P. Leon King | Managing Partner

1. P. Leon King | Managing Partner Contractor Financing

2. Need working capital • New contracts • Difficulty obtaining traditional funding • Need equipment • Payroll and expense management, construction • Experiencing rapid growth • Short operating history Typical Client Scenario

3. Contractors who run well-managed, profitable enterprises, keep promises, deal fairly with others and perform obligations in a timely manner will qualify for financing Qualities We Look For

4. Pre-qualification • Application • Underwriting • Setting up resource monitoring services • Initial funding • Revolving credit cycle The Road to Funding

5. Industry Types • Construction • Service contractor • Contract Types • Government (city, state, federal) • Large, financially stable corporations • Bankable invoices • Pass preliminary review of character, capacity, credit and collateral Pre-Qualification

6. CharacterWhat one does when no one is looking • CapacityThe ability to perform the work • CreditEvidence that previous debts have been repaid on-time • CollateralProperty, invoices or other assets that will guarantee repayment to the lender The 4 “C’s” of Contractor Finance Underwriting

7. Review application part 1 • Review summary business plan • Run personal credit checks on all principals and guarantors • Proposed line of credit • Terms • Conditions • Request for application fee and additional information and documents Preliminary Underwriting If underwriting requirements are met, a proposal will be issued:

8. Application • Company information • Name, address, type of business, date of incorporation, federal tax ID, specialty, accounting history, history of tax filings, credit history questions • Line of credit requested • Principal officer and shareholder information • Current borrowing relationships • Assets assigned or pledged as collateral for present loans • Signatures authorizing corporate and personal credit checks • Brief executive summary of business plan • Current corporate financials • Organizational documents (certificate of incorporation, etc.) Application Part 1

9. Corporate financial information explanation • Bonding relationships, if appropriate • Brief explanation of largest contracts to date • Subcontractor references • Key personnel • Insurance summary • Subsidiaries and affiliates • Professional advisers Application Part 2

10. Current corporate financial statements, including balance sheet & income statements (3 months) • Current A/R and A/P aging • Current work in progress report • Corporate tax returns for the past 3 years (full copies) • Certificate of incorporation • Personal tax returns (each guarantor) for the past 3 years (full copies) • Current personal financial statements (each guarantor) – dated less than 3 months prior • Certificate of insurance showing general liability and workers’ compensation coverage Submit with Application Part 2 Requirements

11. Copy of contract(s) to be financed, with bid, complete estimate and project schedule • Business plan including: • Company description, current status, goals and objectives • Resumes of principals and key employees • Trade letters of reference (owners, GCs, suppliers, A&Es, etc.) • Letters of reference from banks or other lending institutions, with current documents of any outstanding loans • Copies of all MBE, DBE, HUB and 8a certifications • Payment and performance bonds, if applicable Requirements (cont.)

12. Review credit checks for principals and guarantors • Perform corporation credit check • Contact references • Verify financial and tax information • Perform initial plan review for the project to be financed • Prepare credit memorandum Final Underwriting

13. Maintain financial stability of a project • Review pay applications; compare to site reports • Review invoices • Compare invoices to schedule of values and change orders • Issue and collect lien releases from subcontractors, vendors and suppliers • Issue checks in name of contractor • Provide detailed status reports How the RMS Program Works

14. RMS Process Flow

15. Credit memorandum evaluated by lender • Loan documents prepared and signed by all parties (lender, administrator, contractor) • Resource monitoring services agreement prepared Approval and Establishing Line of Credit

16. Required set-up items • Signed RMS agreement • Signed contractor’s letter of agreement • Fully executed “Directive of Draw” or “Assignment of Claims” • Detailed schedule of values • Cost account code breakdown • Copy of contract(s) • Copy of original bid • Copy of production schedule(s) • Copy of contract to subcontractors • Complete list of subcontractors and suppliers Required RMS actions • Establish disbursement account at bank • Set up contractor and project(s) in RMS contractor accounting system Setting Up the RMS Program

17. Credit line approved for applied for amount • Loan approved and RMS program in place and all documents signed • Loan documents are signed • A/R invoices and/or pay applications have been submitted and are approved, establishing availability of loan funds against the line of credit • A/P invoices are submitted to RMS for approval against budget and prepared for payment • Funds disbursed to RMS for payment of approved A/P invoices and credit line is reduced accordingly • RMS pays A/P invoices Initial Funding

18. Credit line established • Funds become available based on eligible invoices and/or pay applications • Funds are disbursed through RMS program, reducing credit line • Funds are received by lender in payment of eligible invoices and/or pay application, replenishing credit line • Fees and interest are paid as funds are received and disbursed • As project requirements dictate and cycles are completed successfully, the credit line may be increased • The revolving credit cycle continues Revolving Credit Cycle

19. Revolving Credit Cycle Revolving Credit Cycle

20. Would you be able to perform the project without the financing? • If not, there is no cost for financing, only profit gained from completing the project • If you are able to negotiate discounts from subcontractors and suppliers as a result of paying them in a more timely fashion, financing and administration fees are an investment that delivers returns How Much Does It Cost? How is It Paid?

21. Approximate Fees and Interest • Part 1 app/preliminary underwriting fee: No charge • Part 2 app/due diligence/application fee: $500 • Commitment/loan origination fee: 1% of approved line of credit (For $100,000 line: $1,000) • Finance charges: 1.5% of each advance • Interest: 1.3% per month of advance/pro rated daily (fluctuates with prime rate) • RMS fee: 1% of contract amount • Approximate total cost: 3.0% to 3.5% or less of project for which working capital is provided Fee & interest overview

22. K-WAM Financial Solutions help overcome financial challenges that occur when you win a contract. Now you can do what you do best… Execute your contract! The K-WAM Solution

23. Contact K-WAM Florida 13245 Atlantic Blvd., Suite 4174 Jacksonville, FL 32225-7118 Phone: (904) 220-2567 Fax: (510) 751-0202 Cell: (510) 773-8326 California 4061 East Castro Valley Blvd., Suite 159 Castro Valley, CA 94552 Phone: (510) 537-1669 Fax: (510) 751-0202 Cell: (510) 773-8326 Online: www.k-wamfs.com  Email: info@k-wamfs.com

24. Questions?