SUMMARY:

This is a formal presentation of the Providence

Fixed Income Fund (“the Fund”) to assist prospective investors in the evaluation of personal financial decisions. The fund has been structured

around the Brazilian Factoring Market taking into consideration the favorable differences currently

existing between the interest rate markets of the United States and Brazil. The result is that Providence Companies has been able to develop a

smart high yield investment instrument where the amount of risk in the investment is proportionally less that the favorable high ROI actually

experienced. This fund is the ideal vehicle to invest in one of the strongest economies of the

world today and enjoy the high interest rates prevailing in the country for the last several years. Since this is expected to continue in the future, by

investing in the Fund, investors are able to tap into the high yield Brazilian money markets for

short periods not exceeding nine (9) months at a time.

Background on the Providence Companies

The Providence Companies (“Providence” or the “Firm”) is an

investment management firm focusing its investments in Brazil,

more specifically the sectors of financial services, commercial paper, factoring, diversified transportation, trade and trade receivables (or “the Sector”). The primary objective of the Firm is to

create significant capital appreciation for its investors by buying high quality negotiable instruments

at a discount. For that purpose Providence has a Brazilian subsidiary duly authorized as a financial

institution to purchase negotiable instruments in the open factoring market. Such instruments are

purchased at a discount of approximately four (4%) per cent per month (or 48% annualized) allowing

significant gross markings to the Firm, being this the main reason why the proposed ROI is possible for our investors.

Executive

Memorandum

Geographic Brazil

Focus:

Business Factoring

Focus:

Corporate Brazilian LTDA

Formation: & Delaware Corp.

Transaction Short-Term

Profile: Note

Interest Rate: 12.0% per annum

Minimum

Amount: US$ 100,000

For More Information, Contact:

The Providence Companies

USA Office

240 Crandon Boulevard

Suite 228

Key Biscayne, Florida 33149

T | 786.866.5824

F | 866.850.2522

Brasil Office

Rua Fidencio Ramos 223

Suite 74

Edificio Palladio

Sao Paulo, Brasil

CEP 04551-010

T | 55-11-3044-5353

Antonio Buzaneli

Managing Director

T | 305.469.5568

E abuzaneli@provcos.com

Factoring in Brazil

Factoring, known in Brazil as ‘Fomento Mercantil,’ is a service

activity that includes ongoing advisory work on credit, risk,

accounting, inventory, and working capital management, in tandem with the irrevocable purchase of credit rights, in the form

of receivables that arise from the sale of goods or services with

maturities ranging from 30 to 300 days. The factoring company

assumes the credit risk associated with the negotiable

instruments, which has remained historically low for the last 10

years due to the severe penalties existing for defaulted credits.

Factoring must be based on commercial sales and is governed by

Brazil’s Civil Code. It can be conducted only with ‘legal persons’

or enterprises and not with individuals. The most common accounts receivable are duplicatas (commercial invoices), which

account for almost 90 percent of all factoring receivables. Others

are checks, bills of exchange, bills of lading, warrants, promissory notes, and post-dated checks (which can be issued to cover mercantile sales, as in commonplace in Brazil).

There are over 700 known factoring companies in Brazil, which

provide services to more than 65,000 small and medium

enterprises. Eighty percent of these enterprises belong to the

industrial sector, with a monthly turnover of around US$10 billion (R$27 billion) as creditor rights resulting from mercantile

sales, representing approximately 6 percent of all domestic

sources of financing. Factoring companies had more than 6,000

employees and were estimated to provide another 710,000

indirect employment opportunities. Thus, factoring is a sizeable industry in Brazil and an important source of finance for a

number of firms. Overall delinquency ratio for receivables is

estimated to be around 3.8 percent across all sectors.

Key Points

Factoring is an important alternative to the banking sector for the

financing of small and medium enterprises. Given difficulties of

entry into the formal banking system, factoring companies have

found an important market niche.

Factoring companies work at a much smaller scale than banks, in

close association with their creditor. Accounts receivables are

already expected cash flows and, thus, a company eliminates its

clients’ business risks through factoring.

Factoring enables quick and relatively inexpensive access to

financing by Brazilian standards. While an interest rate of 48% per year in any loan product is

considered totally unacceptable in the United States, ironically, it is considered in Brazil the most

inexpensive financing alternative available in t he market to the average borrower. Alternatives such

as bank credit based on the discount of invoices as well as bank credit in the form of personal or consumer overdraft facilities are much more expensive.

Providence is a licensed factoring company in Brazil and member of by ANFAC (Brazil’s national trade

association covering all factoring companies in the country), specifically the only foreign entity that holds such membership in Brazil due to Providence’s excellent reputation, past operating history in

Brazil and solid financial references. BPA Fomento Mercantil Investimientos e Participações,

LTDA is the wholly owned subsidiary of Providence Companies and operates the factoring business

for the Fund.

Executive

Memorandum

Geographic Brazil

Focus:

Business Factoring

Focus:

Corporate Brazilian LTDA

Formation: & Delaware Corp.

Transaction Short-Term

Profile: Note

Interest Rate: 12.0% per annum

Minimum

Amount: US$ 100,000

For More Information, Contact:

The Providence Companies

USA Office

240 Crandon Boulevard

Suite 228

Key Biscayne, Florida 33149

T | 786.866.5824

F | 866.850.2522

Brasil Office

Rua Fidencio Ramos 223

Suite 74

Edificio Palladio

Sao Paulo, Brasil

CEP 04551-010

T | 55-11-3044-5353

Antonio Buzaneli

Managing Director

T | 305.469.5568

E abuzaneli@provcos.com

Executive Memorandum

3

Brazil Markets - Current Outlook Market Conditions

During the 1990's, the Brazilian economy did not experience the same level

of robust growth as other major emerging economies like India, Russia and

China. Beginning shortly after the settling of global economic changes and

the election of Luiz Lula Da Silva in the 2002 Brazilian presidential

elections, the Brazilian economy has gradually risen to achieve consistent

growth and a development cycle of significant investments.

As the largest and most populous country in South America, the eighth

largest economy in the world and the fifth largest country in the world in

both area and population, Brazil is well-positioned for continued growth.

Note that the above mentioned highlights clearly depict a scenario of economic stability with excellent growth experience and additional growth

projected for the future.

The nation has well-developed manufacturing, mining, agricultural and

service industries, as well as a large labor pool. Brazil's macroeconomic

fundamentals are currently very strong, and both the long and short-term outlook for the country are positive. Brazil has an increasing balance of

payments surplus, continued government commitment to fiscal discipline

and inflation control, increasing export volume growth, decreasing interest

rates and strong foreign direct investment, all of which are expected to

strengthen the economy.

Add to those fundamentals the fact that in 2007, Brazil discovered the

world’s largest offshore oil reserves off the coast of Rio de Janeiro, makes

Brazil fulfill the prophesy of being the country of the future. The future has

reached destination in Brazil, as well said by The Economist in November

2009, "Brazil Takes Off" (shown above).

Executive Memorandum

4

Economic Impact of Sports in the Next Five Years

FIFA World Cup 2014

In 2010, Brazil's Ministry of Sports of issued

a study on the economic impacts of achieving

the 2014 World Cup showing that the tournament should add to the Brazilian

economy about US$105 Billion. There will be

directly invested US$27 Billion in

infrastructure, tourism and consumption while

the indirect investment is estimated at US$78 Billion from the recirculation of money from the

event.

The impact on infrastructure alone is US$18.7

Billion and 78% of investments will come from

the public sector, aimed at stadiums, urban mobility and the reform of ports and airports.

Other areas that will receive funds include

telecommunications, energy, health, safety and hospitality. Only to

tourism, the World Cup in 2014 should generate US$ 5.3 Billion. During

the World Cup on June and July, the country should receive 600,000 foreign tourists, besides the 3.1 million Brazilians who will travel the

country. This number is equivalent to two thirds of the population of Rio

de Janeiro.

The World Cup is also expected to generate about 710,000 jobs in Brazil

out of which 330,000 thousand will be permanent and other 380,000 temporary.

Olympic Games 2016

An Olympic Games Committee

survey, carried out by Credit Suisse

estimates a R$30 Billion financial

input over the next five years. The Brazilian Ministry of Sport however,

foresees an overall fund injection of

around R$90 Billion, taking into

account indirect investments and

their long-term effects.

The largest sporting event in the

world is predicted to exert such a

strong influence over many Brazilian investors and workers’ lives too. The

estimated impact on the Gross Domestic Product from 2009 to 2016

stands at approximately US$11 Billion.

The Ministry’s study was developed by the Fundação Instituto de

Administração, and it is based on the budget amounts requested by

the Rio de Janeiro Olympic Committee. This huge financial injection will

benefit several different entities: US$2.8 Billion will fund the Brazilian

Olympic Committee, the organizers of the Games, and the remaining

US$11.6 Billion will finance public and private entities for the construction and repairs of Olympic Games infrastructures such as

stadiums, sports pitches, water sports venues and also roads and

subway stations. Now consider the estimated 4.26 production multiplier,

which will inject US$51.1 Billion from 2009 to 2027.

Executive Memorandum

5

Proposed Investment Opportunity

Investment Vehicle

The proposed investment opportunity consist in an unrated commercial

paper instrument in the form of a promissory note between the investor

("the Holder") and Providence Financial Investments, Inc. ("the Issuer"). Providence is registered in the State of Delaware, operates from its

offices in Key Biscayne, Florida, a carries its financial business with

bank accounts at Bank of America.

Summary of Terms & Conditions

Issuer Providence Financial Investments, Inc.

Amount Minimum of US$ 100,000.00

Interest Rate 12 % per Annum, computed on the basis of a 360-day year.

Interest Payments Payable monthly on the 20th of the month, subsequent to the month

where the interest is accrued.

Term 365 Days or 730 Days

Early Maturity Provided certain required prior notices, funds can be released as early as

270 days but resulting in a reduced yield of six (6%) percent per

annum.

Use of Proceeds The proceeds of the Note shall be used for the sole purpose of providing

working capital in the form of an intercompany loan to the Issuer’s Brazilian Subsidiaries or its affiliates which will use the proceeds of the

loan to acquire receivables or financial instruments such as post dated

checks and/or Duplicatas in the Brazilian Factoring Market. The Issuer,

and its subsidiaries, or affiliates at their sole discretion will decide the

allocation rates, discounts, price acquisition, timing, and conditions of such acquisitions.

Payment Modes: Monthly interest payments and principal payments can be arranged to

be made by either company check to a physical address, or a wire

transfer to Holder's bank account.

Identification Individual holders and/or company representatives must provide copies

of passport and driver's license upon execution of the Note.

IRS Interest income will be reported to the Internal Revenue Service for

individuals and Form 1099 will be issued for income tax purposes at the beginning of each fiscal year.

Key Definitions “Effective Date” shall mean the same business day when the amount

that originates this note received by the Issuer from the Holder, becomes free and clear available funds at the Issuer's bank account in a bank in

the United States.

“Maturity Date” shall mean shall mean the last Business Day of the

term of this Note or the next Business Day, if the Maturity Date does not

fall on a Business Day.

Executive Memorandum

6

Factoring Tutorial : The Concept, the History, the Financial Product

What is Factoring?

History of Factoring

Factoring is a financial transaction whereby a business job sells its accounts receivable (i.e., invoices) to a third party (called a factor) at

a discount in exchange for immediate money with which to finance

continued business. Factoring differs from a bank loan in three main

ways: (i) the emphasis is on the value of the receivables (essentially

a financial asset), (ii) factoring is not a loan – it is the purchase of a financial asset (the receivable), and (iii) a bank loan involves two

parties whereas factoring involves three. The three parties directly

involved are: the one who sells the receivable, the debtor, and the

factor.

The receivable is essentially a financial asset associated with the debtor's liability to pay money owed to the seller (usually for goods

sold). The seller then sells one or more of its invoices (the receivables)

at a discount to the third party, the specialized financial organization

(the factor), to obtain cash. The sale of the receivables essentially

transfers ownership of the receivables to the factor, indicating the factor obtains all of the rights associated with the receivables.

Factoring's origins lie in the financing of trade, particularly

international trade. Factoring was underway in England prior to the

year 1400. It is closely related to early merchant banking activities and the Venetian trade model developed during the Middle Ages. Like

all financial instruments, factoring evolved over centuries. This was

driven by changes in the organization of companies; technology,

particularly air travel and non-face to face communications

technologies starting with the telegraph, followed by the telephone, the fax, and the internet.

English common law originally held that unless the debtor was

notified, the assignment between the seller of invoices and the factor

was not valid. The Canadian Federal Government legislation

governing the assignment of moneys owed by it still reflects this stance as does provincial government legislation modelled after it. As

late as the current century the courts have heard arguments that

without notification of the debtor the assignment was not valid. In

the United States it was only in 1949 that the majority of state

governments had adopted a rule that the debtor did not have to be notified thus opening up the possibility of non-notification factoring

arrangements. Now non-notification is widely accepted in major

economies such as Brazil.

By the twentieth century in the United States factoring became the

predominant form of financing working capital for the then high growth rate textile industry. In part this occurred because of the

structure of the US banking system with its myriad of small banks

and consequent limitations on the amount that could be advanced

prudently by any one of them to a firm. In South Florida, it fueled

trade finance to Latin America in the 80’s and 90’s.

In the latter half of the twentieth century the introduction of

computers eased the accounting burdens of factors. The same

occurred for their ability to obtain information about debtor’s

Executive Memorandum

7

The Factoring Business

creditworthiness. Introduction of the Internet and the web has accelerated the process while reducing costs. Today credit

information and regulatory controls are in effect any time of the day

or night on-line. Brazil has the most advance and controled check

processing system in the world. Their POS systems provide

background and activity information on the check writer to such an

extent that in many countries it would be a violation of privacy laws. But then again, Brazil’s total national default rate on checks is less

than 2%.

The use of factoring to obtain the cash needed to accommodate the firm’s immediate Cash needs will allow the firm to maintain a smaller

ongoing Cash Balance. By reducing the size of its cash balances,

more money is made available for investment in the firm’s growth. A

company sells its invoices at a discount to their face value when it

calculates that it will be better off using the proceeds to bolster its

own growth than it would be by effectively functioning as its "customer's bank." Accordingly, Factoring occurs when the rate of

return on the proceeds invested in production exceed the costs

associated with Factoring the Receivables. Therefore, the trade off

between the return the firm earns on investment in production and

the cost of utilizing a Factor is crucial in determining both the extent

Factoring is used and the quantity of Cash the firm holds on hand.

If cash flow can decrease drastically, the business will find it needs

large amounts of cash from either existing Cash Balances or from a

Factor to cover its obligations during this period of time. Likewise,

the longer a relatively low cash flow can last, the more cash is needed from another source (Cash Balances or a Factor) to cover its

obligations during this time. As indicated, the business must balance

the opportunity cost of losing a return on the Cash that it could

otherwise invest, against the costs associated with the use of

Factoring. This is expecially the case with the current economic

boom in Brazil whereby being temporarily “out of the market” because of cash flow product cycles can cost a firm valuable growth

because of the collection lag by not utilizing factoring.

Factors make funds available, even when banks would not do so,

because factors focus first on the credit worthiness of the debtor, the party who is obligated to pay the invoices for goods or services

delivered by the seller or on the regulatory regime that limits risks

associated with collection losses, as in the case in Brazil. In contrast,

the fundamental emphasis in a bank lending relationship is on the

creditworthiness of the borrower, not that of its customers. While

bank lending is cheaper than factoring, the key terms and conditions under which the small firm must operate differ significantly.

From a combined cost and availability of funds and services

perspective, factoring creates wealth for some but not all small

businesses. For small businesses, their choice is slowing their

growth or the use of external funds beyond the banks. In choosing to use external funds beyond the banks the rapidly growing firm’s

choice is between seeking venture capital (non existant in Brazil) or

the lower cost of selling invoices to finance their growth. The latter is

also easier to access and can be obtained in a matter of a week or

two, whereas securing funds from venture capitalists can typically

Executive Memorandum

8

Factoring in Brazil

take up to ten months.

While factoring is an attractive alternative to raising equity for small

innovative fast-growing firms, the same financial technique can be

used to turn around a fundamentally good business whose

management has encountered a perfect storm or made significant

business mistakes which have made it impossible for the firm to work within the constraints of their bank covenants. The value of

using factoring for this purpose is that it provides management time

to implement the changes required to turn the business around. The

firm is paying to have the option of a future the owners control.

For the past four (4) years, Providence Companies has been factoring receivables in Brazil for the following sectors:

Consumer Receivables via Post-Dated Checks at the Point of Sale

Family Healthcare via General Practitioner Consumer Receivables

Pre-Export Financing for Commodity Trade Companies

Industrial Receivables for sales to Brazilian Government and

large corporations

Post Dated Checks: A habit dating from Brazil’s inflationary years in

the 1980’s, when consumer credit was virtually nonexistent, post-dated checks became the norm and the country’s system evolved to

monitor and regulate this form of nationally accepted payment.

In Brazil, the national average of bad checks (non sufficient funds or

NSF’s) is less than 2% as published by ANFAC, the National Trade

Association of Factoring Companies. The reason for such a low loss rate, albeit half of the 2% end up rectifying and making good on their

checks, is Brazil’s sophisticated and unforgiving system for dealing

with NSF’s. Key components of Brazil’s regulatory environment with

regard to checks include:

In Brazil, the bank controls how many checks the account holder

is issued on a monthly basis concurrent with the account holders

credit rating, banking history and income;

In Brazil, writing 10 separate checks of $100, one per month, to

pay for a $1,000 retail item is a nationally accepted method of payment at major stores. Supermarkets and shopping malls for

Executive Memorandum

9

everything from plasma TV’s and laptop computers to groceries all accept post-dated checks to get their business going. In the

above example, shortly after the sale, the retailer sells the 10

post-dated checks to a factoring company for approximately

$820, which is the desired cash price of the retailer, profit

included. The other $180 will be the cumulative interest income

earned by the factoring company as checks mature over the 10 month period. Discounted at 4% per month, factoring companies

make 48% return on the money as normal course of business.

Each check is bar coded to provided valuable and key

information to the vendor at the point of sale on the account holder, such as any negative banking history, credit rating,

volume and average amount of checks written, etc

In Brazil, if an individual bounces a check twice, their accounts

at every single banking institution in the country is closed within

seven (7) business days, including any business accounts on which the individual has signing authority. They also lose their

priveledge to open an account at any bank for a period of five (5)

years. Basically, bouncing a check in Brazil has severe financial

consequences to the issuer. This explains the very low default

rate on Brazilian checks.

Duplicatas: These are irrevocable trade bills or a certified and

negotiable copy of an invoice. Long before Brazil’s banking system

went electronic, businesses entrusted their receivables to banks for

collection. This Brazilian and Portuguese system differs from what is

considered standard in most countries. Most enterprises "vendem a crédito" (sell on credit). Crédito entails cobrança (collections). The

oldest system of collection is sending a cobrador to the customer

with the fatura (invoice) in hand. Alternatively, you could have the

customer go to your place to pay. This is called cobrança em

carteira (direct collection). If the customer was in a different city,

this did not work, so people began to send a duplicata (a duplicate of the invoice) to their customers and instruct them to pay the bill to

a specified bank. Then, they began to send the bills directly to the

bank with a borderô (listing) and instruct the bank to mail the bills

to the customers, collect the payment, stamp the duplciata PAID and

transfer the payment to the creditor. The system was extended

nationwide and is now known as Duplicatas in conducting daily business.

Providence holds in custody both Post-Dated Checks and Duplicatas

purchased at a discount (factored receivables) from vendors, health

practitioners, and companies. These are held at the local level and are presented for payment at maturity of the instrument. The

Providence Fixed Income Fund pays its Holders an 12% annual

yield, or one (1%) percent per month. The Fund covers its cost of

local operations, collections and makes a profit from the current

market spread at the local level. There is no management fee and no

costs or commissions, a straight monthly payout of 1% per month for a 365 day note.

Pre-Factoring - A step further in the factoring business is to

participate at a deeper level in the transaction that originates the

Duplicata. Since the factoring company has decided to purchase a

Executive Memorandum

10

Duplicata issued by a given client, they advance the necessary funds to purchase in the foreign country, the merchandise that would

eventually be shipped to the importer that originates the Duplicata

(the client). Then becomes the foreign exporter that ships to its client

locally making an additional profit margin in the price of the

merchandise sold. Such investment is immediately converted into a

Duplicata instrument upon delivery of the goods, when it starts to accrue interest at 4% per month. In this way factoring companies

obtain additional income with the same cash investment.

ANFAC

ANFAC stands for "Associação Nacional das Sociedades de Fomento Mercantil" (www.anfac.com.br) which is the 29 year old

national trade association that groups over 720 factoring companies

in Brazil. It was founded in 1982 with the objective of disseminating

the promotion of commercial activity in Brazil. Throughout these

years, the institution has established standards of conduct and

acting in Congress to defend the interests of the sector, contributing to the elaboration of legislation regulating the activity in the country.

With the consolidation of the segment now generating around $ 50

billion per year, ANFAC lobbies for passage of legislation to improve

the legal environment of the factoring industry in Brazil.

ANFAC is a non-profit organization that groups the factoring companies that operate in the market buying and selling credit-

market services to industrial and retail. They also assist in the

negotiations between factoring companies and their customers. It

also acts as a court of arbitrator in disputes between its members,

and ensures compliance with ethical standards of self-regulation by the factoring companies.

Providence is a licensed ANFAC member,

specifically the only foreign entity that holds

such a license in Brazil. Due to the deeply

Brazilian nature of the factoring practices,

Executive Memorandum

11

they are little known elsewhere and no foreign company had previously identified the opportunity of tapping into a receivables

market with the extremely effective Brazilian style of government

controls and regulations applicable to defaulted commercial or

personal checks / Duplicatas. BPA Fomento Mercantil,

Investimientos e Participações Ltda is the wholly owned foreign

subsidiary of Providence Companies that operate the factoring business locally.

Understanding How a Low Risk 12% ROI is Possible ?

Benchmark Rates

In the post-Maddoff & Stanford world we live in today, one must

address coupons in excess of the depressed market rates paid in the recession rampant U.S. economy. To the unsophisticated, domestic

U.S. investor, if the return is 12% per year, then it is assumed it is

a high risk investment, right ? Actually the answer is ‘No’ and this

section goes over why by first comparing U.S. benchmark rates

versus Brazil benchmark rates.

The benchmark interest rate is the lowest interest rate that

an investor will accept for a non-Treasury investment. The

benchmark interest rate is tied to the interest rate offered on the

most recently-issued (on-the-run) Treasury security. Since it is

generally possible for investors to find investments paying a greater

rate than the benchmark interest rate, one of the hallmarks of an investment which pays the benchmark interest rate is safety. The

benchmark interest rate is often associated with conservative and

safe investments.

The benchmark interest rate in the United States was last reported

at 0.25 percent. In the United States, authority for interest rate

decisions is divided between the Board of Governors of the Federal

Reserve (Board) and the Federal Open Market Committee (FOMC).

The Board decides on changes in discount rates after

recommendations submitted by one or more of the regional Federal

Reserve Banks. From 1971 until 2010 the United States' average

interest rate was 6.45 percent reaching an historical high of 20.00

percent in March of 1980 and a record low of 0.25 percent in

December of 2008.

Note that the interest rate paid by banks in the United States to its

depositors are tied to the United States benchmark rates. A

Certificate of Deposit in the US in April 2011 can produce, say 1%

per year in Bank of America.

Executive Memorandum

12

Low Risk Premiums

By the same token, Brazil’s benchmark rate is not 0.25% but instead 11.25%. A Certificate of Deposit in a Banco Itau or Banco Safra

would earn 12.5% a year. Brazil had controlled its inflation for the

past decade with high interest rates (to be discussed in more detail

in the following pages).

An 12% return is a high return commensurate with high risk in the

United States market. However, in Brazil, its considered low to

moderate low risk. In the United States, an investment that yields

12% is assumed to carry a 11.75% risk premium (12% less 0.25%). In Brazil, however, 18% minus Brazil Benchmark 11.25% equates to

a 6.75% risk premium. Comparing apples to apples, investing in the

United States in factoring for a risk premium of 6.75% plus 0.25%

benchmark results in a total return of 7% a year. Seven percent per

year in the United States is indicative of low to moderate low risk comparable to buying commercial paper from a Fortune 1,000

company. This explain how the Fund can pay 12% per year to its

Holders under a low to moderate risk product structure. The Fund

does not incur in high risk transactions, the high yield is just the

result of the large differences currently existing between the two

economies.

Why isn’t everyone else investing in Brazil ? The answer is simple:

They are. However, most people only have access to Brazil through

Emerging Market Mutual Funds issued by national and international

institutions. Providence Fixed Income Fund is another alternative but offers better returns as this Fund does not carry high

commissions, tax inefficiencies, fees, etc.

In Numbers:

1.3 Billion checks processed through the banking system.

This represented approximately US $580 Billion

Approximately 43% of these were post dated.

Less than 2% of processed and cleared checks are returned (NSF)

Executive Memorandum

13

Providence Companies Management

Antonio Buzaneli Managing Director

Antonio Buzaneli brings 27 years of experience in creating & growing

businesses, with a deep expertise in operations, global trading, expansions

and consolidation. Mr. Buzaneli has worked in a variety of different industry

verticals, including development & construction, retail consumer goods,

wholesale distribution, finance, commodities, agriculture & fisheries, and manufacturing.

Mr. Buzaneli has founded and grown companies with international

operations, from inception to multi-million dollar revenues, through a broad

knowledge of finance, risk management and distribution structures.

Mr. Buzaneli has served in several executive positions including CEO, President, COO, and Country Manager for various international companies,

including one of the largest distributors of dried marine products in the

world. He has been involved in all aspects including pre-revenue strategy,

through successful startup and operation – including capital acquisition,

corporate structure & governance, executive selection & team building, organization establishment, product optimization, building sales &

distribution channels, vertical integration, highly structured finance &

acquisitions, supply chain creation & management, and international trading

integration & optimization.

Mr. Buzaneli brings a deep strategic perspective to organization development, including the identification of brand new opportunities, segments and

possible paths for future sustainable growth.

Mr. Buzaneli holds a law degree from Anchieta Law School in Brazil, as well

as a Harvard Business School executive management course with specialization in international trade & finance. He has multicultural

experience & is multilingual – English, Italian, Portuguese and Spanish –

enabling him to integrate cultural differences to help focus deliverable

results.

Married, a father of four and a grandfather, Antonio is highly involved in church activities and devotion, believing in the motto that “true leadership is

achieved through service”. He enjoys recreation time with his family and

friends, martial arts, and marine sports. Jose Ordoñez Managing Director

Jose M. Ordoñez brings 16 years of experience in the Banking, Real Estate

and International Trade verticals. Mr. Ordoñez began his career as a credit analyst with a regional bank in Miami, Florida. Within a few years, he rose to

become Vice President in the Corporate Lending Division. Throughout his

long-standing financial career, he structured and provided term financing,

fixed income products, credit lines, construction loans, land acquisition,

general real estate lending and co-directed and expanded the Small Business

Lending Group (SBA). He generated approximately $150 million dollars in new loans while employed by the bank.

In 2003, Mr. Ordoñez was recruited as the Vice President of Finance for a

major tobacco growing conglomerate in Miami, one of the largest tobacco leaf

growers worldwide. Their distinguished client list included, multinational brands, such as Consolidated Cigar, General Cigar, Altaldis and Imperial.

Among his responsibilities were developing new banking relationships as well

as organizing, developing and implementing new structured financial

Executive Memorandum

14

products for the firm. He also led the group to create a platform for ancillary business development.

Fueled by his extensive experience in commercial finance, real estate,

marketing and the banking industry, in early 2005, Mr. Ordoñez was asked

to lead a rapidly growing local commercial real estate development company.

He was responsible for increasing the revenue from $15 Million annually to approximately $350 Million annually in a period of 32 months. Concurrently,

Mr. Ordoñez led the restructuring of all the banking, legal and investment

relationships, improving the overall financial health of the entire enterprise.

At its peak, under the leadership of Mr. Ordoñez, the company went from a

local presence to a regional Southeastern United States presence with over 30 active projects.

Mr. Ordoñez graduated from Florida International University with a

Bachelors Degree in Finance & International Business. He is multilingual –

English, Portuguese and Spanish. He is married, is a father of two and is

very active in his church and community. He enjoys spending time with his family and friends, and is an avid sports participant and fan.

Julio E. Rivera Managing Director

Mr. Rivera has over 28 years experience in banking covering multiple

disciplines. During his banking career Mr. Rivera developed advanced

expertise in real estate lending, focusing on construction project financing

and corporate banking. He worked at Citibank, N.A., Royal Bank of Canada, Chase Manhattan Bank, and most recently 11 years at FirstBank Puerto

Rico, an Institution with $18 Billion in assets. At FirstBank, Mr. Rivera

headed the Construction Financing Division in Puerto Rico and his group

provided the industry credit approval for all construction loans including

those from the U.S. and the British Virgin Islands as well as from

FirstBank’s Florida Division in the U.S. During this time Mr. Rivera gained vast experience in the execution and control of highly complex real estate

transactions, contract negotiations, business presentations, staff

management, court litigation, as well as being designated as an expert

witness over the years.

Mr. Rivera then moved on and partnered with close associates to create a new company dedicated to high-impact workshops for self-help human

transformation in Puerto Rico providing both capital and management

expertise. Additionally, Mr. Rivera invested in and became executive producer

of a film production in Montreal, Canada. He is working on the movie project

currently in its development stage. The project is unique and has tremendous expectations given the potential social/political impact it may

create on a global basis. Given his diversified background, Mr. Rivera

continues to seek opportunities and associations in multiple business

ventures where he can fulfill personal visions and lifelong missions.

Mr. Rivera is a Magna Cum Laude from the University of Puerto Rico where he obtained a Bachelor Degree in Business Statistics and was awarded by

the government of Puerto Rico, Economic Development Administration

among hundreds of qualified participants, with a full scholarship for post

graduate work. With this opportunity, Mr. Rivera completed a Master of

Science in Operations Research and a Master in Business Administration with a major in Management Science.

Executive Memorandum

15

S.E.C. COMPLIANT DISCLAIMER

THIS INVESTMENT PRODUCT HAS NOT BEEN REGISTERED AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION. THIS PRODUCT MAY NOT BE OFFERED, SOLD, HYPOTHECATED, GIVEN, BEQUEATHED, TRANSFERRED, ASSIGNED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF (“TRANSFERRED”) EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT TO THIS NOTE THAT IS EFFECTIVE UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR APPLICABLE STATE SECURITIES LAW RELATING TO THE DISPOSITION OF SECURITIES, PROVIDED THAT AN OPINION OF COUNSEL IS FURNISHED TO THE COMPANY, TO THE EXTENT REASONABLY REQUESTED BY THE COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND/OR APPLICABLE STATE SECURITIES LAW IS AVAILABLE.

_________________________________________________________________________________ www.provfinancial.com www.provcos.com

Providence Companies (Miami) Providence Companies (Sao Paulo) 240 Crandon Blvd Rua Fidencio Ramos 223 - Suite 74

Suite 228 Edificio Palladio

Miami, FL 33149 Vila Olimpia, SP Brasil 04551-010

Executive Memorandum

16

The Economic Success Story of Brazil

The Problems of the 1980's

The Solution

Through the 1980s and 1990s, the Brazilian economy suffered from rampant inflation that subdued economic growth. After several failed

economic initiatives created by the government to consistently control

inflation (some plans brough inflation to zero in the short term, but was

unsustainable over the medium term), in 1994 the Plano Real was

introduced. This plan brought stability and enabled Brazil to sustain

economic growth over that of the global economy through the coming decade.

The Plano Real (Real Plan, in English) was a set of measures taken to

stabilize the Brazilian economy in early 1994, under the direction of

Fernando Henrique Cardoso as the Minister of Finance, during the presidency of Itamar Franco.

According to economic academics, one of the causes of inflation in Brazil

was the inertial inflation phenomenon. Prices were adjusted on a daily basis

according to changes in price indexes and to the exchange rate of the local

currency to the U.S. dollar. Plano Real then created a non-monetary currency, the Unidade Real de Valor ("URV"), whose value was set to

approximately 1 US dollar. All prices were quoted in these two currencies,

cruzeiro real and URV, but payments had to be made exclusively in

cruzeiros reais. Prices quoted in URV did not change over time, while their

equivalent in cruzeiros reais increased nominally every day.

The Plano Real based its actions on an analysis of the root causes of

inflation in the post-military dictatorship Brazil that concluded that there

was both an issue of fiscal policy and severe, widespread inertial inflation. It

created the Unidade Real de Valor (Unit of Real Value), which served as a

key step to the implementation of the current currency, the real. At first, most academics tended not to believe that the Plan could succeed. Stephen

Kanitz was the first public intellectual to predict the future success of the

Real Plan.

The Plano Real: (i) introduced a new currency called the Real (plural Reais) on 1 July 1994, as part of a broader plan to stabilize the Brazilian economy,

the short-lived cruzeiro real was substituted in the process, (ii) enacted a

series of contractionary fiscal and monetary policies, restricting its expenses

and raising interest rates. By doing so, the country was able to keep

inflation under control for several years. In addition, the high interest rates

attracted enough foreign capital to finance the current account deficit and increased the country’s international reserves, (iii) put a strong focus on the

management of the balance of payments, at first by setting the real at a very

high value relative to the U.S. dollar; and later in 1998, by a sharp increase

on domestic interest rates to maintain a positive influx of foreign capitals to

local currency bond markets, financing Brazilian expenditures.

APPENDIX

Brazil Economic Outlook 2012

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17

The Real initially appreciated (gained value) against the U.S. dollar as a result of the large amount of capital inflows in late 1994 and 1995. It then

began a gradual depreciation process, culminating in the 1999 January

Brazilian currency crisis, when the Real suffered a maxi-devaluation, and

fluctuated wildly. Following this period (1994–1999) of a quasi-fixed

exchange rate, an inflation-targeting policy was instituted by new Central

Bank president Arminio Fraga, which effectively meant that the fixed-exchange period was over. However, the currency was never truly "free",

being more accurately described as a managed or "dirty" float, with frequent

Central Bank interventions to manipulate its dollar price.

The currency’s appreciation was crucial to keep inflation under control. Mainly, it assured the supply of cheap imported products to meet the

domestic demand and forced domestic producers to sell at lower prices in

order to maintain their market shares. This was especially important in the

period immediately following the adoption of the new currency, when the

sudden drop in inflation caused a surge in demand. The increased imports,

therefore, were essential to avoid demand-side inflationary pressures that would undermine the stabilization plan.

Macro Economic Overview

Market Conditions

As the largest and most populous country in South America, the tenth

largest economy in the world and the fifth largest country in the world in

both area and population, Brazil is well-positioned for continued growth.

The nation has well-developed manufacturing, mining, agricultural and

service industries, as well as a large labor pool. Brazil's macroeconomic fundamentals are currently very strong, and both the long and short-term

outlook for the country are positive. Brazil has an increasing balance of

payments surplus, continued government commitment to fiscal discipline

and inflation control, increasing export volume growth, decreasing interest

rates and strong foreign direct investment, all of which are expected to strengthen the economy.

The favorable macro

economic environment

has also played a

significant role in the growth of the real estate

industry in Brazil.

Continued economic

expansion, including a

rapidly growing international corporate

presence and growth of

local companies, is

increasing demand for

residential and

commercial real estate development. Industrial real estate development activity, particularly in warehouses and logistics centers, is directly tied to

growing internal demand, consumer purchasing power and increasing trade.

These economic effects have put added pressure on developing distribution

centers to get manufactured goods into retail locations for consumer

consumption. Prices for Class A office space are anticipated to increase as the vacancy rate is expected to continue falling in 2009. The residential real

estate market is further supported by favorable demographics including a

young and growing population, with the prime home buying age group

Executive Memorandum

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Brazil Recent Economic Growth

expected to grow at a fast pace over the next 20 years. In addition, Brazil has a large housing deficit that has primarily been the result of low levels of

mortgage availability in the country. However, mortgages are becoming

more readily available and affordability is expected to increase significantly

over the coming years due to a combination of the following factors: (i)

declining interest rates, (ii) higher availability of credit primarily benefiting

the lower and middle income segments, (iii) extension of mortgage terms, (iv) increasing number of loans granted using saving account funds, and (v) a

more beneficial regulatory framework to mortgage lenders. Moreover, the

hospitality sector is expected to benefit from the robust business

environment and the emergence of Brazil as a major tourist destination.

During the 1990's, the Brazilian economy did not experience the same level

of robust growth as other major emerging economies like India, Russia and

China. Beginning shortly after the settling of global economic and political

changes in 2001-2002 and the Brazilian presidential elections of that year,

the Brazilian economy has gradually risen to achieve consistent growth and a development cycle of significant investments.

Already an economic power in natural resources and agriculture, Brazil has

improved its management of internal and external economic policies which

has resulted in strong monetary inflows and a strengthening currency. This

combination has helped Brazil reach levels of domestic and foreign investment not seen for more than three decades. The country has become

an attractive destination for investments in spite of recent global economic

slowdowns. For the second consecutive year, Brazil’s GDP in 2007 grew by

more than 5% which was enough to allow Brazil to become a net foreign

debt creditor for the first time in its history. Also a first, the country’s sovereign debt was upgraded to investment grade by two recognized global

rating agencies, Standard & Poors and Moody’s. Many of the recent changes

in the Brazilian economy are a result of an overhaul of the administrative

and institutional environment, creating more attractive markets and

business conditions, as evidenced by its GDP growth shown in Exhibit 1.

Exhibit 1 – Brazilian GDP growth on a solid upward trend

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19

While some years resulted in slower GDP growth than others during this

period, the overall trend in Brazil since 2002 has been upward. During this

time Brazil has established itself as a major player in the global commodities

market, and concerns of radical economic and political changes with the

election of leftist President Luiz Inacio Lula da Silva in 2002 have proven

unfounded. Combined with the expansion of foreign direct investment

("FDI"), as shown in Exhibit 2, several other relevant macroeconomic

landmarks were noted in the 2003-2007 period:

Stable political outlook (President Lula reelected in 2006)

Continuous improvements in foreign investment regulatory environment

Controlled inflation allowing for further interest rate reductions,

credit expansion and employment growth.

Stable monetary and fiscal policies.

Diversified export base with no single trade partner representing more

than 20% of exports

No significant ethnic or religious conflicts.

Exhibit 2 - FDI inflows are reaching record levels

Although FDI remains a key determinant of potential real estate

development demand, there is also growing local demand for real estate

because of historically low quality supply and rising internal purchasing

power in Brazil. Local demand for quality real estate has been growing in all

asset classes during the last four years. Local corporate demand growth is

attributable to business expansion and efforts to improve market share from

foreign competitors or through partnerships with established multinationals.

Housing demand has been triggered by rising income levels, the advent of

expanded credit availability and general employment increases. Brazil is

considered to be a “young country” with demographics that support a

sustainable expansion of domestic consumer demand and family formation,

especially when compared with other mature and even some emerging

economies – see Exhibit 3 on the following page.

Executive Memorandum

20

Increasing Domestic Demand

Exhibit 3: Young Population - Savings & Growth Potential

Pent-up demand for low income residential units is particularly strong in

Brazil. Because of the country’s history of high inflation and high interest

rates, mortgage markets did not allow for affordable housing to be financed

in conjunction with the increase in the urban population. However, since the

implementation of inflation targeting by the Brazilian Central Bank, and the

ensuing gradual decrease in interest rates and reduction of taxes, the

expansion of credit availability and disposable income, the residential sector

has experienced unprecedented growth as illustrated by Exhibits 4, 5 and 6

below.

Exhibit 4 - Total Credit to GDP (a Measure of Macroeconomic Stability)

is Directly Affected by Credibility of Inflation Targeting

Executive Memorandum

21

Exhibit 5 - Total and Mortgage Credit / GDP in Brazil is still very low, a

legacy of high inflation / high interest rate history

Exhibit 6

Executive Memorandum

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Consistent GDP Growth & Low

Inflation

Record Foreign Direct Investment &

International Reserves Improved External Accounts Low Credit Usage Compared to Other Countries

Executive Memorandum

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Growing Mortgage Markets & Controlled

Inflation

More Sources of Stability

In 2007, Brazil was able to successfully place external debt denominated in

Brazilian Reais (BRL – Brazil’s currency), which was considered a major accomplishment given that in 2002 most international creditors positioned

Brazil in the group of countries carrying a default risk. For much of this

decade internal demand growth has helped the country to become more

detached than in previous cycles from external risks and the effects of

economic downturns in mature markets such as the U.S. and the EU.

Domestic consumption in Brazil increased 6.5% in 2007 when compared with 2006. In March 2008 formal unemployment recorded its lowest level in

twenty years according to IBGE (Brazilian Institute of Geography and

Statistics). These trends are occurring at a time when first-time homeowners

are directing a significant share of their income to mortgage payments.

Because of the long term profile of FDI applied to mature industries and manufacturing, the foreign exchange outlook in Brazil is expected to

stabilize. This trend is supported by favorable foreign trading pattern and a

high level of international reserves – See Exhibits 7 and 8 below.

Exhibit 7 – Soaring international reserves are a testament of favorable

trading and investment patterns

Executive Memorandum

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Exhibit 8 – Controlled inflation and favorable investment/trade outlook

should bring currency stability

Brazilian real estate capital markets have changed rapidly. This evolution is

evidenced by the large number of real estate companies that went public on

the São Paulo Stock Exchange (BOVESPA) during 2007. A total of 21

companies were listed resulting in approximately BRL12 billion being raised

for companies largely in the residential sector. While the majority of these companies were established in the major centers of Sao Paulo, Rio de

Janeiro and other capitals with a high concentration of urban population,

some companies were conglomerates with interests in industrial and office

sectors. More than 40% of the capital raised through public offerings came

from international investors.

A continuation of political stability in Brazil will support reduced country

investment risk premiums. Country risk reduction, in turn, encourages the

flow of new capital into local real estate debt and equity markets, provided

the host country liberalizes its financial sector. Exhibit 9 describes how the

cost of borrowing has fallen since 2002 in Brazil. This trend of falling rates was consistent in 2006 and 2007, when private banks began competing for

mortgages directly with state sponsored banks.

Exhibit 9 – Lower

interest rates now,

but still trending

down, alongside inflation

Executive Memorandum

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Recent Highlights

Dilma Rousseff

In perhaps the most significant step since she took office on January 1st,

2011, President Dilma Rousseff has differentiated herself from former leader

Luiz Inácio Lula da Silva by supporting the UN vote to monitor human rights in Iran. It marks Brazil’s first change in foreign policy under the new

administration and demonstrates Brazil’s desire to become a permanent

member of the UN Security Council.

A national poll requested by the National Confederation of Industry was released on April 1, 2011 and indicates that the presidency of Dilma

Rousseff has the approval of 73 percent of the population. The rejection of

the first woman to assume the presidency of Brazil is only 12 percent.

Policies on employment, environment, education and poverty reduction were

approved by the citizens, while the tax and health strategies have been

rejected, the survey notes. This high level of popularity has been surpassed only by the former president, Luiz Inacio Lula da Silva, whose popularity the

early days of government reached 75 percent. Respondents were asked how

Rousseff's administration compares with that of Lula and 64 percent believe

it is the same, 12 percent believe it is better, while only 13 percent think the

current government is worse. For 14 percent of respondents, Rousseff has a governing style very different from its predecessor and 40 percent believe it

is a little different, but 39 percent think there is no difference.

Newly Discovered Oil Reserves

An enormous offshore oil discovery could help Brazil join the ranks of the

world's major exporters, but full-scale extraction is unlikely until 2013 and

will be very expensive. The "ultra-deep" Tupi field off the coast of Rio de Janeiro could hold as much as 8 billion barrels of recoverable light crude,

and initial production should exceed 100,000 barrels daily, says Guilherme

Estrella, exploration and production director of Brazilian state oil company

Petroleo Brasileiro (PBR). Petrobras, as it is known, will start pilot pumping

in 2010 or 2011 but full production would take several more years, Estrella said late Thursday.

Tapping the Tupi field will cost billions of dollars, but Petrobras is flush with

cash for strategic investments because of growing production and high

international oil prices. Petrobras, which currently has 16 billion barrels of

proven reserves, is investing more than $200 billion in five years as it taps the so-called pre-salt fields lying two miles below the ocean surface and

another two to four miles beneath the seabed. Brazilian lawmakers passed a

bill last year making Petrobras the operator of all new exploration licenses in

the pre-salt and other areas deemed strategic. Rights to explore more than

half of the region are yet to be auctioned. The oil producer controls or has stakes in 85 percent of all the existing licenses. The area likely holds 60 new

fields with an average size of 2.2 billion barrels, according to the study.

However, the way in which the oil revenues will be spent is more interesting.

As President Dilma Rousseff recently said, oil is Brazil’s “passport to the

future”. It is obvious that a large part of the revenues should go to education, as standardized tests in Brazil prove a poor education system.

Federal funding could also be used in forming high-skilled professional jobs

and encouraging research. Additionally, Brazil needs to improve its decrepit

infrastructure. Airports and highways need improvement in order to

facilitate economic production and efficient public transportation—especially with the upcoming World Cup and Olympic games. Oil revenues should also

be used to curtail inequality through government programs like Bolsa

Família, which gives families stipends for ensuring their kids stay in school.

Executive Memorandum

26

Brazil Credit Rating

Upgraded

In April 2011, Brazil’s credit rating was raised one level by Fitch Ratings, which cited the economy’s growth prospects and budget cuts under President Dilma Rousseff. The country’s foreign debt rating was increased to BBB, the second-lowest investment grade and in line with Mexico, Russia and Thailand, from BBB-. The outlook is stable, Fitch said in a statement. The ratings company last boosted Brazil’s ranking in May 2008. Standard & Poor’sand Moody’s Investors Service rate the country one step lower.

Latin America’s biggest economy may grow 4.1 percent this year after

expanding 7.5 percent in 2010, the fastest in more than two decades,

according to the median estimate of 14 analysts surveyed by Bloomberg.

Rousseff, who took office Jan. 1, pledged to cut this year’s budget by 50.7

billion reais ($31 billion) to help the central bank contain inflation. “The Rousseff administration has displayed signs of greater fiscal restraint, which

coupled with healthy growth prospects should allow for a fall in Brazil’s

heavy general government debt burden,” Fitch said in the statement.

The extra yield investors demand to own Brazilian bonds instead of U.S. Treasuries narrowed 2 basis points, or 0.02 percentage point, to 168 at 3:20

p.m. New York time, according to JPMorgan Chase & Co. The Bovespa stock

index rose 0.5 percent. The real pared its drop and was down 0.1 percent to

1.6090 per dollar.

Brazil’s net debt fell to 40 percent of gross domestic product in February from 60 percent in January 2003, when Dilma Rousseff’s party, the

Workers’s Party, first won the presidency. Rousseff has pledged to slash

spending to ensure net debt will continue to drop as a percentage of GDP

and help the central bank fight inflation.

The Future Leader Of Wind Power

Brazil wind farm capacity making a total of 786 MW. Brazil has massive

wind power potential. The regulator contracted 71 wind turbines projects for

a wind power capacity of 1,800 MW. Far from the bright lights of Rio de Janeiro, the north-easterly Brazilian states of Ceara and Rio Grande del

Norte are blessed with some of the strongest and most consistent winds in

the world.

With such high potential, it is not surprising that Brazil’s wind power

industry has been taking off massively in the last couple of years: the

country added 264 MW of wind farm capacity in 2009 and by mid-2010,

another 180 MW were installed, making a total of 786 MW.

In December 2009, the Brazilian energy regulator hosted the first wind

power only auction, which contracted 71 wind turbines projects for a total

capacity of 1,800 MW. Two additional auctions took place in August 2010,

resulting in an additional more than 3 GW of tendered capacity for

September 2013.

Overall, it seems clear that as for other industries, Brazil is likely to become

a world player for wind energy, providing a hugely important platform for

Europe’s companies to grow and build up their portfolios. All that is needed

in order to ensure that the possible future is truly durable is to reinforce it

with a long-term legislative framework.

Executive Memorandum

27

Promissing Trade

Agreement

The latest China-Brazil trade deal, which was announced in April 2011 is

worth up to $1.5 billion. In fact, as the two countries entered into their 3rd

annual BRIC summit with their Indian and Russian counterparts, Brazil

made it clear that it sees China as a model for its own industrial development.

Brazil and China have entered into an increasing number of trade

agreements as the Red Dragon has sought to shore up supplies of raw

materials to fuel its growth. Brazil, among other things, is the world's largest producer of iron ore and often a counterpoint in negotiations between China

and Australian miners. China actually passed the United States as Brazil's

biggest trading partner in 2009, as trade between the two countries tripled

in the past five years to $62.6 billion.

Brazil's loss has been China's gain. That much was made apparent at this year's iconic Rio's Carnival, where 80% of the costumes on show were made

in China. The tariffs impelled Chinese tech giant Foxconn Technology Group

to look at moving some of its manufacturing operations to Brazil. Though

still under consideration, the $12 billion investment would make products

by such Foxconn clients as Apple Inc., Dell Inc., and Hewlett-Packard Company more affordable in Brazil. It's understandable. China's economy is

expected to grow 9.6% in 2011 -- more than twice the rate of Brazil's 4%.

Through the state-owned development bank, BNDES, the Brazilian

government has wielded credit as a national economic development tool,

increasing lending to many companies in recent years. In addition, federal or state governments hold a stake in as many as one in five Brazilian

companies. For example, the Brazilian government owns 54% of the

common shares of oil giant Petrobras, more formally known as Petroleo

Brasileiro SA.

Bad Checks in Brazil Lowest since 2004

Serasa, the leading consumer credit information service in Brazil reported

the lowest experience of bad checks (returned for not sufficient funds). In

2010, 1.76% of checks around the country have been returned, as shown by

the indicator Serasa of bad checks, reaching the lowest level since

2004. That year, the return rate was 1.58%.

In December, compared with the same period last year, fewer checks were

returned: 1.72% of the total issued, as against 1.87% in December 2009. In

the previous month, in November, the volume of bad checks presented

elevation. In the period, 1.68% were returned checks.

The decrease recorded in the cumulative return of checks in 2010,

compared with previous years, due to consumer preference for forms of

financing with longer maturities that pre-dated and the possibility of making

minimum payments, as the card credit, according to economists Serasa.

For the year, Amapá was the state with the highest percentage of returned checks (10.79%).On the other side is Sao Paulo, which recorded the lowest

percentage, 1.32%. Among regions, the North was the highest percentages of

return checks in the period, 4%. In the opposite appears the Southeast, with

1.43%.

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