Investor Update - Notable Capital Fund - 1st Quarter 2020 • Notable Capital Fund

Dear Investor,

This letter is to give you an update on your investment and how we are managing the Fund during these challenging times.

In this article we will discuss the following items.

1. Risks during period of high borrower unemployment

2. How the fund generates income

3. Advantages of being invested in the Notable Fund

4. What the future looks like for the Fund and the ongoing opportunity for investors

Risks during period of high borrower unemployment
One of the main concerns for all mortgage companies is the ability of borrowers to make their payments on time.

Due to shelter in place orders in many states, unemployment is at record highs and many people are with reduced pay and forced to work from home. The sector of the industry that has been hit the hardest is the service industry. These individuals unable to work from home due to the type of job they have. Examples of this are restaurant waiters, shopkeepers, massage therapists and anyone who has in person or face-to-face physical activities that cannot be done remotely.

It remains to be seen how long these individuals will be out of work. We expect this situation to even out and subside over time although we don’t know how long this will take. Much of it depends on how fast people can get back to work and return to business as usual. We expect to operate business as usual with our operations moving forward.

How the Fund Generates Income
An important factor to understand when thinking about how this economic crisis will affect your investment, is how the Fund generates income.

The notable capital fund has two parts which comprise the income stream to investors and management.

Performing Loans
These are loans that are paying as agreed which the fund has purchased at a discount. These loans provide income to the fund in the form of interest payments each month.

Non-Performing Loans
These are loans purchased from banks or credit unions which have been nonpaying for some time, usually years. These loans are modified through our process, and eventually become performing assets.
Once performing, these can be sold for a very high profit margin. Sales are made to outside investors, and the market is very strong for the purchase of these assets.

The good news for us is that due to our deep relationships with buyers and sellers, the current economic market has not affected our ability to sell these performing assets at a premium. We expect this to continue moving forward, because these assets remain valuable income streams to everyday investors, regardless of market conditions so long as the borrower is paying.

Advantages of Investing in the Notable Capital Fund
Unlike stocks or other assets that can lose value overnight, the fund is invested in assets backed by real estate. Because the investment is backed by real estate, there are always tangible assets to go back to in order to recover initial capital invested. The fund itself has a multiple of equity above all liens on the property securing our investment.

What this means is that taking into account the fair market values of the homes themselves minus any first position lien, and minus our cost basis, there is still substantial equity protecting the portfolio even in a worst-case scenario.

This means your investment is well covered with equity which gives us peace of mind in a downturn like this. We have no major concentration of assets in one area, and this protects the fund from extreme downturns or dips in one geographic area. This is not to say that the property values themselves may not go down, but they would need to go down so drastically to the tune of seventy five percent or more, before it affected our equity coverage ratios in any meaningful way.

We say all this to reinforce the idea that even though the nation is going through tough times right now, we will make it through this and coming out the other side there will be increased advantages for funds like ours to make additional profits and acquire more assets.

What the Future Looks Like
The future for our business is very bright. Moving forward we see much more opportunity to buy quality assets at increased discounts. Nothing has changed with regards to our business model, the assets themselves, or how profit is generated. In fact we see more upside for investors in the coming months/years.

In Closing
We hope this recap and market update has been helpful for you in assessing how the fund is doing and reassuring you we are doing everything in our power to navigate these difficult times successfully. We will continue to monitor and stay abreast of market changes and will let you know if anything materially changes that we believe to be meaningful to your investment.

Q1 Reporting
In the next few weeks, we will be coming out with Quarter One report for all investors. Please be patient with us as things are running a little bit slow with regards to our team working from home and things just taking a little longer in general.

Someone from our team will be reaching out to you if you requested distributions to be made by automatic payment or ACH directly to your account. We will be reaching out by phone to verify that we have the correct information on file prior to making future distributions.

If you have any questions, please let us know. We happy to talk with you. We appreciate the relationship with you and look forward to more success together.

Stay safe and take care of yourself!

Sincerely,

Josh Andrews, Bob Malecki & Scott Ruzich