Key Features

• $500.00 minimum investment required
• No service charges
• Interest is distributed monthly
• Withdrawal or invest at anytime
• Interest compounds daily
• Offered by acknowledgment review only
• Must be a Georgia resident

QUESTIONS AND ANSWERS

Below we have provided some of the more frequently asked questions and answers relating to our Demand Investment Accounts. Please see the "Acknowledgement" for more information about the offering of the Demand Investment Accounts.

1. Who is Barnett Finance Company Inc.?
Barnett is a consumer finance company that originates and services collateralized loans only. We do not originate unsecured loans of any type. We are a Georgia Corporation and have been conducting business since 1994. Barnett is owned and managed locally by a team of seasoned automotive finance professionals. Barnett prides itself on quality, courteous, reliable customer service. We are a member of the Better Business Bureau and have an A+ rating.

2. What are your primary business activities?
Barnett's business model typically remains largely unaffected from various economic scenarios however, with the massive increase in job losses due to our current economy, Barnett's market niche is growing exponentially. Banks have tightened to the point where they will not help even good customers. As a result Barnett has experienced a significant increase in business from higher quality customers. Higher quality customers means better performing loans at lower risk.

3. Is Barnett in good financial health?
Barnett Finance Company began operations in May of 1994. The company has been profitable since inception. Since Barnett is a private company, it does not share its financials however, the company does audit its financial statements yearly. Each and every year, the independent auditors report concludes that the financial position of the company is represented fairly in all material respects. Furthermore, the results of its operations and its cash flows for the years audited ended in conformity with accounting principles generally accepted in the United States. Barnett has never had an unprofitable year since the company was formed.

From a statistical standpoint, some key ratios will further quantify the overall health of the company:

Senior Debt to A/R Balance ratio is less than 50% -Barnett owes much less than it's asset value.

Cash flow exceeds 10% of total debt monthly

Delinquencies run less than 3.5% 30 days + late

Gross earnings exceed 7 figures

4. What are your primary business activities?
Barnett originates purchases and services two types of secured loans. Our core business is Indirect Auto Finance. Indirect auto finance consists of purchasing motor vehicle installment contracts from franchise and independent automobile dealers. Since we only conduct business with car dealers, we are indirectly financing the consumer hence the term indirect auto lender. Our secondary business consists of automobile title loans. These loans are originated directly with the consumer. The following is a summary of how we conduct both types of these loans.

Barnett's indirect loans comprise 95% of the companies business. These loans are originated via a decisioning engine called BarnettMAX. BarnettMAX is a proprietary web based system designed and developed by Barnett professionals. Over the past 15 years, our program has been continuously refined to adapt to the dynamic market conditions. Typically, a deal enters the Barnett pipeline when our in house originators receive the necessary information from our approved automobile dealers (All dealers operate in strict accordance under a dealer agreement). The information submitted is evaluated based on the customers' stability, ability to pay and value of the collateral. From this information, a Barnett approval is structured. This approval determines the advance, interest rate, discount and terms of the deal. The approval and all subsequent correspondence is electronically transmitted and tracked.

Once the dealer receives the approval, the dealer then contracts and delivers the customer. The deal package is then submitted to Barnett for verification. All criteria in the package must pass a very stringent due diligence process. If any items fail verification, the deal is returned. Once all items verify, a GPS is installed on the vehicle. After the GPS has been "pinged" via the internet, Barnett funds the dealer. From that point forward, Barnett services the account. We are currently originating loans in Georgia, South Carolina, North Carolina, Virginia, West Virginia, Maryland and Tennessee.

Our secondary source of business consists of automobile title loans. Title loans comprise 5% of the companies business. These loans (or pawns) are originated directly with consumers. These consumers have a free and clear title on their vehicles. Title loans are typically short term loans. The advance to collateral ratio seldom exceeds 50% therefore; the company is always in an equity position.

5. How can we afford to pay such an attractive rate?
Barnett concentrates it's indirect business in the "subprime niche". We are experts in this space. Barnett's indirect loans are purchased at a discount from automobile dealers. This discount accounts for a significant margin spread on top of our average interest rate of 28%. After factoring out losses and overhead, Barnett manages a very attractive rate of return and is therefore able to pass attractive returns through to our investors.

Barnett title loans are offered at a rate of 10% monthly. Despite the fact that this rate appears significant, we are the most cost effective operator in the immediate area. Furthermore, we are the only title lender that actually determines the customers' ability to pay. Barnett only conducts business with individuals that we feel we can help. If a customer cannot prove the ability to pay back the loan on a timely basis without significant financial strain, we prefer to pass. This is not the norm throughout the industry. The title loan market continues to generate substantial profits that we can in turn pass on to our investors.

6. What is a Subordinated Demand Note?
A Demand Note is issued to each of our Demand Investment Account holders. These notes represent our promise to repay your principal investment, on demand, plus interest earned to that date. The Demand Notes are unsecured obligations and are subordinated in right to present and future senior debt. Subordinated means that if we are unable to pay our debts as they come due, senior debt would be paid before any payment would be made on the Demand Notes.

7. Is my investment in the Demand Notes insured?
No. Demand Notes issued to Demand Investment Account holders are not certificates of deposit or similar obligations or guaranteed by any depository institution, and they are not insured by the FDIC or any governmental or private insurance fund, or any other entity. They are backed only by the faith and credit of our company and our operations.

8. How is the interest rate determined?
The interest rate offered on the Demand Investment Accounts varies depending on the average daily balances in the following ranges: $1.00 to $9,999.99; $10,000.00 to $49,999.99; $50,000.00 to $99,999.99; and $100,000.00 and over. When we establish an interest rate for each range of balances, it becomes effective for and applied to all Demand Notes with a daily balance within that range, whether existing or newly issued. If your average daily balance changes at any time during which you hold Demand Notes, your interest rate will change accordingly.

9. How is interest calculated and paid to me?
The interest rate is compounded daily and based on a 365-day year. The interest rate is published in our rate chart and may fluctuate from time to time. Demand Investment Account holders will be notified upon such changes. Interest on your investment is distributed every month.

10. Do the Demand Notes associated with Demand Investment Accounts have maturity dates?
No. A Demand Note is payable to you on demand at anytime.

11. When may I redeem the Demand Note?
Subject to the subordination provisions, you may redeem or demand payment on the Demand Note at any time. In such event, we will pay you the outstanding principal balance plus interest earned to the date of redemption.

12. Can Barnett force me to redeem my Demand Note?
Yes, we may call your Demand Note for redemption at any time upon 30 to 60 days notice. We may, in our sole discretion, redeem any Demand Note in full if the principal balance falls below $500 at any time. Any such redemption by us will be for a price equal to the principal amount plus accrued interest to the date of redemption.

13. How are Demand Investment Accounts Marketed?
The Demand Notes for our Demand Investment Accounts are offered by our designated selling officer without an underwriter. We market Demand Investment Accounts primarily by placing advertisements in local newspapers, purchasing roadway sign advertisements and placing signs in our office. Demand Investment Account holders must reside in Georgia.

14. What will you do with the proceeds raised from Demand Investment Accounts?
Proceeds from Demand Investment Accounts are used primarily to originate new direct and indirect loans. Proceeds may also be used to pay down senior debt.

15. What are the most significant risks of my investment in the Demand Notes?
You should carefully read and consider all risk factors prior to investing. Please refer to our acknowledgement.

16. Who may I contact for more information?
You may contact Jeff Ellis or Jim Dixon at either at our corporate office located at 7300 Abercorn Street, Savannah, Georgia, 31406 or you can call 912 692 0008. You may also email us at jdixon@barnettfinance.com or jellis@barnettfinance.com. Please feel free to contact us at anytime.

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