Shares Outstanding: 10 Million Active Float: 5.5 Million Recent Price: $0.32 52 Week Bid Range: $0.13 - $0.54 Contact: Scott Miller, CEO (800) 647-8051 Capitalization: $3,200,000 Website: www.autocapitalgroup.com
BUSINESS SUMMARY:
NowAuto, Inc. (Pink Sheets: NWAU)
Now Auto (OTC:NWAU) is an automotive holding company established to invest in all aspects of automotive retailing and finance including franchised new car dealerships, independent used car dealerships, buy-here pay-here dealerships, specialty finance companies including sub-prime lenders and car title loan companies, premium finance companies that finance commercial auto insurance premiums and F&I marketing companies that market all aspects of dealership F&I and the automotive aftermarket.
The Company is placing special emphasis on providing solutions in insurance premium finance, automotive specialty financing including the originating of consumer loans as well as purchasing sub-prime loan portfolios, car title loans and exotic auto loans through our 100% owned corporate subsidiaries, Now Auto, an Arizona Sales Finance Company (application pending), and Premium Assurance Company, an Arizona Premium Finance Company (application pending).
Title Loans
As car title loans become more and more common for short term cash solutions, the title loan industry is growing and having an impact around the country. Today, there are hundreds if not thousands of small title loan companies in what has become a highly fragmented industry. NowAuto seeks to profit in this business by attempting to consolidate the many small companies into their publicly traded company through a corporate acquisition strategy, while also simultaneously seeking to purchase title loan portfolios with the goal of converting these short terms loans into conventional auto financing. The Company's goal is to provide real solutions through their Title Loan Help Program that shows the title loan borrower how to cut his or her interest rate and convert the high interest rate title loan to a more rate friendly conventional loan.
Through NowAuto's acquisition strategy of both title loan companies and title loan portfolio’s, the Company expects to build a publicly traded industry leader in specialty financing of this type.
Premium Finance
Now Auto has agreements with top insurance agency offices to serve as a source of their premium financing needs. Although premium financing has been around for a while, Now Auto believes that it has the industry contacts that can make this division profitable with low overhead.
Specialty Finance
Specialty finance is generally defined as the financing of credit challenged borrowers seeking to purchase or refinance a motor vehicle. Now Auto believes that the borrower with a credit score that qualifies for a sub-prime interest rate is a potential source for an acceptable loan under the proper underwriting circumstances. Now Auto is seeking to originate or purchase car loans from borrowers with non-prime credit who can demonstrate the ability to pay regardless of credit history. In many cases, the ability to pay will depend on the amount of the loan. The amount of the loan is dependant on the amount of the down payment the borrower can afford to pay. A borrower with a job, a sufficient down payment and who purchases a vehicle capable of easy recovery in the event of default, is a borrower of interest to Now Auto and a candidate for a loan.
NowAuto has three unique and complementary sources of revenue broken down as follows:
Navicom, a subsidiary of NowAuto, has cutting edge GPS technology that covers 98% of the United States, Mexico, and Canada. The unique Navicom technology assists in vehicle location and control. Navicom allows the subscriber to access the vehicle location via the Internet and monitor location, speed, and maintenance requirements. The technology also has disabling capabilities, which stop a Navicom equipped vehicle from starting. There are numerous applications of the Navicom technology including personal security on vehicles and motorcycles as well as homeland security. Navicom units retail at $399 with a $9.99/month service fee and there are combined 2,000 units in use and ordered, and this number is growing rapidly. Navicom has been receiving much press lately with its growth and new orders. The company has over 1,500 units in service right now and is growing at 40% PER MONTH. Navicom has already announced that the Inspector Generals Office in Washington, DC is using the portable GPS unit. This is a government agency that can use any product and service they want, they chose Navicom. Could Navicom become a mini TASR? Navicom is getting new orders from civilian, police and homeland security each month. Unlike many of the other companies in this niche market, NowAuto, Inc. is now currently selling units with a monthly reoccurring service plan. Navicom’s website is www.NOWGPS.com. NowAuto, Inc. has a Global Positioning System (GPS) called Navicom that works in 98% of the US, Canada and Mexico. Navicom has been receiving much press lately with its growth and new orders. The company has over 1,500 units in service right now and is growing rapidly at 40% PER MONTH. Navicom has already announced that the Inspector Generals Office in Washington, DC is using the portable GPS unit. This is a government agency that can use any product and service they want, they chose Navicom. Navicom is receiving new orders monthly from civilian, police and homeland security.This is a huge and very profitable niche market! Investors should check out Navicom’s website at www.NOWGPS.com. LoJack, a very successful NASDAQ company and competitor of Navicom, is only offered in 23 states and retails at a much higher price than Navicom. Navicom currently has a large backorder for its product because of the explosive demand being experienced. Furthermore, Navicom has received over 400 distribution/reseller applications from around the US with more applications coming in daily.
NowAuto owns two used vehicle dealerships in the Phoenix area. These dealerships are targeted at buyers with sub prime credit to finance a vehicle with no credit check. Using Navicom's technology the Company can shut down the car if payments are not received and then NowAuto repossesses the car. NowAuto sells its automobiles for an average of $7,000 and has healthy profit margins on all the cars it sells. The Company estimates that it will sell an average of 100 cars per month or 1,200 cars in total for 2005. This represents revenue of $8.4 million for vehicle sales.
NowAuto also finances the vehicles it sells. Automobiles will be financed to sub prime credit borrowers at a rate of 29.99%. By the end of 2005 NowAuto expects to have $10 million in loans receiving 29.99% interest. This represents annualized finance revenue of nearly $2,400,000 after down payment. The Company expects its number of loans to more than double in 2006 through internal growth and acquisitions. RECENT POSITIVE NEWS: ACQUISITION WILL BOOST REVENUES BY 30%
On Dec 28, 2004 the Company announced that it had signed a letter of intent to acquire an established used car dealership located in the southwestern U.S. This will be the third NowAuto location and is expected to increase 2005 revenues by 30% or over $3,000,000 and be accretive to earnings per share. This acquisition brings an important demographic market and adds significant vehicle inventory to NowAuto. The acquisition will be an all cash transaction; therefore it will not be dilutive to shareholders. This acquisition is expected to close by mid-January.
CONCLUSION:
NowAuto is a very exciting HIGH GROWTH Special Situation with an excellent management team and business model that addresses a huge demand for sub prime credit borrowers in the auto industry. NowAuto had announced that they expected to earn net income in excess of $3,000,000 or 30 cents per share in 2005. However, due to the recent acquisition, this EPS projection should increase to around 35 cents. The Company is now projecting revenue for fiscal 2005 of approximately $13,000,000 (up from NowAuto's previous projection of $10 million due to its recent acquisition). There are approximately 10 million NowAuto shares outstanding with under 5.5 million shares in the float. NowAuto expects to file its Form 10 to become a fully reporting company in the next 45 days, which we view as very positive. Once fully reporting, the Company plans to move off the Pink Sheet Markets. The Company is on a very fast growth track and, in our opinion, is extremely undervalued at its current price of only 32 cents (12/27/2004). BOTTOM LINE: NWAU stock is currently trading at just one times Fiscal 2005 estimated EPS. Based on our financial analysis and the Company's continued rapid growth, we have established a realistic 12 month price target of $3.00+ or ten times the current price. This is truly a stock that has HUGE upside appreciation potential!
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