Business Model

AA Energy Group’s business model involves the trading of crude oil and refined products, the buying and selling of fuel oils, and the shipping of purchased fuels internationally. In developing this business model, it was critical to define how customer desires intersect with the products and services offered for sale and the Company’s goals. The Company makes money by positioning itself in the intersection of customer desires, what we sell, and our corporate goals and short-, intermediate-, and long-term objectives. The more our positioning is consistent with these imperatives, the greater will be the development and nurturing of highly profitable revenue streams.

Core Values :

Leadership:The courage to lead by example in uncharted territory

Collaboration:Leverage collective genius

Integrity:Actions speak volumes

Accountability: If it is to be, it’s up to us

Passion: Dedication beyond judgment

Diversity: Include our local, state, and international communities

Quality: What we do, we do well

AA Energy Group, Inc. has adopted a set of Core Values which guide our Company in every aspect of our business operations and the conduct of our employees.

As noted above, leadership must embrace the courage to lead by example. We lead from the front, not from behind. We collaborate by utilizing our collective resources to solve problems and to become successful in our endeavors.

As noted above, leadership must embrace the courage to lead by example. We lead from the front, not from behind. We collaborate by utilizing our collective resources to solve problems and to become successful in our endeavors.

Integrity is a quality that permeates everything we do in our business and outside our business. Our actions speak louder than words. We do what we say. Integrity includes honesty, thoughtfulness, judiciousness, knowing the difference between right and wrong, and acting accordingly.

Accountability involves being responsible for our actions. This requires conscientiousness and clarity of thought. We are very careful in what we do to adhere to all laws, rules and regulations because we embrace integrity, and we understand the nature and impact of consequences.

We act with innate passion in our business and personal lives. We are motivated by our desires to succeed. We’re driven by the excitement to achieve the goals and objectives we’ve set for our company and our employees by following the proper course.

We are a diverse company with respect to our principals, employees, and vendors. As our business is global in nature, we welcome the diverse cultures with which we interact on a routine basis.

Quality describes how we act. What we do, we do well. We are always striving to become the best we can possibly become. Our passion to succeed dictates that we move ahead by paying careful attention both to the big picture and necessary detail. The more careful we are, the greater will be the level of success we achieve.

The Oil Tanker Business

The movement and storage of crude oil in large volume needs oil tankers, which are large sized transport ships. There are different categories of oil tankers: a crude tanker is used for transporting bulk volume of unrefined crude oil from the oil extraction facilities to the refineries. Whereas, a product tanker is used to carry refined products from oil refineries to the markets/consumer facilities. A replenishment oiler is used for refueling ships at the sea, and the old nonoperational oil tankers which are used as floating oil storage Notes. The crude tanker business falls under the oil services industry, and is often classified under the subcategory of oil and gas storage and transportation. (Source: The Industry Handbook: The Oil Services Industry).

The crude tanker business involves firms which own, operate, or lease the crude tankers for their requirements of oil transportation and storage. Different entities get into detailed business contracts which are based on duration of the lease, the quantity of the oil to be transported or stored, the route of transport, or a mix of all such factors. Contracts also include details of which party bears the operational expenses, including fuel costs, crew payments, and insurance. Along with all the above mentioned factors, the demand and supply of oil across various regions of the globe also impacts the crude tanker business. The global crude oil and refined product tanker fleet uses a classification system to standardize contract terms, establish shipping costs, and determine the ability of ships to travel into ports or through certain straits and channels. This system, known as the Average Freight Rate Assessment (AFRA) system, was established by Royal Dutch Shell six decades ago, and is overseen by the London Tanker Brokers’ Panel (LTBP), an independent group of shipping brokers. AFRA uses a scale that classifies tanker vessels according to deadweight tons, a measure of a ship’s capacity to carry cargo. The approximate capacity of a ship in barrels is determined by using an estimated 90% of a ship’s deadweight tonnage, and multiplying that by a barrel per metric ton conversion factor specific to each type of petroleum product and crude oil, as liquid fuel densities vary by type and grade.

Leadership:The courage to lead by example in uncharted territory

Collaboration:Leverage collective genius

Competition

The Company’s direct competitors include all of the major and smaller oil tanker companies and some of the container shipping companies that also own and operate bulk fuel tanker ships. Competition in the oil trading business is intense due to many factors including, but not limited to, volatility in worldwide oil supply and demand, international crude oil inventories, geopolitical circumstances, and existing trading relationships. Currently, there is a glut of crude oil worldwide, which is generating downward pressure on oil prices. As is the case with periods of oversupply, existing tanker ships may be taken offline, which creates spot demand for ships to transport bulk fuels. AA Finance Group believes that this scenario represents an opportunity to provide shipping alternatives for refineries and others at significant up-trending price points. This positioning the Company for immediate, substantial growth.

Target Markets

The Company will be targeting buyers of crude oil and refined products worldwide. These buying groups are always seeking additional supply chains, and many of these buyers seek oceangoing tanker ships that provide optimum transportation costs. So, a tanker ship with highly competitive transportation pricing will directly appeal to these buyers. The Company’s target markets include all fuel buyers, airlines, oil companies, and refineries.

Strategic Plan

AA Energy Group will begin its operations by purchasing its first tanker ship equipped for either crude oil or refined products shipping. In addition, the Company will be purchasing a bulk fuel, tanker ship that is small and nimble enough to dock at virtually any harbor. Thus, our ship will be able to transport fuel to countries whose harbors cannot accommodate the largest tanker ships. Subsequent financings will provide the capital needed to purchase additional tanker ships along with providing working capital for the Company’s Trading Desk. As the Company’s profitable revenue streams grow and expand, AA Finance Group will purchase additional tanker ships and will position itself to secure larger and larger purchases and sales of crude oil and refined products from its target markets worldwide.

The Company will obtain the most up-to-date information available on planned oil tankers, LNG carriers, and LPG tankers across the world to Identify growth segments and opportunities in the global tanker industry, facilitate decision-making on the basis of strong global tankers data, develop business strategies with the help of specific insights into planned tankers across the world, keep abreast of key planned tankers across the world, and assess competitors’ planned tankers.

Stake Out the Best Field Position

The initial strategy for AA FINANCE GROUP is to establish a foothold; that is, the Company will endeavor to convince prospective investors to fund the Company’s working capital and growth. This stage is envisioned to require about 2 to 3 months.

Establish Critical Mass

The next play is to reach an initial ‘critical mass’ and to build enough of a customer base that the Company can scale up its experience and content across broader geographic and demographic sectors. An initial critical mass clearly proves that the Company can support multiple customer profiles in different target audience market segments. At the same time, certain segments of the market will begin to move towards greater acceptance of the Company as a viable option. This critical mass stage is anticipated to require from 6-12 months to effectuate.

Establish Credibility

Initial credibility arises with having a critical mass, but more significant credibility will be a direct result of appealing to prospective buyers. In general, credibility takes one full year to build and will energize the Company to garner more investors.

Enter the Broad Market

The Company will enter the broad market and leverage its well established credibility and initial critical mass across multiple market segments simultaneously. In concert with the Company’s emergence into the broad market growth phase, the market itself will have matured in some market segments. In this stage, the Company will continue to expand customer growth, thereby generating significantly profitable

Invitation

We invite international buyers and sellers of refined crude oil products, shippers, and traders to contact us 24/7 to discuss how we can assist in growing and expanding your businesses. We have always been problem solvers, and we are available to help resolve the challenges you may face in the constantly changing oil and fuel industries. Our principals have a broad range of expertise in all aspects of these specialized businesses including over 60 years of hands-on, know how in the many complexities of bulk fuel handling, loading, documenting, and global maritime shipping. So, please allow us to open communications and begin conversations that will undoubtedly lead to potentially greater revenue and profits for your company.