after the work is completed. They complete the work, have the builder, the bank, and/or the city verify the proper completion, and then they must wait, sometimes as long as 45 to 60 days, for the funding institution to complete the paper work for the payment. It is a very common problem. The sub-contractor often cannot keep crews on the job while he waits for payment. Ergo the need for a private sector "Gap Lender"; because the banks will not lend in those situations consistently or broadly.

An additional factor in the growth of the Panamanian economy is the fact that there is a major expansion of the Panama Canal under way.

These are some of the reasons behind the need for new financial products to be offered to competent, hard working, but under capitalized entities, involved in both the real estate sector and the improvements to the Panama Canal.

A third, large and broad market for this financial service is the country's program to improve infrastructure. In the villages, the improvements to simple things like sidewalks, sewage, water delivery, etc, etc. is just now getting under way. These are "Basic Needs Trust" projects. Many of these are funded by the IMF, (International Monetary Fund), and the Regional Development Bank. A great many are funded domestically from Canal revenue. The same condition exists in this sector of construction as the other two; competent, hardworking, small contractors unable to survive through the payment period. They can survive if they stop work, but that means they also will lose valuable workers. Labor must be earning daily. There is very little ability on the part of labor to go without work for 30, 45, or 60 days in a cyclical manner. All subcontractors will be paid in time--30 to 45 to 60 days--but Labor needs to eat daily.

All three types of projects require some "Unique Lending" in order to maintain velocity. "Gap Lending" is the obvious answer. Short-term—fully secured—self-liquidating loans!

It has been determined that these two major goals, Safety of Principal, and Above Market Yields, can be accomplished by using the Jurisdiction of Panama.

The types of loans to be made are as follows:
a) Real estate construction related lending program.
b) Loans related to the indigenous contractors program at the Canal Zone Expansion Project.
c) Loans related to the Basic Needs Trust improvement program in the villages.

NOTE:
Economy - overview: 
Panama's dollarized economy rests primarily on a well-developed services sector that accounts for three-fourths of GDP. Services include operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth will be bolstered by the Panama Canal expansion project that began in 2007 and should be completed by 2014 at a cost of $5.3 billion (about 30% of current GDP). The expansion project will more than double the Canal's capacity, enabling it to accommodate ships that are now too large to transverse the transoceanic crossway and should help to reduce the high unemployment rate. The government has implemented tax reforms, as well as social security reforms, and backs regional trade agreements and development of tourism. Not a CAFTA signatory, Panama in December 2006 independently negotiated a free trade agreement with the US, which, when implemented, will help promote the country's economic growth.