Leveraging AI For Accurate Private Company Bankruptcy Risk Assessment

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PAYCE Score Predicts Recent Bankruptcies

January - July 2019

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Harnessing deep neural network technology tobring you a highly accurate score forprivate company bankruptcy risk assessment.The PAYCE Score®

2

The first of the fundamental componentsto the PAYCE® score is payment dataobtained through our Trade Contributor Program.Our network of trade contributors provides morethan $150 billion in trade data on their counterpartiesevery month, giving them visibility into theirbiggest dollar risks.biggest dollar risks.

As our Trade Contributor Program grows, so will thenumber of PAYCE® scored businesses in ourdatabase - and the accuracy of the score will alsoultimately improve in time.

The second of the fundamental componentswhich make up the score is based on U.S.federal tax lien data. The IRS goes to greatlengths to negotiate terms with a companythat has defaulted on its tax debt. When afederal tax lien is filed, this is often a signaltherethere’s a serious issue with the company’sability to pay its federal taxes.

The PAYCE® score provides a highly accurate measure of financial stress whenno financial statements are available forprivate companies. It utilizes paymentand U.S. federal tax lien data fromCreditRiskMonitor’s extensive database,analyzed with sophisticated deep neuralanalyzed with sophisticated deep neuralnetwork modeling technology, a type ofartificial intelligence to deliver a 70% accuratescore on approximately 80,000 private companies.

True Health Diagnostics LLCChirch Global Manufacturing, LLCPhiladelphia Energy Solutions Refining and Marketing LLCHeating & Plumbing Engineers, Inc.Allied Welding, Inc.Lotus Business L.L.C.WWall to Wall Tile & Stone LLCGVM, Inc.Centerline Solutions, LLCRoll on Transportation, Inc.Time Definite Services, Inc.Charming Charlie LLCSilver Creek Services, Inc.IILTA Grain Inc.Quinsam Coal Corporation4 Him Food Group, LLCAlgon CorporationBlackjewel L.L.C.Center City Healthcare, LLCSt. Christopher's Healthcare, LLCSpringfield Hospital, Inc.Springfield Hospital, Inc.JM Grain, Inc.Voice Construction Ltd.Joerns Healthcare, LLCSchramm, Inc.Allpro Manufacturing, Inc.Porcelain Industries, Inc.Fish Brewing Co.Fish Brewing Co.

U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaCanadaCanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.

336567

6678

125533444315226295

344567

6668

12434462431

2771

7

3155410

7767

17433363322

3661

6

31

5310

5776

16422553321

2511

6

31

549

5778

3752144311231661

6

31

4310

3557

2343177312232662

64

31

3310

5446

32321551121

2711

44

22

2310

4777

2

521422122

161

663

32

2310

4

55

1

631321121

161

733

51

2210

4

33

1

531221131

262

644

41

219

4

33

1

421221122

272

433

31

11106446

1

421322123

162

442

7/30/20197/29/20197/21/20197/19/20197/17/20197/16/20197/16/20197/16/20197/13/20197/12/20197/12/20197/12/20197/11/20197/11/20197/8/20197/8/20197/3/20197/2/20197/1/20197/1/20196/30/20196/30/20196/26/20196/26/20196/25/20196/25/20196/24/20196/24/20196/17/20196/14/20196/12/20196/12/2019

Rate of Success: 70% | Of 129 bankruptcies, 110 companies had a recent PAYCE® score prior to bankruptcy.

50.00% - 1.69% 1.69% - 0.55% 0.55% - 0.00% FAILED TO PREDICTProbability of bankruptcy within 12 months (PAYCE® Scale)

3

PAYCE® Score Predictions of U.S. Private Company Bankruptcies | January - July 2019

1-5 6-8 9-10

Business Name Country -12 -11 -10-9 -8-7 -6 -5 -4 -3-2-1 PAYCE® @ Filing Bankruptcy

Ellett Brothers, LLCNorth American Communications, Inc.Conference Services International, LLCStandard Rubber Products, Inc.Prousys Inc.American Home Products LLCGamboa Brothers, Inc.Gamboa Brothers, Inc.J&S Air, Inc.National Fish & Seafood Inc.White Star Petroleum, LLCNorth American Lithium Inc.Aegerion Pharmaceuticals, Inc.Frankie V's Kitchen, LLCHollander Sleep Products, LLCHollander Sleep Products, LLCPacific Coast Feather, LLCAmerican Berber, Inc.EdgeMarc Energy Holdings, LLCHannah Solar, LLCGlobal Environmental Solutions, Inc.Signature Pack, LLCCalumetCalumet Abrasives Co., Inc.Keystone Classic Homes, LLCNew LifeCare Hospitals of North Texas LLCSure Winner FoodsSHC Medical Center - ToppenishSHC Medical Center - YakimaSoutheastern Metal Products LLCSunnyside Community HospitalSunnyside Community Hospital Association

U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.

7266433366

2363

3318

85722216

313

443665

22638

2218

4741225

612

443663

22548221

8

5831225

71

352344

13547111

75

6731225

51

352644

15536211

66

7721114

41

251544

315334221

86

7721113

31

24

43

5515433511

54

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81

24

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65

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81

34

22

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5

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61

24

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23333211

4

6621122

31

24

5211

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4

5621111

31

24

41

11344321

77

652111

6/10/20196/10/20196/9/20196/3/20195/31/20195/29/20195/29/20195/29/20195/29/20195/29/20195/28/20195/28/20195/20/20195/20/20195/19/20195/19/20195/19/20195/16/20195/15/20195/15/20195/14/20195/9/20195/7/20195/7/20195/7/20195/7/20195/7/20195/6/20195/6/20195/6/20195/6/20195/6/2019

Rate of Success: 70% | Of 129 bankruptcies, 110 companies had a recent PAYCE® score prior to bankruptcy.

50.00% - 1.69% 1.69% - 0.55% 0.55% - 0.00% FAILED TO PREDICTProbability of bankruptcy within 12 months (PAYCE® Scale)

4

PAYCE® Score Predictions of U.S. Private Company Bankruptcies | January - July 2019

1-5 6-8 9-10

Country -12 -11 -10-9 -8-7 -6 -5 -4 -3-2-1 PAYCE® @ Filing BankruptcyBusiness Name

American Printing Company, Inc.The Lasalle Group, Inc.SunGard Availability Services LPASH Fabrication, LLCProject Services, Inc.Vantage Trailers, Inc.Banner Mattress, Inc.Banner Mattress, Inc.Legacy Measurement Solutions, Inc.nSpire Health, Inc.NanoMech, Inc.Unique Broadband Systems Ltd.Mattress Pal Holding, LLCSunex International, Inc.InterChem USInterChem USA Inc.Jesse Creek Mining, LLCJ.T. Shannon Lumber Company, Inc.Western Reserve Water Systems. Inc.Vanguard Operating, LLCAbsolute Dimensions, LLCPortable Machine Works, LLCThomson-Shore, Inc.Thomson-Shore, Inc.Schendel Mechanical Contracting Ltd.Chef's Requested Foods, Inc.Cherry Bros., LLCCAH Acquisition Company 1, LLCZ Gallerie, LLCCTI Foods Holding Co., LLCCTI-SSI Food Services, LLCCTI-SSI Food Services, LLC

U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.

1

3

1345442169

5

56622437

4

55

1

2

1

35622179765446

2536244

5

1

3

1

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2

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55

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4

81

3577318974224922

35335

5

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6

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31

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125

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6

126

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115

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1162

1

1777312

2244

2122622255

1161

1

1777213

2333

2121412266

114

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1566113

133881111412265

5/3/20195/2/20195/1/20194/29/20194/25/20194/23/20194/22/20194/22/20194/22/20194/22/20194/15/20194/15/20194/7/20194/3/20194/2/20194/2/20194/2/20194/1/20194/1/20193/31/20193/29/20193/27/20193/25/20193/25/20193/22/20193/21/20193/18/20193/15/20193/11/20193/11/20193/3/11/2019

Rate of Success: 70% | Of 129 bankruptcies, 110 companies had a recent PAYCE® score prior to bankruptcy.

50.00% - 1.69% 1.69% - 0.55% 0.55% - 0.00% FAILED TO PREDICTProbability of bankruptcy within 12 months (PAYCE® Scale)

5

PAYCE® Score Predictions of U.S. Private Company Bankruptcies | January - July 2019

1-5 6-8 9-10

Country -12 -11 -10-9 -8-7 -6 -5 -4 -3-2-1 PAYCE® @ Filing BankruptcyBusiness Name

Custom Food Products, LLCLiguria Foods, Inc.S & S Foods, LLCCTI Foods, LLCF+W Media, Inc.HED Products, LLCSimkar LLCSimkar LLCPost Meridiem Plastics LtdMagnum Construction Management, LLCInterChez Logistics Systems, Inc.Munchery Inc.Community Nursing & Rehabilitation Center LLCPrint Group, Inc.Willowood USA, LLCWillowood USA, LLCMama's Hawaiian BBQ Inc.Puerto Rico Hospital Supply, Inc.Papa Grande Gourmet Foods, LLCTrident Crating & Services, Inc.BeavEx, Inc.Payless ShoeSource, Inc.BlueBlue Thunder Truck Brokerage, Inc.The Robert Allen Duralee Group, LLCNew England Motor Freight, Inc.Sural Laminated Products of Canada Inc.Kan-Di-Ki, LLCSchryver Medical Sales and Marketing, LLCCentralite Systems, IncHumperdink's Six Flags Drive, Ltd.Humperdink's Six Flags Drive, Ltd.

U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.U.S.A.U.S.A.U.S.A.U.S.A.

76553

4

4438

28

6

522654522778

96463733

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7

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3

611

6

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511

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311

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89

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87

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8

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8737271163231

9

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1333131

6

266215333

88

3/11/20193/11/20193/11/20193/11/20193/10/20193/9/20193/6/20193/6/20193/5/20193/1/20192/28/20192/28/20192/27/20192/27/20192/27/20192/27/20192/26/20192/26/20192/25/20192/19/20192/18/20192/18/20192/15/20192/15/20192/12/20192/11/20192/11/20192/10/20192/10/20192/8/20192/6/20192/6/2019

Rate of Success: 70% | Of 129 bankruptcies, 110 companies had a recent PAYCE® score prior to bankruptcy.

50.00% - 1.69% 1.69% - 0.55% 0.55% - 0.00% FAILED TO PREDICTProbability of bankruptcy within 12 months (PAYCE® Scale)

6

PAYCE® Score Predictions of U.S. Private Company Bankruptcies | January - July 2019

1-5 6-8 9-10

Country -12 -11 -10-9 -8-7 -6 -5 -4 -3-2-1 PAYCE® @ Filing BankruptcyBusiness Name

RMBR Liquidation, Inc.Precision AgriTechnologies LLCCR Liquidating, Inc.DC Solar Solutions, Inc.FULLBEAUTY Brands, Inc.Burkhalter Rigging, Inc.Penobscot Penobscot Valley HospitalSouthFresh Aquaculture, LLCIPS Worldwide, LLCPacific Steel Casting Company LLCThurston Manufacturing CompanySam Kane Beef Processors, LLCGymboree Group, Inc.Shopko Stores Operating Co., LLCShopko Stores Operating Co., LLCInnovative Mattress Solutions, LLCVari-Form IncBeauty Brands, LLC

U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.U.S.A.CanadaU.S.A.

3

6

6

4531131

44

3

3

6

6

3631131353

3

4

4

6

3731131355

3

315

7

5833151347

55

515

6

5833151355

33

314

7

4833243245

44

415

6

5733242245

66

314

6

5833242245

66

415

6

4733332346446

316

5

2744332456443

41536

5773351356641

31486

4553232356643

2/6/20192/4/20192/3/20192/3/20192/3/20191/31/20191/29/20191/29/20191/28/20191/25/20191/25/20191/23/20191/22/20191/17/20191/16/20191/16/20191/11/20191/8/20191/6/2019

Rate of Success: 70% | Of 129 bankruptcies, 110 companies had a recent PAYCE® score prior to bankruptcy.

7

PAYCE® Score Predictions of U.S. Private Company Bankruptcies | January - July 2019

Country

NOTES:List only includes U.S./Canadian private company bankruptcies that have a PAYCE® score within 12 months of the failure. PAYCE® score accuracy of 70% is based on backtesting of U.S./Canadian private companies; results may vary by country.

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-12 -11 -10-9 -8-7 -6 -5 -4 -3-2-1 PAYCE® @ Filing BankruptcyBusiness Name