Forum Markets Status update

Thanks, Steve, and welcome everyone, and thank you to Force Family Office for hosting us today. We greatly appreciate the opportunity. I'm going to quickly kick things off and provide a brief company overview, including Forum's business model, our competitive mode, and importantly, the team behind the company. Our Chairman and CEO, McAndrew Rudisill, will walk you through our strategy across our four vertical markets. John Saunders, our Forum CFO, will wrap up with what will be a generally brief look at our financials. We are in our quiet period. We'll be announcing our second quarter on August 13th, and want to encourage you to join that call if you're available. Finally, we'll turn it back to Steve to run through the Q&A.

Before we jump in, just a quick reminder, we will be using forward-looking statements today, and we refer you to the more detailed risk factors that have been filed with the SEC. Forum's core thesis. Our thesis is to own and operate cash flowing assets with the option to fractionalize and tokenize those assets to broaden access and increase liquidity. We're focused on assets with high-risk adjusted yields in large scalable markets with moderate to high complexity and durable demand. Our business model is to acquire these assets, generate the yield, distribute any portion to investment partners or token holders, and then reinvest those returns to scale up the business. The most important thing to note is that our assets are intended to generate cash flow first, with tokenization second, as that market develops. Looking at our competitive moat, our advantage is really threefold.

First and foremost, we've built proprietary, scalable pipelines into high-quality asset classes that are otherwise difficult for investors to access directly, and typically come with high minimums and long lockup periods. We've built an exclusive, regulated digital infrastructure to bring more liquidity to these assets through tokenization, which McAndrew will touch on later. I think with any relatively new company, it's really important to understand the driving force behind the company. Today you have three of our leaders that you'll get to meet through this presentation. We all have some common attributes. Decades of capital markets experience with depth across compliance, finance, private credit, and fintech, and deep institutional pedigree across our board, including senior leadership experience at firms such as Lazard, Blackstone, Evercore, UBS, Credit Suisse, and more.

The key takeaway here is that this is an established team with a track record and institutional-grade execution. It's not a young startup learning as it goes. That team is executing across four primary verticals today: commercial aircraft engines, AI infrastructure, finance, and compute, modular home financing, and auto financing. Across these four verticals today, we've built a diversified, scalable business, with that, I'll turn it over to McAndrew to walk you through each of these in detail.

Thanks a lot, John. That was a great introduction. I think we should start by talking about our aircraft engine business. We are focused on generating cash flows by owning CFM56 aircraft engines. It's the most ubiquitous aircraft engine in the world. They're built by GE Aerospace and Safran, they're on all single-aisle commercial jet engines all over the world. They generate around a 15% annualized yield to Forum, we've built a proprietary pipeline on how to source these engines and who we're contracted with. Our partner on the sourcing side is Aero Engine Solutions. They're one of the largest refurbishers of CFM56 engines in the world, they have a large parts network for these aircraft all around the world with warehouses in Europe and the U.S.

They're also partnered with most of the major airlines in the world, helped us generate the partnerships with our two airline partners. We are partnered with the two largest airlines in the U.S. Delta and American are our lease counterparties. Most of our leases are three to five-year leases on the five engines that we currently have in our portfolio. Each of those airlines has a very deep pool of demand for additional refurbished CFM56 engines that we can continue to source through AES's refurbishment pool. We have optionality literally on a monthly basis to add two to four engines a month, they normally come in pairs, to the portfolio and then immediately put them on a long-term lease, where we're paid on a monthly basis for the utilization of the engine, a base lease rate, and for the cycle time on the engine.

It generates an incredibly steady cash flow to us. The deal that we've worked out so that we can pin the residual value of the engines is at the end of the lease term, we have an option on all these engines to sell them back to AES so that they can either part them out or we can fully refurbish them again and then put them back on lease again. It's a very stabilized model with an incredibly high TAM globally that we can just continue to scale up. All right. AI infrastructure. We have spent a lot of time on this. I'm extremely excited about it. I think it's going to become our largest vertical very soon. We've been working both on the short-term financing side, also on the ownership of the compute itself.

We are very focused on that AI compute side. Owning the compute is a very high-margin business. There is an incredible amount of demand for offtake, for the compute if you have the right types of chips. The margins are incredibly high. I always say here it's a 17%-20% annualized yield. At the current rates of compute, if you're using NVIDIA B300s, Blackwells, or Vera Rubins, we have a relationship directly with the distribution partners for these NVIDIA chips that we can acquire them and put them to work in a relatively short timeframe. As long as we get access to the power, we can put these chips to work and start immediately generating revenue and cash flow with long-term offtake agreements from some of the largest hyperscalers in the world.

This is one of our top priorities right now is to expand our AI compute business. Our focus, as Steven brought up earlier, is to deploy these NVIDIA chips into these networks. I've probably said enough. We've got a really exciting pipeline ahead of us on the AI compute side that will generate a lot of revenue and cash flow for Forum. All right. Modular home financing. We got into this business late last year, spent a lot of time studying it. As John mentioned earlier in the presentation, a lot of our board members have a lot of private credit experience. This is one of the best mortgage markets in the U.S.

Berkshire Hathaway has been the 10,000-pound gorilla in the modular home financing market through Triad for many decades. We made an investment in a company called Zippy, which we own 15% of, that had built a digital platform that was AI-based to underwrite modular home loans at both the dealer level and in the HOA level. The reason why that's important is because dealer-originated loans and HOA-originated loans are much more secure than alternate types of modular home loans. Another interesting component to the market is the LTVs are relatively low on the loans. The total quantum of dollars lent is low. It ranges between $50,000-$200,000 per loan. The default rate in this industry is, if you focus on the right channels, which we are, is extremely low.

Because of Zippie's AI underwriting engine, we've actually experienced almost a 0% default rate on all the loans that we've generated. What Zippie does is, we provide them a warehouse facility to initiate the loan to the customer at the dealer or the HOA. We then hold that loan for a moderate duration and then ultimately onsell that loan to buyers of the packaged modular mortgages, which are ultimately sold into the ABS market, or taken onto insurance company balance sheets. For doing that, we're making 9%-11% a year. We're receiving principal amortization payments, and Zippie's origination on a monthly basis has basically just continued to climb ever since we made the investments. I think when we made the investment, they were around $30 million a month of origination.

They're now trending at about $75 million a month of origination, and have signed out multiple partners that are providing them with multi-hundred million-dollar offtake agreements on the backside to purchase these loans. The Zippie equity investment's been very successful, and then we're taking very moderate risk on a moderate duration to provide them this warehouse facility to originate the loans. It's an infinitely expandable business, and the TAM is probably around $10 billion a year in the United States for modular home finance as a whole. Auto finance. This is one of the largest finance markets in the United States, and I'll point out everything that we're working on has extremely high multi-billion, if not multi-hundred billion-dollar TAMs. The aircraft engines, the AI compute is a multi-trillion-dollar industry.