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Pitch deck c corp

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Pitch deck c corp

  1. 1. Introducing Integrity to Subprime Auto Lending April 2020 // Kut Auto Finance LLC // Proprietary and Confidential
  2. 2. 2 OVERVIEW  Large TAM within a fragmented market  Scalable  Balance sheet over $450M in assets and 2:1 collateralized  Revenue grows from $2M to $140M  Head Count grows from 8 to 170  Experienced Team  Kut Financial has developed a proprietary risk model and uses our deep subprime experience as a differentiator
  3. 3. EXPERIENCED TEAM 3 Experienced founder with 2 successful exits. 8 years as an Auto Finance Director in 3 states. Nathaniel Syme Co-founder and fund manager of a $55 million subprime student loan portfolio. Mary Jo Terry Over 17 years of founder, capital strategy, and 7 years of VC experience. Kasten Spethmann PORTFOLIO MANAGER COMPLIANCE, ACQUISITION & UNDERWRITING ADVISOR STRATEGIC CAPITAL MGMT & MARKETING ADVISOR • PORTFOLIO ANALYTICS, RISK, & PERFORMANCE MODELING CEO of TruDecision Co-founder of Exeter Financial, a subprime lender with over $2 billion in assets. Currently a fund manager with over $100 million of subprime auto assets. Daniel Parry PORTFOLIO ANALYTICS, RISK, & PERFORMANCE MODELING
  4. 4. Despite the strong economy, auto loan defaults were twice as high at year end as they were at their 2010 peak. 4 Q3 2003 Q4 2019 Pre-COVID $66 Bil90+ Days Delinquent Auto Loans Source: New York Fed 2010 Post-Financial Crisis
  5. 5. Lenders and dealers are part of the reason their own loans default. 5 So where does the problem lie? Loans are too large Payment to income ratios are too high Interest Rate Mark Ups Dealer Add- Ons Bait and Switch Tactics Lender Fees Preying on the Vulnerable Lack of Respect
  6. 6. 6 Gap $895 Warranty $2,904 Vehicle Value = $12,225 Backend Products $40,176 Sample Subprime Loan in Portfolio Total Cost over Life of Loan
  7. 7. Copyright Kut Auto Finance LLC © 2020 - Proprietary & Confidential Improve customers’ economic health and increase profits through ethical refinancing 7 Kut Auto Finance:
  8. 8. 8 It starts with treating customers with basic dignity Become an Advocate Protect the Vulnerable Respect Customers Lower interest rate Shorten loan duration Remove dealer mark- ups Reduce monthly payments Refinance Auto Debt Existing predatory lending leads to self- destructive loans Reimagine Subprime What if?...
  9. 9. ETHICAL FINANCE WORKS 9 On The Road Lending and Bonnie CLAC *OTR 2019 Annual Report, Changemakers 2018 Report 4%92% loans with payments made in the past 30 days 520 157 average credit score at time of loan lifetime loss rate 8% average increase in credit score borrowers establishing credit for the first time 5.5X Lower than the National average 52% Lower than the National average Not For Profit Organizations Originating Subprime Auto Loans at 9.75% APR
  10. 10. OUT WITH THE OLD… 10 • Larger positive impact on credit Assumes 12 months of payments before default …IN WITH THE NEW 28% 8% $18,578 $16,600 $40,176 $19,452 72 months 48 months $541 $405 & APR Amount Financed Total Payments Loan Term Monthly Payments Loan Savings over $20,000 Shortened term Lowering PTI below 12% • Faster repayment of principle • Higher resale value Additional Benefits: Kut Auto FinanceCurrent Lender Discounted Rate
  11. 11. OUR PROCESS 11 Universe of defaulted subprime auto loan portfolios TruDecision scores risk using alternative data with AI. Kut developed a machine learning proprietary risk model to predict loan performance, cash flow and collateralization.Scoring Modeling are compared to debt seller’s loan valuation to identify which portfolios are undervalued. Kut individually refinances loans in portfolio at a discounted rate of 8% Benefits passed on to customer with ongoing service and respect $
  12. 12. SMARTMODELS LOCATE VALUE 12 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Portfolio 1 Portfolio 2 Portfolio 3 Portfolio 4 Seller Value vs. Model Value Seller Price Model Value
  13. 13. GROWING BALANCE SHEET 13 Showing numbers in $Millions $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Year 1 Year 2 Year 3 Year 4 2:1 Collateralized Investment Portfolio
  14. 14. REVENUE AND EXPENSES 14 Showing numbers in $Millions $- $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 $160,000,000 Year 1 Year 2 Year 3 Year 4 Expenses Revenue
  15. 15. 15 People need our help. Our mission is worthy of failure It is scalable We all share in the benefits We use technology that others do not Why This? We have extensive subprime experience Our team understands de-risking portfolios We all have previous founder experience Why Us? Portfolios have already been hit. Liquidity is thin. If an obligor has kept their job it is less likely they will lose it. Loan prices are lower due to shocks to supply and demand. Why Now?
  16. 16. Kut will begin loan acquisition at $750,000 capital raised. Maximum raise of $6,000,000. With a $100,000 minimum investment you will help 88 families have opportunities they would not otherwise have. Join us and be part of the solution 16 IMPACT FAMILIES AND INDIVIDUALS WHILE BEING 2:1 COLLATERALIZED AND GROWING REVENUE OVER $140,000,000
  17. 17. WHAT WE OFFER… 17 Collateral Rapid revenue growth 3x year over year Investors Up to 30% Preferred Equity Limited Dilution
  18. 18. WHAT WE NEED… 18 Defensibility Debt Structuring Help recruiting talent Investors Partnership Series A timing
  19. 19. USE OF PROCEEDS 19 Max. Proceeds Min. Proceeds Sale of Equity Proceeds from sale of units $6,000,000 $750,000 Offering Expenses and Commissions Est. Offering Expenses (1) $20,000 $10,000 Est. Brokerage Commissions (2) $300,000 $37,500 Total Offering Fees $320,000 $47,500 Corporate Applications of Proceeds Acquisition Expenses $260,000 $39,200 Initial Loan Acquisition $5,260,000 $643,300 Working Capital $160,000 $20,000 Total Corporate Use $5,680,000 $702,500 Total Use of Proceeds Offering Expenses and Commissions $320,000 $47,500 Corporate Application of Proceeds $5,680,000 $702,500 Total Proceeds $6,000,000 $750,000 87.6%
  20. 20. Americans deserve reliable, and affordable transportation. The solution isn’t a better economy, it’s better loans and repayment options. April 2020 // Kut Auto Finance LLC // Proprietary and Confidential
  21. 21. DISCLAIMERS 21 FOR RESIDENTS OF ALL STATES: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), OR THE SECURITIES LAWS OF CERTAIN STATES ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS OF SAID ACT AND SUCH LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THIS OFFERING IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MIGHT BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. AN INVESTOR MUST REPRESENT THAT THE SECURITIES ARE BEING ACQUIRED FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A VIEW TO OR PRESENT INTENTION OF DISTRIBUTION. THIS PRESENTATION DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. IN ADDITION, THIS CONFIDENTIAL PRESENTATION CONSTITUTES AN OFFER ONLY TO THE OFFEREE NAMED. EXCEPT AS OTHERWISE INDICATED, THIS PRESENTATION SPEAKS AS OF THE DATE OF THE PRESENTATION AND NEITHER THE DELIVERY HEREOF NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE CONDITION OF THE COMPANY SINCE THE DATE HEREOF. NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS OR PROVIDE ANY INFORMATION OTHER THAN THAT CONTAINED IN THIS PRESENTATION AND ACTUAL DOCUMENTS (SUMMARIZED HEREIN), WHICH ARE FURNISHED UPON REQUEST TO AN OFFEREE, OR HIS REPRESENTATIVE MAY BE RELIED UPON IN CONNECTION WITH THIS OFFERING. PROSPECTIVE PURCHASERS OF THE SECURITIES ARE NOT TO CONSTRUE THE CONTENTS OF THIS PRESENTATION AS LEGAL OR TAX ADVICE. EACH PROSPECTIVE PURCHASER SHOULD CONSULT HIS OWN PROFESSIONAL ADVISORS AS TO LEGAL, TAX, AND RELATED MATTERS CONCERNING HIS INVESTMENT. THIS PRESENTATION HAS BEEN PREPARED FROM DATA SUPPLIED BY SOURCES DEEMED RELIABLE AND DOES NOT KNOWINGLY OMIT ANY MATERIAL FACT OR KNOWINGLY CONTAIN ANY UNTRUE STATEMENT OF ANY MATERIAL FACT. IT CONTAINS A SUMMARY OF THE MATERIAL PROVISIONS OF DOCUMENTS REFERRED TO HEREIN. STATEMENTS MADE WITH RESPECT TO THE PROVISIONS OF SUCH DOCUMENTS ARE NOT NECESSARILY COMPLETE AND REFERENCE IS MADE TO THE ACTUAL DOCUMENTS FOR COMPLETE INFORMATION AS TO THE RIGHTS AND OBLIGATIONS THERETO. FORWARD LOOKING STATEMENT THE COMPANY MAKES NO EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE COMPLETENESS OF THIS INFORMATION OR, IN THE CASE OF PROJECTIONS, ESTIMATES, FUTURE PLANS, OR FORWARD LOOKING ASSUMPTIONS OR STATEMENTS, AS TO THEIR ATTAINABILITY OR THE ACCURACY AND COMPLETENESS OF THE ASSUMPTIONS FROM WHICH THEY ARE DERIVED, AND IT IS EXPECTED THAT EACH PROSPECTIVE INVESTOR WILL PURSUE HIS, HER, OR ITS OWN INDEPENDENT INVESTIGATION. IT MUST BE RECOGNIZED THAT ESTIMATES OF THE COMPANY’S PERFORMANCE ARE NECESSARILY SUBJECT TO A HIGH DEGREE OF UNCERTAINTY AND MAY VARY MATERIALLY FROM ACTUAL RESULTS. YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN THIS INVESTMENT. IN DOING SO, YOU SHOULD BE AWARE THAT AN INVESTMENT WITH OUR COMPANY MAY BE VOLATILE AND LOSSES FROM ITS BUSINESS ACTIVITIES MAY REDUCE THE NET ASSET VALUE OF THE COMPANY. INVESTORS MAY LOSE ALL OR PART OF THEIR INVESTMENT. THIS BRIEF PRESENTATION CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMPANY. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN AN INVESTMENT IN THIS COMPANY, YOU SHOULD CAREFULLY STUDY ALL DISCLOSURE DOCUMENTS, INCLUDING A DISCUSSION OF POTENTIAL RISKS RELATED TO THIS INVESTMENT. NASAA LEGEND IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THESE SECURITIES MAY BE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER FEDERAL AND STATE SECURITIES LAWS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

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