Axia Traders 2014-Q3 Investor Update

©2014 AXIA Traders, LLC. Confidential. All Rights Reserved.

Q3 2014 Investor Update

Contact: Lawrence McDaniel

(415) [email protected]

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2014 YTD Profit & Loss ($USD)

AXIA Traders

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• B2B Manufacturer’s Rep Division• Executed exclusive wholesale-distribution agreement with Supremia International Inc. (www.supremia.com).• Completed $37,000,000 M.N. in sales to Diageo.• Delivered approximately 40 containers of Chinese imported goods to Diageo.• Selected to return next year to participate in Diageo’s 2015 VAP program.• Began sales processes with Pernod Ricard, AB Inbev, and Unilever.

• Wholesale-Distribution: Outdoor Products Division• Executed exclusive Mexico wholesale-distributor agreement with Inoveight Ltd, maker of inov-8 footwear.• Imported first shipment of 700 pairs of inov-8 Footwear.• Affiliated 8 retail stores, created pipeline of 50 additional retailer candidates.• Officially launched the inov-8 brand in Mexico on 20-Sep.• Hired a full-time sales person for the Outdoor Products Division.

• New Business Development• Executed exclusive Mexico wholesale-distributor agreement with Point6 LLC, maker of Point6 merino wool performance sport socks.• Began negotiations with Chesapeake Bay Candles to become their exclusive wholesale-distributor in Mexico.• Began negotiations with Fiskars / Gerber Knives to source and oversee outsourced manufacturing processes for select products.• Began negotiations with Siamons International to become their exclusive wholesale-distributor in Mexico.

• Corporate• Relocated to 210 meter office, Tamaulipas 150, Torre A, Piso 18, Colonia Condesa.• Hired a full-time Mexican accountant.

Q3 Highlights

About AXIA Traders


• Ownership: Founded in 2013; currently owned 100% by Axia Partners Holdings Ltd, LLC

• Core Expertise

a) Manufacturer’s Representativeb) Wholesale-distributionc) Product Sourcing

• Primary Markets:

a) Mature US and Canadian privately-owned, niche manufacturers serving a global market, who are ready to enter Mexicob) Multinationals with a presence in Mexico, including Unilever, Procter & Gamble, Kraft, PepsiCo, Coca Cola, Diageo, AB InBev, Pernod Ricard, LVMH, Beam

Global, and Bacardic) Mexican national retail chains including Sam’s Wholesale Club, Costco, Sears, Palacio de Hierro, Liverpool, Martí, Mr. Tennis, OXXO, 7-11, and Extra

• Vision: continue our organic growth path. Within the next four years we expect to be an approved supplier to all multinational conglomerates.

AXIA is an import-export company specializing in Mexico-centric trade in the NAFTA zone

About AXIA Traders


• Founded: March 2013

• Company Headquarters: Tamaulipas 150, Torre A, Piso 18Colonia CondesaMexico CityMexico

• Employees: 6 full-time employees & contractors + 4 external consultants

• Annual Sales– 2013: $10,000 USD– 2014: $4,000,000 USD (est. YTD)

• Net Invested Capital to Date: $130,000 USD

Key Data Points

About AXIA Traders


Legal Structure

About AXIA Traders

AXIA

CONFIDENTIAL - FOR INTERNAL GSK TRAINING USE ONLY

NOT TO BE USED WITH, SHOWN TO, OR DISTRIBUTED TO CUSTOMERS OR OTHERWISE SHARED OUTSIDE GSK.©2014 AXIA Traders, LLC. Confidential. All Rights Reserved.

Divisions

About AXIA Traders

1. Import: Manufacturer’s Representative– Revenues are derived from import fees applied to products that we sell on behalf of our partners– Local sales office and business development / sales channel development– Registered Importer in Mexico, facilitating DDP (“delivered duty paid”) pricing terms to key customers in Mexico– Professional Services

• Product Market Entry Planning and Sourcing Feasibility Studies• Mexico Food & Drug Administration Liaison and Consulting Office (Mexico’s COFEPRIS)• Mexico Product Labeling Compliance Consulting (Mexico’s NOM-51 consumer protection laws for product packaging)• English-Spanish Registered Language Translations

2. Import: Wholesale-Distribution– Revenues are derived from purchase and resale of consumer products– Exclusive multi-year distribution agreements. Factory-direct purchasing programs.– Niche, well-defined markets

3. Export: Product Sourcing– Revenues are derived from export fees applied to goods that we procure or manufacturer on a contract basis for our partners – Locate, Qualify, Negotiate with, and Oversee Mexican manufactures of high-volume products– Design near shoring solutions; primarily to supplement or replace existing manufacturing capacity in China– Multi-disciplinary materials handling, including metals & alloys, glasses, vulcanized rubber, and injection molded plastics

AXIA



MANUFACTURER’S REP DIVISION


Manufacturer’s Rep Division Key Customers & Partners


Supremia is privately owned and was founded in 1981 in London, England and has offices in U.S.A, France, China, India, Germany, Russia, and Mexico (via AXIA Traders); creating a global network employing over 130 professionals worldwide.

Supremia provides value-added packaging solutions and premiums to hundreds of the largest brands worldwide through its clients relationships with top-tier multinationals including Inbev, Unilever, Pepsi, Diageo, Patron, Parlux, Pernod Ricard, Moet Hennesey, Office Depot, Beam Global, Conde Nast, Yves Rocher, Time, Hearst, RCI, Bacardi, Procter & Gamble, Kraft, And Coty.

AXIA Traders manages Supremia’s representative office in Mexico, acting as both local sales support and logistics management as well as a sourcing office for a growing list of Supremia’s promotional items and consumer products for key brands in their client portfolio.


Supremia International


1. Unilever de Mexico

2. Pepsico Mexico

3. Diageo Mexico

4. Patron Spirit Mexico

5. Parlux

6. Pernod Ricard

7. MOËT HENNESSY DE MÉXICO

8. Office Depot de Mexico

9. Beam Global Spirits de Mexico

10.Conde Nast

11. Yves Rocher de Mexico

12.Bacardi y Compañia

13.P&G Mexico

14.Productos Kraft

15.Coty Mexico


Supremia International – Mexico Clients


Pacific Trade International, Inc. manufactures and distributes home fragrance and decor products. The company offers jar, pillar, and filled candles. Additionally, it provides reed diffusers, candle gift sets, candle stands, and home accessories. Pacific Trade International, Inc. was founded in 1994 and is based in Rockville, Maryland.

AXIA Traders is in negotiations with PTI to become their representative office and exclusive wholesale-distributor in Mexico.


Pacific Trade International (PTI)


Siamons International was founded in 2003 to develop and commercialize a new cleaning technology called “Concrobium”. The unique solution, which kills and prevents harmful mold secured EPA registration in 2005. Concrobium is an award-winning product who’s largest retail channel in USA is Home Depot.

Axia is currently on retainer with Siamons and is in negotiations to become their representative office and exclusive wholesale-distributor in Mexico.


Siamons International

AXIA



WHOLESALE-DISTRIBUTION DIVISION


Inoveight Ltd, founded in Durham England, wholly owns the Innov-8 brand, a global leader in high performance footwear and apparel for athletes competing in extreme sports activities including ultra marathon, mountain running, ultra-distance road running, triathlon, and most importantly, Cross Fit.

Inov-8 sponsors more than 100 of the world’s top-ranking ultra running and Cross Fit athletes. Inov-8 sponsors the World Mountain Running Association and is a headline sponsor of grass root competitions and events across the globe.

AXIA Traders is the exclusive wholesale-distributor of Inov-8 products in Mexico.

Wholesale-Distribution Brand Portfolio


• High margins at the wholesale as well as retail levels.

• 50% profit margin• 35% operating margin• Nearly 100% variable costs

• Well-defined markets: around one million cross fit and trail runner athletes in Mexico

• Strong international brand recognition

• Competitively priced



Point6, founded in Colorado Springs, wholly owns the Point6 brand, a complete line of purpose-designed high performance socks for high-impact sports including distance running, biking, trekking, and skiing. Point6 receives regular press coverage from major publications including Outside, Bicycling, Wall Street Journal, and InsideOutdoor. The brand is internationally recognized within several elite professional sport communities including triathlon, cycling, mountain biking, marathon and ultra-marathon, and skiing. Point6 sponsors nearly a dozen professional athletes across various sports categories.

Point6 is considered the category leader for purpose-designed wool socks, making this an ideal complement to Inov-8 footwear. Beginning spring 2015 Point6 will also introduce a line of insulation layers that will compete directly against Patagonia Capilene.

AXIA Traders is the exclusive wholesale-distributor of Point6 products in Mexico.



Ruffwear, Inc., based in Bend, Oregon, manufactures canine outdoor gear and focuses on dog owners with active lifestyles. Founded in 1994 by Patrick Kruse. Ruffwear products are sold in more than 1,500 retail locations in the US and Europe. The company sells harnesses, dog packs, lifejackets, dog boots, collars, leashes, and dog beds and all-natural dog treats.

We consider Ruffwear a good complement to Inov-8 footwear because many of Inov-8’s dominant activities are highly conducive to dogs.

AXIA is the exclusive wholesale-distributor of Ruffwear products in Mexico.

AXIA Traders Overview

AXIA



SOURCING DIVISION


The Fiskars Corporation is a metal and consumer brands company founded in 1649 at Fiskars Bruk, a locality now in the town of Raseborg, Finland, about 100 km west of Helsinki on the old main road from Turku to Vyborg. Fiskars is best known today for its scissors, axes and high-quality knives. The business areas of Fiskars Brands include Outdoor Recreation, Portland, Oregon, USA; Fiskars School, Office, and Craft, Madison, Wisconsin, USA; Fiskars Garden and Outdoor Living, Sauk City, Wisconsin, USA; Fiskars Europe, Brussels, Belgium; and Fiskars Corporation and Fiskars Housewares, Helsinki, Finland.

During Q3 of this year AXIA began negotiating with Fiskars on a long-term sourcing agreement in which we will assist and oversee outsourcing of certain manufacturing processes to sub-contractors in Mexico.

Sourcing Division Manufacturer Clients


Axe, also known as Lynx in the United Kingdom, the Republic of Ireland, Australia and New Zealand, is a brand of male grooming products, owned by Unilever and marketed towards the young male demographic. Axe also ships a shower scrub tool called the Axe Detailer, which is produced on a contract basis by AXIA’s partner Supremia.

In December of 2013 AXIA began sourcing a limited volume of the Axe Detailers destined for Unilever-USA. Axia expects to produce around 800,000 Axe Detailers during calendar 2014.


Supremia International for


Crown Royal is a blended Canadian whisky. The brand is owned by Diageo, which purchased it when the Seagram portfolio was dissolved in the year 2000. It is the top-selling Canadian whisky in the United States. Supremia International conceived the idea for, and has produced the signature soft-fabric Crown Royal packaging bag since it was added to the product’s packaging in the early 1980’s.

In Q4-2014 AXIA will begin producing a limited quantity of Crown Royal packaging bags.


Supremia International for

AXIA



PROFESSIONAL SERVICES


As part of our standard business development process for our manufacturer’s rep division, AXIA conducts a Product-Market Fit Analysis (“PMF”) on a fee basis for potential manufacturer partners. For a typical PMF AXIA charges between $1,500 - $3,000 USD. A PMF is a brief analysis that considers basic business planning concepts including market definition, pricing & elasticity, incumbent competition, barriers to entry, and the dynamics of demand for the manufacturer’s product(s). The PMF is intended to steer AXIA’s team towards an objective opinion about whether or not it makes sense for the manufacturer to enter the Mexican market.

During AXIA’s startup phase in 2013 we learned that charging a fee for this analysis was a good way to further qualify a manufacturer of interest; the rationale being that serious manufacturer’s need to know and understand the contents of the analysis, and they are very willing to pay for it.

Professional Services

Market Entry Product-Market Fit Analyses


As part of our standard sales / business development process for product sourcing clients, AXIA conducts a Feasibility Analysis on a fee basis for potential manufacturer partners. A feasibility analysis helps AXIA’s team and the client determine, based on the decision criteria given to us, whether further research is merited to consider producing a certain product in Mexico. AXIA charges a flat fee of $1,500 USD per product to evaluate the relative feasibility of producing the product in Mexico. Feasibility analyses consider the availability of raw materials, their global competitiveness, and supply chain dynamics and risks. Most importantly, these analyses identify the existence, reputations, experience, availability and reliability of the various fabricators who will create and/or assemble the final product.

AXIA has seen that clients consider manufacturing in Mexico for several reasons. Cost and quality are obviously important considerations, but they often are not the primary criteria.

It is typically a months long, if not years long process to actually begin to manufacture a product. AXIA remains available on a retainer basis at the discretion of the client to assist on next steps.


Product Sourcing Feasibility Studies


The Federal Commission for the Projection against Sanitary Risk (in Spanish, Comisión Federal para la Protección contra Riesgos Sanitarios, COFEPRIS) is a regulatory body of the Mexican government. It is supervised by the Mexican Secretariat of Health, and is responsible for regulating a variety of health related topics in Mexico, including food safety, pharmaceutical drugs, medical devices, organ transplants, and environmental protection. COFEPRIS approval is a common stumbling block for foreign companies setting out to export their products to Mexico for the first time.

Mrs. Laura Gonzalez Paxtian, one of Mexico’s foremost authorities on COFEPRIS import permit policy, is on permanent retainer with AXIA. Mrs. Gonzalez personally handles all of Axia Traders' Clients' COFEPRIS, NOM-51, SAGARPA and SEMARNAT applications and approval processes. Prior to joining Axia Traders Mrs. Gonzalez spent 30 years in a variety of different roles at COFEPRIS.

AXIA charges clients a flat fee of $750 USD to evaluate and provide a written letter expressing our formal opinion on the likely COFEPRIS application procedure that will be used, and the expected time and costs associated with the application. At the clients’ discretion, AXIA remains available on a retainer basis.


Mexico Food & Drug Administration Consulting


AXIA is available, strictly as a value-added service to its existing partners and clients, to translate and/or tropicalize assets including marketing collateral, web site text, product labels and product packaging. We also make ourselves available as a general contractor for larger or more specialized translation projects such as creating certified translations of legally binding cross-border agreements.

AXIA does not advertise these services to the general public, and, all projects are priced a la carte.


Language Translation & Tropicalization Services


Lawrence McDaniel

[email protected]

Avenida Tamaulipas 150, Torre A, Piso 18Colonia CondesaMexico, DF 06170

Office: (55) 5211-7828Cellular: (55) 4388-3070USA: (415) 766-9012

Contact Information

mailto:[email protected]

http://www.axiatraders.com/

Axia Traders 2014-Q3 Investor Update

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