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Confidential
Method Nutritiontm
Strategic Business Opportunity
Quiksilver®
Roxy
Confidential
Method Nutrition
Forging an Alliance based on Science
Shaping a Healthy Core Lifestyle
Confidential
Table of Contents:
•Executive Summary
•The Opportunity
•Market Landscape & Plan
•SWOT Analysis
•Marketing Strategy
•Financial Forecast
•Structure
•Next Steps
•Science Data
Confidential
Initial Product Suite
Ready to Drink
 12-16 oz
Method Nutrition Bar
12 bars in a 4 color box
Roxy
Roxy Madness (travel pack)
RTM + Bars + Surf/ Roxy Related
Products
The Roxy branded products will be specially formulated
for the target market; size, flavors, and caloric volume
Confidential
Marketing Tactics II
Harness “editorial secret agents” who are Method friends and
have columns in high circ enthusiast publications/websites
Print Advertising
Enthusiast Vehicle
Editorial
Press Conferences
Announcing significant study results, with venue co-located
with national/intl. science conference, near journal publisher
Product Placement
Strategic, cost-contained print advertising in select magazines,
targeting demographically-rich, enthusiast communities
VIP User/Influencer
Marketing
Ambitious, Method-managed, low $, elite user/VIP/ambassador
program: pro elite trainers/coaches; amateur to pro standouts
Digital & Interactive
“Books”
New media format “books”, with interactive and Web-enabled
content, extolling Method platform, and significant introductions
Leverage contacts (directors, actors, producers) in TV/film to
anchor Method brand (clothing, product use)
Event Promotions
Nationwide, active presence with Method team at enthusiast
and competitive events: youth to world class; podcasts
Confidential
Marketing Tactics – ZQK Specific
Frequent media announcements directed to corporate,
franchise, and board shops, via email and podcasts
Quik Announcements
Co-promotions
Conference Calls/
Webinars
Regular visits to each Surf region to provide training and
motivational seminars about new products, w/Method mgmt
Regular scheduled conference calls with store managers to
update on products, marketing support, new offerings, promos
Store Visits
Pro Appearances
Incentives & Rewards
Info Packages
Creation and collaborative review/shaping of digital and print
information kits for each product
Cash incentives for active promotion & sale of Method brand;
“Secret Shopper”, on-site multifaceted rewards program
Complementary Quiksilver co-branding product
recommendations placed in all Method product media formats
In-person appearances of pro and elite athletes, at
Quiksilver/Board stores; trade shows, etc.
Confidential
Initial Distribution – Revenue Range
Method Nutrition
Stores 12 24 60
Quiksilver 500 1,786,560 2,855,520 6,062,400
Surfshops 1000 3,573,120 5,711,040 12,124,800
Snow/Ski/Skate 1000 3,573,120 5,711,040 12,124,800
Military 300 1,071,936 1,713,312 3,637,440
Sporting Goods 200 714,624 1,142,208 2,424,960
Total Year 1 3000 10,719,360 17,133,120 36,374,400
Total Product Suite
RTD / Bar / RTM (turns per month)
Confidential
Year One & Two Distribution
Method Nutrition
Stores 12 24 60
Quiksilver 500 1,786,560 2,855,520 6,062,400
Surfshops 1000 3,573,120 5,711,040 12,124,800
Snow/Ski/Skate 1000 3,573,120 5,711,040 12,124,800
Military 300 1,071,936 1,713,312 3,637,440
Sporting Goods 200 714,624 1,142,208 2,424,960
Total Year 1 3000 10,719,360 17,133,120 36,374,400
Golf 1000 3,573,120 5,711,040 12,124,800
Trader Joes 272 971,889 1,553,403 3,297,946
Whole Foods 194 693,185 1,107,942 2,352,211
Wild Oats 110 393,043 628,214 1,333,728
Mother's Market 4 14,292 22,844 48,499
Military 3100 11,076,672 17,704,224 37,586,880
Sporting Goods 928 3,315,855 5,299,845 11,251,814
Total Year 1&2 8608 30,757,417 49,160,632 104,370,278
Total Product Suite
RTD / Bar / RTM (turns per month)
Confidential
Year Three Plus Distribution
Method Nutrition
Stores 12 24 60
Safeway/Vons 1761 6,292,264 10,057,141 21,351,773
Kroger 2507 8,957,812 14,317,577 30,396,874
Stater Brothers 158 564,553 902,344 1,915,718
RiteAid 3300 11,791,296 18,846,432 40,011,840
Walgreens 5000 17,865,600 28,555,200 60,624,000
CVS 6200 22,153,344 35,408,448 75,173,760
SubTotal Mass 18,926 67,624,869 108,087,143 229,473,965
Grand Total 27,534 98,382,286 157,247,775 333,844,243
Total Product Suite
RTD / Bar / RTM (turns per month)
Confidential
Launch Support
The Method launch plan is to utilize the best of
Quiksilver and Genr8--synergy--with no duplication
of infrastructure where applicable. Method would
be expected to stand on its own and therefore
Quiksilver support to Method will be at an agreed
upon rate/allocation
This structure will promote Method to be nimble
and achieve positive cash flow faster than building a
traditional infrastructure from which to launch
Method
Confidential
Who does What
Quiksilver
Quik Brands
Corp Store Distribution
Core Shop Distribution
Event Marketing/Promotions
Marketing Support*
Accounting, Tax & Legal
Support*
Internet Synergy/Links*
Genr8 / MRM
Management Team
Vitargo Intellectual Property,
Scientific Proof
R&D/Innovation &
Formulation
Sales, Marketing & CRM
Operations / Distribution
Sport/Science-Driven
Media
Supply Chain Mgmt
Regulatory
Method
*At an agreed upon rate
Confidential
Financial Forecast
Confidential
ProForma Income Statement Five Year
Pre Launch Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 10,223,112 52,394,828 111,747,064 204,564,307 464,659,096
Cogs 147,466 4,089,245 22,018,403 46,960,586 85,966,104 195,268,339
Operating Profit 6,133,867 30,376,426 64,786,478 118,598,202 269,390,758
Op Margin 60.0% 58.0% 58.0% 58.0% 58.0%
General + Admin 433,098 4,904,024 17,169,193 39,494,145 71,623,196 156,311,439
Total Expense 8,993,269 39,187,596 86,454,731 157,589,300 351,579,778
EBIT 1,229,843 13,207,232 25,292,333 46,975,007 113,079,319
Margin 12.0% 25.2% 22.6% 23.0% 24.3%
Interest - - - - -
Taxes 582,029 4,622,531 8,852,317 16,441,252 39,577,762
Net Income 647,814 8,584,701 16,440,017 30,533,754 73,501,557
6% 16% 15% 15% 16%
Confidential
ProForma Income Statement Year 1
Pre Launch Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1
Revenue 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 1,908,784 2,863,176 10,223,112
Cogs 147,466 27,022 41,894 62,841 113,113 135,736 162,883 244,324 293,189 488,649 610,811 763,514 1,145,270 4,089,245
Operating Profit 40,533 62,841 94,261 169,670 203,604 244,324 366,486 439,784 732,973 916,216 1,145,270 1,717,905 6,133,867
Op Margin 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0%
General + Admin 433,098 153,153 165,634 179,197 214,826 242,540 248,297 303,066 335,928 489,314 554,785 657,477 926,709 4,904,024
Total Expense 180,175 207,528 242,038 327,939 378,276 411,179 547,390 629,117 977,963 1,165,596 1,420,991 2,071,979 8,993,269
EBIT (112,620) (102,793) (84,936) (45,157) (38,936) (3,972) 63,421 103,856 243,659 361,431 487,793 791,197 1,229,843
Margin -166.7% -98.1% -54.1% -16.0% -11.5% -1.0% 10.4% 14.2% 19.9% 23.7% 25.6% 27.6% 12.0%
Interest - - - - - - - - - - - - -
Taxes (39,417) (35,978) (29,728) (15,805) (13,628) (1,390) 22,197 36,350 85,281 126,501 170,728 276,919 582,029
Net Income (73,203) (66,816) (55,209) (29,352) (25,309) (2,582) 41,223 67,507 158,378 234,930 317,065 514,278 647,814
-108% -64% -35% -10% -7% -1% 7% 9% 13% 15% 17% 18% 6%
Confidential
Volume Forecast
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1
Number of Outlets 1000 1000 1000 1200 1200 1200 1500 1500 2000 2000 2000 3000 1550
Factor 100% 100% 150% 150% 120% 120% 120% 120% 125% 125% 125% 100% 0%
1.21 tub
Sales Volume (per Month) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1
Method Ready to Drink (12 case) 1.0 2.0 3.0 4.5 5.4 6.5 7.8 9.3 11.7 14.6 18.2 18.2 102
Method Bar (box of 12) 1.0 2.0 3.0 4.5 5.4 6.5 7.8 9.3 11.7 14.6 18.2 18.2 102
Method Flavor - 1 (.77kg) Orange 1.0 1.0 1.5 2.3 2.7 3.2 3.9 4.7 5.8 7.3 9.1 9.1 52
Method Flavor - 2 (.77kg) TroPunch 1.0 1.0 1.5 2.3 2.7 3.2 3.9 4.7 5.8 7.3 9.1 9.1 52
Method Ready to Drink (12 case) 1,000 2,000 3,000 5,400 6,480 7,776 11,664 13,997 23,328 29,160 36,450 54,675 194,930
Method Bar (box of 12) 1,000 2,000 3,000 5,400 6,480 7,776 11,664 13,997 23,328 29,160 36,450 54,675 194,930
Method Flavor - 1 (.77kg) Orange 1,000 1,000 1,500 2,700 3,240 3,888 5,832 6,998 11,664 14,580 18,225 27,338 97,965
Method Flavor - 2 (.77kg) TroPunch 1,000 1,000 1,500 2,700 3,240 3,888 5,832 6,998 11,664 14,580 18,225 27,338 97,965
Total Unit Volume 4,000 6,000 9,000 16,200 19,440 23,328 34,992 41,990 69,984 87,480 109,350 164,025 585,789
Confidential
Volume Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Number of Outlets 1550 6456 8608 12912 27534
Factor 0% 160% 170% 120% 100%
1.21 tub 13.6 23.2 27.8 27.8
Sales Volume (per Month) Year 1 Year 2 Year 3 Year 4 Year 5
Method Ready to Drink (12 case) 102 163 278 334 334
Method Bar (box of 12) 102 163 278 334 334
Method Flavor - 1 (.77kg) Orange 52 67 87 113 147
Method Flavor - 2 (.77kg) TroPunch 52 67 87 113 147
Method Ready to Drink (12 case) 194,930 1,055,491 2,392,446 4,306,403 9,183,124
Method Bar (box of 12) 194,930 1,055,491 2,392,446 4,306,403 9,183,124
Method Flavor - 1 (.77kg) Orange 97,965 432,990 750,515 1,463,505 4,057,077
Method Flavor - 2 (.77kg) TroPunch 97,965 432,990 750,515 1,463,505 4,057,077
Total Unit Volume 585,789 2,976,961 6,285,923 11,539,816 26,480,403
Confidential
ProForma G&A Expense
General + Administrative
Spiffs 5,067 7,855 11,783 21,209 25,450 30,541 45,811 54,973 91,622 114,527 143,159 214,738 766,733
Media spend (all formats)200,000 8,107 12,568 18,852 33,934 40,721 48,865 73,297 87,957 146,595 183,243 229,054 343,581 1,426,773
Promotions 1,351 2,095 3,142 5,656 6,787 8,144 12,216 14,659 24,432 30,541 38,176 57,264 204,462
Public relations 50,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 86,000
Payroll 98,000 38,750 38,750 38,750 38,750 38,750 38,750 38,750 38,750 46,750 46,750 46,750 46,750 595,000
Fringe Benefits 6,975 6,975 6,975 6,975 6,975 6,975 6,975 6,975 8,415 8,415 8,415 8,415 89,460
Consulting - 2,095 3,142 5,656 6,787 8,144 12,216 14,659 24,432 30,541 38,176 57,264 203,111
Facilities 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 250,000
Travel 45,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 165,000
Auto lease/reimbursement - - - 250 250 250 250 250 250 250 250 250 2,250
Phone 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000
Shipping/Postage 8,848 1,621 2,514 3,770 6,787 8,144 9,773 14,659 17,591 29,319 36,649 45,811 68,716 254,203
Utilites (elect, water, etc) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000
IT 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000
Legal (IP, regulatory, corp)12,500 12,500 12,500 12,500 50,000
Quality assurance/control 3,750 - 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 20,250
Product Liability Insurance15,000 4,183 4,183 4,183 4,183 4,183 4,183 4,183 4,183 4,183 - - 52,650
Other Insurance 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000
Depreciation 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 88,000
Miscellaneous - - - 2,828 3,393 4,072 6,108 7,330 12,216 15,270 19,088 28,632 98,937
Product Endorsement 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 47,194
Quiksilver Support 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 288,000
Total G&A 433,098 153,153 165,634 179,197 214,826 242,540 248,297 303,066 335,928 489,314 554,785 657,477 926,709 4,904,024
Confidential
ProForma Cashflow
Pre Launch Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12
COD Cash Flow (850,000) (950,000)
Cash Income 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 1,908,784 2,863,176
Cash Expense (844,564) (1,053,225) (271,414) (397,600) (370,376) (479,531) (534,152) (784,381) (939,405) (1,245,494) (1,692,722) (1,500,144) (1,869,375)
Cash Flow (985,670) (166,679) (240,498) (87,593) (140,192) (126,945) (173,570) (206,432) (23,873) (165,695) 408,640 993,800
Cum Cashflow (985,670) (1,152,350) (1,392,848) (1,480,441) (1,620,633) (1,747,578) (1,921,148) (2,127,580) (2,151,453) (2,317,147) (1,908,508) (914,707)
Net 30 Cash Flow
Cash Income - 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 1,908,784
Cash Expense (844,564) (1,053,225) (271,414) (397,600) (370,376) (479,531) (534,152) (784,381) (939,405) (1,245,494) (1,692,722) (1,500,144) (1,869,375)
Cash Flow (1,897,790) (203,859) (292,865) (213,274) (196,748) (194,813) (377,174) (328,594) (512,521) (471,100) 26,883 39,408
Cum Cashflow (1,897,790) (2,101,649) (2,394,514) (2,607,788) (2,804,536) (2,999,349) (3,376,523) (3,705,118) (4,217,639) (4,688,739) (4,661,856) (4,622,448)
Net 60 Cash Flow
Cash Income - - 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027
Cash Expense (844,564) (1,053,225) (271,414) (397,600) (370,376) (479,531) (534,152) (784,381) (939,405) (1,245,494) (1,692,722) (1,500,144) (1,869,375)
Cash Flow (1,897,790) (271,414) (330,045) (265,642) (322,430) (251,370) (445,042) (532,198) (634,683) (959,749) (278,522) (342,348)
Cum Cashflow (1,897,790) (2,169,203) (2,499,248) (2,764,890) (3,087,319) (3,338,689) (3,783,731) (4,315,929) (4,950,612) (5,910,361) (6,188,883) (6,531,231)
Confidential
Startup Capital
Start-up Expense
G&A 433,098 Payroll, Sales & Marketing
Inventory 147,466 Three Months
Roxy R&D 38,000 Formulation & Design
RTD Prototype 15,000 Development
Bar Prototype 10,000 Development
QC Per Product 12,000 Six sku's
Office & Computer 39,000 Hardware
Software - Quiksilver
Miscellaneous 100,000 Reserve
Internet/Website 50,000 Design
Total Initial Expense 844,564
Total Capital Expense264,000
Confidential
Possible Structures: Quiksilver & Genr8
Joint Venture: Ownership structure to be
developed (xx% Quik; yy% Genr8)
Hybrid JV: With revenue and earnings
consolidation to Quiksilver (accretive)
Quiksilver Subsidiary: Under the Quiksilver
umbrella (financial consolidation) with equity
issued to Genr8 and appreciation rights
Confidential
What’s Next
Letter of Intent
Presentation to Quiksilver leadership
Comprehensive business plan: meticulous manufacturing/supply
chain, branding, financials marketing, sales & distribution strategy
Entity Creation
Entity Operational
Product Launch
Market Capture
Value Creation
Confidential
Thank you
Merci Beaucoup
большое спасибо
Muchas Gracias
ありがとう
Danke
謝謝
obrigado muito muito
Genr8 & Quiksilver
Confidential
Science Data
Confidential
Anthony has worked within the natural products industry since 1975. He performed
his undergraduate training in physiology and nutritional biochemistry at UC Irvine
and CSU Long Beach. He performed his graduate research at Berkeley in antioxidant
and exercise biochemistry. In 1992 he co-founded EAS, the world’s largest sports
nutrition company, acquired by Abbott Labs/Ross in 2004. At EAS he developed and
implemented a strategic university research program that completed over 15 clinical
studies in the first 3 years of the company’s history, and yielded 2 patents. He then co-
founded a medical food company focused on the prevention of HIV-associated
wasting. He has collaborated on over 90 university and private research center clinical
trials, ranging from AIDS/HIV to weight loss. He is the founder and CSO of
IMAGINutrition, Inc., a think tank focusing upon intellectual properties, clinical
research validation, and science-driven media campaigns in the dietary supplement,
cosmeceutical, medical food, and conventional beverage and food sectors. He is a
founding partner of LevInova, Inc., marketers of Zsweet™, a patent pending all
natural, zero calorie, clinical research-validated zero glycemic bulk sweetener. He is
the Managing Director of a North American subsidiary of a spin-out from the
University of Nottingham, poised to market an evidence-based suite of performance
nutrition dietary supplements. He has been a surfer since 1975 and a Quiksilver brand
loyalist since 1979
Anthony L. Almada
Confidential
Tom is a surfer, hiker, dad, and finance guy. He is Financial Advisor for Metabolic Response
Modifiers and BarTech. MRM is a cutting edge, rapidly expanding sports nutrition company.
BarTech is a high quality, custom bar manufacturer. Prior to joining MRM Corrigan served as
Finance Advisor for ImagiNutrition, a nutritional technology and demand creation think tank.
Consultants to the natural products industry, with a focus on dietary supplements, nutraceuticals,
and functional beverages. Previously Corrigan was Director of Finance for Alteon, the Flight and
Technology subsidiary of the Fortune 20 Boeing Company. Alteon has flight training facilities
on 6 continents and 24 locations. Corrigan has over twenty years financial and business
development experience and has consulted within the Natural Products Industry since 1998. He
specializes in the architecture of product launches, business strategies, financing, and value
creation. Tom is also on the board of directors for BarTech Manufacturing
Tom has International experience in China, Korea, Australia, the UK and Mexico; his education
includes an MBA from the Chapman University School of Business, BA from California State
University, Long Beach. He is a member of Surfrider Foundation, the Chapman Alumni
Association. Tom enjoys time with his family, surfing, hiking and travel. Tom also speaks
Spanish and French.
Disclosure - Corrigan owns shares of ZQK
Tom Corrigan
Confidential
Mark is a Surfer, Dad, and the Chief of Chemi Source, Inc. and Metabolic
Response Modifiers (MRM). He is also Chairman of the Board for BarTech.
MRM is experiencing exponential growth in both top and bottom lines.
Previous experience initiated while working on his Masters in Clinical
Nutrition and publishing/participating in several clinical trials at
Harbor/UCLA, Research and Education Institute
As Director of R&D for KAL (now Nutriceutical, Inc.), he successfully
launched Melatonin (industry first) and did other innovations while at Jarrow
Formulas, Inc. Mark continued consultation for the supply-side of this
industry which led to the formation of Chemi-Source in 1996. Mark has had
many studies published and continues to be a contributing writer for
numerous health oriented publications
Mark Olson
Confidential
Energ8 Group Ltd: UK Roots
• An elite, UK university-based muscle scientist: Dr. Paul
Greenhaff
•A highly respected English Premier
League (soccer) strength coach veteran
•A “dormant” patented carbohydrate with underappreciated
potential
Confidential
Energ8 International: Mission
• Apply pioneering, exclusive human science to enhance
muscular and metabolic performance
• Develop and exploit a pipeline of University lab-birthed,
evidence-based nutritional compositions
• Create unflinching confidence--from elite coach to consumer--
and create legions of brand zealots across many sports
• Proof Before Promises™ (mark filed for registration)
Confidential
Product Development Strategy
• Identify and explore unchartered, consumer-relevant regions
of human performance and metabolism enhancement:
GENERATE IP
• Prove concept in rigorously controlled, university-based
clinical studies: GENERATE VALIDATION
• Apply the IP and science platform to novel compositions with
a variety of delivery systems
• Undertake additional studies to build evidence bases for
each composition
Confidential
Genr8 Management Team
• Anthony L. Almada, MSc--CEO (32 years; EAS; DietMax®)
• Tom Corrigan, MBA--CFO (20 years; MRM, BarTech, Fortune 100)
• Joe Evans, PhD--VP, Scientific Affairs (17 years; MRI, Shaman
Pharmaceuticals, Novartis)
• Chris Noonan, MPH--VP, Marketing & Regulatory Affairs (13 years;
Pharmanex, Pharmavite, EAS [team sales])
• Neil Beltran, MBA--VP, Branding (26 years; Weider, Amerifit)
Plus 9 other industry veterans: endurance, pros, EAS sales, legal
Confidential
Genr8, Inc. Advisory Board
• Greg Horn (former CEO, GNC)
• Farah Ahmed, BSc, Esq: former attorney for FDA (CFSAN);
Bachelors in neuro-nutrition; assistant general counsel, CTFA
• W. Patrick Noonan, RPh, MBA, Esq: former nutrition industry
EVP; submitted first NDI; 35 years food & drug law experience
•Rod Berman, MS, Esq: 20+ years IP law experience; Masters in
Chemistry; voted one of Top 25 IP lawyers in California
•Steve Jennings: launched first creatine product; ex-Pepsico
Confidential
Opportunity: Quiksliver & Genr8
• Novel, evidence-based (U Nottingham), IP-anchored (Vitargo®
axis + patents and patents pending) platform with a deep
innovation pipeline
• Savvy and highly skilled management team (> 160 years of
industry experience)
• Industrial Physics 101: minimal inertia to overcome; Vitargo
momentum across a broad span of enthusiasts
• Incremental consumer$: parents + youths, plus soccer,
endurance, and performance-driven communities
Confidential
Initial (Launch) Product Suite
• Method – Ready to Drink
• Method Endurance/Energy Bar
• Method Ready to Mix
Confidential
Proof Before Promises™
REAL WORLD SCIENCE
Confidential
Scientific Rationale (1): Vitargo
• Prolonged sub-maximal exercise in humans is limited by
availability of muscle and liver glycogen stores
• Glycogen stores increase when carbohydrate intake is high
• Glycogen synthesis is highest in muscles in which glycogen
stores have been depleted by exercise, especially during first
two hours post-exercise
Confidential
Effects of Vitargo on Muscle Glycogen
Overview of Study Design
• Single-Blinded, Randomized, Two-Way, Cross-over Design
• 13 healthy well-trained young male students
• Subjects performed standard exercise routine to deplete muscle glycogen stores
• 60 min on treadmill followed by 60 min submax cycle ergometer + sprints
• After exercise, subjects ingested 4 servings of one of 2 carbohydrate drinks (300 g total):
• 75g Monomeric/Oligomeric Glucose (MW ~ 500; 350 mosmol/liter)
• 75 g Vitargo, a High Molecular Weight Glucose Polymer (MW ~500-700K; 84
mosmol/liter)
• Muscle biopsies at 0, 2, and 4 hours post-exercise
Timing
of carb
drinks,
post-
exercise
Confidential
Vitargo Increases Muscle Glycogen and
Glycogen Synthesis Rate in Humans
Aulin et al 2000 Eur J Appl Physiol 81:346-351
Conclusion
• Use of Vitargo after glycogen-depleting exercise restores
muscle glycogen at a 70% faster rate compared to equal calorie
maltodextrin + glucose drink with higher osmolality
• The rate of glycogen repletion approaches that of IV glucose
Confidential
Scientific Rationale (2): Vitargo
• Synthesis of muscle glycogen from ingested carbs is dependent upon 1)
glucose transport across intestinal mucosa and muscle cell membrane, 2)
glucose phosphorylation, and 3) the enzyme glycogen synthase
• Blood glucose concentrations are influenced by the flux of glucose from
stomach via the intestine
• Rate of gastric (stomach) emptying is influenced by the osmolality
(amount of dissolved ingdts.) of ingested solution
• Solution with high osmolality could delay gastric emptying, thereby
delaying release of glucose into the blood
Confidential
Effects of Vitargo on Gastric Emptying
Overview of Study Design
• Single-Blinded, Randomized, Two-Way, Cross-over Design
• 6 healthy young males evaluated on two separate occasions
• After 5 hour fast, subjects were given (by oral tube into the
stomach, to control amount) one of 2 carbohydrate drinks:
• 75g Monomeric/Oligomeric Glucose [15% glucose; 13%
disaccharides] (MW ~ 500; 336 mosmol/liter)
• 75 g Vitargo (MW ~ 500-700K; 62 mosmol/liter)
• Gastric volumes measured at 10-minute intervals for 60 min.
post-gavage using standard techniques (concentration of dye-
containing solution)
Confidential
Vitargo Accelerates Gastric Empting
in Humans
Leiper et al 2000 Scand J Gastroenterol 35:1143-1149
Conclusions
•Vitargo empties from stomach 2x faster than equal carbs as
maltodextrin + sugars drink (minimizes “fullness” feeling)
• Vitargo delivers energy to small intestine (for rapid absorption)
at a rate 2x faster than maltodextrin + sugars drink
Confidential
Effects of Vitargo on Endurance
Overview of Study Design
• Single-Blinded, Randomized, Three-Way, Cross-over Design
• 8 healthy recreationally active young male students
• Subjects performed cycling exercise to the point of exhaustion at 75% VO2max
(previously determined)
• Protocol results in virtually complete glycogen depletion
• After exercise, subjects ingested one of 3 drinks (1 liter total volume)
• 100g Monomeric/Oligomeric Glucose (MW ~ 900; 124 mosmol/liter)
• 100g Vitargo (MW ~500-700K; 34 mosmol/liter)
• Control Solution: Equal volume of calorie-free flavored water
•Two hours after consumption of drink, subjects performed as much work as possible in
15 minutes on a braked cycle ergometer
• Validated model of endurance performance
•Blood (arterialized) samples obtained every 10 minutes during 2 h recovery period for
glucose and insulin measurements
Confidential
Effects of Post-Exercise Use of Vitargo on
Glucose and Insulin
Conclusion
• Post-exercise consumption of Vitargo results in faster and
higher increases in glucose and insulin concentrations
• Blood sugar does not “crash”; glucose enters muscle
Stephens et al 2007 J Sports Sci in press
Confidential
Vitargo Improves Max Endurance
Performance after Glycogen Depletion
Conclusions
• Post-exercise use of Vitargo results in 10% greater work
output during 15 min. subsequent max endurance exercise
• Improvement observed in each subject
Stephens et al 2007 J Sports Sci in press
Confidential
Scientific Rationale: Carnitine +
Superior Insulin Elevating Agent
• Carnitine: essential for fatty acid transport into mitochondria; as
buffer for excess acetyl groups produced during carb oxidation
• >95% of body’s total carnitine stores: in skeletal muscle
• During intense exercise, skeletal muscle free carnitine
decreases >65%, fatty acid (FA) oxidation decreases by 30%
• During intense exercise, free carnitine availability might be rate
limiting for FA oxidation in muscle
• CHALLENGE: Carnitine supplementation alone does not
increase carnitine pool in skeletal muscle in humans--explaining
the equivocal performance and fat oxidation (and lack of human
fat loss data) body of science
Confidential
Metabolic Roles of Carnitine in Muscle
Figure modified from Stephens et al 2007 J Physiol
INSULIN
Confidential
Carnitine Increases Fat Oxidation and
Glycogen Storage in Humans: Breakthrough
Data from Stephens and Greenhaff et al 2006 J Clin Endocrinol Metab 91: 5013-5018.
Conclusion
• Increased muscle carnitine content boosts fat oxidation
(judged by reduced PDH activity) AND muscle glycogen in
humans, without increasing carb intake
Confidential
Carbohydrate Ingestion Augments Carnitine
Retention in Humans
Data from Stephens and Greenhaff et al 2007 J Appl Physiol 102: 1065-1070.
Single Dose 14 Day Dosing
3 g Carnitine (base) + 94 g CHO
Conclusion
• CARB-stimulated insulin secretion results in increased
whole body (muscle) carnitine retention in humans
Confidential
Skeletal Muscle Carnitine Delivery
Technology
Product Development Approach
• Combine carnitine with a superior insulin elevating agent to
insure carnitine retention in skeletal muscle
• Superior Insulin elevating agent: Vitargo
• Take as a daily post-workout or rest day solution
Results
• Increased fat oxidation in skeletal muscle
• Increased glycogen storage in skeletal muscle
Applications
• Sport Nutrition: Endurance Sports; Post-training Repletion
• Medical Foods (Obesity, Impaired Glucose Tolerance, Type
2 diabetes, Metabolic Syndrome), others
Confidential
Product Safety
• No issues have been observed with regard to safety,
tolerability, adverse events, dropouts from clinical studies, or
any other indices of product safety following consumption of
Vitargo
Confidential
Intellectual Property
• Issued, unchallenged US patent related to Vitargo--expires
2016--with EXCLUSIVE North Am license;
exclusive license to Vitargo trademark
• Three U Nott patents pending, related to
CarniSure platform; Vitargo + “black box”;
exclusive license to all U Nott/Greenhaff IP
• Engagement of elite IP firm: patent
and ™ prosecution; offensive and
defensive patent infringement
strategies in place; swift enforcement
• Genr8 management team has HIGH IP savvy, expertise
Confidential
Manufacturing
• NPA, NSF cGMP contract manufacturer for RTMs, sachets,
solid doses (only ultra high speed sachet packaging unit west
of MS)--15+ year close working relationship with owner/CEO
• ALL US or EU-produced bioactives; Swecarb (Vitargo) is a
global top producer of starches--2 yr shelf stability
• Food cGMP bar manufacturer--28+ year working relationship
with majority owner; excellent working relationship with CEO;
Genr8 CFO has served as external CFO for this company
• Food cGMP flavor and RTD manufacturer, for aseptic and
UHT development, and aseptic production; stability testing
Genr8 is committed to satisfying Quiksilver’s quality standards
Confidential
Regulatory Status
•Genr8 product suite (and innovation pipeline) contains both old
and new dietary ingredients – qualifies as dietary supplements
•Sucralose is the only sweetener; pursuing GRAS status on a
natural, zero calorie, high intensity sweetener constituent found
in Stevia (NOT Stevia extract or stevioside), to create 100%
natural line extensions (for youths/Mom shoppers)
•Banned Substances Control Group (BSCG) certification for
EACH product
Confidential
Product Certification
• EACH lot of Genr8 finished product will be submitted to
certify the absence of ANY substances banned by WADA,
IOC, MLS, NFL, MLB, NBA, NHL, NCAA
• Testing by Banned Substances Control Group
• www.bscg.org
• ONLY certification program in the US that uses a WADA-
accredited laboratory for all analyses
• Detection limits used by BSCG are the lowest detection
limits for any similar program worldwide
• Assays for the presence of
• Anabolic Agents (>40 different banned substances)
• Stimulants (> 30 different banned substances)
Confidential
Prove It and They Will Come
SCIENCE-DRIVEN
MARKETING
Confidential
Core Sports Synergy
•Surfing
•Snow Sports
•Golf
•Skateboarding
•Motocross
•Volleyball
•School and University
•Unlimited Potential
Confidential
Marketing Objectives
•Build on the scientific support for the product; “Proof Before
Promises™” is our mantra
•Create legions of brand zealots across many sports AND age
ranges: leverage relationships in professional & youth surfing,
skiing, snowboarding, golf, and skateboarding
•Highly targeted messaging through digital media, relationships
with key influencers (who use the product, not sponsorship), and
abundant beta-testing, trial, and sampling programs
•“Curriculum marketing” to both Quiksilver & board shop retail
staff and end users via multimedia/interactive vehicles and
forums
•Achieve HIGH editorial:advertorial ratio through strategic media
campaigns linked to every new published human study
Confidential
Sales & Distribution Plan:
•Controlled distribution to build incremental and high velocity
awareness and maintain nationwide price integrity
•Method will attract new customers to Quiksilver enthusiasts with
NOVEL, evidence-based products
•Minimize commoditization (despite robust and expanding
patent/IP portfolio)
•Breed Method brand zealots and NEW Quiksilver consumers

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ZQK JV

  • 2. Confidential Method Nutrition Forging an Alliance based on Science Shaping a Healthy Core Lifestyle
  • 3. Confidential Table of Contents: •Executive Summary •The Opportunity •Market Landscape & Plan •SWOT Analysis •Marketing Strategy •Financial Forecast •Structure •Next Steps •Science Data
  • 4. Confidential Initial Product Suite Ready to Drink  12-16 oz Method Nutrition Bar 12 bars in a 4 color box Roxy Roxy Madness (travel pack) RTM + Bars + Surf/ Roxy Related Products The Roxy branded products will be specially formulated for the target market; size, flavors, and caloric volume
  • 5. Confidential Marketing Tactics II Harness “editorial secret agents” who are Method friends and have columns in high circ enthusiast publications/websites Print Advertising Enthusiast Vehicle Editorial Press Conferences Announcing significant study results, with venue co-located with national/intl. science conference, near journal publisher Product Placement Strategic, cost-contained print advertising in select magazines, targeting demographically-rich, enthusiast communities VIP User/Influencer Marketing Ambitious, Method-managed, low $, elite user/VIP/ambassador program: pro elite trainers/coaches; amateur to pro standouts Digital & Interactive “Books” New media format “books”, with interactive and Web-enabled content, extolling Method platform, and significant introductions Leverage contacts (directors, actors, producers) in TV/film to anchor Method brand (clothing, product use) Event Promotions Nationwide, active presence with Method team at enthusiast and competitive events: youth to world class; podcasts
  • 6. Confidential Marketing Tactics – ZQK Specific Frequent media announcements directed to corporate, franchise, and board shops, via email and podcasts Quik Announcements Co-promotions Conference Calls/ Webinars Regular visits to each Surf region to provide training and motivational seminars about new products, w/Method mgmt Regular scheduled conference calls with store managers to update on products, marketing support, new offerings, promos Store Visits Pro Appearances Incentives & Rewards Info Packages Creation and collaborative review/shaping of digital and print information kits for each product Cash incentives for active promotion & sale of Method brand; “Secret Shopper”, on-site multifaceted rewards program Complementary Quiksilver co-branding product recommendations placed in all Method product media formats In-person appearances of pro and elite athletes, at Quiksilver/Board stores; trade shows, etc.
  • 7. Confidential Initial Distribution – Revenue Range Method Nutrition Stores 12 24 60 Quiksilver 500 1,786,560 2,855,520 6,062,400 Surfshops 1000 3,573,120 5,711,040 12,124,800 Snow/Ski/Skate 1000 3,573,120 5,711,040 12,124,800 Military 300 1,071,936 1,713,312 3,637,440 Sporting Goods 200 714,624 1,142,208 2,424,960 Total Year 1 3000 10,719,360 17,133,120 36,374,400 Total Product Suite RTD / Bar / RTM (turns per month)
  • 8. Confidential Year One & Two Distribution Method Nutrition Stores 12 24 60 Quiksilver 500 1,786,560 2,855,520 6,062,400 Surfshops 1000 3,573,120 5,711,040 12,124,800 Snow/Ski/Skate 1000 3,573,120 5,711,040 12,124,800 Military 300 1,071,936 1,713,312 3,637,440 Sporting Goods 200 714,624 1,142,208 2,424,960 Total Year 1 3000 10,719,360 17,133,120 36,374,400 Golf 1000 3,573,120 5,711,040 12,124,800 Trader Joes 272 971,889 1,553,403 3,297,946 Whole Foods 194 693,185 1,107,942 2,352,211 Wild Oats 110 393,043 628,214 1,333,728 Mother's Market 4 14,292 22,844 48,499 Military 3100 11,076,672 17,704,224 37,586,880 Sporting Goods 928 3,315,855 5,299,845 11,251,814 Total Year 1&2 8608 30,757,417 49,160,632 104,370,278 Total Product Suite RTD / Bar / RTM (turns per month)
  • 9. Confidential Year Three Plus Distribution Method Nutrition Stores 12 24 60 Safeway/Vons 1761 6,292,264 10,057,141 21,351,773 Kroger 2507 8,957,812 14,317,577 30,396,874 Stater Brothers 158 564,553 902,344 1,915,718 RiteAid 3300 11,791,296 18,846,432 40,011,840 Walgreens 5000 17,865,600 28,555,200 60,624,000 CVS 6200 22,153,344 35,408,448 75,173,760 SubTotal Mass 18,926 67,624,869 108,087,143 229,473,965 Grand Total 27,534 98,382,286 157,247,775 333,844,243 Total Product Suite RTD / Bar / RTM (turns per month)
  • 10. Confidential Launch Support The Method launch plan is to utilize the best of Quiksilver and Genr8--synergy--with no duplication of infrastructure where applicable. Method would be expected to stand on its own and therefore Quiksilver support to Method will be at an agreed upon rate/allocation This structure will promote Method to be nimble and achieve positive cash flow faster than building a traditional infrastructure from which to launch Method
  • 11. Confidential Who does What Quiksilver Quik Brands Corp Store Distribution Core Shop Distribution Event Marketing/Promotions Marketing Support* Accounting, Tax & Legal Support* Internet Synergy/Links* Genr8 / MRM Management Team Vitargo Intellectual Property, Scientific Proof R&D/Innovation & Formulation Sales, Marketing & CRM Operations / Distribution Sport/Science-Driven Media Supply Chain Mgmt Regulatory Method *At an agreed upon rate
  • 13. Confidential ProForma Income Statement Five Year Pre Launch Year 1 Year 2 Year 3 Year 4 Year 5 Revenue 10,223,112 52,394,828 111,747,064 204,564,307 464,659,096 Cogs 147,466 4,089,245 22,018,403 46,960,586 85,966,104 195,268,339 Operating Profit 6,133,867 30,376,426 64,786,478 118,598,202 269,390,758 Op Margin 60.0% 58.0% 58.0% 58.0% 58.0% General + Admin 433,098 4,904,024 17,169,193 39,494,145 71,623,196 156,311,439 Total Expense 8,993,269 39,187,596 86,454,731 157,589,300 351,579,778 EBIT 1,229,843 13,207,232 25,292,333 46,975,007 113,079,319 Margin 12.0% 25.2% 22.6% 23.0% 24.3% Interest - - - - - Taxes 582,029 4,622,531 8,852,317 16,441,252 39,577,762 Net Income 647,814 8,584,701 16,440,017 30,533,754 73,501,557 6% 16% 15% 15% 16%
  • 14. Confidential ProForma Income Statement Year 1 Pre Launch Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Revenue 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 1,908,784 2,863,176 10,223,112 Cogs 147,466 27,022 41,894 62,841 113,113 135,736 162,883 244,324 293,189 488,649 610,811 763,514 1,145,270 4,089,245 Operating Profit 40,533 62,841 94,261 169,670 203,604 244,324 366,486 439,784 732,973 916,216 1,145,270 1,717,905 6,133,867 Op Margin 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% General + Admin 433,098 153,153 165,634 179,197 214,826 242,540 248,297 303,066 335,928 489,314 554,785 657,477 926,709 4,904,024 Total Expense 180,175 207,528 242,038 327,939 378,276 411,179 547,390 629,117 977,963 1,165,596 1,420,991 2,071,979 8,993,269 EBIT (112,620) (102,793) (84,936) (45,157) (38,936) (3,972) 63,421 103,856 243,659 361,431 487,793 791,197 1,229,843 Margin -166.7% -98.1% -54.1% -16.0% -11.5% -1.0% 10.4% 14.2% 19.9% 23.7% 25.6% 27.6% 12.0% Interest - - - - - - - - - - - - - Taxes (39,417) (35,978) (29,728) (15,805) (13,628) (1,390) 22,197 36,350 85,281 126,501 170,728 276,919 582,029 Net Income (73,203) (66,816) (55,209) (29,352) (25,309) (2,582) 41,223 67,507 158,378 234,930 317,065 514,278 647,814 -108% -64% -35% -10% -7% -1% 7% 9% 13% 15% 17% 18% 6%
  • 15. Confidential Volume Forecast Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Number of Outlets 1000 1000 1000 1200 1200 1200 1500 1500 2000 2000 2000 3000 1550 Factor 100% 100% 150% 150% 120% 120% 120% 120% 125% 125% 125% 100% 0% 1.21 tub Sales Volume (per Month) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Year 1 Method Ready to Drink (12 case) 1.0 2.0 3.0 4.5 5.4 6.5 7.8 9.3 11.7 14.6 18.2 18.2 102 Method Bar (box of 12) 1.0 2.0 3.0 4.5 5.4 6.5 7.8 9.3 11.7 14.6 18.2 18.2 102 Method Flavor - 1 (.77kg) Orange 1.0 1.0 1.5 2.3 2.7 3.2 3.9 4.7 5.8 7.3 9.1 9.1 52 Method Flavor - 2 (.77kg) TroPunch 1.0 1.0 1.5 2.3 2.7 3.2 3.9 4.7 5.8 7.3 9.1 9.1 52 Method Ready to Drink (12 case) 1,000 2,000 3,000 5,400 6,480 7,776 11,664 13,997 23,328 29,160 36,450 54,675 194,930 Method Bar (box of 12) 1,000 2,000 3,000 5,400 6,480 7,776 11,664 13,997 23,328 29,160 36,450 54,675 194,930 Method Flavor - 1 (.77kg) Orange 1,000 1,000 1,500 2,700 3,240 3,888 5,832 6,998 11,664 14,580 18,225 27,338 97,965 Method Flavor - 2 (.77kg) TroPunch 1,000 1,000 1,500 2,700 3,240 3,888 5,832 6,998 11,664 14,580 18,225 27,338 97,965 Total Unit Volume 4,000 6,000 9,000 16,200 19,440 23,328 34,992 41,990 69,984 87,480 109,350 164,025 585,789
  • 16. Confidential Volume Forecast Year 1 Year 2 Year 3 Year 4 Year 5 Number of Outlets 1550 6456 8608 12912 27534 Factor 0% 160% 170% 120% 100% 1.21 tub 13.6 23.2 27.8 27.8 Sales Volume (per Month) Year 1 Year 2 Year 3 Year 4 Year 5 Method Ready to Drink (12 case) 102 163 278 334 334 Method Bar (box of 12) 102 163 278 334 334 Method Flavor - 1 (.77kg) Orange 52 67 87 113 147 Method Flavor - 2 (.77kg) TroPunch 52 67 87 113 147 Method Ready to Drink (12 case) 194,930 1,055,491 2,392,446 4,306,403 9,183,124 Method Bar (box of 12) 194,930 1,055,491 2,392,446 4,306,403 9,183,124 Method Flavor - 1 (.77kg) Orange 97,965 432,990 750,515 1,463,505 4,057,077 Method Flavor - 2 (.77kg) TroPunch 97,965 432,990 750,515 1,463,505 4,057,077 Total Unit Volume 585,789 2,976,961 6,285,923 11,539,816 26,480,403
  • 17. Confidential ProForma G&A Expense General + Administrative Spiffs 5,067 7,855 11,783 21,209 25,450 30,541 45,811 54,973 91,622 114,527 143,159 214,738 766,733 Media spend (all formats)200,000 8,107 12,568 18,852 33,934 40,721 48,865 73,297 87,957 146,595 183,243 229,054 343,581 1,426,773 Promotions 1,351 2,095 3,142 5,656 6,787 8,144 12,216 14,659 24,432 30,541 38,176 57,264 204,462 Public relations 50,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 86,000 Payroll 98,000 38,750 38,750 38,750 38,750 38,750 38,750 38,750 38,750 46,750 46,750 46,750 46,750 595,000 Fringe Benefits 6,975 6,975 6,975 6,975 6,975 6,975 6,975 6,975 8,415 8,415 8,415 8,415 89,460 Consulting - 2,095 3,142 5,656 6,787 8,144 12,216 14,659 24,432 30,541 38,176 57,264 203,111 Facilities 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 20,833 250,000 Travel 45,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 165,000 Auto lease/reimbursement - - - 250 250 250 250 250 250 250 250 250 2,250 Phone 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 24,000 Shipping/Postage 8,848 1,621 2,514 3,770 6,787 8,144 9,773 14,659 17,591 29,319 36,649 45,811 68,716 254,203 Utilites (elect, water, etc) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 60,000 IT 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 120,000 Legal (IP, regulatory, corp)12,500 12,500 12,500 12,500 50,000 Quality assurance/control 3,750 - 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 20,250 Product Liability Insurance15,000 4,183 4,183 4,183 4,183 4,183 4,183 4,183 4,183 4,183 - - 52,650 Other Insurance 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 12,000 Depreciation 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 7,333 88,000 Miscellaneous - - - 2,828 3,393 4,072 6,108 7,330 12,216 15,270 19,088 28,632 98,937 Product Endorsement 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 3,933 47,194 Quiksilver Support 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 288,000 Total G&A 433,098 153,153 165,634 179,197 214,826 242,540 248,297 303,066 335,928 489,314 554,785 657,477 926,709 4,904,024
  • 18. Confidential ProForma Cashflow Pre Launch Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 COD Cash Flow (850,000) (950,000) Cash Income 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 1,908,784 2,863,176 Cash Expense (844,564) (1,053,225) (271,414) (397,600) (370,376) (479,531) (534,152) (784,381) (939,405) (1,245,494) (1,692,722) (1,500,144) (1,869,375) Cash Flow (985,670) (166,679) (240,498) (87,593) (140,192) (126,945) (173,570) (206,432) (23,873) (165,695) 408,640 993,800 Cum Cashflow (985,670) (1,152,350) (1,392,848) (1,480,441) (1,620,633) (1,747,578) (1,921,148) (2,127,580) (2,151,453) (2,317,147) (1,908,508) (914,707) Net 30 Cash Flow Cash Income - 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 1,908,784 Cash Expense (844,564) (1,053,225) (271,414) (397,600) (370,376) (479,531) (534,152) (784,381) (939,405) (1,245,494) (1,692,722) (1,500,144) (1,869,375) Cash Flow (1,897,790) (203,859) (292,865) (213,274) (196,748) (194,813) (377,174) (328,594) (512,521) (471,100) 26,883 39,408 Cum Cashflow (1,897,790) (2,101,649) (2,394,514) (2,607,788) (2,804,536) (2,999,349) (3,376,523) (3,705,118) (4,217,639) (4,688,739) (4,661,856) (4,622,448) Net 60 Cash Flow Cash Income - - 67,555 104,734 157,102 282,783 339,339 407,207 610,811 732,973 1,221,622 1,527,027 Cash Expense (844,564) (1,053,225) (271,414) (397,600) (370,376) (479,531) (534,152) (784,381) (939,405) (1,245,494) (1,692,722) (1,500,144) (1,869,375) Cash Flow (1,897,790) (271,414) (330,045) (265,642) (322,430) (251,370) (445,042) (532,198) (634,683) (959,749) (278,522) (342,348) Cum Cashflow (1,897,790) (2,169,203) (2,499,248) (2,764,890) (3,087,319) (3,338,689) (3,783,731) (4,315,929) (4,950,612) (5,910,361) (6,188,883) (6,531,231)
  • 19. Confidential Startup Capital Start-up Expense G&A 433,098 Payroll, Sales & Marketing Inventory 147,466 Three Months Roxy R&D 38,000 Formulation & Design RTD Prototype 15,000 Development Bar Prototype 10,000 Development QC Per Product 12,000 Six sku's Office & Computer 39,000 Hardware Software - Quiksilver Miscellaneous 100,000 Reserve Internet/Website 50,000 Design Total Initial Expense 844,564 Total Capital Expense264,000
  • 20. Confidential Possible Structures: Quiksilver & Genr8 Joint Venture: Ownership structure to be developed (xx% Quik; yy% Genr8) Hybrid JV: With revenue and earnings consolidation to Quiksilver (accretive) Quiksilver Subsidiary: Under the Quiksilver umbrella (financial consolidation) with equity issued to Genr8 and appreciation rights
  • 21. Confidential What’s Next Letter of Intent Presentation to Quiksilver leadership Comprehensive business plan: meticulous manufacturing/supply chain, branding, financials marketing, sales & distribution strategy Entity Creation Entity Operational Product Launch Market Capture Value Creation
  • 22. Confidential Thank you Merci Beaucoup большое спасибо Muchas Gracias ありがとう Danke 謝謝 obrigado muito muito Genr8 & Quiksilver
  • 24. Confidential Anthony has worked within the natural products industry since 1975. He performed his undergraduate training in physiology and nutritional biochemistry at UC Irvine and CSU Long Beach. He performed his graduate research at Berkeley in antioxidant and exercise biochemistry. In 1992 he co-founded EAS, the world’s largest sports nutrition company, acquired by Abbott Labs/Ross in 2004. At EAS he developed and implemented a strategic university research program that completed over 15 clinical studies in the first 3 years of the company’s history, and yielded 2 patents. He then co- founded a medical food company focused on the prevention of HIV-associated wasting. He has collaborated on over 90 university and private research center clinical trials, ranging from AIDS/HIV to weight loss. He is the founder and CSO of IMAGINutrition, Inc., a think tank focusing upon intellectual properties, clinical research validation, and science-driven media campaigns in the dietary supplement, cosmeceutical, medical food, and conventional beverage and food sectors. He is a founding partner of LevInova, Inc., marketers of Zsweet™, a patent pending all natural, zero calorie, clinical research-validated zero glycemic bulk sweetener. He is the Managing Director of a North American subsidiary of a spin-out from the University of Nottingham, poised to market an evidence-based suite of performance nutrition dietary supplements. He has been a surfer since 1975 and a Quiksilver brand loyalist since 1979 Anthony L. Almada
  • 25. Confidential Tom is a surfer, hiker, dad, and finance guy. He is Financial Advisor for Metabolic Response Modifiers and BarTech. MRM is a cutting edge, rapidly expanding sports nutrition company. BarTech is a high quality, custom bar manufacturer. Prior to joining MRM Corrigan served as Finance Advisor for ImagiNutrition, a nutritional technology and demand creation think tank. Consultants to the natural products industry, with a focus on dietary supplements, nutraceuticals, and functional beverages. Previously Corrigan was Director of Finance for Alteon, the Flight and Technology subsidiary of the Fortune 20 Boeing Company. Alteon has flight training facilities on 6 continents and 24 locations. Corrigan has over twenty years financial and business development experience and has consulted within the Natural Products Industry since 1998. He specializes in the architecture of product launches, business strategies, financing, and value creation. Tom is also on the board of directors for BarTech Manufacturing Tom has International experience in China, Korea, Australia, the UK and Mexico; his education includes an MBA from the Chapman University School of Business, BA from California State University, Long Beach. He is a member of Surfrider Foundation, the Chapman Alumni Association. Tom enjoys time with his family, surfing, hiking and travel. Tom also speaks Spanish and French. Disclosure - Corrigan owns shares of ZQK Tom Corrigan
  • 26. Confidential Mark is a Surfer, Dad, and the Chief of Chemi Source, Inc. and Metabolic Response Modifiers (MRM). He is also Chairman of the Board for BarTech. MRM is experiencing exponential growth in both top and bottom lines. Previous experience initiated while working on his Masters in Clinical Nutrition and publishing/participating in several clinical trials at Harbor/UCLA, Research and Education Institute As Director of R&D for KAL (now Nutriceutical, Inc.), he successfully launched Melatonin (industry first) and did other innovations while at Jarrow Formulas, Inc. Mark continued consultation for the supply-side of this industry which led to the formation of Chemi-Source in 1996. Mark has had many studies published and continues to be a contributing writer for numerous health oriented publications Mark Olson
  • 27. Confidential Energ8 Group Ltd: UK Roots • An elite, UK university-based muscle scientist: Dr. Paul Greenhaff •A highly respected English Premier League (soccer) strength coach veteran •A “dormant” patented carbohydrate with underappreciated potential
  • 28. Confidential Energ8 International: Mission • Apply pioneering, exclusive human science to enhance muscular and metabolic performance • Develop and exploit a pipeline of University lab-birthed, evidence-based nutritional compositions • Create unflinching confidence--from elite coach to consumer-- and create legions of brand zealots across many sports • Proof Before Promises™ (mark filed for registration)
  • 29. Confidential Product Development Strategy • Identify and explore unchartered, consumer-relevant regions of human performance and metabolism enhancement: GENERATE IP • Prove concept in rigorously controlled, university-based clinical studies: GENERATE VALIDATION • Apply the IP and science platform to novel compositions with a variety of delivery systems • Undertake additional studies to build evidence bases for each composition
  • 30. Confidential Genr8 Management Team • Anthony L. Almada, MSc--CEO (32 years; EAS; DietMax®) • Tom Corrigan, MBA--CFO (20 years; MRM, BarTech, Fortune 100) • Joe Evans, PhD--VP, Scientific Affairs (17 years; MRI, Shaman Pharmaceuticals, Novartis) • Chris Noonan, MPH--VP, Marketing & Regulatory Affairs (13 years; Pharmanex, Pharmavite, EAS [team sales]) • Neil Beltran, MBA--VP, Branding (26 years; Weider, Amerifit) Plus 9 other industry veterans: endurance, pros, EAS sales, legal
  • 31. Confidential Genr8, Inc. Advisory Board • Greg Horn (former CEO, GNC) • Farah Ahmed, BSc, Esq: former attorney for FDA (CFSAN); Bachelors in neuro-nutrition; assistant general counsel, CTFA • W. Patrick Noonan, RPh, MBA, Esq: former nutrition industry EVP; submitted first NDI; 35 years food & drug law experience •Rod Berman, MS, Esq: 20+ years IP law experience; Masters in Chemistry; voted one of Top 25 IP lawyers in California •Steve Jennings: launched first creatine product; ex-Pepsico
  • 32. Confidential Opportunity: Quiksliver & Genr8 • Novel, evidence-based (U Nottingham), IP-anchored (Vitargo® axis + patents and patents pending) platform with a deep innovation pipeline • Savvy and highly skilled management team (> 160 years of industry experience) • Industrial Physics 101: minimal inertia to overcome; Vitargo momentum across a broad span of enthusiasts • Incremental consumer$: parents + youths, plus soccer, endurance, and performance-driven communities
  • 33. Confidential Initial (Launch) Product Suite • Method – Ready to Drink • Method Endurance/Energy Bar • Method Ready to Mix
  • 35. Confidential Scientific Rationale (1): Vitargo • Prolonged sub-maximal exercise in humans is limited by availability of muscle and liver glycogen stores • Glycogen stores increase when carbohydrate intake is high • Glycogen synthesis is highest in muscles in which glycogen stores have been depleted by exercise, especially during first two hours post-exercise
  • 36. Confidential Effects of Vitargo on Muscle Glycogen Overview of Study Design • Single-Blinded, Randomized, Two-Way, Cross-over Design • 13 healthy well-trained young male students • Subjects performed standard exercise routine to deplete muscle glycogen stores • 60 min on treadmill followed by 60 min submax cycle ergometer + sprints • After exercise, subjects ingested 4 servings of one of 2 carbohydrate drinks (300 g total): • 75g Monomeric/Oligomeric Glucose (MW ~ 500; 350 mosmol/liter) • 75 g Vitargo, a High Molecular Weight Glucose Polymer (MW ~500-700K; 84 mosmol/liter) • Muscle biopsies at 0, 2, and 4 hours post-exercise Timing of carb drinks, post- exercise
  • 37. Confidential Vitargo Increases Muscle Glycogen and Glycogen Synthesis Rate in Humans Aulin et al 2000 Eur J Appl Physiol 81:346-351 Conclusion • Use of Vitargo after glycogen-depleting exercise restores muscle glycogen at a 70% faster rate compared to equal calorie maltodextrin + glucose drink with higher osmolality • The rate of glycogen repletion approaches that of IV glucose
  • 38. Confidential Scientific Rationale (2): Vitargo • Synthesis of muscle glycogen from ingested carbs is dependent upon 1) glucose transport across intestinal mucosa and muscle cell membrane, 2) glucose phosphorylation, and 3) the enzyme glycogen synthase • Blood glucose concentrations are influenced by the flux of glucose from stomach via the intestine • Rate of gastric (stomach) emptying is influenced by the osmolality (amount of dissolved ingdts.) of ingested solution • Solution with high osmolality could delay gastric emptying, thereby delaying release of glucose into the blood
  • 39. Confidential Effects of Vitargo on Gastric Emptying Overview of Study Design • Single-Blinded, Randomized, Two-Way, Cross-over Design • 6 healthy young males evaluated on two separate occasions • After 5 hour fast, subjects were given (by oral tube into the stomach, to control amount) one of 2 carbohydrate drinks: • 75g Monomeric/Oligomeric Glucose [15% glucose; 13% disaccharides] (MW ~ 500; 336 mosmol/liter) • 75 g Vitargo (MW ~ 500-700K; 62 mosmol/liter) • Gastric volumes measured at 10-minute intervals for 60 min. post-gavage using standard techniques (concentration of dye- containing solution)
  • 40. Confidential Vitargo Accelerates Gastric Empting in Humans Leiper et al 2000 Scand J Gastroenterol 35:1143-1149 Conclusions •Vitargo empties from stomach 2x faster than equal carbs as maltodextrin + sugars drink (minimizes “fullness” feeling) • Vitargo delivers energy to small intestine (for rapid absorption) at a rate 2x faster than maltodextrin + sugars drink
  • 41. Confidential Effects of Vitargo on Endurance Overview of Study Design • Single-Blinded, Randomized, Three-Way, Cross-over Design • 8 healthy recreationally active young male students • Subjects performed cycling exercise to the point of exhaustion at 75% VO2max (previously determined) • Protocol results in virtually complete glycogen depletion • After exercise, subjects ingested one of 3 drinks (1 liter total volume) • 100g Monomeric/Oligomeric Glucose (MW ~ 900; 124 mosmol/liter) • 100g Vitargo (MW ~500-700K; 34 mosmol/liter) • Control Solution: Equal volume of calorie-free flavored water •Two hours after consumption of drink, subjects performed as much work as possible in 15 minutes on a braked cycle ergometer • Validated model of endurance performance •Blood (arterialized) samples obtained every 10 minutes during 2 h recovery period for glucose and insulin measurements
  • 42. Confidential Effects of Post-Exercise Use of Vitargo on Glucose and Insulin Conclusion • Post-exercise consumption of Vitargo results in faster and higher increases in glucose and insulin concentrations • Blood sugar does not “crash”; glucose enters muscle Stephens et al 2007 J Sports Sci in press
  • 43. Confidential Vitargo Improves Max Endurance Performance after Glycogen Depletion Conclusions • Post-exercise use of Vitargo results in 10% greater work output during 15 min. subsequent max endurance exercise • Improvement observed in each subject Stephens et al 2007 J Sports Sci in press
  • 44. Confidential Scientific Rationale: Carnitine + Superior Insulin Elevating Agent • Carnitine: essential for fatty acid transport into mitochondria; as buffer for excess acetyl groups produced during carb oxidation • >95% of body’s total carnitine stores: in skeletal muscle • During intense exercise, skeletal muscle free carnitine decreases >65%, fatty acid (FA) oxidation decreases by 30% • During intense exercise, free carnitine availability might be rate limiting for FA oxidation in muscle • CHALLENGE: Carnitine supplementation alone does not increase carnitine pool in skeletal muscle in humans--explaining the equivocal performance and fat oxidation (and lack of human fat loss data) body of science
  • 45. Confidential Metabolic Roles of Carnitine in Muscle Figure modified from Stephens et al 2007 J Physiol INSULIN
  • 46. Confidential Carnitine Increases Fat Oxidation and Glycogen Storage in Humans: Breakthrough Data from Stephens and Greenhaff et al 2006 J Clin Endocrinol Metab 91: 5013-5018. Conclusion • Increased muscle carnitine content boosts fat oxidation (judged by reduced PDH activity) AND muscle glycogen in humans, without increasing carb intake
  • 47. Confidential Carbohydrate Ingestion Augments Carnitine Retention in Humans Data from Stephens and Greenhaff et al 2007 J Appl Physiol 102: 1065-1070. Single Dose 14 Day Dosing 3 g Carnitine (base) + 94 g CHO Conclusion • CARB-stimulated insulin secretion results in increased whole body (muscle) carnitine retention in humans
  • 48. Confidential Skeletal Muscle Carnitine Delivery Technology Product Development Approach • Combine carnitine with a superior insulin elevating agent to insure carnitine retention in skeletal muscle • Superior Insulin elevating agent: Vitargo • Take as a daily post-workout or rest day solution Results • Increased fat oxidation in skeletal muscle • Increased glycogen storage in skeletal muscle Applications • Sport Nutrition: Endurance Sports; Post-training Repletion • Medical Foods (Obesity, Impaired Glucose Tolerance, Type 2 diabetes, Metabolic Syndrome), others
  • 49. Confidential Product Safety • No issues have been observed with regard to safety, tolerability, adverse events, dropouts from clinical studies, or any other indices of product safety following consumption of Vitargo
  • 50. Confidential Intellectual Property • Issued, unchallenged US patent related to Vitargo--expires 2016--with EXCLUSIVE North Am license; exclusive license to Vitargo trademark • Three U Nott patents pending, related to CarniSure platform; Vitargo + “black box”; exclusive license to all U Nott/Greenhaff IP • Engagement of elite IP firm: patent and ™ prosecution; offensive and defensive patent infringement strategies in place; swift enforcement • Genr8 management team has HIGH IP savvy, expertise
  • 51. Confidential Manufacturing • NPA, NSF cGMP contract manufacturer for RTMs, sachets, solid doses (only ultra high speed sachet packaging unit west of MS)--15+ year close working relationship with owner/CEO • ALL US or EU-produced bioactives; Swecarb (Vitargo) is a global top producer of starches--2 yr shelf stability • Food cGMP bar manufacturer--28+ year working relationship with majority owner; excellent working relationship with CEO; Genr8 CFO has served as external CFO for this company • Food cGMP flavor and RTD manufacturer, for aseptic and UHT development, and aseptic production; stability testing Genr8 is committed to satisfying Quiksilver’s quality standards
  • 52. Confidential Regulatory Status •Genr8 product suite (and innovation pipeline) contains both old and new dietary ingredients – qualifies as dietary supplements •Sucralose is the only sweetener; pursuing GRAS status on a natural, zero calorie, high intensity sweetener constituent found in Stevia (NOT Stevia extract or stevioside), to create 100% natural line extensions (for youths/Mom shoppers) •Banned Substances Control Group (BSCG) certification for EACH product
  • 53. Confidential Product Certification • EACH lot of Genr8 finished product will be submitted to certify the absence of ANY substances banned by WADA, IOC, MLS, NFL, MLB, NBA, NHL, NCAA • Testing by Banned Substances Control Group • www.bscg.org • ONLY certification program in the US that uses a WADA- accredited laboratory for all analyses • Detection limits used by BSCG are the lowest detection limits for any similar program worldwide • Assays for the presence of • Anabolic Agents (>40 different banned substances) • Stimulants (> 30 different banned substances)
  • 54. Confidential Prove It and They Will Come SCIENCE-DRIVEN MARKETING
  • 55. Confidential Core Sports Synergy •Surfing •Snow Sports •Golf •Skateboarding •Motocross •Volleyball •School and University •Unlimited Potential
  • 56. Confidential Marketing Objectives •Build on the scientific support for the product; “Proof Before Promises™” is our mantra •Create legions of brand zealots across many sports AND age ranges: leverage relationships in professional & youth surfing, skiing, snowboarding, golf, and skateboarding •Highly targeted messaging through digital media, relationships with key influencers (who use the product, not sponsorship), and abundant beta-testing, trial, and sampling programs •“Curriculum marketing” to both Quiksilver & board shop retail staff and end users via multimedia/interactive vehicles and forums •Achieve HIGH editorial:advertorial ratio through strategic media campaigns linked to every new published human study
  • 57. Confidential Sales & Distribution Plan: •Controlled distribution to build incremental and high velocity awareness and maintain nationwide price integrity •Method will attract new customers to Quiksilver enthusiasts with NOVEL, evidence-based products •Minimize commoditization (despite robust and expanding patent/IP portfolio) •Breed Method brand zealots and NEW Quiksilver consumers

Editor's Notes

  1. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  2. Print Advertising: We will not be spending heavily on print advertising; however, we will (at the backend of the marketing plan) obtain ad pages/advertorials in targeted media. Advertorials: Used in those magazines in which the audience is actively seeking detailed scientific explanation (i.e. ) Press Conference: If study results are significant enough to warrant a press conference, we will announce the results a major scientific conferences. Press Releases: Actively disseminated through our website and to key level media contacts, stories about study results. Celebrity Marketing: We have many contacts in the celebrity genre. One of our key personnel, Mike Ryan, is the trainer of several high profile people in Hollywood (and India). Mike will continue to work with (Indian Superstar)….Paul Winspar and David Beckham…etc. Book: We will introduce in the 3rd qrtr of the marketing plan a book on peak physical performance.
  3. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  4. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  5. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  6. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  7. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  8. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  9. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  10. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  11. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  12. Figure 1. A schematic diagram of the metabolic roles of carnitine in skeletal muscle. Carnitine’s role in long-chain fatty acid (acyl group) translocation into the mitochondrial matrix, for subsequent β-oxidation is highlighted in red, whereas the role of carnitine as a buffer of excess acetyl-CoA production is highlighted in blue. PDC, pyruvate dehydrogenase complex; TCA, tricarboxylic acid cycle; CAT, carnitine acetyltransferase; CACT, carnitine acylcarnitine translocase; CPT, carnitine palmitoyltransferase; CD36, fatty acid translocase.
  13. Study Design: A 5 hour continuous infusion of saline or L-carnitine (60 mM) was administered while insulin was clamped at a physiologically high concentration (105 mU per min).
  14. Carnitine approved as GRAS for use in beverages and approved as a new dietary ingredient.
  15. Osmolality measures the number of particles in solution, The higher the osmolarity of a solution, the more particles in solution along with a lower concentration of water.
  16. Carnitine approved as GRAS for use in beverages and approved as a new dietary ingredient.