FU FUELING THE GROW OWTH OF OF SM SMALL BUSI SINESS SS
CORPORATE PRESENTATION SEPTEMBER 2016
TSX-V LISTED ISSUER (IOU)
FU FUELING THE GROW OWTH OF OF SM SMALL BUSI SINESS SS - - PowerPoint PPT Presentation
CORPORATE PRESENTATION SEPTEMBER 2016 TSX-V LISTED ISSUER (IOU) FU FUELING THE GROW OWTH OF OF SM SMALL BUSI SINESS SS FORWARD LOOKING STATEMENTS Certain information set forth in this presentation may contain forward-looking statements.
CORPORATE PRESENTATION SEPTEMBER 2016
TSX-V LISTED ISSUER (IOU)
FORWARD LOOKING STATEMENTS
Certain information set forth in this presentation may contain forward-looking statements. Forward-looking statements are statements, other than statements of historical fact, that address or discuss activities, events or developments that IOU Financial expects or anticipates may occur in the future. These forward-looking statements can be identified by the use of words such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", or the negative thereof or other variations thereon. These forward-looking statements reflect management's current views and are based on certain assumptions including assumptions as to future economic conditions and courses of action, as well as other factors management believes are appropriate in the circumstances. Such forward-looking statements are subject to risks and uncertainties and no assurance can be given that any of the events anticipated by such statements will occur or, if they do occur, what benefit IOU Financial will derive from them. A number of factors could cause actual results, performance or developments to differ materially from those expressed or implied by such forward looking statements, including, but not limited to risks inherent in growing a new business, dependence on third-party service providers, competition, regulatory risk, dependence on key personnel, risks related to rapid growth of IOU Financial, security and confidentiality risk, risk related to inability to attract borrowers and lenders, technological development risk, IT disruptions, maintenance of client relationships, litigation risk, volatility of stock price, and
found beginning on page 16 under the heading "Risks and Uncertainties" in IOU Financial's management's discussion and analysis dated August 25, 2016, which is available under IOU Financial's profile on SEDAR at www.sedar.com. IOU Financial does not undertake any obligation to update publicly or to revise any such forward-looking statements, unless required by applicable legislation or regulation.
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CORPORATE OVERVIEW
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$0 $50 $100 $150 $200 $250 $300 $350 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
TRACK RECORD OF EXCEPTIONAL GROWTH
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Originations (US$mm)
CUMULATIVE LOAN ORIGINATIONS
2011 2012 2013 2014 2015 2016 Q2 2016: $366,498,684
INDUSTRY TRENDS
SMALL BUSINESS LENDING MARKET
10% 11% 12% 13% 14% 15% 16% 17% 18% 19% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800
All Domestic C&I Loans to U.S. Addressees ($ Billions) SMB Share (%)
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MASSIVE MARKET OPPORTUNITY
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Unmet Demand for SMB Lines of Credit(1) Commercial and Industrial Loan Balances at FDIC – Insured Institutions under $250,000(2) IOU Loans Oustanding as of Q2 2016
TOTAL US SMB MARKET CURRENT MARKET SHARE
CAD $80.8M
US$186 B
US$80B -
US$120B
Notes: (1) Oliver Wyman, 2013 (2) FDIC, Q2 2015
TARGET CUSTOMER
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Type of Customer Geographic Distribution
Restaurant, Retail Shop, Grocery Shop… Across all US States and Canada. >1 Year in Business
Time in Business
LOAN PRODUCT
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* Loan size in Canada: $5,000 - $100,000
$.7 M $.5 M $3.1 M $8.8 M $3.0 M $4.7 M 2012 2013 2014 2015 6M 2015 6M 2016 $10.9 M $49. M $96.3 M $137.6 M $62.1 M $52.5 M 2012 2013 2014 2015 6M 2015 6M 2016
MULTI-CHANNEL DISTRIBUTION STRATEGY
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(US$mm) (US$mm)
RETAIL/REFERRAL**
LOAN ORIGINATION
WHOLESALE*
LOAN ORIGINATION
*Wholesale: Borrowers are sourced via relationships with third-party business loan brokers. ** Retail/Referral: Borrowers are sourced directly via strategic partnerships and other methods.
91.9% 8.1% 94.0% 6.0% 96.8% 3.2%
CHANNEL MIX
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Channel Mix | 2014 Channel Mix | 2015 Channel Mix | 6M 2016
Form New Strategic Partnerships Expand Product Offering Increase Relationship With Existing Customers GROWTH STRATEGY
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IOU RISKLOGIC SCORE
TM
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IOU RiskLogic Score™
Monitoring and reporting performed on IOU RiskLogic Score™ with best in class business intelligence tools.
D E F C B A
PROPRIETARY ANALYTICS PLATFORM INPUT VARIABLES
IOU RISKLOGIC SCORE™ VS. OTHER SCORES
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Cumulative Lift Chart (Lorenz Curve) Commentary
Considerable lift (predictive power) versus Personal or Business Generic Credit Scores. For the same reject rate, the company can eliminate significantly more bad loans. For the same level of risk, the company can fund significantly more loans.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0% 20% 40% 60% 80% 100% Business Credit Score Personal Credit Score IOU RiskLogic Score 2.0 Baseline Cumulative of Bad Captured (%) Reject Rate (%)
STRONG UNDERWRITING PERFORMANCE OVER TIME
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Net Charge-Off Rate*
*Net Charge-Off Rate: Represents net charge-offs as a percentage of average outstanding loans on balance sheet, annualized.
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2014 2015 6M 2016
FULLY INTEGRATED TECHNOLOGY PLATFORM
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SHIFTING TO A PRIMARILY BALANCE-SHEET FUNDED MODEL
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75% 25% 70% 30%
Loans Outstanding 2014 Loans Outstanding 2015 Loans Outstanding Q2 2016
54% 46%
The interest rate on the facility is LIBOR plus 8.50%. If the facility is increased to $37.5 million, the interest rate will be LIBOR plus 8.20%, and if the facility is increased to $50 million, the interest rate will be LIBOR plus 7.75%.
NEW SOURCE OF FUNDING
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CREDIT FACILITY SUMMARY
LENDER
MidCap Financial (an entity that is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, LLC)
INITIAL COMMITMENT
US$25 million.
ACCORDION
Expandable to US $50 million at IOU’s request and lender’s acceptance.
INTEREST RATE MATURITY
April 22nd, 2019
LOAN ORIGINATION & LOANS UNDER MANAGEMENT
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Loan Originations | Annual Loan Originations | Quarter Loans Under Management | Annual Loans Under Management | Quarter
$0 $30 $60 $90 $120 2012 2013 2014 2015 Millions $0 $40 $80 $120 $160 2012 2013 2014 2015 Millions $0 $20 $40 $60 $80 6M 2015 6M 2016 Millions
(US$) (US$)
$68 $72 $76 $80 $84 Q2 2015 Q2 2016 Millions
ADJUSTED GROSS REVENUES & ADJUSTED EBITDA
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($1,500) ($1,000) ($500) $0 $500 2012 2013 2014 2015 Thousands
Adjusted EBITDA | Annual Adjusted EBITDA | Quarter
$0 $4 $8 $12 $16 2012 2013 2014 2015 Millions
Adjusted Gross Revenues | Annual Adjusted Gross Revenues | Quarter
*Adjusted Gross Revenues: Represents revenues excluding certain non-cash items such as the gain on servicing asset and amortization of the servicing asset. **Adjusted EBITDA: Represents net loss before taxes excluding interest expense and certain non-cash items such as amortization and depreciation, stock based compensation, gains on servicing asset, amortization of servicing asset as well as certain non-recurring expenses.
$0 $2 $4 $6 $8 6M 2015 6M 2016 Millions ($300) ($200) ($100) $0 6M 2015 6M 2016 Thousands
PROVEN MANAGEMENT TEAM
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MA MARK SCHREWS
VP Wholesale
BR BRIAN STUPP
VP Marketing & Retail
PH PHIL MARLEAU
CEO & Director
MA MAYCO QUIROZ
Treasurer
RO ROBERT RT GLOER R
COO
PA PAUL HAMILTON
CTO
JE JEFF TURNER
VP Credit & Compliance
MA MADELINE WADE
VP Operations
LU LUIS ROCHA
VP Analytics
DA DAVID D KENNEDY DY
CFO
INVESTMENT HIGHLIGHTS
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FUNDING MODEL – VALUE CREATION OPPORTUNITY MASSIVE SMALL BUSINESS LENDING MARKET PROPRIETARY CREDIT SCORING MODEL MULTIPLE DISTRIBUTION CHANNELS FULLY-INTEGRATED TECH PLATFORM PROVEN MANAGEMENT TEAM
CAPITALIZATION SUMMARY
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VALUATION TRADING DATA
as of: 6/10/2016
SHARE PRICE (C$) P/SALES MARKET CAP (CAD)
1.82X $0.40 $24.7M
52 WEEK LOW 20 DAY VWAP 52 WEEK HIGH
$0.40 $0.33 $0.75
For more information, please reach out today. Phil Marleau| CEO pmarleau@ioufinancial.com 514-789-0694 x225