MARKET STATISTICS Calpian, Inc. Marco Rodriguez, CFA ...edg1.precisionir.com/companyspotlight/NA019752/Calpian_Stonegat… · Calpian, Inc. (OTCQB: CLPI) Initiation of Coverage: CLPI:

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S E P T E M B E R 3 , 2 0 1 3

I N D U S T R Y :C A R D & M O B I L E P A Y M E N T P R O C E S S I N G

See Important Disclosures and Disclaimer on Page 20

Calpian, Inc. (OTCQB: CLPI) Initiation of Coverage: CLPI: Benefiting from a diversified and growing payments industry Calpian, Inc. provides access to third-party electronic payments transaction processing services and related software to the US merchant community. The Company’s core US business provides a steady monthly cash flow, which has allowed Calpian to enter the high growth mobile payment market in India via its investment in Money on Mobile (MoM). Through its investment in MoM and via additional acquisitions, the Company is seeking to grow substantially. Targeting steady cash flow in the payment processing industry Calpian’s business model entails the acquisition of credit card residual income portfolios from Independent Sales Organizations (ISOs), who sell payment processing services and equipment to merchants as well as other payment processing entities. The value of the residual portfolio has grown from ~$1.6M in December 2010 to ~$13.0M in June 2013 with a quarterly revenue run-rate of ~$5M. Calpian expects to continue this growth by closing additional acquisitions of residual portfolios or other payment processing entities with an objective of adding up to $5M in EBITDA per year. The acquired portfolios should provide steady monthly revenues and should add a steady base for other growth initiatives. Recent acquisition should also help cash flow Calpian’s March 2013 acquisition created a subsidiary called Calpian Commerce (CCI). While the acquisition brought a large sequential increase in the value of the residual portfolio, CCI also brings an internal sales force that is focused on growing its merchant customer base. And lastly, the acquisition brought Calpian an increase in service offerings via a payment gateway and a product called Aircharge (enables a mobile device to accept credit card payments). MoM is looking to tap the large potential in the mobile payment industry

Beginning in March 2012, through a series of investments in MoM, Calpian has stepped up its presence in the nascent and growing mobile payments industry in India. One of the key drivers for the mobile payment industry is the growing use of mobile phones by people to transfer money or pay for goods and services. India has more than 900M mobile phone users and nearly all financial transactions take place via cash. Driven by the growing mobile subscriber base, India’s mobile payment market is estimated to grow from $86M in 2011 to $1.15B in 2016 for a CAGR of 68%. MoM has shown strong growth via retail stores and transaction volumes as it looks to take advantage of these high growth rates in the Indian mobile payment industry.

Valuation Using a sum-of-the-parts analysis, we value Calpian’s core business and its investment in Money on Mobile separately. Based on this analysis, we arrive at a valuation range of ~$1.90 to ~$3.25, with the midpoint at ~$2.50.

MARKET STATISTICS Price $1.28

52-Week Range $0.88 - $2.75

Daily Vol. (3 Month Avg.) 3,137

Market Cap ($M) $35.6

Enterprise Value ($M) $53.2

Shares Outstanding (M) 27.8

Float (M) 11.4

Insider Ownership 58.9%

Institutional Ownership 0.0%

FINANCIAL SUMMARY

COMPANY DESCRIPTION Calpian, Inc. provides access to third-party electronic payments transaction processing services and related software to the US merchant community. The Company offers access to credit and debit processing, ACH, mobile acceptance and gateway payment solutions. Calpian also looks to acquire recurring monthly residual income streams of the 10,000 Independent Sales Organizations (ISOs) who provide card payment processing solutions to merchants in the US. The Company also ventured into the growing mobile payment service business through its investment in the Money on Mobile (MoM) service in India.

Marco Rodriguez, [email protected]

214-987-4121

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

$2.20

$2.40

$2.60

$2.80

$3.00

Equity (M) 5.0$ BV/Sh 0.18$ Cash (M) 1.0$ Debt (M) 18.6$ Debt/Cap 78.8%

FYE: Dec 2012A 2013E 2014E

(in $000)Rev 3,439$ 21,576$ 26,841$ Chng% 22% 527% 24%

EBITDA 364$ 592$ 879$ EPS (0.20)$ (0.24)$ (0.23)$

EV/R 15.5x 2.5x 2.0xP/E nm nm nm

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E Q U I T Y R E S E A R C H S T O N E G A T E S E C U R I T I E S

Calpian Inc. | September 3, 2013

INVESTMENT FACTORS Calpian, Inc. is engaged in the electronic payment processing industry. The Company is looking to grow by providing access to third-party electronic payment transaction processing services and related software to the US merchant community and by acquiring residual portfolios that provide monthly cash flow or other payment processing entities. Given its experience and potentially steady cash flow from its residual portfolio, Calpian has moved into a high growth investment via a mobile payments firm in India called Money on Mobile (indirect investment via MyMobile Payments, Ltd [MMPL]). Below we outline important investment points to consider. Investment Positives Card Payment Processing Business Targeting steady cash flow in the payment processing industry

Calpian’s business model entails the acquisition of credit card residual income portfolios or other payment processing entities. The value of the residual portfolio has grown from ~$1.6M in December 2010 to ~$13.0M in June 2013 with a quarterly revenue run-rate of ~$5M. Calpian expects to continue this growth by closing additional acquisitions of residual portfolios or other payment processing entities with an objective of adding up to $5M in EBITDA per year. The acquired portfolios should provide steady monthly revenues and should add a steady base for other growth initiatives.

Focus on reliable processors to provide stable income source The card payment processing industry carries a high risk of default, thus reducing future cash flows from residual income streams. To mitigate this risk, the Company is working hard to focus on acquiring ISOs generating business via well-established processors like Elavon, Chase Paymentech, RBS Lynk, First Data Merchant Services, etc. This ensures credit-worthiness of merchants registered through a diligent documentation process, and hence a stable future income stream to the Company. Recent acquisition should also help cash flow Calpian acquired certain assets of Pipeline Data in March 2013, which then became a subsidiary called Calpian Commerce (CCI). The acquisition is largely responsible for the large sequential increase in the value of the residual portfolio on the balance sheet and monthly revenue run-rate. However, CCI also brings an internal sales force that is focused on growing its merchant customer base. Additionally, the acquisition brought Calpian its own payment gateway, which should help the Company lower costs. And Calpian also acquired a product called Aircharge (enables a mobile device to accept credit card payments), that increase its service offerings to merchants. Consequently, the Company has the opportunity to increase revenues to offset attrition rates in its residual portfolio. Mobile Payment Business Large penetration opportunity in a cash-based economy India’s population is over 1.2B and is expected to grow to 1.6B by 2030. Calpian, through its investment in Money on Mobile (MoM), is looking to address some key pain points in India. For example, ~70% of the population is based in rural areas which lack income generating sources. The incidence of people migrating to urban cities for employment has increased and hence, remitting money to their family in villages is on the rise. Compounding this issue is that most of the population is unbanked. Thus, most of India’s population works on an all cash economy. On the other side, the urban population, due to a lifestyle of long working hours, has less time to make utility bill payments and buy mobile talk-time, etc. The MoM solution is a mobile wallet that allows a consumer to load virtual currency on their mobile phone and use this currency via SMS texts to transfer money or pay for goods and services. Consequently, the solution helps the population by saving them time and money.

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Higher usage of mobile phones to drive growth of mobile payment services India’s cell phone penetration has increased rapidly over the last decade with more than 900M subscribers registered at the end of 2012 (~75% penetration vs. ~14% for internet penetration). We also note that the rural mobile phone user growth rate is double the urban growth rate. This provides a large opportunity for MoM to offer its mobile wallet services. The mobile payments market is expected to grow from $86M in 2011 to $1.15B in 2016 for a 68% CAGR. This should all lead to faster growth Supported by the opportunities mentioned above, the MoM business has grown robustly. In 2012 its retailer network tripled from ~40,000 to ~120,000 and volumes processed grew from $67M per year (annualized Jan 2012 volumes) to ~$137M (annualized Dec 2012 volumes). Investment challenges / risks Card Payment Processing Business Growth of its residual portfolio is primarily dependent on acquisitions The residual portfolio should experience a monthly churn of 1.4% to 1.6%, in line with industry metrics, and decline in value over time. At the midpoint of this range, this implies a residual portfolio’s cash flows will decline by ~55% in 4 years. While the new subsidiary CCI should help offset some of this decline by adding new merchants to the portfolio, the sales force is relatively small and targeting the NE of the US. Therefore, Calpian is dependent on acquisitions to substantially grow its residual portfolio. Acquisition model is dependent on capital markets Calpian remains in its early stages of growth. Consequently, in order for the Company to continue to grow it will need access to capital. Any capital raised may lead to dilution. If capital is not readily available, the Company may find it difficult to grow and financial results will be negatively impacted. Highly regulated industry The payment industry is highly regulated by the government with numerous laws and regulations. The introduction of new regulations and changes in fee structure at the merchant/retailer level could adversely impact the Company’s financial results. Merchant chargebacks Chargebacks or a customer dispute related to a charge, are part of the industry. Certain processing contracts specify ISOs bear such chargebacks arising at the merchants’ end. Hence, portfolios with such terms acquired by the Company may bear chargeback risks. Mobile Payment Business Payment industry is highly regulated In India, mobile payments are governed by the Indian Payments and Settlement Systems Act 2007 and the country’s central bank, The Reserve Bank of India (RBI). RBI reviews the operations, systems, and processes to grant licenses to operate a payments system. MMPL license to operate expires in October 2013. While the license auto renews for 7-year terms, the RBI can revoke the license at any time. Any inability to maintain the license will negatively impact financial results. Stiff competition from large mobile operators India’s mobile payment industry is nascent and faces stiff competition from established mobile operators. Several telecom operators like Bharti Airtel, BSNL, and Vodafone have started their mobile money transfer services in India. These telco players have a large customer base and are well financed to establish their services on a large scale. Additional equity raises are likely to fund its investment in MoM Calpian’s goal is to acquire up to a 74% equity interest in MoM via cash and the issuance of stock. In order for Calpian to meet this goal, the Company will likely need to raise capital that will lead to equity dilution.

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VALUATION SUMMARY To help frame valuation, we used a some-of-the-parts (SOTP) analysis. For our SOTP analysis we used an EV/EBITDA framework to arrive at a valuation range of ~$1.90 to $3.25 with the midpoint at ~$2.50. Calpian Assumptions

We first looked at Calpian itself apart from its ownership in MoM. Importantly, we note that our modeled estimates do not include acquisitions and we are only modeling out to 2014. However, Calpian’s business model assumes that the Company does acquire additional residual portfolios and/or other operating entities. Consequently, we used management’s EBITDA goal that it expects to hit in 2016 via acquisitions. We then applied a 6x – 10x range for EV/EBITDA multiples that are in-line with historical industry multiples. Lastly, we applied a 40% discount rate to bring the price back to present. We believe the high discount rate is warranted given 1) the infancy of the business model, which has yet to show long-term execution and; 2) the model is based on acquisition growth. Given these assumptions our price range for Calpian is ~$1.15 to $2.15. MoM Assumptions

For MoM, our revenue assumption in 2016 is ~ $580M and is based on retail store growth that is in-line with recent results. We also assumed that transaction size per retail store would also remain similar to current levels and that foreign exchange would be unchanged. We next assumed that EBITDA margins would be ~ 1.0%, which we derived via implied assumptions that were given in corporate presentations. We also assumed that MoM would carry no debt, would need 1% of revenues in cash and Calpian owns 74% of the entity. Lastly, we applied a 10x-15x EV/EBITDA multiple given the higher growth rates. We also used a 40% discount rate given the early nature of the venture. Given these assumptions, our price range for MoM is ~ $0.75 - $1.10. Upside to MoM mainly comes from better growth rates for store counts, and a higher level of revenue/store than we assumed. While MoM is in the process of rolling-out new service offerings, its impact on transaction values is undefined. We see the following important catalysts for the stock in FY13 and beyond: Acquisitions of residual portfolios or other operating companies ……..................2013/2014 Increasing store count for MoM …....………………………..................................2013/2014 Increasing transaction volumes for MoM ………………………………………...2013/2014

Sum of the Parts Analysis

EV/EBITDA Framework Low-End Base Case High-End

(in thousands, except per sh)

Calpian2016 EBITDA Goal 15,200$ 15,200$ 15,200$ EV/EBITDA multiple 6.0x 8.0x 10.0x

Total EV of CLPI 91,200 121,600 152,000

Mrkt Cap 73,550 103,950 134,350 Price /sh 3.58$ 5.05$ 6.53$

Discount Rt 40% 40% 40%

Price/sh 1.16$ 1.64$ 2.13$

MoM2016 EBITDA 5,835 5,835 5,835

EV/EBITDA multiple 10.0x 12.0x 15.0xTotal EV of MMPL 58,351 70,021 87,526

Mrkt Cap 64,186 75,856 93,361 CLPI ownership 74% 74% 74%Price /sh 2.31$ 2.73$ 3.36$

Discount Rt 40% 40% 40%

Price/sh 0.75$ 0.89$ 1.09$

Total Value per Share 1.92$ 2.53$ 3.22$

5Calpian Inc. | September 3, 2013

E Q U I T Y R E S E A R C HS T O N E G A T E S E C U R I T I E S

COMPANY OVERVIEW

Company Background Calpian, Inc. provides access to third-party electronic payments transaction processing services and related software to the US merchant community. The Company offers access to third-party credit and debit processing services, ACH, mobile acceptance and gateway payment solutions. Calpian also looks to acquire recurring monthly residual income streams of the 10,000 Independent Sales Organizations (ISOs) who provide card payment processing solutions to merchants in the US. The Company mainly targets portfolios of small and mid-sized merchants in the US. Calpian came public in April 2010 by acquiring a shell company whose business plan never materialized. Current management and affiliates of Calpian changed the business focus to electronic payment processing and, in September 2010, changed the name to Calpian, Inc. We note that ‘Calpian Inc.’ and its related trademark and domain name were acquired from ART Holdings, Inc., a merchant payment processing company. ‘Calpian’ was a trade name of ART Holdings, Inc. and was in the same business of acquiring ISO processing portfolios. ART Holdings is owned and controlled by Calpian’s CEO/Chairman, Harold Montgomery, and President/Director, Craig Jessen. What’s more, Calpian acquired its first residual portfolio for $1.6M from an entity controlled by Mr. Montgomery and Mr. Jessen. Equity Investment – Money on Mobile

Apart from the core business described above, the Company also ventured into the mobile payments market in India through an agreement to acquire equity interests in Digital Payments Processing, LTD (DPPL), based in India. DPPL, jointly with My Mobile Payments Limited (MMPL), operates a mobile payment processing service known as ‘Money on Mobile’. Since its first investment in March 2012, Calpian has acquired a 38% equity interest in DPPL and plans to raise it to 74%.

Exhibit 1: Equity Investment Structure

Source: Company reports, Stonegate Securities

Calpian reserves the right to reclaim ~4.9M shares of its common shares from the founders of DPPL as penalty in the event certain pre-defined financial performance metrics are not fulfilled. Calpian has stated that all future investments in DPPL will be enabled through a mix of cash and stock.

March-12 $1.25 17%

May-12 $2.5

August-12 $3.7

December-12 $4.1

Mar-13 $5.3

May-13 $6.3

Jul-13 $7.3 38%

Future Tranches

Sep-13 $1.2

Oct-13 $1.2

2014 $1.1

Total $10.8 74%

Investment Tranche% Ownership of

MOMCumulative Amount

(USD Millions)

Paid



Services Overview While Calpian is engaged in the electronic payments business in general, it has two different sides to its business. One part is providing access to US based third-party card payment processing services. The other is its investment in the Indian mobile payments market. Below we describe both businesses. US Based Card Payment Processing Calpian provides credit and debit card processing services to small retail merchants in the U.S. This core business is looking to acquire ISO residual portfolios and through its new subsidiary, Calpian Commerce, to directly provide access to credit and debit card processing services to merchants. To better understand the core business, we first outline how the industry works. How a Payment Transaction Works A merchant payment transaction involves multiple parties: the customer, the merchant, the processor, ISO (agent) and banks. A payment transaction is originated by the customer with the merchant for payment of goods and services. To process a transaction, the merchant uses payment gateways provided by ISO/processors and pays a fee for its usage to the processor. In the US, such merchants are estimated to transact around $40/month per store (net revenue) and an ISO is estimated to earn around 0.25%-0.50% commission on every such transaction. ISOs are contracted with payment card processors like First Data Merchant Services, Chase Paymentech, Elavon, etc., and act as a distribution channel to the processors. The ISO is authorized to sell processing terminals and sell third-party processing services to small, mid-sized, and large merchants. Thus, the ISOs earn revenues mainly from: (1) sale of terminals (one time revenue) and (2) recurring income stream based on fees paid by the merchant to the processor. Generally, an ISO sells processing services to merchants at a retail price which is above the wholesale price charged by the processor. The difference termed as “residual revenue streams” are paid by the processors and are the main source of revenue to the ISOs. Over time, ISOs will develop a portfolio of “residual revenue streams” as the ISO adds more merchant clients.

Exhibit 2: Components of a Merchant Payment Transaction


Exhibit 3: Revenue Allocation in Merchant Transaction

Source: Heartland Payments Annual Report, Stonegate Securities

Consumer$100.00

Merchant$97.50

Purchase Transaction Merchant Settlement

$2.50

Dues & Assessments

Transaction fees

Net Revenue

Interchange fees $1.87

$0.11

$0.02

$0.50

Visa & Mastercard

Visa/Mastercard

ISO

Card Issuer

Revenue Allocation



Calpian’s Role in the Payment Transaction

Calpian is engaged in two parts of the industry via Calpian Inc. and Calpian Commerce (CCI). First, Calpian Inc. focuses on the acquisition of recurring income streams from ISOs. The rights to ISOs residual revenue streams are bought at a negotiated price and the processor is notified of such transactions to enable future residual payments to Calpian. Such transactions are funded through a combination of cash and common stock. Importantly, in this instance, Calpian is not a credit card processor but just an acquirer of revenue streams from merchant portfolios. The Company’s acquisition process typically spans a 60 to 90 day time frame and targets are based on the following criteria:

Small ISOs, having less than 2,000 merchants, with financial requirements generally arising due to personal needs like medical, educational, etc.; and

Larger ISOs, having 2,000 and above merchants, with financial needs arising out of business issues like partnership splits, expansion funding and exit plans.

Currently, Calpian doesn’t target large merchants, as that market faces much larger competition and runs the risk of revenue concentration.

Exhibit 4: Calpian’s ISO Target Market


Next, the Company entered the ISO marketplace via its March 2013 acquisition of Pipeline Data. Pipeline Data is now a subsidiary called Calpian Commerce, Inc. (CCI). CCI provides merchants access to a suite of payment services and related software products. These services include: third-party credit and debit card processing, ACH, mobile payment acceptance and gateway payment solutions. In this instance, Calpian is an ISO. The acquisition brought a small sales force targeting the NE region of the US with approximately 13,000 existing merchants in its portfolio. CCI also has two main service offerings in Aircharge and Secure Pay. Aircharge enables a mobile device to accept credit card payments for a merchant. Transactions and authorizations provided by the processor are conducted in real-time through its payment gateway.

Exhibit 5: Aircharge Solution




Secure Pay is payment gateway that routes card transactions to the processor of Calpian’s choice. This position in the transaction cycle allows CCI to use the lowest cost processor. Business Strategy Calpian is looking to grow via the expansion of its residual portfolios. It plans on doing this by 1) acquiring residual portfolios from ISOs or other payment processing entities, and 2) using its direct sales force at CCI to further penetrate the merchant market in the NE region of the US. Importantly, the company will focus on small and medium-sized merchants. Another important aspect is that Calpian will concentrate on ISOs contracted with preferred processors. Since the payment processing business involves high risk of default, the Company is focusing on acquiring ISOs who serve reliable and credit-worthy processors like Elavon (earlier NOVA Information Systems), RBS Lynk, Chase Paymentech, National Processing Company, and First Data Merchant Services, among others. Thus the default risk of the merchants may be lower. Sales and Marketing Strategy Calpian advertises in the trade journal named ‘Transaction World Magazine’ (TWM). According to Calpian, the March 2013 issue of TWM was circulated to more than 14,000 readers. TWM is a wholly-owned subsidiary of ART Holdings, which, as mentioned, is owned and founded by Harold Montgomery and Craig Jessen, Calpian’s executive management, directors and controlling shareholders. We also note that Calpian started funding all of the magazine’s expenses (net of advertising revenue). The net expenses averaged around $21,500 per month in FY11. Mobile Payment Business Calpian entered the mobile payment industry in India, via the aforementioned agreement to acquire equity interest in DPPL. The Money on Mobile (MoM) service was launched in 2010 and the service acts like a mobile wallet wherein users can carry virtual cash on their mobile phones to make mobile recharge, DTH (direct-to-home; think satellite TV) recharge, utility payments,, and other small consumer purchases. In June 2011, the service received Reserve Bank of India’s (RBI’s) approval to offer its semi-closed mobile-wallet service to Indian consumers. How It Works MoM currently has over 150,000 retailers across 200 cities in India. Consumers go to a retailer and give the retailer cash and then receive credit for a prepaid virtual currency associated to their phone number. Consumers can then use virtual currency to pay for services from an approved vendor (telephone, utilities, etc.) via a SMS text message. At present, the vast majority of transactions (over ~95%) by the consumer are for prepaid mobile and prepaid TV. MoM revenue streams come in two forms, which the Company calls B2B (business to business) and B2C (business to consumer). The B2B model entails MoM retailers reselling prepaid mobile minutes and prepaid TV time to consumers. The B2C model entails having the consumer use their mobile phones to make payments directly to vendors. These vendors include phone, utilities, and other MoM retailers for goods and services.

Exhibit 6: Secure Pay Processing Gateway




Exhibit 7: B2B model Exhibit 8: B2C Model

Source: Company reports, Stonegate Securities Source: Company reports, Stonegate Securities

MoM plans to add the B2C functionality in the near future. The Company believes the B2C model offers significant opportunities as the volume of transactions are expected to be higher, and MoM receives a higher margin on transactions processed. Nonetheless, MoM has been growing quite rapidly as illustrated below. MoM has signed up several mobile service providers, satellite TV operators, and other utility providers to enable customer payments.

Exhibit 9: MoM Growth

(1) Volumes processed are in rupees Source: Company Reports, Stonegate Securities



Sales and Marketing Strategy To increase its user base, MoM focuses on expanding its retail base across India to target the country’s large population. The strategy here is to target merchant distributors who supply goods to the various retailers across India. Once a distributor signs up, MoM then gains the distributor’s entire retail customer base. Importantly, both distributor and retailer get a revenue share.

Financial Model Review Calpian overall business model generates revenues based on a percentage earned on transactions processed. An ISO in the US earns around 0.25%-0.50% on every transaction processed by merchants, which is the equivalent to $40 per store per month (net revenue). Additionally, the residual portfolio generally sees a 1.4% - 1.6% monthly attrition rate (17% - 19% annualized), in-line with industry standards. At the midpoint of this range, this implies a residual portfolio’s cash flows will decline by ~55% in 4 years. Calpian plans on mitigating the attrition via its direct sales force in CCI and expects further growth of revenues via acquisitions of additional ISO residual portfolios. Since inception, the Company has grown its residual portfolio from $1.6M to $13.1M in Q213. We note that the CCI acquisition in March 2013 is the reason for the large jump in Q113. Importantly, this is not the cash flow of the portfolio but the value Calpian paid to acquire the residual portfolios (cash and shares). Calpian’s acquisition model calls for the Company to buy residual portfolios at ~ 2x to 3x annual cash flows or other payment processing entities. We also note that ~16% of the acquired residual portfolios prior to 2013 (as measured by price paid) were related party transactions from entities controlled by Calpian’s executive management. We also note that the Company has provided the following revenue and EBITDA objectives based on its acquisition model, described above. Through its acquisition strategy, Calpian’s objective is to add up to $5M in EBITDA per year via the acquisition of additional residual portfolios or other payment processing entities.

Exhibit 11: Calpian Acquisition Model Objectives


We note that amortization of the residual portfolio is calculated based on future expected cash flows derived from each individual portfolio and is reevaluated quarterly. Consequently, as future cash flows change, so will amortization.

Exhibit 10: Revenue and Residual Portfolio


0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

24.0%

28.0%

32.0%

36.0%

40.0%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Rev

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$ T

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On the mobile payment side, MoM earns revenue in the form of commission on purchase of inventory from providers (Mobile minutes, etc.). This “inventory” is purchased from the providers, and then resold to the individual customer. An increase in customer base will result in MoM buying more recharge values from service providers and hence earning more commission/income. Margins for MoM depend on product mix as well as the channel employed. Currently, the vast majority of users employ the B2B channel where a consumer goes to a retailer and pays the retailer cash, who then loads the consumer’s virtual wallet to make transactions and then the retailer physically does the transaction for the consumer on his mobile. On the other hand, MoM is looking to move more toward a B2C channel, where the customer initiates transactions by themselves after visiting the retailer. G&A expenses for Calpian are mainly semi-fixed to fixed expenses that largely comprise compensation & benefits, management advisory fees, and legal & accounting fees. Calpian does not have a significant employee base other than its executive officers. Working capital is virtually non-existent for Calpian as it has minimal accounts receivable and no inventory. Capex is also minimal and is for computers and other office equipment and/or fixtures. However, one could view Calpian’s acquisition plans as a form of capex. Thus, acquisition expenditures will vary year to year depending on deal flow and deal size and availability to credit. Furthermore, since Calpian funds its portfolio acquisitions through the issuance of equity or debt, the Company may witness dilution and a higher interest burden going forward. At the end of June 2013, Calpian had debt outstanding of ~$18.9M carrying an average interest rate of 12.9% (effective rate ~14.0%). The Company also has a significant amount of warrants and options outstanding as well as potential shares to issue for its equity interest in MoM, which may lead to equity dilution of ~24%.

Exhibit 13: Common Stock Dilution


Exhibit 12: Margin Profiles for Money on Mobile

Source: Company Reports, Stonegate Securities

Warrants/Options/Additional Share Issue

Number of shares (in 000s)

Range of price

WTD Average exercise price

Expiry

Warrants 3,147 $1.00 - $3.00 1.95 and 7 years from dates of grant

(various grants)

Stock Options 600 $1.50 - $2.50 $2.0010 years from grant date (April and

August 2011) or termination of services, whichever is earlier

Convertible sub note 667 $1.50 Dec 2013 - Feb 2014

DPPL investment - potential 2,333 $1.50Assumes all future investments in

stock

Total additional shares 6,747

Current shares outstanding 27,803

Potential dilution 24.3%



Model assumptions We are modeling the Company without acquisitions because we believe it is impossible to model acquisitions as we have no idea as to the size of an acquisition or its timing. Therefore, our model is primarily based on CCIs ability to add additional merchants.

Exhibit 14: Revenue Model - Calpian


We modeled FY13 and FY14 revenues of $21.6M and $26.8M respectively, which represents growth rates of 527.4% and 24.4%, respectively. As a reminder, the CCI acquisition happened in March 2013 and skews the FY13 growth rate. Our basic assumptions on merchant attrition rates, new merchants adds and revenue per merchant are listed above. We modeled gross margins largely in-line with recent results. We note that CCI is a lower margin business in comparison to Calpian Inc., which is just residual portfolio cash flow. Consequently, as CCI becomes a large percentage of revenue, gross margins decline in our model. We also kept G&A relatively level at the $2.4M - $2.5M level. For MoM, we modeled an increasing store count through our model based on recent trends. We then also assumed a consistent revenue per store, also based on current trends As revenues for MoM are in rupees, we also assumed a USD to INR exchange rate that was constant at recent rates. These assumptions drive a FY13 and FY14 USD$ revenue of $181.1M and $271.9M, respectively.

Q2 Q3 E Q4 EJun-13 Sep-13 Dec-13 FY 2013 E FY 2014 E

Calpian Inc.Base merchants (actual) 3,500 3,343 3,192 2,655 Montly attrition rate -1.5% -1.5% -1.5% -1.5%Merchant count (actual) 3,343 3,192 3,048 2,536 Rev/merchant 245 245 245 245

Calpian, Inc. 818 782 747 3,165 2,666

CCIBase merchants (actual) 12,500 12,475 13,204 New merchants 350 450 2,500 Montly attrition rate -1.0% -1.0% -1.0%Merchant count (actual) 12,500 12,475 12,551 13,508 Rev/merchant 339 340 340 340 CCI merchant portfolio 4,244 4,246 4,254 12,744 17,646

Processing fees 936 934 936 2,852 3,882 as a % of CCI 22.1% 22.0% 22.0% 22.4% 22.0%

Other 629 637 638 1,949 2,647 as a % of CCI 14.8% 15.0% 15.0% 15.3% 15.0%

Total CCI 5,808 5,817 5,828 18,411 24,175

Total Revenues 6,626$ 6,599$ 6,575$ 21,576$ 26,841$



Our MoM gross margin assumption is largely based on recent results and we modestly grow expenses year-over-year. We lastly assumed 50% ownership in 2H13 due to some disclosed dilution that Calpian initiated in an effort to avoid consolidation of financials. However, we assumed Calpian’s ownership percentage increases to 74% in 2014, in-line with the investment schedule illustrated in Exhibit 1 on page 5. While this implies that financial results should be consolidated, we are keeping our model showing Calpian’s ownership interest in the net loss (equity interest that is). We do this because we do not have detailed financials for Money on Mobile but rather abbreviated numbers as illustrated in Exhibit 15. Consequently, without detailed financial disclosures on MoM, we can’t accurately forecast a combined P&L statement. The above assumptions result in a FY13 and FY14 EPS loss of $(0.24) and $(0.23), respectively. Additionally, EBITDA for FY13 and FY14 are $0.6M and $0.9M, respectively. We also note that we assume equity capital raises to fund the additional MoM investments ($2.4M in FY13; $1.1M in FY14) and project that the Company’s convertible debt will convert in FY14 for proceeds of $1M. We also project additional equity capital raises of $0.5M in FY13 and $1.5M in FY14.

Exhibit 15: Revenue Model – Money on Mobile

Source: Company Reports; Stonegate Securities

Q2 Q3 E Q4 EJun-13 Sep-13 Dec-13 FY 2013 E FY 2014 E

Money on MobileStore count 130,250 162,323 179,970 179,970 271,947 Revenue/store (Rs) 6,248 6,007 6,000 6,000 USD/INR rate 59 60 60 60

Revenue 44,123 46,916 52,186 181,121 271,989 growth Y/Y na na 72% 86% 50%growth Q/Q 16% 6% 11%

Gross profit 230 258 287 1,020 1,587 GPM % 0.5% 0.6% 0.6% 0.6% 0.6%

Expenses 1,262 1,290 1,331 4,989 5,794 as a % 3% 3% 3% 3% 2%growth Y/Y na na -39% 62% 16%growth Q/Q 14% 2% 3%

Net loss (1,016) (1,032) (1,044) (3,950) (4,206)



INDUSTRY OVERVIEW Industry Background Card Payment Processing Industry – the US The payment transaction industry in the US is directly proportional to the country’s retail sales trend. Moreover, a favorable regulatory environment in the US has encouraged other modes of payment replacing cash. Accordingly, the US payment system has witnessed a significant shift resulting in the evolution of multiple modes of payments. With the emergence of various non-cash payment modes, the electronic payment processing industry has evolved over the last decade. Some of the participants in the electronic payment processing industry include banks, merchants, ISOs or Merchant Service Providers and Third-Party Providers. With changing payment patterns and consumer preferences, the total volume of non-cash payments increased sharply from 81.4B in 2003 to 92.5B in 2006 and reaching 109B in 2009.

Exhibit 16: Non-cash Payment Trend in the US

Source: 2007 and 2010 Federal Reserve Payments Studies, Stonegate Securities

In 2009, debit and credit card transactions constituted 55% of the total non-cash payment volumes compared to 49% in 2006. With a shift in the US consumer payment system, by 2015, credit cards will be the top mode of payment in terms of purchase volumes followed by debit cards. The recent trends in the usage of cards indicate higher acceptability of cards by US inhabitants. US consumers spent $3.6 trillion using general purpose cards1 in 2011, an increase of 10.4% over 20102. The electronic payment processing industry is likely to see further technological innovation in many such alternative modes of payments and payment gateways driving the business higher. In addition, it is expected that a large number of firms will look at outsourcing payment processing in the future to achieve faster and more efficient payments, while adhering to regulatory compliance and risk management.

1 Refers to major card network brands like Visa, MasterCard, American Express (NYSE: AXP), etc 2 The Nilson Report dated February 2012,

67.675.7 72.2

15

30

45

60

75

90

2003 2006 2009

In U

S$

Tri

llio

n

In Value terms

81.4

95.2

109

15

30

45

60

75

90

2003 2006 2009

In U

S$

Bil

lion

In Volume terms

Exhibit 17: Distribution of non-cash payment volumes in 2006 and 2009

Source: The 2010 Federal Reserve Payments Study, April 2011, Stonegate Securities

26%

23%15%

3%

32%35%

20%

18%

6%

22%

Debit card Credit cardACH/electronic payments PrepaidChecks paid

2009109 bn

200695.2 bn



Payment processors offer high-volume electronic transaction payment processing and support services directly to merchants, who carry out retail sales transactions using processor payment gateways of this nature. Hence, incomes of processors and ISOs are linked to sales at merchants’ end. In 2011, merchant transactions on general purpose payment cards3 totaled 135.3B, an increase of 12.1% over 20104. With greater acceptance of payment cards in the US and emerging technologies, growth in payment card processing is expected to continue going forward. Also moving ahead, the acceptance of emerging technologies, recovering retail sales, and wider usage of payment cards are expected to push spending on general purpose cards to $5.2T by 2015, representing a compounded annual growth rate of 9.6%5 over 2011. Competition

The US payment processing industry is highly competitive and fragmented. Calpian avoids competition with larger processors by focusing on the small merchant segment, which has traditionally been targeted by the ISO community. The small merchant segment is often too small for larger processors to target cost effectively. Competition mainly rests on services offered to the merchant and pricing. Pricing is directly related to the scale that a payment processor attains, which it can then pass onto its customers. While merchants typically enter into multi-year contracts with payment processors, we believe that switching costs are negligible once contracts expire. Exhibit 18: Competitor Map

Source: Company Reports, Stonegate Securities * Revenues are for respective firms last fiscal year

Calpian also competes for the acquisition of residual portfolios. Again, Calpian avoids larger competitors by focusing on portfolios of smaller merchants. Calpian competes primarily based on price, an ability to offer publicly traded stock, and flexibility in acquisition terms. Mobile Payment Industry – India The Mobile payment industry comprises services like mobile banking, mobile commerce and mobile money transfers. India’s mobile payment industry was valued at $86M in 2011. While mobile payments penetration in India is very limited due to lack of confidence in processes, it is slated to increase in future on the back of favorable regulations6 and mobile service operators’ objective to tap the mobile-commerce growth potential, as seen previously in Africa, the US, and Europe. Market potential

India has a large population of over 1.2B people and is the second most populous country in the world. Interestingly, it is an all cash economy with more than 65% of retail transactions ($410B/per year) being conducted through cash. This is reflective of the fact that ~700M people, or over half of the population is unbanked. Despite this, according to the Telecom Regulatory Authority of India

3 Refers to brands like Visa, MasterCard, American Express, etc 4 ‘Global Credit Card Brands’, The Nilson Report 5 The Nilson report and Stonegate Securities Research 6 Regulation imposed by Reserve Bank of India and Telecom Regulatory Authority of India

Processing Service Providers Acquisition of Residual Portfolio

First Data Private Blue Pay PrivateElavon (US Bancorp Subsidiary) NYSE: USB Frontstream Payments PrivateInnovative Merchant Services ( Intuit subsidiary)

NASDAQ:INTU Century Bankcard Private

Heartland Payment Services NYSE: HPY Cutter Financial PrivateGlobal Payments NYSE: GPN Stream Cash PrivateTSYS Merchant Solutions Private



(TRAI), as of 2012, India had more than 900M mobile subscribers. TRAI further estimates Internet subscribers at ~165M at March 2013. Consequently, mobile is emerging as an important medium in which to provide electronic payment for goods and services. As the current level of transactions, through mobile are small, the potential for a mobile wallet service is large. In fact, the mobile payments market in India is estimated to reach $1.15B in 2016 from 2011, registering a CAGR of 68%7. Despite the strong growth of mobile subscribers, mobile payments in India currently suffer from mass appeal due to significant challenges including lack of understanding, lack of confidence among citizens, and the absence of multi-language platforms. Government regulations

The mobile payment industry in India is highly regulated by The Reserve Bank of India. To take advantage of the immense opportunities in mobile payment, the regulator is gradually amending regulations. In 2010, it allowed semi-closed prepaid payment instruments (mobile wallets) to be used for bill payments and ticketing services. We note that the MMPL license to operate expires in October 2013. While the license auto renews for 7-year terms, the RBI can revoke the license at any time.

Competition

Competition in the mobile payments space in India is increasing as a result of entry of well-established telephone service providers like Bharti Airtel Limited (BSE: BHARTIARTL), Loop Mobile (tied up with ZipCash), BSNL (tied up with Obopay), Vodafone (LSE: VOD), etc. and the presence of other operators like PayPal, mchek, and Beam to name a few. Going forward, we expect competition in this industry to intensify as most of the major telecom players in the country have aggressive plans to scale up in this space. MoM plans to compete by offering a mobile wallet that is agnostic to the mobile phone provider and by offering customers easier access to retail locations to load their mobile wallets with virtual currency.

Exhibit 19: Peer comparison – Payment Initiatives in India

Source: Bloomberg, Stonegate Securities

7 “Knowledgefaber”, Business Standard News Item, Dec 2012

Company Ticker OperationsOperating Region

Mobile recharge

DTH recharge

Utility Payments

TicketingDomestic

remittanceMobile

BankingShopping

Money on Mobile Private Provider of m-wallet services in India. India

Beam Private Provider of mobile commerce services in India. India

M-Pesa PrivateOnwed by Vodaphone & in partnership with ICIC Bank. Provides m-wallet services in India

India and Africa

Airtel M Commerce Services

Private

A fully owned subsidiary of Bharti Airtel Ltd, provides mobile commerce solutions. Its mobile recharge services are only for its own telecom services.

India and Africa

mchek Private

Mobile Money solutions provider. Partnered with nearly all top mobile, payment gateways, banks, corporates in India. Offers cross-border remittances also.

India

Paymate PrivateMobile payment system consisting of a hybrid SMS and IVR based transaction platform.

India

PayPal, owned by eBayNASDAQ:

EBAYRecently received permission for domestic payment in India.

India* and Global

Zipcash PrivateOperates in the form of a mobile voucher loaded on mobile phone, which can be used for making various payments.

India

Service Offerings

17


Calpian Inc. |September 3, 2013

BALANCE SHEETS Calpian, Inc. (O TCQ B: CLPI)Consolidated Balance Sheets (in thousands $)Fiscal Year: December

FY 2012 Q 1 Q 2 Q 3 E Q 4 E FY 2013 E FY 2014 EASSETS Mar-13 Jun-13 Sep-13 Dec-13Current AssetsCash & cash equivalents 314 381 982 649 1,138 1,138 722 Accounts receivables, net 35 345 57 57 57 57 57 Restricted cash 270 662 562 562 562 562 562 Other current assets 70 159 403 528 526 526 547 Total Current Assets 690 1,547 2,004 1,796 2,283 2,283 1,888

PP&E - 330 396 396 396 396 396 Intangible assets acquired, at cost 10 39 39 39 39 39 39 Residual portfolios acquired, net 5,254 13,758 13,098 12,470 11,872 11,872 9,753 Equity investment 6,854 7,857 9,014 9,698 10,376 10,376 8,364 Deferred financing costs 245 1,381 1,027 973 919 919 714 Total Assets 13,053$ 24,913$ 25,579$ 25,373$ 25,885$ 25,885$ 21,154$

LIABILITIES AND STO CKHO LDERS' EQUITYCurrent LiabilitiesAccounts payable 51 117 283 321 279 279 288 Accrued expenses 61 210 788 785 782 782 814 Accrued exp payable to officers, directors and affiliates 395 430 459 528 526 526 547 Interest payable 40 151 203 202 201 201 209 Deferred comp of officers, directors and executives 125 106 100 100 100 100 100 Note payable 8 59 100 132 132 132 137

Total Current Liabilities 679 1,073 1,933 2,068 2,020 2,020 2,096

Long-Term LiabilitiesSenior term loan credit facility 3,000 13,170 13,170 13,170 13,170 13,170 12,073 Subordinated notes payable 3,300 4,800 4,800 4,800 4,800 4,800 4,800 Convertible subordinated notes 850 1,000 1,000 1,000 1,000 1,000 - Discount on subordinated notes payable (368) (507) (338) (281) (233) (233) (111)

Total Long-Term Liabilities 6,782 18,463 18,632 18,689 18,737 18,737 16,762

Stockholders' EquityCommon stock 24 24 26 27 28 28 30 Additional paid-in capital 13,703 14,571 17,696 18,895 21,094 21,094 25,192 Accumulated deficit (7,980) (9,128) (10,933) (12,532) (14,218) (14,218) (21,152) Other comprehensive (155) (90) (1,775) (1,775) (1,775) (1,775) (1,775) Total Stockholders' Equity (deficit) 5,592 5,376 5,015 4,616 5,129 5,129 2,296 Total Liabilities and Stockholders' Equity 13,053$ 24,913$ 25,579$ 25,373$ 25,885$ 25,885$ 21,154$

RatiosLiquidityCurrent Ratio 1.0x 1.4x 1.0x 0.9x 1.1x 1.1x 0.9xQuick Ratio 0.9x 1.3x 0.8x 0.6x 0.9x 0.9x 0.6xWorking Capital $11.1 $474.0 $70.8 ($272.2) $263.0 $263.0 ($208.2)

LeverageDebt To Equity 121.4% 344.5% 371.5% 404.9% 365.3% 365.3% 730.0%Debt To Capital 54.8% 77.5% 78.8% 80.2% 78.5% 78.5% 88.0%

Capital Usage -AnnualizedA/P Turns 32.5x 48.6x 93.2x 60.8x 60.8x 89.9x 64.3x


18


INCOME STATEMENTS Calpian, Inc. (O TCQ B: CLPI)Consolidated Statements of Income (in thousands $, except per share amounts)Fiscal Year: December

Q 1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 E Q 4 E Q 1 E Q 2 E Q 3 E Q 4 EFY 2011 Mar-12 Jun-12 Sep-12 Dec-12 FY 2012 Mar-13 Jun-13 Sep-13 Dec-13 FY 2013 E Mar-14 Jun-14 Sep-14 Dec-14 FY 2014 E

RevenuesRevenues 2,809.1$ 870.4$ 892.8$ 859.7$ 816.1$ 3,438.9$ 1,775.8$ 6,626.3$ 6,598.7$ 6,575.4$ 21,576.2$ 6,599.8$ 6,658.9$ 6,740.1$ 6,842.5$ 26,841.4$

Total revenue 2,809.1 870.4 892.8 859.7 816.1 3,438.9 1,775.8 6,626.3 6,598.7 6,575.4 21,576.2 6,599.8 6,658.9 6,740.1 6,842.5 26,841.4

Cost of revenuesCost of sales 1,179.5 439.0 199.6 294.6 278.8 1,211.9 1,019.5 4,658.6 4,593.8 4,561.4 14,833.3 4,510.3 4,532.3 4,569.1 4,620.2 18,231.8 Total cost of revenues 1,179.5 439.0 199.6 294.6 278.8 1,211.9 1,019.5 4,658.6 4,593.8 4,561.4 14,833.3 4,510.3 4,532.3 4,569.1 4,620.2 18,231.8

Gross (loss) profit 1,629.6 431.4 693.2 565.1 537.2 2,227.0 756.3 1,967.7 2,004.9 2,014.0 6,742.9 2,089.6 2,126.7 2,171.0 2,222.3 8,609.5

Operating expensesG&A 2,009.8 700.9 580.4 564.8 1,120.2 2,966.4 1,054.4 2,406.5 2,400.0 2,500.0 8,360.9 2,450.0 2,425.0 2,425.0 2,550.0 9,850.0

Total operating expenses 2,009.8 700.9 580.4 564.8 1,120.2 2,966.4 1,054.4 2,406.5 2,400.0 2,500.0 8,360.9 2,450.0 2,425.0 2,425.0 2,550.0 9,850.0

Income (loss) from operations (380.3) (269.5) 112.8 0.3 (583.0) (739.4) (298.1) (438.8) (395.1) (486.0) (1,618.0) (360.4) (298.3) (254.0) (327.7) (1,240.5)

Other income (expense):Amortization of deferred financing costs (740.5) (282.4) (285.2) (288.3) (735.1) (1,591.0) (23.6) (54.0) (54.0) (54.2) (185.8) (54.4) (51.6) (50.1) (48.6) (204.8) Amortization of discount of sub notes payable (545.6) (171.1) (171.1) (81.6) (41.5) (465.2) (69.2) (85.9) (57.4) (47.6) (260.1) (39.7) (32.9) (27.3) (22.7) (122.7) Interest expense, net (406.4) (185.6) (195.2) (208.1) (213.0) (801.9) (310.2) (609.8) (576.2) (577.0) (2,073.1) (575.8) (576.6) (559.4) (540.7) (2,252.4) Other income/(expense) - - - - - - - - - - - - - - - -

Total other income (expense): (1,692.5) (639.1) (651.4) (578.0) (989.7) (2,858.1) (403.0) (749.7) (687.5) (678.8) (2,519.1) (669.9) (661.2) (636.8) (612.0) (2,579.9)

Pre-tax income (loss) (2,072.8) (908.6) (538.7) (577.6) (1,572.7) (3,597.5) (701.1) (1,188.5) (1,082.6) (1,164.8) (4,137.1) (1,030.3) (959.5) (890.8) (939.7) (3,820.4)

Provision for taxes (benefit) 18.8 5.7 (21.9) - (2.1) (18.2) - - - - - - - - - - Equity investment profit / (loss) - - - (151.2) (610.7) (762.0) (447.1) (616.3) (516.1) (521.9) (2,101.4) (674.4) (795.1) (826.3) (817.0) (3,112.8)

Net income (loss) (2,091.6)$ (914.3)$ (516.8)$ (728.8)$ (2,181.3)$ (4,341.3)$ (1,148.2)$ (1,804.8)$ (1,598.7)$ (1,686.7)$ (6,238.5)$ (1,704.7)$ (1,754.6)$ (1,717.1)$ (1,756.7)$ (6,933.1)$

EPS (loss) (0.11)$ (0.05)$ (0.03)$ (0.03)$ (0.09)$ (0.20)$ (0.05)$ (0.07)$ (0.06)$ (0.06)$ (0.24)$ (0.06)$ (0.06)$ (0.06)$ (0.06)$ (0.23)$

Shares outstanding 18,306.8 19,374.1 20,133.8 22,817.1 23,743.0 21,517.0 23,907.6 25,697.5 27,165.4 28,298.7 26,267.3 29,032.1 29,365.4 29,698.7 30,032.1 29,532.1

EBITDA 431.6 138.7 286.6 268.6 (329.5) 364.3 25.4 221.2 233.2 112.1 591.9 209.0 243.8 262.2 163.7 878.7

Margin AnalysisGross margin 58.0% 49.6% 77.6% 65.7% 65.8% 64.8% 42.6% 29.7% 30.4% 30.6% 31.3% 31.7% 31.9% 32.2% 32.5% 32.1%G&A 71.5% 80.5% 65.0% 65.7% 137.3% 86.3% 59.4% 36.3% 36.4% 38.0% 38.8% 37.1% 36.4% 36.0% 37.3% 36.7%Operating margin -13.5% -31.0% 12.6% 0.0% -71.4% -21.5% -16.8% -6.6% -6.0% -7.4% -7.5% -5.5% -4.5% -3.8% -4.8% -4.6%EBITDA margin 15.4% 15.9% 32.1% 31.2% -40.4% 10.6% 1.4% 3.3% 3.5% 1.7% 2.7% 3.2% 3.7% 3.9% 2.4% 3.3%Pre-tax margin -73.8% -104.4% -60.3% -67.2% -192.7% -104.6% -39.5% -17.9% -16.4% -17.7% -19.2% -15.6% -14.4% -13.2% -13.7% -14.2%Net income margin -74.5% -105.1% -57.9% -84.8% -267.3% -126.2% -64.7% -27.2% -24.2% -25.7% -28.9% -25.8% -26.3% -25.5% -25.7% -25.8%Tax rate -0.9% -0.6% 4.1% 0.0% 0.1% 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Growth Rate Analysis Y/YTotal revenue nm 104.4% 113.0% -15.3% -14.0% 22.4% 104.0% 642.2% 667.6% 705.7% 527.4% 271.6% 0.5% 2.1% 4.1% 24.4%Total cost of revenues nm 92.5% 13.1% -20.9% -30.7% 2.7% 132.3% 2234.2% 1459.6% 1535.8% 1123.9% 342.4% -2.7% -0.5% 1.3% 22.9%G&A 41.3% 22.9% 4.6% 13.7% 188.8% 47.6% 50.4% 314.6% 324.9% 123.2% 181.9% 132.4% 0.8% 1.0% 2.0% 17.8%Operating income 73.3% 27.7% 136.1% -99.8% -468.3% -94.4% -10.6% -489.1% -116996.0% 16.6% -118.8% -20.9% 32.0% 35.7% 32.6% 23.3%EBITDA 130.4% 158.0% 251.8% -42.4% -183.7% -15.6% -81.7% -22.8% -13.2% 134.0% 62.5% 721.9% 10.2% 12.4% 46.0% 48.4%Pre-tax income -39.2% -76.7% 28.9% -33.8% -325.8% -73.6% 22.8% -120.6% -87.4% 25.9% -15.0% -47.0% 19.3% 17.7% 19.3% 7.7%Net income -40.4% -77.9% 31.9% -67.0% -470.7% -107.6% -25.6% -249.2% -119.4% 22.7% -43.7% -48.5% 2.8% -7.4% -4.1% -11.1%EPS - fully diluted -35.7% -54.5% 39.9% -41.1% -364.8% -76.6% -1.8% -173.6% -84.2% 35.1% -17.7% -22.3% 14.9% 1.8% 1.9% 1.2%Share count - fully diluted 3.5% 15.1% 13.3% 18.3% 22.8% 17.5% 23.4% 27.6% 19.1% 19.2% 22.1% 21.4% 14.3% 9.3% 6.1% 12.4%

Source: Company Reports, Stonegate Securities estimates



CASH FLOWS

Calpian, Inc. (O TCQ B: CLPI)

Consolidated Statements of Cash Flows (cumulative)

Fiscal Year: December

FY 2012 Q 1 Q 2 Q 3 E FY 2013 E FY 2014 ECash Flow from O perations Mar-13 Jun-13 Sep-13Net income (loss) (4,341) (1,148) (2,953) (4,551) (6,238) (6,933)

Adjustments to reconcile net income to net cash :Depreciation - 8 35 35 35 - Equity investment loss 762 447 1,063 1,580 2,101 3,113 Amortization of deferred financing costs 1,591 24 78 132 186 205 Amortization of residual portfolios acquired 1,104 324 983 1,612 2,210 2,119 Amortization of discount on subordinated notes p 465 69 155 212 260 123 Amortization of deferred consulting fees - - 21 21 21 - Equity awards to management 11 - 111 111 111 - Stock issued for services 390 - - - - -

Changes in operating assets and liabilities:Accounts receivable - (310) (21) (21) (21) - Restricted cash - (85) 15 15 15 - Other current assets (10) 7 (152) (277) (275) (21)Deferred compensation of officers, directors (235) (19) (25) (25) (25) - Accounts payable 28 65 231 269 227 10 Accrued expenses 25 93 671 667 665 32 Accrued expenses payable to officers, directo 193 35 64 133 131 21 Interest payable 14 111 163 162 162 8

Net cash provided by operating activities (5) (379) 440 75 (436) (1,324)

Cash Flow from InvestingCapital expenditures - - (96) (96) (96) - Proceeds from asset sales - 18 21 21 21 - Cash acquisitions - (9,500) (9,500) (9,500) (9,500) - Residual portfolios acquired (492) - - - - - Equity investment (4,081) (1,385) (2,985) (4,185) (5,385) (1,100)

Net cash used by investing activities (4,573) (10,867) (12,560) (13,760) (14,960) (1,100)

Cash Flow from FinancingProceeds from convertible debt - - - - - (1,000) Proceeds from issuance of senior notes payable 3,000 10,170 10,170 10,170 10,170 (1,098) Proceeds from issuance of subordinated notes payable 1,600 1,650 1,950 1,950 1,950 - Proceeds from issuance of common stock 2,805 35 1,235 2,435 4,635 4,100 Change in restricted cash 155 - - - - - Payments on notes payable (33) (8) (32) 0 (0) 5 Repayment of senior notes payable (2,700) - - - - - Deferred financing costs (303) (535) (535) (535) (535) -

Net cash provided (used) by financing activities 4,524 11,312 12,788 14,020 16,220 2,008

Net increase (decrease) in cash (53) 66 668 335 824 (416) Cash and cash equivalents, beginning of year 368 314 314 314 314 1,138 Cash and cash equivalents, end of period 314 381 982 649 1,138 722




IMPORTANT DISCLOSURES AND DISCLAIMER a) Stonegate Securities, Inc. (“Stonegate”) expects to receive or intends to seek compensation for investment banking or other

business relationships with the covered companies mentioned in this report in the next three months. b) The Research Analyst principally responsible for the preparation of this report has received compensation that is based upon,

among other things, Stonegate’s investment banking revenues. c) Within the last twelve months, Stonegate has not received compensation for investment banking services from the Company;

however Stonegate has a non-exclusive research and institutional investor awareness agreement in place since 1/23/12; Stonegate is currently engaged to provide research and institutional investor awareness for the Company. As compensation, Stonegate receives $10,000 per month for the next 3 months and thereafter, at the Company’s discretion.

d) Within the last twelve months, Stonegate has not managed or co-managed a public offering for the Company. e) Stonegate and/or its employees, officers, directors and owners do not own options, rights or warrants to purchase this security. f) Stonegate does not make a market in this security. g) No employee of Stonegate serves on the Company’s Board of Directors. h) A Research Analyst and/or a member of the Analyst’s household do not own shares of this security. i) A Research Analyst and/or a member of the Analyst’s household do not serve as an officer, director, or advisory board

member of the Company. j) This security is eligible for sale in one or more states. k) This security is subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice

requirements for certain low-priced securities. l) Stonegate or its affiliates do not beneficially own 1% or more of an equity security of the Company. m) Stonegate does not have other actual, material conflicts of interest in the securities of the Company.

Meaning of Ratings - Stonegate does not rate the securities covered in its information memorandums. Distribution of Ratings - Stonegate does not rate the securities covered in its information memorandums. Price Chart - Stonegate does not have, nor has previously had, a rating for any securities of the Company. Price Targets - Stonegate does not have a price target for any securities of the Company. Regulation Analyst Certification: I, Marco Rodriguez, CFA, hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in this report. For Additional Information Contact:

Stonegate Securities, Inc. Marco Rodriguez, CFA 214-987-4121 [email protected]

Please note that this report was originally prepared and issued by Stonegate for distribution to their market professional and institutional investorcustomers. Recipients who are not market professional or institutional investor customers of Stonegate should seek the advice of theirindependent financial advisor prior to taking any investment decision based on this report or for any necessary explanation of its contents. Theinformation contained herein is based on sources which we believe to be reliable, but is not necessarily complete and its accuracy cannot beguaranteed. Because the objectives of individual clients may vary, this report is not to be construed as an offer or the solicitation of an offer tosell or buy the securities herein mentioned. This report is the independent work of Stonegate Securities and is not to be construed as havingbeen issued by, or in any way endorsed or guaranteed by, any issuing companies of the securities mentioned herein. The firm and/or itsemployees and/or its individual shareholders and/or members of their families and/or its managed funds may have positions or warrants in thesecurities mentioned and, before or after your receipt of this report, may make or recommend purchases and/or sales for their own accounts orfor the accounts of other customers of the firm from time to time in the open market or otherwise. While we endeavor to update the informationcontained herein on a reasonable basis, there may be regulatory, compliance, or other reasons that prevent us from doing so. The opinions orinformation expressed are believed to be accurate as of the date of this report; no subsequent publication or distribution of this report shall meanor imply that any such opinions or information remains current at any time after the date of this report. All opinions are subject to changewithout notice, and we do not undertake to advise you of any such changes. Reproduction or redistribution of this report without the expressedwritten consent of Stonegate Securities is prohibited. Additional information on any securities mentioned is available on request.

Documents

MARKET STATISTICS Calpian, Inc. Marco Rodriguez, CFA ...edg1.precisionir.com/companyspotlight/NA019752/Calpian_Stonegat… · Calpian, Inc. (OTCQB: CLPI) Initiation of Coverage: CLPI: