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DSC Trading, LLC

Commercial Aircraft Parts Distributor

Up to $5,000,000

Min. investment – $25,000

11.0% Senior Secured Notes

A Debt Investment

investment overview video
(4 min watchtime)

  • Current income opportunity, interest paid monthly, 6/30/2022 maturity
  • Secured by commercial aircraft parts
  • Four previously successful offerings for Carofin affiliates*
*Past performance is not a guarantee of future performance

Replacement parts are essential to performing scheduled maintenance on commercial aircraft, which fly, on average, about 30 years. DSC Trading buys and then resells commercial aircraft parts to the maintenance, repair and overhaul (MRO) industry, specializing in one-time use “expendables”.

Why We Like This Company

Business Opportunity

Reliable delivery of commercial aircraft parts to MRO industry worldwide
  • Commercial aircraft are typically flown for about 30 years.
  • Required repairs (“checks”) range from more frequent (every 200-300 flights) hangar-based procedures involving 50-70 man-hours to periodic “heavy maintenance visits” every 6-10 years when the aircraft is dismantled, thoroughly inspected, repaired as needed and rebuilt.
  • Throughout these checks, replacement parts are needed.
  • One-time use expendables for older airframes (e.g. Boeing 727 or 747) are often difficult to obtain.
  • All such parts must have accompanying certification of their authenticity from the original equipment manufacturer (OEM) as required by both US and international industry regulation.

DSC Trading’s Service

A specialized, worldwide distributor of expendable commercial aircraft parts
  • DSC Trading, LLC (“DSC” or the “Company”), founded in 2002 by industry veterans Mark and Jonelle Wise, specializes in acquiring for ongoing future sales expendable, commercial aircraft parts.
  • DSC enjoys a very strong reputation across the MRO industry.
  • 170,000 different SKU’s now held in inventory by the Company.
  • About 80% of DSC sales are online through specialized listing services which also list parts of other sellers.
  • Because all parts delivered must be certifiably authentic and reliability of overnight delivery of a part is essential, service quality is as important to buyers as pricing.

AN INVESTMENT IN THE NOTES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT.

By registering with Carofin, Members have access to more extensive due diligence materials, additional private investment opportunities, and can proceed with making an investment.

Issuer

DSC Trading, LLC (“DSC Trading”)

Founded in 2002, DSC Trading is a commercial aircraft parts distributor that specializes in “new-surplus” “expendable” replacement parts (parts used once and then discarded) for use by commercial airlines (both domestic and foreign), fixed-base operators and maintenance facilities (MRO or Maintenance, Repair and Overhaul), engine and auxiliary power unit repair facilities and repair management companies.

Extensive experience

Purchased or represented under consignment over 40 discrete inventories of “new-surplus” parts

Long term customer relationships

Company principals have customer relationships exceeding 20 years

Securities Offered

11.0% Senior Secured Promissory Notes

Up to $5,000,000 Notes due 6/30/2022

Interest Rate

Higher of 11.0% annual rate or the U.S. Prime Rate as published in the Wall Street Journal plus 5.5%, calculated on a 30/360-day basis, capped at 13.0%, paid monthly. These returns cannot be guaranteed.

Maturity Date

June 30, 2022 (the “Maturity Date”), with all outstanding Note principal and interest due and payable. These returns cannot be guaranteed.

Amortization

Loan principal will amortize on a mortgage-style basis calculated through June 30, 2026 (a seven-year amortization schedule), but with all outstanding principal due on June 30, 2022.

Use of Proceeds

To refinance approximately $3,300,000 of currently outstanding indebtedness, to make an additional aircraft part acquisition and to provide for note issuance expenses.

Positives

Past Issuance History

This is the fifth private offering of comparable promissory notes the Company has issued privately through CFG since 2012, each associated with financing the acquisition of commercial aircraft parts. Throughout this period the Company has punctually met all required payments of interest and principal.

Consistently Successful Operations and Financial Performance

Since 2006, DSC Trading has purchased or represented under consignment over 40 discreet inventories of “new-surplus” expendable commercial aircraft parts generating from 2006 to date, on average, 3.9x in sales price versus purchase prices. This has enabled the company to maintain EBITDA margins of greater than 20% on average during the same period.

Collateral Supporting $5.0 million Note Repayment

Currently owned commercial aircraft parts have an appraised liquidation value of approx. $18.5 Million to $30.5 million. In a sales liquidation, the starting inventory is projected to achieve a sales value in excess of $10.2 million, generating value within 30 days.

Long-term Customer Relationships

DSC Trading principals have professional relationships with maintenance facilities which are, in many cases, are well over 20 years. This has enabled the company to identify attractive inventory acquisition opportunities and has resulted in a stable customer base.

AN INVESTMENT IN THE NOTES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT.

Background

For over 15 years the Company has specialized in distributing “new-surplus”, “expendable” (one-time use) commercial aircraft parts, which it acquires through bulk purchases from airlines and major aircraft repair facilities. Over 40 such acquisitions or consignment relationships have been made by the Company since 2006.

Success in this industry sector requires consistent regulatory compliance, in-depth technical knowledge, readily available inventories, high levels of accuracy in fulfillment and rapid customer response times.

DSC is currently in the process of moving its distribution center and inventory warehouse to a new location in Branson, Missouri, from its current location near Miami, Florida. This move will allow the Company to operate out of a warehouse 3 times larger than its current facility, giving it ample room to add additional future inventory and grow the business while saving approximately $68,000 per year in lower rent. Additional cost savings are possible as DSC’s sister company, W3K, grows and takes on a portion of the rent expense. W3K sells “rotable” aircraft parts and is complementary to DSC. Management, including Mark, Janelle, and Shane Wise will be moving to the new location as well.

Airlines and the MRO Community

A major consideration for airlines is the time its aircraft are on the ground (AOG). As each hour out of the air is an hour in which the aircraft is not profitable, it is essential that airlines have constant access to spare parts where and when needed. The MRO community is poised to take advantage of airline carrier needs.

In fact, entering 2018, for the first time in airline history, carriers recorded three consecutive years of record or near record profits, due, in part, to constrained fuel prices and operational efficiencies. Increasing demand for air travel keeps aircraft, engine, and component manufacturers busy and setting records.

MRO market growth rates are projected to rise 4.0% annually, worldwide from 2018-2028, with a 1.8% annual growth in North America.

Market Position and Inventory Purchasing

DSC Trading has aligned its resources and personnel to enable it to respond rapidly to purchase attractively priced inventories of broadly deployed airframes as they become available and to deliver customers the highest quality of service in a timely and dependable manner with same day response and shipment. DSC Trading’s sales are generated through 20+ year relationships between the Company’s professionals and customer counterparts at commercial aircraft repair facilities worldwide.

Assumptions

  • Revenue projections are based on Company estimates by inventory lot for 2019, with the addition of two new inventory lots acquired in September and December. Revenues for 2020-2022 are projected using modest growth rates of 4.0%, as new inventory is acquired.
  • Expenses increase in 2019 due to the costs of the Company moving its headquarters to Branson, Missouri (such as shipping, transportation, and temporary dual rents), and is expected to be lowered in 2020.
  • Additional Inventory purchases of $600k in 2019 and $500k per year thereafter
  • Assumed average of $50k capex per year
  • Debt amortizes over an 84-month period, and is assumed to be refinanced in 2022 at maturity
  • Assumes debt is refinanced at maturity at similar terms with no additional capital raised. See “Refinancing of the Loan” in the Risk Factors.
  • Due to timing of capital raising and increased expenses from the Company’s move to Branson, Missouri, the Company is expected to exceed the Funded Debt Ratio in 2019. Existing lenders have agreed to an amendment to increase this covenant to 4.25 times until March 31, 2020, at which time the covenant will return to 4.00, and the Company is projected to be in compliance with that original covenant.

Associated Risks

  • Changes in the financial, economic, and/or political conditions affecting replacement parts used in commercial aircraft repair may have an adverse impact on the Borrower’s credit quality and security values. See “Credit Risk” in the Risk Factors.
  • The Borrower being unable to successfully raise additional capital, if needed, to meet the projected principal redemption through the issuance of additional debt or equity securities may have an adverse impact on the timely redemption of the Loan. See “Refinancing of the Loan” in the Risk Factors.
  • Industry changes relating to demand, price, and regulation could impede the achievement of the forecasts. See “Dependence on the Airline Industry​” and “B. Industry-Related Risks” in the Risk Factors.

These financial projections reflect DSC Trading’s best estimate forecasts and are not guaranteed to be accurate. These figures are forward-looking and reflect the Company’s views about various future events or expectations. Known and unknown risks, uncertainties and other factors and assumptions may cause the Company’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by this forward-looking investment return profile. Historical financial figures have not been audited by a third party and do not reflect an opinion as to their accuracy.

Janelle Wise
President
MORE INFO
  • Founding owner, President 14 years
  • 36 years of experience in Aviation parts sales and Acquisition including Eastern Airlines and Aviation Sales (now Kelstrom)
  • Has directly sold over $100 million in parts sales in career
Mark Wise
Vice President of Sales
MORE INFO
  • Designer of DSC Trading business plan and structure
  • 37 years of experience in Aviation Parts sales, acquisition and repair marketing
  • Marketed for aviation parts and repair facilities entire career
  • Acquired long-term contracts with major airlines worldwide including Southwest Airlines, Northwest Airlines, United Airlines, FedEx, UPS, Monarch Airlines, KLM, ATA Airlines, Cathay Pacific, Alaska Airlines and many more
Mark White
Director of Operations
MORE INFO
  • 5 years with DSC as Director of Operations and Human Resources
  • 12 years as Area Manager for Advance Auto Parts South Florida
  • 4 years as Region Vice President Parts Depot Inc.
  • Duties include P&L responsibilities, budgeting, hiring and training, Inventory management and shipping and receiving
Shane Wise
Director of Sales and Marketing
MORE INFO
  • Prior to joining full time in 2018, previously worked at DSC part time for 10 years
  • Graduated 2018 Jacksonville University
  • Bachelor's in marketing
  • Bachelor's in economics
  • MBA with specialty in Management

Securities Offered

11.0% Senior Secured Promissory Notes due 6/30/2022

Loan Amount

A minimum of $4,000,000 up to $5,000,000

Interest Rate

Higher of 11.0% annual rate or the U.S. Prime Rate as published in the Wall Street Journal plus 5.5% calculated on a 30/360-day basis, capped at 13.0%. These returns cannot be guaranteed.

Maturity Date

June 30, 2022 (the “Maturity Date”), with all outstanding Note principal and interest due and payable. These returns cannot be guaranteed.

Amortization

Loan principal will amortize on a mortgage-style basis calculated through June 30, 2026 (a seven-year amortization schedule), but with all outstanding principal due on June 30, 2022.

Use of Proceeds

To refinance approximately $3,300,000 of currently outstanding indebtedness, to make an additional aircraft part acquisition and to provide for note issuance expenses.

Fees & Expenses

A fee equaling 2.0% of Loan participation for investors currently participating in Company indebtedness and 4.0% for participation by new investors in the Offering will be paid by the Borrower as a placement fee to Carolina Financial Securities, LLC (which is 75% owned by CFG) for acting as Placement Agent for the Offering. Up to 50% of such placement fees may be paid by Carolina Financial Securities to Carofin, LLC for its assistance in the placement of the Notes.

1Gross Cash Flow - means the Borrowers EBITDA plus cost of goods sold, minus equity distributions for the last twelve months

2Fixed Charge Coverage - means a ratio calculated wherein the numerator equals the Borrower’s Gross Cash Flow and the denominator equals the Borrower’s required principal and interest payments

3Funded Debt Ratio - means a ratio calculated wherein the numerator equals Borrower’s Funded Debt and the denominator equals the Borrower’s Gross Cash Flow

4Collateral includes the following assets: All inventory owned by the Borrower at the time of funding of the loan

5Debt Coverage Ratio - current collateral value divided by the outstanding principal balance of indebtedness

Model Assumptions

  • Revenue projections are based on Company estimates by inventory lot for 2019, with the addition of two new inventory lots acquired in September and December. Revenues for 2020-2022 are projected using modest growth rates of 4.0%, as new inventory is acquired.
  • Expenses increase in 2019 due to the costs of the Company moving its headquarters to Branson, Missouri (such as shipping, transportation, and temporary dual rents), and is expected to be lowered in 2020.
  • Additional Inventory purchases of $600k in 2019 and $500k per year thereafter
  • Assumed average of $50k capex per year
  • Debt amortizes over an 84-month period, and is assumed to be refinanced in 2022 at maturity
  • Assumes debt is refinanced at maturity at similar terms with no additional capital raised. See “Refinancing of the Loan” in the Risk Factors.
  • Due to timing of capital raising and increased expenses from the Company’s move to Branson, Missouri, the Company is expected to exceed the Funded Debt Ratio in 2019. Existing lenders have agreed to an amendment to increase this covenant to 4.25 times until March 31, 2020, at which time the covenant will return to 4.00, and the Company is projected to be in compliance with that original covenant.

Associated Risks

  • Changes in the financial, economic, and/or political conditions affecting replacement parts used in commercial aircraft repair may have an adverse impact on the Borrower’s credit quality and security values. See “Credit Risk” in the Risk Factors.
  • The Borrower being unable to successfully raise additional capital, if needed, to meet the projected principal redemption through the issuance of additional debt or equity securities may have an adverse impact on the timely redemption of the Loan. See “Refinancing of the Loan” in the Risk Factors.
  • Industry changes relating to demand, price, and regulation could impede the achievement of the forecasts. See “Dependence on the Airline Industry​” and “B. Industry-Related Risks” in the Risk Factors.

These financial projections reflect DSC Trading’s best estimate forecasts and are not guaranteed to be accurate. These figures are forward-looking and reflect the Company’s views about various future events or expectations. Known and unknown risks, uncertainties and other factors and assumptions may cause the Company’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by this forward-looking investment return profile. Historical financial figures have not been audited by a third party and do not reflect an opinion as to their accuracy.

AN INVESTMENT IN THE NOTES IS SPECULATIVE AND IS SUITABLE ONLY FOR PERSONS OF SUBSTANTIAL FINANCIAL MEANS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT AND HAVE NO NEED FOR LIQUIDITY IN THIS INVESTMENT. AN INVESTMENT IN THE SECURITIES OFFERED HEREIN SHOULD NOT BE A MAJOR PART OF YOUR INVESTMENT PORTFOLIO. YOU SHOULD REVIEW THE RISKS OF THIS INVESTMENT WITH YOUR LEGAL OR FINANCIAL ADVISORS.

THIS OFFERING INVOLVES SUBSTANTIAL RISKS. THESE RISKS INCLUDE, BY WAY OF ILLUSTRATION AND NOT LIMITATION, THE FOLLOWING: RISKS ASSOCIATED WITH THE FACT THAT THE LENDERS WILL NOT HAVE THE RIGHT TO VOTE ON OR APPROVE MOST DECISIONS REGARDING THE BUSINESS AND, AS SUCH, WILL NOT BE IN CONTROL OF THEIR INVESTMENTS IN THE NOTES OF THE COMPANY AND THE BUSINESS.

THE NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM, AND WITH THE PRIOR CONSENT OF THE COMPANY, WHICH CONSENT MAY BE WITHHELD IN THE COMPANY’S SOLE DISCRETION. PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

SOME OF THE INFORMATION IN THIS MEMORANDUM MAY CONTAIN “FORWARD-LOOKING” STATEMENTS. YOU CAN IDENTIFY SUCH STATEMENTS BY THE USE OF FORWARD-LOOKING WORDS SUCH AS “MAY,” “ANTICIPATE,” “ESTIMATE,” “COULD,” “SHOULD,” “WOULD,” “EXPECT,” “BELIEVE,” “WILL,” “PLAN,” “INTEND,” “PROJECT,” “PREDICT,” “POTENTIAL” OR OTHER SIMILAR WORDS. THESE TYPES OF STATEMENTS DISCUSS FUTURE EXPECTATIONS OR CONTAIN PROJECTIONS OR ESTIMATES WHICH MAY OR MAY NOT HAPPEN AS PROJECTED HEREIN. WHEN CONSIDERING SUCH FORWARD-LOOKING STATEMENTS, YOU SHOULD KEEP IN MIND THE RISK FACTORS LISTED BELOW, WHICH COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT.

YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN CONJUNCTION WITH THE OTHER INFORMATION CONTAINED IN THIS MEMORANDUM BEFORE PARTICIPATING IN THIS OFFERING. THE RISKS DISCUSSED IN THIS MEMORANDUM CAN ADVERSELY AFFECT THE COMPANY’S OPERATION, OPERATING RESULTS, FINANCIAL CONDITION AND PROSPECTS FOR SUCCESS. THIS COULD CAUSE THE VALUE OF THE SECURITIES OFFERED HEREIN TO DECLINE AND COULD CAUSE YOU TO LOSE PART OR ALL OF YOU INVESTMENT. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES THE COMPANY FACES BUT DO REPRESENT THOSE RISKS AND UNCERTAINTIES KNOWN TO THE COMPANY AND THAT THE COMPANY BELIEVES ARE MATERIAL TO THE COMPANY’S FUTURE OPERATING PERFORMANCE.

A. Investment Related Risks

Speculative Investment

The Loan being offered should be considered a speculative investment. The ability of the Borrower to achieve its objectives may be determined by factors beyond its control that cannot be predicted at this time. Consequently, there can be no assurance that the Borrower’s efforts to continue its business operations will prove to be sufficient to enable the Borrower to generate the funds required to repay the Loan. Anyone investing in the Loan should do so only if they are financially able to sustain the loss of their entire investment and should recognize that such a possibility exists.

Credit Risk​

A fundamental risk, relating to all Loans, is a chance that the Borrower will fail to make a principal and interest payment when due. Borrowers with higher credit risks typically offer higher yields for this added risk, such as the Borrower. Changes in financial conditions of the Borrower, changes in economic and political conditions in general, changes in economic or political conditions specific to the Borrower, and changes in the conditions affecting replacement parts used in commercial aircraft repair are factors that may have an adverse impact on the Borrower’s credit quality and security values.

Covenant Compliance​

The Company, while currently in compliance with all financial covenants, may exceed the allowable limit on its Funded Debt Ratio, which is currently set at 4.00x (calculated as total debt divided by 12-month gross cash flow). If the Company raises the $523,000 of Notes remaining in this offering, it will temporarily be out of compliance with this covenant. Existing Lenders have consented to amend the covenant to 4.25x until March 31, 2020, at which time the covenant will return to 4.00x.

Reliance on Credit of the Borrower and on the Value of the Collateral​

This offering is predicated upon the Loan and Security Agreement between the Borrower and the Lenders for the repayment of its borrowings from Lenders, and, if necessary, on the third-party sale of the Collateral, which secures the Loan. If the Agreement becomes unenforceable or is not honored by the Borrower for any reason it will have a severe adverse effect on the sale of the collateral.

Dependence on the Airline Industry​

The Borrower’s business is dependent on the airline industry’s need to repair its aircraft. If the airline industry’s need to have its aircraft repaired were greatly diminished, it could affect the Borrower’s ability to sell parts to third party maintenance, repair, and overhaul companies.

No Secondary Market for the Borrower’s Loans​

As this Loan is a private transaction, there is currently no public market for the Borrower’s Loans being offered herein. This Loan is not a publicly registered security and will have no secondary sale liquidity.

Refinancing of the Loan

This Loan is scheduled for repayment on June 30, 2022. It may be necessary for the Borrower to meet the projected principal redemption through the issuance of additional debt or equity securities. If the Borrower is unable to successfully raise additional capital, this may have an adverse impact on the timely redemption of the Loan.

Selling the Collateral May Take Some Time

This offering involves a significant variety of Collateral (over 150,000 different SKU’s). Liquidation of this collateral will involve significant logistical efforts which may take a month or more to accomplish and may not result in an amount sufficient to repay the Loan.

B. Industry Related Risks

Demand for Aircraft Parts Related to Certain Airframes

Any substantial decline in the demand for products sold by the Borrower (such as parts related to specific, older airframes) including, but not limited to, the introduction of new technology or airframe types, may cause a decline in the market value of Borrower’s product and negatively impact the Borrower’s financial performance.

Price Volatility of Commercial Aircraft Parts​

Pricing for commercial aircraft parts varies significantly depending on whether the certification for a given part has been properly maintained. While the Borrower has represented that it has verified such certification and that its record systems are adequate regarding parts certifications, the maintenance of such documentation is critical to the Collateral value.

Quality & Safety of the Products​

Success for the Borrower’s business depends, in part, on the quality and safety of the Borrower’s products. If the products are found to be defective or unsafe, or if they otherwise fail to meet customer standards, relationships with customers could suffer. Further, the Borrower’s reputation could be diminished, and the Borrower could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on the business.

Regulatory Oversight​

The Borrower’s activities are subject to international, federal, and state laws, as well as agencies including, but not limited to, the Department of Transportation and the Federal Aviation Administration. As with all airline-related industries, the Borrower’s activities are expected to have a variety of regulatory oversight as development proceeds. Development of any of the Borrower’s operations will be dependent on the Borrower satisfying regulatory guidelines and, where required, being approved by governmental authorities. The Borrower intends to conduct their business activities in a compliant manner and in accordance with all applicable laws but may still be subject to accidents or other unforeseen events which may compromise its performance, and which may have adverse financial implications.

Changes in Laws, Regulations and Policies​

Changes in the laws, regulations and policies including the interpretation or enforcement thereof, that are germane to the Borrower’s industry, can affect its business including changes in accounting standards, tax laws, data privacy as well as anti-corruption laws. Additionally, as the Borrower continues to sell and expand its international business, it may be subject to laws relating to selective distribution, environmental or climate change laws, trade accords and customs regulations could adversely affect the Borrower’s distribution endeavors.

Competition​

The Borrower competes with other aircraft part supply companies in the industry. Competitors include companies that may have greater financial and other resources than the Borrower. Additionally, these competitors may use pricing or other strategies to prevent the Borrower from achieving its business development objectives. This may have a material adverse impact on the financial position and prospects of the Borrower.

C. Management-Related Risks

Reliance on Key Personnel

Due to the size of the organization, the Borrower has a significant reliance on certain key employees, particularly Mark Wise, Janelle Wise, and Shane Wise. If the Borrower is unable to retain key employees it could jeopardize the Borrower’s ability to implement its business plan, its relationships with its customers, and its financial stability.

Ability to Manage Growth

The Borrower’s expects to continue to acquire inventory and grow its overall operations and this may strain the Borrower’s resources. Any inability to manage growth effectively would have a material adverse effect on the Borrower’s business.

D. Offering-Related Risks

Acceptance of Investors on a First-Come, First-Serve Basis​

The Borrower reserves the right to accept or reject any proposed investment in its sole discretion. Subject to this discretion, it intends to accept investments on a “first-come, first-served” basis, with the consequence that Lenders will be allocated a portion of the total Offering, based upon the amounts they have committed, in the order in which such commitments have been accepted. The Borrower is not required to accept all commitments tendered to it. There is no assurance, therefore, that your commitment will necessarily be accepted in whole or in part by it should it raise more or less funds than are needed to make its investments.

Possibility of Material Differences Between Projected and Actual Results​

The financial projections contained in this Offering Summary and any supplements represent the Borrower’s estimated results of operations. The financial projections have been prepared upon the basis of assumptions and estimates which may differ from actual events and/or circumstances.

Reliance on Aspects of the Offering​

Potential investors should not rely exclusively on one aspect of the security structure, such as the debt service capacity of the Borrower or the collateral value of its inventory, when making an investment decision in order to participate in this Offering.

E. Federal Income Tax Risks

Lack of Rulings and Opinions; Possibility of IRS Challenge of the Borrower’s Tax Position

The Borrower has not requested and will not request any tax ruling from the IRS regarding the tax consequences of the Borrower’s activities. Accordingly, there is no certainty as to the tax consequences of participating in the Loan. The Borrower has not sought or obtained a legal opinion with respect to the tax treatment of the offering proceeds or issuance of the Loan. Accordingly, Lenders are urged to consult your own tax advisor with respect to the federal and state tax consequences arising from participation in this Offering.

Risk of Audit to Investors

There is a possibility that the IRS will audit the Borrower’s income tax returns. If the Borrower’s income tax returns are audited, your return might also be audited.

Future Federal Income Tax Legislation and Regulations

No assurance can be given that the current Congress or any future Congress will not enact federal income tax legislation that could adversely affect the tax consequences of participating in the Loan.

F. Other Risks

Reliance on Certain Aspects of the Offering

Potential investors should not rely exclusively on one aspect of the security structure, such as the debt service capacity of the Company when making an investment decision on whether or not to participate in this Offering.

Unforeseen Risks

In addition to the above risks, businesses are often subject to risks not foreseen or fully appreciated by management. Prospective investors reviewing this Term Sheet should keep in mind other possible risks that could be important to the success of their investment in the Notes.

Due Diligence Materials

From the Carofin Knowledge Base:

Private Lending to Operating Companies

You don’t need to be a genius to understand what happens when you lend money to a private company, but there are important things you need to know. Let’s take the mystique out of private loans! Investments in Private Debt. Whether called Promissory Notes, Senior Notes, Senior Secured Notes, or Subordinated Notes, they’re all a form of debt investment representing... Read More

Private Lending Term Sheet: Typical Investment Terms and Conditions

What should you look for when making a private loan to a business? It’s very important that you understand the standard commitments a business Borrower should be making to you… and that they are part of your loan documentation! A Summary of Terms (often called a Term Sheet) like the one described below, should be created... Read More

Why Do Companies Use Debt Financing?

The following outlines the major reasons why businesses may choose to use debt financing over issuing equity when capital is needed. Businesses and other entities can finance their enterprises by issuing equity or using debt, such as borrowing funds through loans or by issuing notes. Unlike equity, debt has a specified interest rate and a schedule of dates when interest is to be paid... Read More

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Important Disclosures

These securities have not been registered with the Securities and Exchange Commission (the “SEC” or the “Commission”), or with any state securities commission or any other regulatory authority. The securities are being offered in reliance upon an exemption from the registration requirement of federal and state securities laws and cannot be resold unless the securities are subsequently registered under such laws or unless an exemption from registration is available. Neither the SEC nor any other agency has passed on, recommended or endorsed the merits of this offering (this “Offering”) or the accuracy or adequacy of this webpage (the “Offering Package”). Any representation to the contrary is unlawful.

These securities are offered through Carolina Financial Securities, LLC and Carofin, LLC, Members of FINRA/SIPC. Carolina Financial Securities is an affiliate of Carofin and both Broker-Dealers are affiliates of Carolina Financial Group, LLC. Documents have been prepared by Carolina Financial Securities and have been reviewed and approved by the management of DSC Trading, LLC (the “Issuer” or the “Company”). The information contained herein has not been independently verified and is dependent on information provided by DSC Trading, LLC to Carolina Financial Securities, LLC.

The information contained herein is for informational purposes only and is not intended for further distribution. The information does not constitute a complete description of any investment or investment performance. This document is in no way a solicitation nor is it an offer to sell securities nor is it advice or recommendation regarding any investment. The information is not directed to any person who is not believed to qualify under the definition of an Accredited Investor under the rules of Regulation D of the 1933 Securities and Exchange Act. No security listed in this document or otherwise offered through Carolina Financial Securities, LLC or Carofin, LLC may be purchased without prior receipt of a complete Private Placement Memorandum or other official offer to sell.

The Company will not offer, sell or issue any Notes in any jurisdiction where it is unlawful to do so or where laws, rules, regulations or orders would require the Company, in its sole discretion, to incur costs, obligations or time delays disproportionate to the net proceeds the Company will realize from such offers, sales or issuances. Neither this Offering Package nor any subscription agreement shall constitute an offer to sell or a solicitation of an offer to purchase any Notes in any jurisdiction in which such transactions would be unlawful.

Private placements are high risk and illiquid investments. As with other investments, you can lose some or all of your investment. Nothing in this document should be interpreted to state or imply that past results indicate future performance, nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided in this document. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be impaired if it is sold. Please see the Private Placement Memorandum (PPM), and the complete list of contents of this Offering Package for a more detailed explanation of the securities Summary of Terms, Investor Suitability Standards, Confidentiality, Securities Matters and Risk Factors.

Caution Regarding Forward-Looking Statements

Certain statements on this webpage may be “Forward-looking” in that they do not discuss historical facts but instead note future expectations, projections, intentions, or other items relating to the future. We caution you to be aware of the speculative nature of forward-looking statements as these statements are not guarantees of performance or results.

Forward-looking statements, which are generally prefaced by the words “may,” “anticipate,” “estimate,” “could,” “should,” “would,” “expect,” “believe,” “will,” “plan,” “project,” “intend,” and similar terms, are subject to known and unknown risks, uncertainties and other facts that may cause our actual results or performance to differ materially from those contemplated by the forward-looking statements.

Although these forward-looking statements reflect our good faith belief based on current expectations, estimates and projections about, among other things, the industry and the markets in which we operate, they are not guarantees of future performance. Whether actual results will conform to our expectations and predictions is subject to several known and unknown risks and uncertainties, including risks and uncertainties discussed on this webpage.

Consequently, all the forward-looking statements made on this webpage are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us or our business or operations. Risks, uncertainties, and factors that could cause actual results to differ materially from those projected are discussed in the “Risk Factors” section of this Webpage. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Considering these risks, uncertainties, and assumptions, the forward-looking events discussed on this webpage might not occur.

OFFERING TEAM

Nash Roberts

Chris Keeney

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Securities offered through Carolina Financial Securities, LLC and Carofin, LLC, Members FINRA/SIPC. Carolina Financial Securities is an affiliate of Carofin and both Broker-Dealers are affiliates of Carolina Financial Group, LLC. This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Craig Gilmore at 828.393.0088 x 520 and/or cgilmore@carofin.com

The information contained herein is for informational purposes only and is not intended for further distribution. The information does not constitute a complete description of any investment or investment performance. The presentation is in no way a solicitation nor is it an offer to sell securities nor is it advice or recommendation regarding any investment. The information is not directed to any person who is not believed to qualify under the definition of an Accredited Investor under the rules of Regulation D of the 1933 Securities and Exchange Act. No security listed in this presentation or otherwise offered through Carolina Financial Securities, LLC or Carofin, LLC may be purchased without prior receipt of a complete Private Placement Memorandum or other official offers of sale. Carolina Financial Securities and Carofin only offer one type of alternative investment, those sold as private placements.

Private placements are high risk and illiquid investments. As with other investments, you can lose some or all of your investment. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance nor should it be interpreted that FINRA, the SEC or any other securities regulator approves of any of these securities. Additionally, there are no warranties expressed or implied as to accuracy, completeness, or results obtained from any information provided on this website. Investing in private securities transactions bears risk, in part due to the following factors: there is no secondary market for the securities; there is credit risk; where there is collateral as security for the investment, its value may be impaired if it is sold.

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