10760 South 7E Yuma, AZ 85365

1. Welcome!!! 10760 South 7E Yuma, AZ 85365

2. What we want to accomplish. * An informative presentation on the Foreign Trade Zone. * Showhow the FTZ can save your clients money and increase your income. * A look at the big picture, how can we build the Southwest area as a Logistic Center Point.

3. Foreign Trade Zone 219 • Yuma County Airport Authority, Grantee of Foreign Trade Zone 219 U.S. Department of Commerce Foreign Trade Zone Board Grantee Users and/or Operators utilization of General Purpose or Sub-Zone

4. Who is Desert Depot? Desert Depot is a public warehouse and logistic company operating Foreign Trade Sub-Zone 219b. • We specialize in industrial and manufacturing warehousing logistic service.

5. Part of the Gowan Group • Gowan Company – Ag-chemical Specialty Crop • Gowan Milling – Formulation / Manufacturing Customers include, Dupont, Dow, Bayer, BASF • Gowan Seed - Specialty Crop Seed • Dune Company – Full Service Crop Production supplier • Gowan De Mexico – Mexico Chemical Crop Production supplier • Margarita – International

6. Foreign Trade Zone 219b • An FTZ is a specific area that is recognized by US Customs as being outside of Customs territory. Some of the benefits that may be gained are: • Reduction, elimination or • deferral of US Customs • Duties. • Imports can be stored in • the FTZ and gradually • removed as needed for • JIT (Just in Time). • Improved logistics by being able to sort, mix • and consolidate prior to • shipping to Mexico.

7. Foreign Trade Zone 219b Yes, and here are some examples of how the FTZ has already been used. Ok, but has anyone around here used the FTZ? 1) Importer used FTZ 219b for warehousing raw material from Mexico that was from a foreign supplier to reduce inventory tax in Mexico and U.S. Duty. (Elimination of duty & tax savings) 2) Importer utilized FTZ for warehousing at Desert Depot for export production. The product was held in the warehouse until exported. No Duty paid, No Drawback. (Improved cash flow) 3) Importer used FTZ 219b to apply a US compliant (EPA) label. As the FTZ is outside of Customs territory, they were able to apply a new label without any penalty and have the product at the production site in time for manufacturing. Saved approximately 7 weeks. (Saving time)

8. Assume that you have a customer that has two containers arriving in Long Beach with a) different parts, b) each container has a value of $200,000, and c) 4%US duty: Lets look at how it works? 1 2 The containers are then returned with no demurrage. The Customs Broker cuts a IT on each container to Yuma The containers arrive at Desert Depot and are admitted into the FTZ. A 24 hr advance notice is given to the FTZ and Customs.

9. Lets look at how it works? Within the Zone they can be inspected, combined, mixed & inventoried. The number of Customs Broker transactions were increased from 1 to 7. As part of JIT supply chain, the raw materials are sent (TE) to Mexico as needed. For this example we are assume that it is sent for manufacturing over a 6 month period. 1 San Luis Mexico 2 3 4 5 6

10. Logistics Applications How does this Save Money in the U.S.? Invoice Value US Duty Rate Duty Amount Total Warehouse & FTZ charges Cost of Money Gross Savings Net Savings

11. Logistics Applications How does this Save Money in Mexico? The Combined value of both containers The Tax rate # of pallets at beginning of each month Total monthly savings The Total Savings over 6 months

12. Other Savings Same value as used on other examples Here is a sample of how working with a manufactures supplier you may gain additional savings for them and increase business for all of us. Used Customers Inventory Carrying Cost Inventory carrying cost savings

13. Recap Savings vs. Cost Mexican Inventory Tax $7,646 US Duty $7,360 Let’s recap what all the benefits could be in this example. The User Benefits Inv. Carrying Cost $26,833 Avoid Mexican or U.S. Customs Penalties Better service to your customer Reduce Demurrage Charges Increase the number of billable transactions The Customs Brokers benefits Use as a sales tool

14. Facility Overview Two buildings totaling 215,500 sq. ft. • Building 1 is 103,000 sq. ft. concrete tilt up construction environmentally controlled for hazardous materials • Building 2 is 112,500 sq. ft. steel building for general commodities. • All buildings are protected by high pressure fire sprinklers. • Monitored security system, lighting, fencing and strict security procedures, compliant to US Customs. • Hazmat Safety trained Staff. Desert Depot has the ability to expand, or customize our facility and services to include rail.

15. Facility Overview • Advanced Warehousing Management Technology. • Fully Bar Coded warehouse with lot or serial number tracking. • Proprietary on-line EDI capability. • Internet inventory reporting at www.desertdepot.com. • Customized inventory and logistic reports.

16. Visit our Website at www.desertdepot.com

17. Developing Logistic Center We need to provide Value Added Services Canadian Market Pacific Rim Europe & East Coast Maquiladora Develop a Transportation Interchange point more involvement with the Can/Mex corridor Produce Market

18. Southwest Arizona Port Users CUSTOMS, GYPA, GYEDC, YCAA AND OTHERS Trucking Customs Broker SWAPU ORGANIZATION TO FACILATE ACTION Air Freight Produce Industry FTZ/Warehousing Freight Forwarding Maquiladora Manufacturing Results

19. Give us a call! Desert Depot Phone 928-344-3272 10760 South 7E Fax 928-344-0331 Yuma, AZ 85365 www.desertdepot.com David Mansheim General Manager Mobil 928-920-6817