dismissed L-1A Case: Product Sales

MATTER OF M-H-, LLC 
Non-Precedent Decision of the 
Administrative Appeals Office 
DATE: DEC. 27, 2018 
APPEAL OF CALIFORNIA SERVICE CENTER DECISION 
PETITION: FORM 1-129, PETITION FOR A NONIMMIGRANT WORKER 
The Petitioner, which sells bicycle helmets, seeks to temporarily employ the Beneficiary as executive 
director of its new office1 under the L-lA nonimmigrant classification for intracompany transferees. 
Immigration and Nationality Act (the Act) section 101(a)(l5)(L), 8 U.S.C. § l 10l(a)(l5)(L). The L~lA 
classification allows a corporation or other legal entity (including its affiliate or subsidiary) to transfer a 
qualifying foreign employee to the United States to work temporarily in a managerial or executive 
capacity. 
The Director of the California Service Center denied the petition, concluding that the record did not 
establish, as required, that: ( 1) the Petitioner has a qualifying relationship with the Beneficiary's 
foreign employer; and (2) the new office will support an executive position within one year after 
approval of the petition. 
The matter is now before us on appeal. In its appeal, the Petitioner submits additional evidence and 
asserts that the Director erroneously relied on minor discrepancies without first giving the Petitioner 
the opportunity to address them. 
Upon de nova review, we will dismiss the appeal. 
I. LEGAL FRAMEWORK 
To establish eligibility for the L-lA nonimmigrant visa classification in a petition involving a new 
office, a qualifying organization must have employed the beneficiary in a managerial or executive 
capacity for one continuous year within three years preceding the beneficiary's application for 
admission into the United States. 8 C.F.R. § 214.2(1)(3)(v)(B). In addition, the beneficiary must 
seek to enter the United States temporarily to continue rendering his or her services to the same 
employer or a subsidiary or affiliate thereof in a managerial or executive capacity. Id. 
1 The term "new office" refers to an organization which has been doing business in the United States for less than one 
year. 8 C.F.R. § 214.2(1)(1)(ii)(F). The regulation at 8 C.F.R. § 214.2(1)(3)(v)(C) allows a "new office" operation no 
more than one year within the date of approval of the petition to support an executive or managerial position. 
Matter of M-H-, LLC 
The petitioner must submit evidence to demonstrate that the new office will be able to support a 
managerial or executive position within one year. This evidence must establish that the petitioner 
secured sufficient physical premises to house its operation and disclose the proposed nature and 
scope of the entity, its organizational structure, its financial goals, and the size of the U.S. 
investment. See generally, 8 C.F.R. § 214.2(1)(3)(v). 
II. QUALIFYING RELATIONSHIP 
The Director also denied the petition based on a finding that the Petitioner did not establish that it 
has a qualifying relationship with the Beneficiary's foreign employer. 
To establish a "qualifying relationship" under the Act and the regulations, a petitioner must show 
that the beneficiary's foreign employer and the proposed U.S. employer are the same employer (i.e. 
one entity with "branch" offices), or related as a "parent and subsidiary" or as "affiliates." See 
generally section 10l(a)(l5)(L) of the Act; 8 C.F.R. § 214.2(1). 
The regulation and case law confirm that ownership and control are the factors that must be 
examined in determining whether a qualifying relationship exists between United States and foreign 
entities for purposes of this visa classification. See Matter of Church Scientology Int'/, 19 I&N Dec. 
593 (BIA 1988); see also Matter of Siemens Med. Syss., Inc., 19 I&N Dec. 362 (BIA 1986); Matter 
of Hughes, 18 I&N Dec. 289 (Comm'r. 1982). In the context of this visa petition, ownership refers 
to the direct or indirect legal right of possession of the assets of an entity with full power and 
authority to control; control means the direct or indirect legal right and authority to direct the 
establishment, management, and operations of an entity. Matter of Church Scientology Int'!, 19 I&N 
Dec. at 595. 
The Petitioner initially stated that the Beneficiary is the "[ s ]ole owner & manager" of the petitioning 
company and its affiliate in China, and that she "owns 100% stock" of both entities. We note that 
the foreign entity's articles of association show that the Beneficiary as the owner of 90%, not 100%, 
of the foreign entity. The discrepancy illustrates why a petitioner's unsupported statements carry 
limited weight in this proceeding. 
The Petitioner's initial submission included a copy of IRS Form SS-4, Application for Employer 
Identification Number, which indicated that the company is a limited liability company (LLC) with 
one member (owner). Under "Type of entity," the Petitioner indicated that the company is a sole 
proprietorship. The record shows that the Petitioner is an LLC, not a sole proprietorship. 
The Director denied the petition, stating that the company's ownership is in doubt because th,:! Social 
Security Number (SSN) shown on IRS Form SS-4 was not the same number claimed elsewhere by 
the Beneficiary. On appeal, the Petitioner explains that the number in question is an Individual 
Taxpayer Identification Number (ITIN), not an SSN. Evidence shows that the Beneficiary used that 
ITIN as early as 2015. The Petitioner also protests that, although the IRS Form SS-4 was part of the 
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Matter of M-H-, LLC 
initial submission, the Director did not raise this issue in the request for evidence (RFE) and allow 
the Petitioner to address it before the denial. 
The Petitioner is correct that the IRS Form SS-4 allows the use of an ITIN or an SSN on the line in 
question, and that the perceived discrepancy should not disqualify the Petitioner. However, the 
record does not otherwise suffice to establish a qualifying relationship between the two employers. 
The Petitioner did not submit corporate documentation to identify the member or members of the 
petitioning LLC, such as an operating agreement, certificate of membership, or comparable evidence 
that not only refers to the Beneficiary as a member, but also legally establishes her membership. 
IRS Form SS-4 does not meet this threshold. The Petitioner's articles of organization, filed with the 
State of California, identified the Beneficiary as the manager of the LLC, but a manager does not 
necessarily hold a membership interest. 
Local business permits identified the Beneficiary as the owner of the petitioning entity. These 
permits are secondary evidence, consistent with the Beneficiary's ownership, but they are not first­
hand evidence of that ownership comparable, for instance, to share certificates. 
In the RFE, the Director stated that the Petitioner had not sufficiently established the Beneficiary's 
claimed ownership and control of the petitioning U.S. entity. The Director listed several examples 
of acceptable documentation of ownership. The list of examples did not include IRS Form SS-4. 
In response, the Petitioner submitted copies of previously submitted documents, and "a copy of [the 
Petitioner's] business plan, which clearly sets out [the Beneficiary's] ownership and control over the 
company." The Petitioner did not address the list of qualifying documents from the RFE or explain 
why none of them could be submitted. 
The business plan is not contemporaneous evidence of the Beneficiary's ownership of the company. 
The plan includes specific dates for events that occurred after the filing of the petition, and it quotes 
a demographic study published after the Director issued the RFE. The business plan, evidently 
created for the RFE response (the phrase "Ll Business Plan" appears on the cover), amounts to 
repetition, rather than corroboration, of the claim that the Beneficiary owns the company. 
The Petitioner submits several exhibits on appeal. Rather than submit direct evidence of ownership, 
however, the Petitioner submits information concerning the preparation of the IRS Form SS-4. 
Because the Petitioner has not directly documented the Beneficiary's claimed ownership of the 
petitioning entity, the Petitioner has not met its burden of proof in this regard. Based on the 
deficiencies and inconsistencies discussed above, the Petitioner has not established that it has a 
qualifying relationship with the foreign entity. 
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Matter of M-H-, LLC 
III. NEW OFFICE 
A petitioner seeking to employ a beneficiary as a manager or executive of a new office must 
establish that the new office will support an executive or managerial position within one year of 
approval of the petition. The Petitioner must establish the proposed nature of the office, describing 
its scope, organizational structure, and financial goals; the size of the United States investment and 
the foreign entity's financial ability to remunerate the beneficiary and to commence doing business 
in the United States; and the foreign entity's organizational structure. 8 C.F.R. § 214.2(1)(3)(v)(C). 
When a new business is first established and commences operations, the regulations recognize that a 
designated manager or executive responsible for setting up operations will be engaged in a variety of 
low-level activities not normally performed by employees at the executive or managerial level and 
that often the full range of managerial responsibility cannot be performed in that first year. The 
"new office" regulations allow a newly established petitioner one year to develop to a point that it 
can support the employment of a beneficiary in a primarily managerial or executive position. 
Accordingly, if a petitioner indicates that a beneficiary is coming to the United States to open a "new 
office," it must show that it is prepared to commence doing business immediately upon approval so 
that it will support a manager or executive within the one-year timeframe. This evidence should 
demonstrate a realistic expectation that the enterprise will succeed and rapidly expand as it moves 
away from the developmental stage to full operations, where there would be an actual need for a 
manager or executive who will primarily perform qualifying duties by the end of the one year 
period. See generally 8 C.F.R. § 214.2(1)(3)(v). The petitioner must describe the nature of its 
business, its proposed organizational structure and financial goals, and submit evidence to show that 
it has the financial ability to remunerate the beneficiary and commence doing business in the United 
States. Id. 
A. Staffing 
A new office petition must include evidence of the proposed nature of the office, describing the 
scope of the entity, its organizational structure, and its financial goals. 8 C.F.R. 
§ 214.2(1)(3)(C)(v)(J). 
The Petitioner filed the petition in February 2018. The Petitioner's financial plan indicated that the 
company sought to "[h ]ire two minimum-wage employees initially to handle assembly & shipping of 
helmets. By end of 2018 projected sales volume should support the hiring of 1-2 additional 
employees." 
In the RFE, the Director asked for more information about the Petitioner's first-year staffing plans to 
show that the company will support a managerial or executive position. In response, the Pt~titioner 
stated that it "has already hired a sales manager and a warehouse manager to handle the day-to-day 
operations of the business." 
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Matter of M-H-, LLC 
This assertion, however, conflicts with the business plan, submitted at the same time. That business 
plan indicated that the company intended to hire a warehouse manager and two warehouse staff 
during the first year. The personnel forecast in the business plan did not mention a sales manager, 
but indicated that the company planned to hire a marketing manager during its third year of 
operations, at a starting salary of $35,000 per year. The first-year financial projections contained no 
provision to pay that salary. 
The Petitioner did submit any payroll records or similar documentation to resolve these discrepant 
claims about existing staff at the new office. 
The job descriptions in the business plan appear to be generic templates. The stated duties for the 
warehouse staff included tasks such as packing boxes and tracking shipping, but not assembling 
helmet parts into finished helmets ready for sale. The marketing manager's job description referred 
to supervision of a sales staff that the company had not yet hired, which suggests that the marketing 
manager would personally have to perform sales and marketing functions. 
In denying the petition, the Director concluded that all the Beneficiary's planned U.S. subordinates 
for the first several years of operation would be warehouse workers "involved in the day-to-day 
duties related to [the Petitioner's] receiving and shipping activities." 
On appeal, the Petitioner protests that, after "the expense and effort that went into developing and 
producing [the] business plan," the Director found the plan to consist of "mere assertions without 
sufficient corroborating evidence." Considering the discrepancies between the business plan and the 
previous financial plan, and between the business plan and the Petitioner's claimed staffing, the 
Petitioner has not shown the business plan to be reliable evidence of the state of the company. The 
Petitioner must resolve these inconsistencies with independent, objective evidence pointing to where 
the truth lies. Matter of Ho, 19 I&N Dec. 582, 591-92 (BIA 1988). 
The Petitioner asserts that the Petitioner has already hired a warehouse manager and a sales manager, 
both of whom oversee subordinate staff and who "have already freed up the Beneficiary to focus on 
more 'big picture' affairs of the company." The Petitioner has not actually documented the extent of 
this claimed staffing. The individual identified as the warehouse manager has established accounts 
with various services, identifying her as the Petitioner's point of contact, but this evidence dloes not 
establish the nature or extent of her role with the company. 
The individual identified as the warehouse manager, whose initials are H.E., states, on appeal: 
My primary responsibilities each day include opening and closing the warehouse and 
overseeing the staff as they unload shipments, sort materials, and pack and process 
orders. I maintain close tabs on our current inventory and order all supplies and other 
necessary materials for the smooth running of the business. I am also in charge of 
hiring and firing new personnel, setting their work schedules, and making sure they 
get paid on time. 
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Matter of M-H-, LLC 
The described tasks appear to include managerial activities, but the record does not establish that 
H.E. actually performs those functions. The company's activities, as described, would have incurred 
various expenses, not least of which would be several salaries, but the Petitioner has not shown that 
it has been paying those expenses. A new office petition need not show that the company is already 
up and running, but in this instance the Petitioner has specifically claimed as much, and therefore it 
should be able to show evidence from the typical "paper trail" that invariably follows from such 
business activity. 
H.E. added that she has "worked as [the Beneficiary's] personal assistant in the United States since 
before [the petitioning entity] was even founded." It is this role that the Petitioner documents with 
printouts of email messages that H.E. sent or received in June 2018. Most of the conversations 
concern pricing for printing and mailing promotional fliers. H.E.' s self-written job description does 
not include responsibility for making such arrangements. In one of these messages, she refers to 
herself as the Beneficiary's "assistant." The remaining conversation, relating to changes to the 
Petitioner's website, includes this passage: "I will inform [H.E.] to give you CHECK." 
The Petitioner has provided conflicting information about its current and planned business activity. 
Given these discrepancies, and the lack of corroborating documentation, the Petitioner has not 
established that the new office will support an executive position within a year after approval of the 
petition. 
B. Finances 
A new office petition must establish the size of the United States investment and the financial ability 
of the foreign entity to remunerate the beneficiary and to commence doing business in the United 
States. 8 C.F.R. § 214.2(1)(3)(C)(v)(2). 
The Petitioner's financial plan included the following elements: 
• Initial investment: $300,000 
• Yearly expenses: $170,680 
• "In addition to the general business expenses," the Petitioner planned to purchase "five 
shipping containers" of helmet parts, for a total cost of $125,000. Once assembled, the 
helmets "are expected to yield a profit of $187,500, which more than covers the: yearly 
expenses, allowing for a reasonable salary of $40,000/year for the Owner & Executive 
Director." 
After subtracting the Petitioner's stated yearly expenses of $170,680, the anticipated profits would 
leave only about $17,000 for the Beneficiary's salary. Furthermore, on the petition form, the 
Petitioner specified that the Beneficiary's annual salary would be $52,000, not the $40,000 shown in 
the financial plan and other documents. 
Matter of M-H-, LLC 
The plan referred to an "[i]nitial investment" of $300,000, but did not specify whether this was the 
amount already invested, or the amount still required. 
The Director requested "[p ]roof of capital contribution" and other evidence to show the foreign 
entity's support of the new office, and its ability to remunerate the Beneficiary. 
In response, the Petitioner submitted its business plan, indicating that "the Foreign Affiliate is 
investing $300K." A breakdown of the "Use of Start-up Funding" showed $16,343 in "Total Start­
up Expenses" (mostly rent) and $283,657 in "Total Start-up Assets." The start-up assets would 
include $25,000 in inventory, with the balance designated as "Working Capital." 
The Petitioner also submitted a printout showing a $15,000 wire transfer in December 2017 from the 
claimed foreign affiliate to the Petitioner. The amount transferred would not cover the full $16,343 
in start-up expenses. A chronology in the business plan indicated that the Petitioner already paid the 
rental costs for the warehouse space in July 2017, before the wire transfer went through. The record 
does not show how much start-up funding the Petitioner received other than the December 2017 
transfer. 
A "Pro Forma Cash Flow" table, also in the business plan, showed the following first-year figures: 
Cash Received 
Revenue 
Owner Contribution 
Subtotal Cash Received 
Expenditures From Operations 
Total Personnel 
Bill Payments 
Subtotal Spent on Operations 
Additional Cash Spent 
Start-up Costs 
Purchase Inventory 
Purchase Long-term Assets 
Subtotal Cash Spent 
Net Cash Flow 
Cash Balance 
$375,000 
300,000 
675,000 
110,000 
225,692 
335,692 
16,343 
25,000 
5,000 
382,035 
292,965 
292,965 
The table indicated that the "Cash Flow Assumption" is that the "Owner Contribution is $300K." 
The business plan's "Year One Balance Sheet" showed current assets of $300,740 during the first 
month, including $25,000 worth of inventory. The Petitioner did not, however, submit evidence to 
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Matter ~f M-H-. LLC 
show that the Petitioner was already in possession of those assets. Financial figures for later months 
are clearly projections. 
In the denial notice, the Director noted that the Petitioner had claimed $300,000 in startup costs, but 
the Petitioner had documented only $15,000 transferred to the U.S. entity. 
On appeal, the Petitioner states: "Since the U.S. entity began operations last this [sic] year, it has 
received an additional total of $65,000 from its overseas affiliates." Bank documents show four 
incoming wire transfers, totaling $64,925. One of those wire transfers is the same one from 
December 201 7 that the Petitioner had already documented. The other transfers took place after the 
Director issued the RFE in February 2018. The most recent transfer ($19,975 in July 2018) took 
place after the Petitioner filed its appeal. Although the Petitioner refers to these transfers as "an 
additional total," the Petitioner has not shown any prior infusions of capital into the company. 
In order "to show the company's recent growth," the Petitioner submits copies of monthly profit and 
loss statements from February to May 2018, and a bank statement from June 2018. The Petitioner 
states that "these sales figures demonstrate an additional $21,000 in revenue, which is used in 
conjunction with the overseas funding to offset necessary start-up expenses." The earlier 
submissions, however, showed funding for start-up expenses separate from sales income. 
The profit and loss statements are not first-hand financial evidence. Rather, they represent data 
compiled from unidentified sources. Each statement shows between $3000 and $5500 iln sales 
income, well short of the business plan's projection of $31,250 per month. None of the profit and 
loss statements list salaries among the month's expenses, which raises the question of who is 
performing the necessary work to assemble, sell, and ship the products as well as the underlying 
administrative tasks. When the Petitioner responded to the RFE in May 2018, it claimed to have 
"already hired a sales manager and a warehouse manager." The absence of corroborating salary 
information from the May 2018 profit and loss statement is, therefore, of significant concern. 
Likewise, the profit and loss statements do not reflect any expenditures for the purchase of 
inventory. The business need not have begun operations before the Beneficiary's arrival, but in this 
case the Petitioner has specifically claimed several months of sales revenue. In the face of those 
claims, it is noteworthy that there is no direct evidence of inventory purchase. 
The bank statement from June 2018 shows nearly $7000 in deposits from Bank of America 
Merchant Services, but the bank balance decreased over the course of the month due to $15,000 in 
transfers to another account for which the Petitioner did not provide any statements. The starting 
balance on June 1, 2018 was $13,478.17. The bank statement is not evidence that the company had 
received six-figure infusions of start-up capital. 
The submitted documentation includes some evidence of sales income, but the Petitioner has not 
shown that this income derives from sales of helmets assembled at the petitioning company rather 
than, for instance, direct sales from overseas, with funds routed through the petitioning entity. 
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Matter of M-H-, LLC 
Outsourced assembly and shipping would be consistent with the gaps in the record relating to 
salaries and inventory, and also explain why the Petitioner's only documented business 
communications have related to marketing. 
Based on the deficiencies and inconsistencies discussed above, the Petitioner has not established that 
the new office will support an executive position within one year after approval of the petition. 
IV. CONCLUSION 
The Petitioner did not establish that it has a qualifying relationship with the Beneficiary's foreign 
employer, or that the new office will support an executive position within one year after approval of 
the petition. 
ORDER: The appeal is dismissed. 
Cite as Matter ofM-H-, LLC, ID# 1907128 (AAO Dec. 27, 2018) 
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