ABL and other forms of International Finance

1. ABL and other forms of International Finance

2. Overview: ABL and other forms of international finance • Purchase order financing • Supply Chain financing • Vendor leasing • ABL and inventory financing • ABL and equipment financing • Equipment finance and inventory financing • Factoring and inventory financing • Logistics financing and factoring • Multi-jurisdictional financing

3. Overview: ABL and other forms of international finance

4. Overview:ABL and other forms of international finance Cross Border Supply Chain

5. Overview: Supply Chain Finance Asset Based Lending, factoring and leasing go hand in hand to deliver a supply chain financing solution. • Cater to the entire flow of Clients supply chain • Vendor settlement • Payables acceleration • Receivable funding • Inventory financing at multi-vendor hubs • Floor planning • End User financing

6. Overview: Supply Chain Finance

7. Overview: ABL and other forms of international finance

8. Overview: ABL and other forms of international finance

9. Overview: ABL and other forms of international finance

10. Overview: ABL and other forms of international finance

11. Purchase Order Finance? Purchase Order Finance is short term transaction- based financing that allows companies to purchase or manufacture goods that have been presold to their credit worthy end customers. Equity alternative enabling companies to achieve sales and profits otherwise not attainable without diluting existing ownership or losing operational control. Bridge financing that works alongside a company’s existing financing facility (asset-based lender, factor, or traditional line of credit)

12. How does it work? • Tool that allows companies to finance large orders that they otherwise couldn’t afford to fulfill on their own due to lack of working capital, supplier credit or availability with a bank or receivable finance company. • In a typical purchase order finance solution, the purchase order finance company purchases the inventory on behalf of the company using letters of credit, cash, other forms of credit enhancement • This ensures that the supplier will release the required inventory and allows the company to fulfill sales orders

13. Where does Purchase Order Financing Fit? • Delivers programs needed to finance the production of inventory • Provides an equity alternative that enables increased sales opportunities • Supplies in-depth operational expertise to help achieve a smooth transaction • Gives businesses a short-term solution to fund the inventory required to complete sales transactions

14. Purchase Order Financing is used to support: Sales growth that is outpacing working capital Seasonal sales spikes that are straining cash flow Inability to obtain an over-advance from current lender Suppliers demand an assurance of payment prior to manufacturing goods. This is especially the case with overseas suppliers Cash flow gap that exists between payment to the supplier and repayment from the end customer. Suppliers require payment before production starts or prior to shipment whereas end customers demand payment terms once goods have been delivered. Turnaround mode or fast growing start-up

15. Candidates for Purchase Order Financing? Importers/Exporters Distributors/wholesalers Manufacturers Must provide tangible goods as opposed to a service Examples of companies recently assisted by King Trade Capital: Apparel distributor Housewares importer and distributor Toys/games distributor Furniture importer and distributor Vehicle exporter Foods manufacturer

16. Identifying a Purchase Order Opportunity • Client must have purchase orders/contracts in hand from a credit worthy end customer. • Purchase orders/contracts must be firm orders. No consignment or guaranteed sales. • Gross profit in the transaction of at least 20%. • Time frame of no longer than 120 days. • Client either produces goods themselves or has a third party supplier providing a finished good. • Client’s supplier won’t ship unless payment is received or acceptable payment arrangements are in place (i.e., letter of credit). • Client has the ability to perform. • Client needs to move fast.

17. Multi jurisdictional financing • Complex Corporate Structure • International Sales Growth • Sales and Collections in Foreign Currencies • Foreign Credit Risks • Increased Liquidity Needs

18. Solutions Offered by a multijurisdictional Lender • Resources to Structure Complex Deals • Experience with International Markets • Expertise in Foreign Exchange • Understanding of Foreign Credit • Ability to Support Capital Needs

19. Important things to think about: • Find an Experienced Partner • Create an Inter-Creditor Agreement with an Experienced Partner • Set expectations and define individual responsibilities

20. What makes a partnership successful? • Maintain Open and Frequent Dialogue • Support Your Partner • Support the Client’s Growth

21. Speaker Contact Information ANR Partners, LLC Richard Palmieri Managing Director 415 Pine Street Philadelphia, PA 19106 Tel: 917-863-9661 rpalmieri@anrpartnersinc.com www.anrpartnersinc.com

22. Speaker Contact Information • Edward P. King • 5944 Luther Lane, Suite 300 • Dallas, TX 75225 • Tel: 214-368-5100 • Fax: 214-368-5105 • www.kingtradecapital.com

23. Speaker Contact Information Sami Altaher Executive Director 15 Berkeley StreetFifth FloorLondon W1J 8DY Tel: +44.020.7016.7724 http://www.fgifinance.com/

24. Thank You

25. Purchase Order & Trade Finance Presentation Edward P. King Founder and Managing Partner

26. Goals for Discussion Define Purchase Order Financing How does Purchase Order Financing work and where does it fit? How King Trade Capital is different from a bank How King Trade Capital is different from a factor Identify the benefits of purchase order finance to clients and A/R lenders What to look for in identifying a purchase order finance opportunity and initial questions to ask Who is King Trade Capital? How King Trade Capital works with A/R lenders Examples of transactions

27. What is Purchase Order Finance? Purchase Order Finance is short term transaction- based financing that allows companies to purchase or manufacture goods that have been presold to their credit worthy end customers. Equity alternative enabling companies to achieve sales and profits otherwise not attainable without diluting existing ownership or losing operational control. Bridge financing that works alongside a company’s existing financing facility (asset-based lender, factor, or traditional line of credit)

28. How does it work? • Tool that allows companies to finance large orders that they otherwise couldn’t afford to fulfill on their own due to lack of working capital, supplier credit or availability with a bank or receivable finance company. • In a typical purchase order finance solution, the purchase order finance company purchases the inventory on behalf of the company using letters of credit, cash, other forms of credit enhancement • This ensures that the supplier will release the required inventory and allows the company to fulfill sales orders

29. Where does Purchase Order Financing Fit? • Delivers programs needed to finance the production of inventory • Provides an equity alternative that enables increased sales opportunities • Supplies in-depth operational expertise to help achieve a smooth transaction • Gives businesses a short-term solution to fund the inventory required to complete sales transactions

30. How Is King Trade Different From a Traditional Bank? • A bank lends money based on a client’s balance sheet and income statement—financial ratios, net worth, etc., as well as cash collateral, certificates of deposit, and real estate. King Trade Capital bases its funding not solely on the income statement and balance sheet, but rather on the client’s ability to perform and the credit worthiness of the client’s end customers.

31. How Is King Trade Different From a Traditional Bank? • A bank is capped as to the amount it will be willing to loan to a client determined by the client’s balance sheet and income statement. The amount of funding that King Trade Capital provides is dependent on the size of the purchase order from the end customer and the client’s abilities to perform. King Trade Capital provides financing for up to 100 percent of the cost of goods related to a specific purchase order. • King Trade Capital is a privately held investment company that is able to react quickly and move faster than banks and other traditional lenders.

32. How Is King Trade Capital Different From a Factor? • A factor advances on valid accounts receivable once the product has already been delivered and accepted by the end customer. King Trade Capital bridges the cash flow gap between the supplier and the end customer. King Trade Capital will secure payment to the supplier prior to the goods being produced and shipped. Additionally, King Trade Capital will also consider funding direct labor, freight and other logistical needs of fulfilling a purchase order.

33. PO finance vs. traditional inventory lending

34. Purchase Order Financing is used to support: Sales growth that is outpacing working capital Seasonal sales spikes that are straining cash flow Inability to obtain an over-advance from current lender Suppliers demand an assurance of payment prior to manufacturing goods. This is especially the case with overseas suppliers Cash flow gap that exists between payment to the supplier and repayment from the end customer. Suppliers require payment before production starts or prior to shipment whereas end customers demand payment terms once goods have been delivered. Turnaround mode or fast growing start-up

35. Who is a good candidate for Purchase Order Financing? Importers/Exporters Distributors/wholesalers Manufacturers Must provide tangible goods as opposed to a service Examples of companies recently assisted by King Trade Capital: Apparel distributor Housewares importer and distributor Toys/games distributor Furniture importer and distributor Vehicle exporter Foods manufacturer

36. Benefits of Purchase Order Finance to Client • In order to fully understand the benefits of purchase order finance, we need to first set the stage for the common dilemma. First, the client receives a large order from its credit worthy end customer(s) and/or the client’s sales are seasonal and deliveries are concentrated in a defined period of time. The dilemma • The client is a start-up. • The client is cash strapped due to: A. Start-up nature. B. Balance sheet doesn’t support additional borrowings from its senior lender.

37. Benefits to Client Continued Dilemma continued… C. Past bumps in the road such as: I. A/R dilution. II. Loss of a large customer. III. Reorganization/new ownership. IV. Bad operating results. D. Lender fatigue. E. Bankruptcy. F. No down payment from end customer. G. No credit terms from supplier. H. Mismatched cash flow-supplier needs to be paid immediately; however, end customer demands payment terms.

38. Benefits to Client Continued • The solution — Purchase Order Finance. • Benefits: 1. Fulfill deliveries on time. 2. Continue to grow unencumbered by lack of working capital and/or credit with suppliers. 3. Replacement of equity. Purchase order finance provides. working capital where banks cannot. An equity placement would give away permanent ownership. 4. Build the balance sheet. 5. Structure safe transactions, especially with overseas suppliers. 6. Keep clients’ suppliers and end customers apart.

39. Benefits to A/R Lenders • Help keep an existing client and help that existing client continue to grow. • Help win a new client. • Reduce the need to be forced into an “over advance” situation where reserve and/or desire is not there. • Purchase order finance provides a structure to ensure successful deliveries and quality A/R through: 1. Due Diligence - verifications with buyers and accounts payable. 2. Structure funding to ensure timely delivery. 3. Schedule third party inspections of goods prior to shipment. • Create additional A/R to help a struggling client grow or get a client out of an “over advance” situation.

40. How to Identify a Purchase Order Opportunity • Client must have purchase orders/contracts in hand from a credit worthy end customer. • Purchase orders/contracts must be firm orders. No consignment or guaranteed sales. • Gross profit in the transaction of at least 20%. • Time frame of no longer than 120 days. • Client either produces goods themselves or has a third party supplier providing a finished good. • Client’s supplier won’t ship unless payment is received or acceptable payment arrangements are in place (i.e., letter of credit). • Client has the ability to perform. • Client needs to move fast.

41. Initial Purchase Order Questions • Copy of the purchase orders in hand that the client needs financing help to fulfill. • Complete cost breakdown in order to fulfill those orders including freight and duties if needed. • Complete supplier list in order to fulfill the purchase orders in hand. • Cash flow time line showing when financing is needed to purchase finished goods/raw materials, pay for freight, labor needs, etc. in relation to production lead times, shipping and invoicing. • General information on the client including year end and year to date financials, ownership breakdown, management bios and product information.

42. Who Is King Trade Capital • We are a purchase order and trade finance company offering the broadest-based purchase order finance solutions in the country. • We have been in business for over 19 years with offices in Dallas and New York. • We are a well-capitalized private investment/finance company. • We are not a bank; therefore, we are not hindered by the regulations that restrict banks.

43. What King Trade Capital Does • Provide purchase order finance to importers, exporters and manufacturers of up to 100% of the cost of goods (<80% of total sales). • Provide letters of credit to domestic or overseas suppliers for cost of goods. • Provide cash funding to secure payment for raw material, freight, duties and transaction-specific labor. • Minimum transaction size of $300,000.00 depending on the opportunity • Maximum funding size of $20 million

44. What King Trade Capital Doesn’t Do • Provide inventory financing where goods are not pre-sold. • Finance transactions with <20% margins unless the transaction is a quick-turn deal. • Construction transactions. • Service-only transactions. • Acquisition financing (need to buy equipment or a factory in order to fulfill purchase orders). • Carry accounts receivable - We need an A/R lender in place to take our financing out.

45. What role does the existing bank or factor play? • After the product is shipped and received by the end customer, the company will invoice and submit that invoice to their bank or factor. • The existing lender will purchase or lend against the resulting invoice generated from the King Trade Capital financing. • Available proceeds related to those invoices are remitted to King Trade Capital to repay what is owed and the balance is remitted to the company.

46. How King Trade Capital Works With A/R Lenders Logistically • King Trade Capital , client and A/R lender enter into an “inter-creditor agreement” prior to funding that instructs A/R lender that payments of all available proceeds related to King Trade Capital financed goods are to be remitted to King Trade Capital . • Once goods have been shipped to end customer(s), the resulting invoice is sent to the A/R lender to be advanced. • All payments from A/R lender are to be remitted to KTC first, until KTC is paid in full.

47. How King Trade Capital Works With A/R Lenders Continued Legally. • King Trade Capital files a UCC-1 to perfect its security interest in the inventory and accounts receivable of client. • “Intercreditor agreement” specifically spells out KTC’s and A/R lender’s security interests, respectively. • Once KTC is paid in full on an invoice-by-invoice basis from A/R lender, KTC shall subordinate its interest in those accounts receivable and inventory related to KTC funding to A/R lender.

48. Importer Dilemma • KTC was approached by a well-known importer of bed sheets and pillow cases. The client’s existing lender had termed out a portion of their revolving line due to slower sales and covenant violations. The importer had received large seasonal purchase orders from its long-time credit worthy customer; however, it did not have the availability to issue letters of credit to its overseas supplier. KTC was able to assess the company’s ability to perform, the credit worthiness of the end customer and the specific shipping logistics surrounding the delivery.

49. ImporterDilemmaContinued… • Within a week, KTC was able to issue a letter of credit acceptable to the overseas supplier, as well as set up a repayment agreement with the existing secured lender. • Goods were produced, inspected by a reputable third party before shipment, and delivered on time to meet the demands of the end customer. • KTC was taken out of the transaction through an advance on the resulting invoice from the existing lender. The remaining proceeds were used to pay down existing debt, as well as for general working capital for the client.

50. Domestic Transaction • A Factor contacted King Trade Capital with a prospective client shipping advertising mailers to individuals in certain Hispanic communities. The client had contracts totaling approximately $950K with credit worthy end customers. The client had terms with the print shop responsible for printing the envelopes and staging them for mailing, however needed postage paid to the postal service before the mailers could be sent. The client had all of the necessary ingredients in place for a successful transaction. However, without prepaid postage, the program would not be able to be completed.