OTC: SPFX

·maintains current state licenses to operate a premium
finance company,

·meets or exceeds all statutory net worth requirements,

·maintains professional liability insurance with an
A rated major insurance carrier with limits of $500,000, in compliance with all state requirements,

·has secured and maintained computer hardware and licensed
software to conduct its business in a timely fashion,

·has a revolving senior credit line and long-term debt
in the form of subordinated corporate notes to help finance its loan production,

·has secured a long-term lease on office space which
it currently occupies, and which is sufficient to meet anticipated future needs,

·has developed a set of working procedures by which
it operates,

·generates daily management control reports,

·has cultivated and maintained relationships with various
independent insurance agents providing the source of all new and renewal business, and

·currently finances approximately $120 million dollars
in insurance premiums annually.

The Property and Casualty
Insurance Premium Finance Market

Commercial insurance performs
a critical role in the world economy. Without it, the economy could not function. Insurers protect the economic system from failure by
assuming the risks inherent in the production of goods and services. All businesses share a need for insurance: Without the right insurance
coverage, each could be wiped out by a disaster or a lawsuit. The Insurance Information Institute reported that $416.5 billion of commercial
lines insurance premiums were generated in the U.S. in 2023.

1

The insurance premium finance
industry began in Pennsylvania in 1933 and has grown along with the U.S. economy. There are several reasons that an insurance policy buyer
would choose to finance its insurance premiums. Financing an insurance premium is much like any other commercial or consumer purchase.
It is financed based on the insured’s decision resulting from current economic trends and other considerations. For some customers,
insurance premium financing is a convenient way to buy insurance without tying up working capital or accessing other credit sources. Other
customers, who do not have the means to pay the premium in full at the time of purchase, consider premium financing a necessity. When
customers finance insurance policies, they enter into a contract with the insurance premium finance company to obtain a loan. The contract
assigns the borrower’s rights to all unearned premiums and dividends on the policy to the insurance premium finance company and
appoints the insurance premium finance company as its ‘attorney in fact,’ which gives the insurance premium finance company
the right to cancel the insurance policy in the event of non-payment of a loan installment and to receive all unearned premiums and credits
from the insurance company. The customer, upon executing the premium financing loan contract, makes the initial down payment and agrees
to pay back the principal with interest in monthly payments. The unearned premium of the insurance policy provides the collateral for
each loan.

Our Loan Referral Base

Substantially all of our insurance
premium loans originate from insurance agents and brokers who recommend our insurance premium loan program to their clients who would
like to finance their insurance premiums. We currently market our loans through more than 850 independent insurance brokers and agents
located in thirty-seven states, although most of our loans are made in thirteen (13) states. For risk management purposes, we have a policy
limiting the amount of loans to the customers of any one insurance broker or agent to 5% of our outstanding loan portfolio. We may change
this policy at any time based on then-existing market conditions or otherwise, at the discretion of our CEO.

Our website includes a secure
portal for our brokers and agents, which allows them to quote premiums, print drafts on our bank account to pay the balance of the insurance
premium due upon initiation of the premium finance loan, and finance agreements online. The drafts and agreements are forwarded to us
for loan underwriting, risk management, and approval. Our brokers and agents do not have the authority to bind us to making a loan.

We compensate the insurance
brokers and agents for their loan origination service through commissions, if permissible by state law regulated by the states in which
we do business. The commission paid is generally tied to the gross revenue that the loan generates or a fixed per-loan fee. Interest rates
are determined by the size of the loan, and, to a certain degree, the rating of the insurance company as well as the creditworthiness
of the borrower. Typically, a higher interest rate yields a higher commission to the broker. In addition, the Company offers a rewards
program (where permitted by state law) for our insurance brokers and agents. Under the rewards program, points are earned based on the
amount of financed premiums. These points are then redeemable for travel and merchandise. The rewards program is equivalent to 1/10th
of one percent (.001) of the amount financed and is in addition to payment of commissions.

We do not have any exclusive
or long-term arrangements with the insurance agents and brokers that make up our referral base and they have other sources of premium
financing at their disposal. We have no contractual relationship with the insurance agents and brokers requiring them to recommend us
to their clients. However, in connection with each premium loan we make, the borrower’s agent or broker:

·Certifies that the policies
being financed have been issued and delivered and that the required down payment has been paid by or on behalf of the insured;

·Warrants that the premium finance
agreement evidences a bona fide and legal transaction and that the insured is of legal age and has capacity to contract;

·Warrants that the insured’s
signature is genuine, and that the agent or broker has delivered a copy of the premium finance agreement to the insured;

·States that the financed policies
do not contain an audit or reporting form;

·Acknowledges that it is not
affiliated in any capacity or manner with us; and

·Agrees that in the event of
cancellation of the financed policy to remit the gross unearned commissions or unearned premiums to us upon request.

In the property and casualty
insurance industry, some insurance policies contain provisions for audits or other additional reporting. These provisions may allow the
insurance company to evaluate (audit) the insurance premium after cancellation. Such provisions may delay or reduce the amount of unearned
premium. Since the unearned premium represents the collateral in our loan, this would have a detrimental effect on us. It is Company policy
to avoid financing these types of policies.

2

Employees

As
of December 31, 2025, we had twenty-five employees, twenty of whom were full-time employees. Our full-time employees are covered by a
corporate benefit plan for major medical and hospitalization. None of our employees are members of a labor union or subject to a collective
bargaining agreement. All of our employees are “at will” with no guaranteed period of employment except our CEO and CFO who
have executive contracts through March 2030. We believe our employee relations are satisfactory.

Our Insurance Premium
Loans

Our insurance premium finance
loans are typically provided to small- and medium-sized businesses to finance the purchase of commercial property and casualty insurance
policies with a one-year term. Insurance premium loans are generally in the range of $1,000 to $100,000 per loan. The customer typically
pays 25% of the annual policy premium at the initiation of coverage and we provide the balance of the premium at that time. Our loans
generally have a nine-to-ten-month term. The purpose of this is two-fold; first, by making the financing term shorter than the policy
term, a small “surplus” of collected funds is developed that helps ensure that the balance due is paid off by refund of the
unearned premium in case of cancellation, and second, it gives the insured a two to three-month break in payments before the policy term
expires and the process repeats for the renewal of the policy.

Insurance premiums are earned
by the insurance company over the term of the policy. If the policy is terminated prior to completion of the term, a refund of the unearned
portion of the policy premium is made. If the policy was financed, the refund of unearned premiums goes to the insurance premium finance
lender with any amount received by the lender in excess of the amount owed by the borrower being refunded to the borrower.

The following table illustrates
the “surplus” between the unearned premium and the loan balance based on a typical annual premium of $10,000 with a $2,500
(25%) deposit paid by the borrower at the inception of the loan. In this scenario, the insurance premium finance company advances $7,500
and the borrower repays the loan in 10 monthly payments of $750. Note that interest is excluded in this example to highlight the collateral
on the principal balance.

Months

in Force
Payments

Made
Payment

(Principal Only)
Principal

Balance
Unearned

Premium
“Surplus”

1
0
$0
$7,500
$7,890
$390

2
1
$750
$6,750
$7,150
$400

3
2
$750
$6,000
$6,410
$410

4
3
$750
$5,250
$5,670
$420

5
4
$750
$4,500
$4,930
$430

6
5
$750
$3,750
$4,190
$440

7
6
$750
$3,000
$3,450
$450

8
7
$750
$2,250
$2,710
$460

9
8
$750
$1,500
$1,970
$470

10
9
$750
$750
$1,230
$480

11
10
$750
$0
$490
$490

Although this is a typical
representation of a loan in our portfolio, we may be undercollateralized depending on certain factors, including, but not limited to,
lower down payments, minimum earned premiums, fully earned fees and taxes, governmental filings, audit provisions, longer payment terms,
and other competitive factors. See Item 1A, Risk Factors, for more information about our loan risks.

3

We had $76,630,634 and $67,173,975
in premium finance loans outstanding as of December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, we had 18,846
active premium finance loans in eighteen states. The following is a summary of our premium loan portfolio as of December 31, 2025:

State
Loans
Total

Premiums
Down

Payment
Amount

Financed
Total

Outstanding

Florida
12,321
108,954,692
25,895,452
83,059,240
47,650,451

Georgia
1,827
13,325,913
3,551,625
9,774,288
5,942,237

North Carolina
2,520
13,007,189
2,907,361
10,099,828
5,734,629

South Carolina
959
14,834,442
3,182,876
11,651,566
6,931,229

Texas
895
12,557,929
3,262,385
9,295,544
5,100,610

All other states
324
9,723,223
2,351,184
7,372,039
5,271,478

Grand Total
18,846
$172,403,388
$41,150,883
$131,252,505
$76,630,634

As of December 31, 2024, we
had 18,858 active premium finance loans in thirteen states. The following is a summary of our premium loan portfolio as of December 31,
2024:

State
Loans
Total

Premiums
Down

Payment
Amount

Financed
Total

Outstanding

Florida
11,899
104,350,859
25,073,838
79,277,021
44,675,794

Georgia
1,889
15,225,990
3,934,361
11,291,629
6,644,889

North Carolina
2,812
13,130,784
2,999,627
10,131,157
5,328,038

South Carolina
1,027
14,076,290
2,946,522
11,129,768
5,564,436

Texas
952
11,274,360
3,005,453
8,268,907
4,162,549

All other states
279
1,854,586
428,834
1,425,752
798,269

Grand Total
18,858
$159,912,869
$38,388,635
$121,524,234
$67,173,975

Credit Quality Information

The following table presents
credit-related information at the “class” level in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification Topic (“ASC”) 310-10-50, Disclosures about the Credit Quality of Finance Receivables
and the Allowance for Credit Losses. A class is generally a disaggregation of a portfolio segment. In determining the classes, the
Company considered the finance receivable characteristics and methods it applies in monitoring and assessing credit risk and performance.

Our premium finance receivables
portfolio is analyzed in two segments: (1) Due from Insured and (2) Due from Insurance Carrier. The following tables summarize the portfolio
segments by the risk ratings that regulatory agencies utilize to classify credit exposure, and which are consistent with indicators the
Company monitors. Risk ratings are reviewed on a regular basis and are adjusted as necessary for updated information affecting the borrowers’
ability to fulfill their obligations.

For the Due from Insured segment,
we analyze and rate our receivables based on the amount of unearned premium (i.e. collateral) on a loan based on a “worst case”
cancellation date. Loans that would be undercollateralized as of this assumed cancellation are deemed to be Special Mention loans. For
the Due from Insurance Carrier segment, we analyze and rate our receivables based on the amount of unearned premium (i.e. collateral)
on a loan based on the actual cancellation date. Loans that would be undercollateralized as of the cancellation date are deemed to be
Special Mention loans. The Company monitors the amount at which Special Mention receivables are undercollateralized. The Company strategically
balances its exposure to undercollateralized loans, while staying competitive in the markets it serves.

4

The definitions of these ratings
are as follows:

●
Pass – finance receivables in this category do not meet the criteria for classification in one of the categories below.

●

Special mention – a special mention asset
exhibits potential weaknesses that deserve management’s close attention.

If left uncorrected, these potential weaknesses
may, at some future date, result in the deterioration of the repayment prospects.

●

Classified – a classified asset ranges from:
1) assets that are inadequately protected by the current sound worth and

paying capacity of the borrower, and are characterized
by the distinct possibility that some loss will be sustained if the deficiencies are not corrected to 2) assets with weaknesses that make
collection or liquidation in full unlikely on the basis of current facts, conditions, and values. Assets in this classification can be
accruing or on non-accrual depending on the evaluation of these factors.

●
Pass loan collateral in excess of receivable value – the total amount of excess collateral over the receivable on loans classified as “pass” loans. All “pass” loans are fully collateralized based on the value of the unearned premium (i.e. collateral) compared to the unpaid balance of the loan. If a “pass” receivable were to undergo an assumed cancellation as of the respective balance sheet date, the Company would not experience a loss.

●
Special mention receivable in excess of collateral value – the total amount of excess receivable over collateral on loans classified as “special mention” loans. All “special mention” loans are undercollateralized based on the value of the unearned premium (i.e. collateral) compared to the unpaid balance of the loan. For the Due from Insured segment, if a “special mention” receivable were to undergo an assumed cancellation as of the respective balance sheet date, the Company would expect to experience a loss. For the Due from Insurance Carrier segment, the “special mention” receivable is expected to produce a loss based on the actual cancellation date as of the respective balance sheet date. An estimate of the anticipated loss of all “special mention” loans is represented by the “’Special mention’ receivable in excess of collateral value.

As of December 31, 2025 and
December 31, 2024, the Company considered $304,740 and $520,550, respectively, as lacking collateral adequate for the level of risk associated
with these loans while staying competitive within the industry. Management does not believe any of its receivables would be considered
Classified. The following tables classify our Finance Receivables by risk rating and portfolio segment:

Segment – Due from Insured

December
31, 2025
December
31, 2024

Pass
$66,677,989
$57,190,695

Special mention
2,672,817
2,567,395

Classified
—
—

Total
$69,350,806
$59,758,090

“Pass” loan collateral in excess of receivable value
22,836,137
20,921,390

“Special mention” receivable in excess of collateral value
112,889
99,990

Segment – Due from Insurance Carrier

December
31, 2025
December
31, 2024

Pass
$5,191,859
$4,806,766

Special mention
2,087,969
2,609,119

Classified
—
—

Total
$7,279,828
$7,415,885

“Pass” loan collateral in excess of receivable value
6,133,473
6,607,527

“Special mention” receivable in excess of collateral value
191,851
420,561

The Company regularly monitors
each contract for payment status, sending late notices and cancelling contracts at the earliest permissible date allowed by the statutory
cancellation regulations. In maintaining a proper allowance for credit losses, the Company monitors past due accounts and scrutinizes
older receivables, generally over 120 days. However, in this industry, even though accounts may be highly aged and appear stale, they
are still collectible. Unearned premiums on cancelled accounts may be held at insurance companies for varying periods, though they are
still highly collectible. The Company protects its collateral by cancelling policies at the earliest permissible date. The Company regularly
contacts the insurance companies to ensure collectability. The Company manages its allowance conservatively ensuring an allowance balance
that encompasses uncollectible accounts. In the following table, the Company defines “non-performing loans without a specific reserve”
as loans in the Due from Insurance Carrier segment aged over 120 days. All other loans are considered “Performing loans evaluated
collectively.” On December 31, 2025 and December 31, 2024, there were no loans with deteriorated credit quality.

5

Finance Receivables – Method of individual
evaluation:

December
31, 2025
December
31, 2024

Performing loans evaluated individually
$—
$—

Performing loans evaluated collectively
74,132,785
64,786,338

Non-performing loans without a specific reserve
2,497,849
2,387,637

Non-performing loans with a specific reserve
—
—

Total
$76,630,634
$67,173,975

Revenue Recognition

Finance charges on insurance
premium installment contracts are initially recorded as unearned interest and are credited to income monthly over the term of the finance
agreement. An initial service fee, where permissible, and the first month’s interest, on a pro rata basis, are recognized as income
at the inception of a contract. The initial service fee can only be charged once to an insured in a twelve-month period. In accordance
with industry practice, finance charges are recognized as income using the “Rule of 78s” method of amortizing finance charge
income, which does not materially differ from the interest method of amortizing finance charge income on short term receivables. Late
charges are recognized as income when charged. Maximum late fee charges are mandated by state regulations. The Company charges late fees
at the earliest permissible date based on the late fee regulations of the state in which the loan originated. Furthermore, the Company
charges the maximum permissible late fee based on the state in which the loan originated. Unearned interest is netted against Premium
Finance Contracts and Related Receivables on the balance sheet for reporting purposes.

Debt Summary and Sources of Liquidity

Below is a summary of some
of our debt and sources of liquidity. The discussion below does not discuss all of our debt. Please see the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” as well as our financial statements and the notes to those
financial statements contained elsewhere in Item 8 of this Form 10-K for additional information about debt and sources of liquidity.

Line of Credit

On February 3, 2021, the Company
entered into an exclusive twenty-four month loan agreement with First Horizon Bank, our senior lender, for a revolving line of credit
in the amount of $35,000,000, which was immediately funded for $25,974,695 to pay off the prior line of credit. On this date, the prior
line of credit was fully repaid and terminated. The Company recorded $180,350 of loan origination costs. In October 2021, the Company
increased its line of credit with First Horizon Bank from $35,000,000 to $45,000,000. The Company recorded $25,771 of line of credit costs
related to the credit increase. In November 2022, the Company extended the maturity on its line of credit agreement with FHB until November
30, 2025. This extension also changed the Index Rate of the line of credit from 30-Day Libor to 30-Day Secured Overnight Financing Rate
(“SOFR”). The Company recorded $117,228 of line of credit costs related to this extension. In June 2025, the Company increased
its line of credit with FHB from $45,000,000 to $50,000,000. In September 2025, the Company renewed its line of credit agreement with
FHB until September 25, 2028. This renewal also increased the commitment amount from $50,000,000 to $75,000,000, lowered the interest
rate margin from 2.55-2.96% to 2.10%, and syndicated the line of credit between two additional lenders, Flagstar Bank and Cadence Bank.
The Company is unaffected operationally by the additional lenders as First Horizon Bank acts as the agent for the other lenders in the
syndicated loan agreement. The Company recorded $373,011 of line of credit costs related to this extension, which is included in the line
of credit balance in the consolidated balance sheet at December 31, 2025.

At December 31, 2025 and 2024,
the advance rate was 85% of the aggregate unpaid balance of the Company’s eligible accounts receivable. The line of credit is secured
by all Company assets and is personally guaranteed by our CEO. The line of credit bears interest at 30-Day SOFR plus 2.10% per annum (5.97%
and 7.30% at December 31, 2025 and 2024, respectively). As of December 31, 2025 and 2024, the amount of principal outstanding on the line
of credit was $49,575,004 and $41,217,513, respectively, and is reported on the consolidated balance sheet net of $341,927 and $1,445,
respectively, of unamortized loan origination fees. Interest expense on this line of credit for the years ended December 31, 2025 and
2024 totaled approximately $3,071,000 and $3,556,000, respectively. The Company recorded amortized loan origination fee for the years
ended December 31, 2025 and 2024 of $32,529 and $1,576, respectively. For the years ended December 31, 2025 and 2024, the Company paid
a fee based on the unused portion of the line of credit totaling $29,254 and $4,093, respectively, which is included in interest expense.
The Company had availability on this line of credit of $6,893,451 as of December 31, 2025.

The Company’s agreements
with FHB contain certain financial covenants and restrictions. Under these restrictions, all the Company’s assets are pledged to
secure the line of credit, the Company must maintain certain financial ratios such as an adjusted tangible net worth ratio, interest coverage
ratio and adjusted leverage ratio. The loan agreement also provides for certain covenants such as audited financial statements, notice
of change of control, budget, permission for any new debt, and copies of filings with regulatory bodies. On November 14, 2023, the Company
executed an amendment of the loan agreement, which provided a waiver of default on its Interest Coverage Ratio as of September 30, 2023.
The amendment also reduced the Minimum Interest Coverage Ratio for the following four quarters through September 30, 2024. Management
believes it was in compliance with the applicable debt covenants as of December 31, 2025 and December 31, 2024.

6

Promissory Notes to Unrelated Parties

These are notes payable to
individuals. The notes have interest payable monthly, ranging from 6% to 8% per annum and are unsecured and subordinated. The principal
is due on various dates through December 31, 2031. The maturity date of these notes automatically extends for periods of three months
to six years unless the note holder requests repayment through written instructions at least ninety days prior to the maturity date of
the note. The automatic maturity extension of these notes is considered a loan modification. Notes totaling $2,832,726 and $1,029,750
were rolled over during the years ended December 31, 2025 and 2024, respectively. Interest expense on the notes totaled approximately
$680,000 and $596,000 during the year ended December 31, 2025 and 2024, respectively. The Company received proceeds on these notes of
$720,682 and $2,269,440 for the years ended December 31, 2025 and 2024, respectively. The Company repaid principal on these notes of $887,254
and $131,500 for the years ended December 31, 2025 and 2024, respectively. In August 2024, the Company exchanged, in a cashless transaction,
$10,000 of these notes for 12,500 shares of common stock at a price of $0.80 per share from the exercise of previously vested incentive
stock options by an employee. There were no gains or losses on this exchange.

Promissory Notes to
Stockholders and Related Parties

These are notes payable to
stockholders and related parties. The notes have interest payable monthly of 8% per annum and are unsecured and subordinated. The principal
is due on various dates through February 28, 2030. The maturity date of these notes automatically extends for periods of one to four years
unless the note holder requests repayment through written instructions at least ninety days prior to the maturity date of the note. The
automatic maturity extension of these notes is considered a loan modification. Notes totaling $506,000 and $278,040 were rolled over during
the years ended December 31, 2025 and 2024, respectively. Interest expense on the notes totaled approximately $231,000 and $211,000 during
the years ended December 31, 2025 and 2024, respectively. The Company received proceeds on these notes of $79,460 and $1,028,000 for the
years ended December 31, 2025 and 2024, respectively. The Company repaid principal on these notes of $490,000 and $10,000 for the years
ended December 31, 2025 and 2024, respectively. In August 2024, the Company exchanged, in a cashless transaction, $66,960 of these notes
for 83,700 shares of common stock at a price of $0.80 per share from the exercise of previously vested incentive stock options by an employee.
There were no gains or losses on this exchange. 

Series A Convertible
Preferred Stock

The Company is authorized
to issue 600,000 shares of Series A Convertible Preferred Stock, $.001 par value. As of both December 31, 2025 and 2024, there were 166,000
shares of Series A convertible preferred stock issued and outstanding for $10.00 per share.

In the event of any liquidation,
dissolution or winding up of the Company, the holders of preferred stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets of the Company to the holders of common stock, an amount equal to $10 for each share of preferred stock,
plus all unpaid dividends that have been accrued, accumulated or declared. As of December 31, 2025, the total liquidation preference on
the preferred stock is $1,689,050. The Company may redeem the preferred stock from the holders at any time following the second anniversary
of the closing of the original purchase of the preferred stock. The Series A Convertible Preferred Stock can be converted to common stock
at 80% of the prevailing market price over the previous 30-day period at the option of the Company.

Holders of preferred stock
are entitled to receive preferential cumulative dividends, only if declared by the board of directors, at a rate of 7% per annum per share
of the liquidation preference amount of $10 per share. During the years ended December 31, 2025 and 2024, the Board of Directors has declared
and paid dividends on the preferred stock of $116,200 and $116,200, respectively. As of each of December 31, 2025 and 2024, preferred
dividends are in arrears by $29,050. December 31, 2024 dividends in arrears were declared and paid in January 2025. December 31, 2025
dividends in arrears were declared and paid in January 2026. As of January 2026, all dividends in arrears had been declared and paid.

Our Customers

The
majority of our customers are small- to medium-sized businesses seeking property and casualty insurance through local independent insurance
agents. We are currently licensed to operate in thirty-seven states where the premium finance laws are favorable to making insurance premium
finance loans. Premiums on these commercial insurance policies are written on a semi-annual or annual basis exclusively and insurance
premium finance loans are repaid over a maximum of four and eleven consecutive monthly payments, respectively. Substantially all of our
loans are written for a nine- to ten-month term. Premiums on these financed policies typically range between $1,000 to $100,000.
At December 31, 2025 and December 31, 2024, we have 18,846 and 18,858 premium finance loans outstanding, respectively. The types of policies
we finance vary. They are most often motor truck cargo, physical damage and liability, commercial auto, commercial general liability,
commercial package policies, professional liability, and commercial property. Most of the policies we finance are written through local
independent insurance agents. The insurance companies they represent generally do not provide premium installment payment plans.

7

Competition

Our industry is highly competitive
with three types of competitors. Fifteen of our largest competitors are national premium finance firms primarily owned by commercial banks,
which write over 70% of all premium finance loans. A second type of competitor is comprised of regional premium finance companies owned
by entrepreneurs. Our remaining competitors are smaller, local companies, many of which are affiliated with insurance agencies. There
is a low barrier to entry into the business as regulations do not require passing any tests or having substantial capital. A prime requirement
for success in the industry is access to low-cost capital as profits are substantially related to the spread between the cost of capital
and interest earned on premium finance loans. Because of the secure nature of insurance premium finance loans, our industry is intensely
competitive:

·Large National Finance Companies
are owned or affiliated with financial institutions and make up approximately 50% of the financed premiums in the industry today. Since
access to capital is plentiful and the cost of funds are historically low, these finance companies seek the security of the premium finance
industry to get valued returns with minimal risk. However, since these competitors oftentimes lack the agility or desire to develop personal
relationships, they generally seek out the largest premiums solely by offering the lowest rates.

·Regional finance companies compete
for business in smaller regional territories throughout the U.S. These companies are typically owned by entrepreneurs that raise debt
privately and leverage it with a bank or similar asset-based lender. While these regional competitors manage to maintain some of the benefits
of the smaller companies on a relationship level, they lack access to capital enjoyed by large institutionally owned competitors. Thus,
they are limited to modest organic growth with limited exit strategy.

·Smaller locally operated finance
companies generally conduct business in the state in which they are domiciled and typically limit their business to that state, county,
or municipality. These companies are often family-owned and operated and can even be affiliated with an insurance agency or agencies or
even a small insurance company. While these smaller competitors are able to develop personal relationships, owners often lack the experience,
business acumen and access to capital enjoyed by their larger competitors.

Marketing

The
servicing of loans for policy premiums of $1,000 to $100,000 can be time consuming and require responsive customer service, but competition
in this segment is less intense. Our customers generally do not have an insurance expert on staff, and they rely on their brokers or agents
to recommend insurance premium finance companies. Our referral base has access to multiple alternate insurance premium finance sources
operating at the national, regional and local level. We believe we compete against our competitors primarily through the quality of our
technology, which allows our agents and brokers to receive a quick response to a loan application and the quality of the personalized
service of the loans which we provide. We believe that we are successful because our technology and customer service helps our referral
sources achieve their own customer satisfaction and retention. We have a website for our customers and agents at www.standardpremium.com.
We have six employees who act as our marketing representatives in the field. They call on our broker and agent base and seek new brokers
and agents to represent us to their clients. Our main marketing activities are the establishment and maintenance of relationships with
our loan referral sources. We do not market or advertise our loan services directly to the parties receiving our loans but rather depend
upon insurance agents and brokers to advise their clients who wish to finance their premiums about our insurance premium loan program.

Regulation

In
most states, insurance premium finance companies are regulated by the Insurance Departments or Offices of Insurance Regulation in which
they operate. Each state has specific laws regulating items such as interest rates, late charges, loan terms, forms, audit provisions,
cancellation requirements among others. In addition, each state has the ability to audit each finance company and requires annual reports
to be submitted. We employ a full-time compliance manager as well as retained legal counsel who provide updates to our policies in accordance
with changes to laws in the states where we do business.

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