JOIN OUR WORLD KOTA LONGBOARDS BUSINESS PLAN 2018 · riding the slopes of dry swimming pools and drainage canals. The introduction of ‘kicktail’ boards with turned-up ends in

JOIN OUR WORLDKOTA LONGBOARDSBUSINESS PLAN 2018

Table of Contents | KOTA Business Plan 2018

Executive Summary 3-4

Industry Overview 5-6

Longboards Past to Present 5 Evolution of the Longboard 5 Traditional Market 6 Mainstream Market 6 Brand Overview & Strategy 8-9

KOTA Logo 8 Brand Strategy 9 KOTA Product Differentiation 10-13

KOTA Longboard Engineering 10 KOTA Design & Styling 10 KOTASpitfireMkVElectric 12 DemographicAnalysis 13 Innovation 14 Executive Team 15-16

OrganizationalChart&ManagementProfiles 15 Sales Channels, Marketing & Distribution 17-21

SpecialtyRetail 17 Corporate Partner Program (CoBrands) 18 DirectSales 21

Marketing Spend 22-24

SocialMedia 22

Tradeshows 22 DomesticTravel 23 TraditionalMedia 23 LocalEvents,LevittPavilion&theKOTAEscadrille 24

Recognition & Reality TV 25-26

ChaseMissionMainStreetGrant 25 TheProfit 26

Community Outreach & CSR 27-28

CarveItForLife! 27 EnvironmentalStewardship 28

APPENDICES

Appendix A: KOTAPricing&Terms 30-31 Appendix B: KOTAWeFunder 32-34

KOTA Longboards | Confidential And Proprietary Information PAGE 2

Executive Summary: KOTA (KNIGHTS OF THE AIR)KOTAisanemerginglifestylebrandonafast-growthtrajectory.Withinthesepageswewillsharetheorigins,directionandfutureofourproductlines,ourbrandandthepeoplethatmakeKOTAaninspiringcompany.

KOTAisanacronymfor‘KnightsoftheAir’,themonikergiventotheworld’sfirstfighterpilotsduringWWI.KnightsoftheAirissynonymouswiththeconceptsofchivalry,honorandespritdecorps-evenamongstadversaries.TheessenceoftheKOTAbrandandthecompanyitselfistoembodythesequalities,holdingourselvestoahigherstandardinallthatwedo.

KOTAoperatesonprinciplesthatguideusdailyaswellasinthelonger-term.Theseprinciplesareexpressed in our brand positioning:

Heritage KOTA,KnightsoftheAir,ismaderichwithheritage,historyandcontexteventhoughthecompanyisyoung.

Quality KOTAisuniformlyobsessedwithqualityanddetail.Thisdriveseverythingwedo.Authenticity KOTAlivesbywhatitstandsfor.Webackuptheheritageofthebrandwithour

backgrounds,experienceandconductinthemarketplace.Premium KOTAisapremiumbrand,producingpremiumproducts-nomatterwhatproduct

hastheKOTAbrandonit.Connection KOTAconnectswithadiverse,broadanddynamicdemographicembodying

enthusiasm,energy,confidence,fellowship,empowerment,integrityandcompassion.

Emotion KOTAstrivesforanemotionalrelationshipwithitsaudience-builtuponadventure,fun,theoutdoorsandfamily.Weinspireconfidenceandoptimism.AtKOTAwedon’task“Why”,but“Whynot?”.

Lifestyle TheKOTAlifestyleisoneofparticipation,action,learning,sharing,andofcourse,honor,courage,freedom,integrity,truthandespritdecorps.

PREPARE for FLIGHT

Whether you’re new to KOTA or you’ve been around the company for awhile, you know there is something

VERY SPECIAL about this BRAND.


KOTA was founded on the belief that given an innovative, high value, thoughtfully engineered product and compelling brand, the activity of longboarding was ripe for adoption as a mainstream action sports activity. Today,KOTA’sgrowingfamilyofclientsisacollectionofactionsports/activelifestyleparticipantsspanning5decadesinage(20sthrough60s).Thisdemographicisgrowing,withaconsistenthungerfornewactivitiestoengageinanddisposableincomeavailableforlifestylepurchases.

OurclientstellusthatwhatattractsthemtoKOTAisthecompany’s‘vibe’.Whetherit’stheempowermenttheyfeelbyadoptinglongboardingasalifestyleactivity,ourhistoricaviationheritage,corevaluesandbrandauthenticity,thequalityandstylingofourproducts,orthecommunityoutreachthat’scodedintotheKOTADNA,theyallsaythesamething-It’sabouttheKOTABRAND!

KOTA’slongboardsareengineeredsoriderscancontroltheirspeedanddirection,openinguplongboardingtoanewworldofpotentialriders.Innovationssuchasourproprietary,smooth,clearglossKOTAgripfinishsetusapartfromthetraditionalskateboardcommunity.KOTAgripeliminatestheneedforgriptapeallowingustomovetheprimaryartsurfacetotheboard’stopsurface-afeatureuniquetoKOTAintheskateindustry.

KOTA’selevatedstylingandperformancebreaksawayfromthestereotypicalreckless,rebellious,teenage‘skateboardculture’.Asaresult,KOTAappealstoabroaddemographic,welloutsideofthemarketplacetargetedbyotherlongboardmanufacturers.Ingeneral,ourclienteleismadeupofparticipantsinactivitiessuchasskiing,surfing,standuppaddle,roadandmountainbiking,kayaking,etc.

Asthecompanymatures,KOTAisevolvingintoan‘aspirational’brandintheactivelifestylemarket.BrandssuchasPatagonia,TheNorthFace,VansandBurtonhavecreatedconsumerconnectionssimilartowhatwebelievecanexistovertimewiththeKOTAbrand.

What really inspires us is YOUbecause we believe you are all pilots, race car

drivers, adventurers and explorers.


Industry Overview:

Longboards Past to Present Inthefamilyofboardsports,skateboardingwasthefirstmajordeparturefromsurfing.Inthe1960’ssurfersusedroller-skatehardwareandshortpiecesoflumbertocreaterollingboardsforcoastingthesmoothnewstreetscapesofSouthernCalifornia,andridingtheslopesofdryswimmingpoolsanddrainagecanals.Theintroductionof‘kicktail’boardswithturned-upendsin1969allowedriderstoleveragetheirboardsintotheairandskateboardtricksbegantogainpopularity.Theexpansionofboardsportswiththerisingpopularityofsnowboardingaroundthesametimehelpednormalizeskateboarding.

LongboardskateboardshadtheirgenesisamongHawaiiansurferswhowantedacarvingandtraversingor“landsurfing”experience.Withasmoother,morestableride,longboardsgainedpopularityintheearly2000’sasconsumersrecognizedtheiradaptabilityfortravelfrompointAtopointB.

Evolution of the Longboard Whilethereisnospecificlengthatwhichashortboardbecomesalongboard,thedifferentiationbetweenthetwoisgenerallyinhowtheboardisused.Longboardsdepartedfromswimmingpoolsandskateparksintocruisingandlandsurfingwithanemphasisonrecreationratherthantricks.

Earlyon,inanattempttodefinethesport,theskateboardindustrydecidedtopromoteanextremeimageoflongboardingwithdownhillingandsliding.ThisimagecateredtotheSouthernCaliforniateenagemalebuthadverylimiteddemographicappealandhascastastigmaonlongboardingasbeingwelloutsideofthemainstream.

Inrecentyears,longboardinghasbeenmostcommonlyseenoncollegecampusesinacommuterapplication.RidershipisoverwhelminglymalefittingwiththeSurfIndustryManufacturersAssociation(SIMA)longboarddemographicofmales(93%)ages9to24.

The longboard has now been around long enough where we seepost-collegeridershipincreasing.YoungprofessionalsincoatandtiearefrequentlyseencommutingtoworkonlongboardsthroughurbanstreetsfromNewYorktoLA,Milan(picturedatright)toParisandBerlin.1 The longboard industryhasbeenslowtorecognizethisexpansionofridershipbeyondtheirtraditionaldemographic.

Tastes,aspirationsandculturalaffiliationschangedramaticallypost-college.Consumerfocusonvalueoverprice,productsophisticationandinnovation,andtimelessstylingmovethemawayfromtheskateshopculture,stylesandtrends.

1 See Skateboards for Working and Working Out,NYTimes,August2013:www.nytimes.com/2013/08/23/nyregion/skateboards-for-work-and-working-out


Traditional Market ThereareanumberofNorthAmericanlongboardmanufacturersparticipatinginthemarket.Accordingtosurveysandourownanalysisofspecialtyretailers,Sector9(nowownedbyBillabong)isthetopsellingbrandnationally.Ahandfulofbrands,suchasArbor(nowmanufacturedbySector9inChina),Loaded,LandYachtz,etc.arevyingforsecondtierpresence.

Regionalparticipantstrendtowardthecoastsandmountainregions.Forexample,Denver-basedNeverSummer Industries is a snowboard companythatmanufacturesskateboards to offset the winter seasonalityoftheircorebusiness.NeverSummerhassignificantlocalmarketshareintheRockyMountainregion.SourceswithknowledgeofNeverSummerindicatethecompanysellsapproximately10,000longboardsannually.Asevidencedbytheirmarketingmaterial,NeverSummer’stargetmarketistheirloyalsnowboardcustomerandthecompanyisheavilyassociatedwithwintermountainactivity.ThisplayswellalongtheFrontRangebuthaslessrelevanceinwarmerclimates.

Mostlargeandsmalllongboardcompaniesoffertextilesandothersoftgoods,however,fewverticallyintegrateintocomponents(i.e.,wheels,trucks,etc).Thetraditionalmarketischaracterizedbynewentrantsgainingrapidpopularityandstayingatopthemarketforacoupleofyearsbeforeblendingbackintothecrowd.BeyondSector9noneofthebrandsappearcapableofsustaineddifferentiationwithconsumersorretailersinthe9-24yearoldmarket.

Mainstream Markets The mainstream markets that KOTA appeals to are the “actionsports”and“activelifestyle”markets.Thisincludesthe‘surfinspired’,skiandmountainlifestyle,fitness,adventureandrecreationconsumer.

The2017SIMAConsumerInsightsReportquantifiedthe‘surfinspired’marketat66.5millionadultsintheU.S.alone.That’snearly1/3oftheU.S.adultpopulation.Trendswithinthismarketplaceindicated(a)diversityinage,genderandrace,(b)womenrepresent56%ofthespendinthissector,(c)while60%ofbuyingisthroughbrickandmortar,theconsumeristrendingtowardonlinepurchasing,and(d)theconsumerismotivatedbyvalueandqualityoverprice.Thisrepresents$26.5billionannuallysolelyinthesurflifestylemarket.

KOTAproductsandbrandappealtothevalueandqualityorientedbuyerreflectedbytheSIMASurfMarketreport.KOTAreachesthatconsumerviasocialmedia,online,selectCoBrandsandactionsportsretailerssuchassurfshops,bikeshops,skiandsnowboardshops,etc.The


consumerdollarswecompeteforwouldbethesamedeployedforproductssuchasanactionsportscamera,performancesunglasses,hydrationpack,standuppaddleboard,skis,beachcruiserbicycleorsimilarproducts-evenhigh-endbrandapparelandfootwear.

KOTAproductshavelowerappealtothe9to24yearoldmaleprimarilyduetoprice.Ourproductissimplynotwhatthey’relookingforasapricesensitiveconsumer.Weareinconstantobservationofalonglistoflongboardmakerswhosellprimarilyonlineorthroughskateshopscateringtotheteenagemale,however,we’renotdirectlycompetingwithmostofthem.

SIMAistheprimarysourceofinformationontheSurf/Skatemarket’ssizeandwellbeing.DataextrapolatedfromSIMA’sSpecialtyRetailDistributionStudyfor2010impliedaU.S.longboardskateboardmarketsize(hardgoodonly)ofover$2billionannually.70%ofskateboardersridelongboards(asopposedtoorinadditiontoshortboards)resultinginanaverageU.S.longboard ridershipof7-8million.

SIMA’s2012reportstated,“...oneoverridingthemeremainedconsistent:thesurf/skateindustryisalifestyledrivenbypassion,notapassingtrend.Dedicatedsurfersandskatersloyaltothesesportscontinuetopurchaseatspecialtyretail,evenintougher[economic]times.”



KOTA Brand Overview

KOTAisabrandthathasmeaning,contextandauthenticity.Honor,courage,truth-theidealsthatKnightsoftheAirembodiesareuniversal.Themajorityofourclientsdon’tperceiveKOTAasamilitarybranddespiteourfighteraviationheritage.

AppealforKOTAisalsoindependentfromanyaffinityforaviation,themilitaryorinterestinhistory.OurclienteleresonateswiththeconceptsthattheKOTAbrandembodies.

Ourclients,particularlywomen,tellusthattheyfeelempoweredbytheKOTAbrandbecausetheyneverthoughtthey’dberidingalongboard.Itmakesthemfeelmoreyouthful,energetic,stylishandtrendsetting.Moreimportantly,theyfeelothersperceivethemtorepresentthesecharacteristics.

However,theirattractiontoKOTAgoesbeyondtheproduct.TheydesiretobeassociatedwiththequalitiesandidealsthatKnightsoftheAirstandsforinadditiontothecommunityoutreachthatKOTAparticipatesin.

The KOTA Logo FromthebeginningwerecognizedthatKOTA’stargetdemographicisattractedtoproductandbrandcharacteristicssuchastimelessstyling,quality,authenticityanddependability.Wesumthatupintheterm“timelessvintage”.

Giventherichhistoricalcontextofourbrandnamewewantedaclassiclookthatembodiedthesequalities.OurinspirationfortheKOTALongboardslogocamefromanexplorationofvintagebicycleheadbadges.2

Headbadgesbeganasawayforbicyclemanufacturerstoidentifyanddifferentiatetheirproductlines.Overtime,however,thesebrandbadgeswereraised

toahighart-particularlyintheUnitedStates.

Inthemindoftheconsumer,theheadbadgebecamerepresentativeofthequalityandartistryoftheproduct.Withanimaginativebadge,youweren’tmerelyridingabicycleanylonger,youwerepilotingaZephyroraWhirlwind,orcommandingaSilverKing.Youwereacowboy,aspaceranger-oraKnightoftheAir.

TheKOTAlogoisaninspired,imaginativeheadbadgedesign.Colorful,energeticandfluid.Ourbrandingandproductstylingare

centeredonpresentingapositive,cleanandsophisticatedimagerecallingtheartistry,courageandcompetitivespiritofAmericanculture.

2 SeeBadgesOfDistinction,BicyclingMagazine,January2012:www.bicycling.com/culture/fashion/badges-distinction

EveryKOTAlongboardfeaturesametalmedallioninsetintothetopoftheboardbringingatactilequalitytoourbrand.

KOTA Apparel Logo In2015wecreatedtheKOTA“Propwash”logoaswebegantoextendproductdevelopmentintoapparelandaccessories.ThePropwashconceptwasderivedfromthestylizedpropellerrotationinouroriginallogo.Thislogo’scleanlinessofdesignandeaseofrecognitionbettertranslatesintoapplicationswhereembroidery,colororsizenecessitatessimplicity.

Ourclientele,includingwomen,increasinglytellusthey’dliketoseeKnightsoftheAirspelledout.ThemeaningofKnightsoftheAiriscompellingtothemandtheywanttowearit(literally)asabadgeofhonorandconversationstarter.ThisisfurtherevidencethattheidealsassociatedwiththeKOTAbrandresonatewiththelifestyleconsumer.

KOTA Brand Strategy Today,KOTA’srevenueisgeneratedalmostexclusivelyfromlongboardskateboardsales,however,wedon’tviewKOTAassolelyaskateboardcompany.OurclientelehavemadeitveryclearthattheKOTAbrand-it’shistory,it’sauthenticity,thevaluesitstandsforandKOTA’scommunityoutreach-iswhatdrawsthemtoKOTA.Overtime,weseeKOTAemergingasanaspirational,activelifestylebrand.

Ournear-termbrandstrategyistomaintainthelongboardasoursignaturehardgoodwhileexpandingourlineofKOTAbrandedproductsandaccessories(skatetools,wallhangers,t-shirts,ballcaps,waterbottles,etc.).FeedbackfromourfollowersisthattheywantproductinadditiontothelongboardthatisanexpressionoftheKOTAbrand.Expandingourbrandedproductlinesgivestheconsumeramultipleproductsatavarietyofpricepointstochoosefrom.OurintentionistodriveKOTAtosustainedprofitabilityonourlongboardandbrandedproductlines.

Oncethecompanyachievessustainedprofitability,ourgoalistofurtherestablishtheKOTAbrandwithastrategicmoveintoapparelinabroadlifestylecategory.Theintentistooffertheactivelifestyle/actionsportsmarketafullassortmentofhardgood,logoproduct,apparelandaccessories.This would broaden our brand appeal to retailers and consumersthataredrawntotheKOTAbrandbutmayhaveastrongeraffinityforsoftgoodoverhardgood.

AtthistimetheearliestKOTAanticipatesanylaunchanapparellinewouldbeFall2020.ThiswouldrequiresamplestobecompletedandavailabletosalesrepsbyNovember2019.Weunderstandtheimportanceoflaunchingameaningfulapparellineandwilldelaythis move as needed to maximize our probability of success.

ThisbusinessplanwillfocusondrivingKOTAtoprofitabilitywithKOTAlongboardsandbrandedproductalone.


KOTA Product Differentiation KOTA Longboard Engineering KOTAlongboardsarepressedintoacomplexcurveknownasa‘HyperbolicSaddle’.ThiscamberedshapeusedinallKOTAboardsisintentionallyengineeredtoprovideridercontrol.Camberprovidesthreemainattributesthatenhanceriderexperience:

1) Steppingontheboardandflatteningoutthecamberimpartstensionandcompression(energy)inthecoreoftheboard.Thisenergystrengthenstheboardmakingitdurableaswellasflexible.

2) Similartoahigh-performancealpineski,theenergyinthecoreoftheboardcanbeusedtocontrolspeed.Withsubtlealterationoftherider’scenterofgravity,thisenergycanbeusedtoeitherbleedenergy(speed)throughaturnoraccelerate.

3) Camberalsoactsasashockabsorbergivingtherideranexceptionallysmoothride.

KOTA Design and Styling KOTALongboards’PremiumLinecurrentlyfieldsfourunique44”shapes,eachnamedafteraniconicairplane.ThefourPremiumdesignsaretheSPADXIII,Nieuport17,HandleyPageandSopwithPup.KOTA’snewMacchilineisdesignatedbylength(40”)astheMacchiM.40.

AllofKOTAstockboardsare7-plyHardRockMaplepressedinthesamemold(i.e.,theyallhavethesameconcave/cambercombination),yeteachisdesignedtohavespecificperformanceattributes.InthePremiumLine,noseshapeisaprimaryfactorintheturningcapabilityofthedeck.Thewidthofthewoodatthebacktruckdetermineshowflexiblethedeckwillbe.TheMacchihasashorterwheelbasesoturnsmoreaggressively.


Camber is the engineered curvature of yourKOTAlongboard.It’sthemechanismthatallowsyou to control your ride!

The Concave surface on top of yourKOTA longboard gives you added turningperformancewhileyoucarve!

BoardshapesinthePremiumLinehaverecommendedriderweightlimits(190lbsfortheSPAD,230lbsfortheNieuport,and250lbsfortheHandleyandSopwith).Forasmallupcharge,KOTAwillpressan8-plythatwillaccommodateweightsover250forallboardshapes.Whilestillasmallpercentageofsales,we’veseenanincreasein8-plyordersoverthepast18months.

What differentiates KOTA in the longboard market is a combination of:

a) KOTAgripOurproprietaryKOTAgripfinish eliminates the need forgriptape.KOTAgripallowsustomovetheprimaryartsurfacetothetopoftheboard-acharacteristiciscompletely unique to KOTAintheskateboardmarket.

b) HYPERBOLIC SADDLEOurcamberedconstructionallowstheriderincreasedcontroloftheirspeed,directionandride,afeaturethatappealstoabroader,olderdemographic;

c) VALUE & QUALITYApricepointthatiscompetitivewithinthelongboardmarketplace(pleaseseeAppendixAforamarketpricinganalysis)andevenmoresointheactivelifestylespecialtygearmarketwherevalueandqualityaretheprimarypurchasemotives.

d) KOTA BRANDTheKOTAbrandandcompanycultureattractsthemainstreamactionsportsparticipant,inspiringthemtoadoptlongboardingaspartoftheiractivelifestyle.


KOTA Spitfire Mk V Electric

eBoard Market: Themodernmotorized(electric)longboardhitthemainstreamin2012withZBoard’sKickstartercampaignwhichoversubscribedtothetuneof$1million.Today,Boosted,EvolveandInboardareamongthetopsellingbrands.

Mostcompaniesfieldingelectricboardsareessentiallybatterytechnologycompanies.Theirfocusisondevelopingandimprovingthepowerplant(battery)anddrivetrain(motorsanddiscorbeltdrives).They’verefinedskateboardpropulsionbutfallshortofofferingacomprehensive,highperformanceride.Inessence,theyhavetheFerrarienginebutlackthesuspension,chassisandbodythatmakeaFerrariaFerrari.

KOTA Market Opportunity:Performancespecificationsforthetopsellingbrandsarebeginningtoplateauandmerge,leavinglessandlessdifferentiationbetweenproducts.InthenearfuturetherewillbevirtuallynodifferenceinpowerplantperformancebetweentoptiereBoards.Whenthishappens,webelievethemarketwillmovetowardboardperformance,quality,styleandbrand,playingdirectlyintoKOTA’smarketstrengths.

TheprimaryperformancespecificationsforeBoardsaredistance(i.e.,batterycapacity),re-chargetimeandtopspeed.3 TheKOTASpitfireMkVhasanempirically testedrangeof15-17miles with a top speed between 22and25mph.95%chargewilloccurinlessthan2hourswithfullchargeafter4hours.

KOTAhastheabilitytosourcebest-in-classcomponentsbutcombinethemwithasuperiorperformanceboardwhilegivingtheconsumerachoiceofboardshapesanddesigns.NoothereBoardcompanycandothistoday.Inaddition,KOTAcanoffertheSpitfireMkVatamateriallylowerpricepointthanBoosted,EvolveorInboard.

3 We’relessconcernedwithspeedascurrentcomponentsystemsarealreadyachievingspeedsthatarebecomingasafetyissue.


KOTA’s demographic overlaps the Active Lifestyle market, spanning several decades in age from the mid-20s to 60s.

The heart of our demographic is age 35-55, 40% women.

KOTA clients select board shape based upon shape aesthetic, performance & rider weight. Our sales reflect the depicted distribution of board shapes.

Demographic Analysis

Men: Men’spurchasemotivesseemtobedominatedbyquality,styleandperformance.EuropeanmentendtopushtechnologyhigheruptheirpurchasematrixthanAmericanmen.FeedbackfromdistributorsindicatesahungeralongthePacificRimforanyU.S.manufacturedspecialtyproduct.

Todate,menhavebeenprimarilyattractedtotheNieuport17.KOTAdesignstylesfeaturingaviation,surfandracecarthemesarepopularwithmen.OurU.S.Flag,FlyingTigersandDeweyWeberdesignsarecurrentlymostpopularwithmen.

Women:Womenhaveamorecomplexandsophisticatedpurchasedecisionmatrixthanmen.KOTAoffersbothalookandfeelthatincreasinglyappealtowomen.

Traditionallongboardmanufacturershaveoverwhelminglymarketedtoteenagemales.Womenhavegenerallybeenexcludedfromlongboardingasanactivelifestyleactivity.Weconsistentlyhearfromwomenthattheyfeelalienatedbythecultureandatmosphereofthelocalskateshop,andthestylespromotedbyourcompetitorsareunappealing.Thesearetheprimaryfactorsthatkeepwomenfromadoptinglongboarding.

WomentellusthatKOTAoffersthemacomfortableandappealingentryintolongboarding.Theyfeel‘welcomeandincluded’intheKOTAculture.Approximately40%ofKOTAsalesaretowomen.

AtKOTA,weactivelymarkettoanddesignproductthatwebelievewillappealtowomen.We’vefoundthatwomenwillbeattractedtotheaestheticofKOTAlongboards.Drawninbyourstyling,womenseeKOTAcontent(stillandvideo)ofwomenjustlikethemselvesridingsafely,inacommunityoflike-mindedwomen.Relatingtothewomeninthiscontent,theybegintoimaginethemselveslongboarding.ThisleadsthemtoexploringandunderstandingtheKOTAbrand.Appealforthebrandleadstopurchaseandadoptinglongboardingaspartoftheiractivelifestyle.


Innovation Attheappropriatetimeandwithavailablecapital,weintendtodevelopourownKOTAcomponents,verticallyintegratingalongourhardgoodslines.

• KOTA Simulator (patent pending): TheKOTASimulatorisauniqueandvaluablestatictrainerwhichrecreatestheturningmotionandflexofthelongboardwithoutrolling.UseoftheKOTASimulatorhasproventobeinfluentialinencouragingpeopleofallageswhomaybeskepticalaboutgettingonalongboardtobecomeenthusiasticaboutriding.

Onseveraloccasionswe’vehelpedpeople(particularlywomen)whoinitiallyscoffedattheideaofgettingon a skateboard learn to ride andevenpurchaseaKOTAlongboard after spending timeontheKOTASimulator.The KOTA Simulator enables newcomerstothesporttofeelourKOTAgripfinish,andlearnfootposition,weightandbalance,andcontroloftheboardwithouteverrollinganinch.

WeselltheKOTASimulatortoretailersandCo-Brandclientsasaninteractivepoint-of-purchasetool.

• KOTA Clear Deck: KOTAhasdevelopedandtestedatechnologythatisuniqueinthelongboardindustry.Borrowingfromskimanufacturingtechnology,wehaveinsetmetalscrewreceiversintothebottomoftheboard,eliminatingtheneedtodrillholesthroughthedecktoholdtrucksinplace.WecallthisinnovationClearDeck.ClearDeckenhancesthestabilityofthetrucksandpreventscracksfromformingaroundtruckholes,amplifyingtheaestheticofourlongboards.KOTAClearDeckandKOTAgripareanexclusivecombinationfoundonlyonKOTAlongboards.

• Truck System: KOTAhasaconceptualdesignforatruckbindingsystememployingtechnologycurrentlyusedinroadandmountainbikepedal/shoebindings.Thisbindingsystemallowsforeasyexchangeoftrucksfromonedecktoanotherorswitchingfromutilitytruckstohighperformancetruckswithease.Thebindingsystemwillalsofeatureanintegratedanti-theftsystem,poweredRFIDtechnologyandadjustabletorsionlimitertoeliminatewheelbite.


Executive Team

Organizational Chart:

Mike Maloney (Founder, President/CEO):MikeisaformerNavyF-14pilotandgraduateoftheU.S.NavyFighterWeaponsSchool(TOPGUN).Hehascareer-longexperienceinmissioncriticalleadership,planningandexecution.MikeandNikkifoundedKOTALongboardsinMay2012followingseveralmonthsofmarketanalysisandpreparation.

MikeistheformerPresident/CEOofNovindaCorp.,aDenver-basedcleancoaltechnologycompanyspunoutfromCH2MHILL.Previously,MikeestablishedandmanagedCH2MHILL’stechnologycommercializationandinvestmentprogramwhereheledmanydiversetechnologyefforts,buildingproductandprocesstechnologiesintofunctioningbusinesses.

Mike’sexpertisebridgesbothearlystageproductcommercializationandgrowthopportunitiesforproductadoptioninnewandemergingmarkets.Heisthoroughlyexperiencedindevelopingrevenuemodelsforemergingproductsandstructuringinvestmentpartnerships.MikeholdsaBSMechanicalEngineeringfromtheUniversityofColoradoandaMSFinancefromtheUniversityofDenver.Heisanaviddownhillskier,roadbiker,woodworkerandfamilyman,ridingKOTAlongboardsdailywithhiskids.

Nikki Maloney (Founder, VP Ops, Office Manager): NikkiisaveteranoftheDenverMayor’sOfficeofEconomicDevelopmentandInternationalTrade(MOED&IT)whereshewasaneconomicdevelopmentspecialistfocusingonstartups,thehightechsector,anddevelopmentinDowntownDenver,CherryCreek,LowryandtheDenverTechCenter.

PriortoMOED&IT,NikkiworkeddirectlyforthePresident&CEOofCH2MHILLinpublicaffairs.Sheestablishedastatewidetradeorganizationfortheengineeringcommunity,workedwiththeClintonWhiteHouseonenvironmentaltechnologyconferencesanddidPR,marketingandbusinessdevelopmentfortheCEO.

NikkihasalsobeenactiveinhercommunityspearheadingmanychangeeffortswithinDenverPublicSchools.ShealsoestablishedandservedontheboardsofFlightforLife,theStEPPFoundation,SafeRoutestoSchool,CollaborativeSchoolCommittees,etc.NikkiholdsaBAinPublicPolicyandHistoryfromtheUniversityofDenver.


Wick Hardenbergh (Production Manager):WickattendedtheOhioStateUniversity,majoringinWorldEconomyandBusinessintheInternationalStudiesprogram.BeforejoiningtheKOTAteam,hemanufacturedcomponentsforGEturbinesatIndyHoneycombinNorthernKentucky.

Wick’sbeenanavidlongboarderfortwelveyearsandstrivesto integrate his passion into his work to further the growth of the sport.

Sean McGrane (Marketing Director):Seanlearnedandpracticedfoundationalmarketing/advertisingskillsasamemberoftheU.S.Army’sCivilAffairsandPsychologicalOperationsCommand.Hefurtherhonedthesetoolsinvarioustacticalandstrategicleadershippositionsinthecivilianworldacrossavarietyofverticalsincludingretail,construction,healthcareandnon-profit.

SeanhasassistedwithmanufacturingandmarketinginitiativesatKOTAandhelpedcreateKOTA’s501(c)3,CarveItForLife!.

Rick Rusch (Apparel, Accessories & Merchandising Advisor): Rickisacareer-longretailmerchantandmarketer.HehasheldseniorexecutivepositionswithLands’EndandGanderMountain.InadditionhehasextensiveretailexperiencewithoutdoorspecialtyretailersREIandEddieBauer.

Rickrunshisownconsultingfirm,TheBrandGuidesLLC,abranding,marketingandsalesconsultingorganization.Rickwasresponsiblefortheinitialbuild-outoftheKOTAwebsiteanddevelopingkeyrelationshipswithvendorsanddistributors.HecurrentlyadvisesKOTAonmerchandisingstrategyawaitinganypotentialmovebyKOTAintotheapparelmarket.


Sales Channels, Marketing & DistributionTheKOTAbrandisgrowinginresonancewithconsumers.Activelifestyleconsumersinourtargetdemographichaveaconsistentandpositivereactiontoourbrand.We’reconfidentthatwe’llgetthesame,consistentresponsetoKOTAasweexpandawarenessofourbrandandproductlines.

Wedistributethroughthreedistributionchannels,SpecialtyRetail,CoBrandsandDirect.Consumerpurchasemotivesandbuyinghabitsareconstantlyevolving.Throughout2016wegainedvaluableinsightintowhichsaleschannelscanberapidlyscaled.Asaresult,we’veadoptedamorefluidstrategyforgainingmarketshareasweunderstandwhatismotivatingconsumerstopurchasewithintheKOTAbrand.

Wefindtheconsumertrendinginthefollowingdirectionsbaseduponmarketreportsandinteractionwithretailers:

• PRODUCTAftermorethanadecadeofconsumerfocusonprice,consumerbehaviorisnowmoving toward quality,value and brand characteristics.KOTAfulfillsalloftheseattributessothistrendispositiveforourproductlines.

• BRAND Theconsumerishungryfornew,exciting,authenticandmeaningfulbrands.WhileiconicbrandssuchasPatagoniaremainpopular,consumersareincreasinglylookingfornewanduniquebrandstoengagewith.

• ‘CAUSAL’ PURCHASING Anotheremergingtrendisthe‘causalpurchase’,meaningconsumersaredrawntopurchasingproductsthatdirectlysupportacausethatismeaningfultothem.

• ONLINE vs B&M Eventhoughconsumershaveincreasingaccesstoandeaseofonlinepurchasing,primarilythroughmobiledevices,wedon’tbelievethatthey’veabandonedbrickandmortar.Retailers,however,areslowtounderstandthatstoreatmosphereandinteractivedisplaysareimperativetoattractingconsumers.SpecialtyretailerssuchasREIhavemasteredthisconsumerapproach.Smallerspecialtyretailershavefounditdifficulttoimplement.

SPECIALTY RETAIL Ourfocusin2016wasonincreasingspecialtyretaildistribution.Whatwediscoveredwasthatspecialtyretailersintheactivelifestylesector,withfewexceptions,arestrugglingtoadapttochangingconsumermotivesandmethodsofpurchase.

Retailersconsistentlytoldustheywerestillholdinginventoryfromthepreviousbuyingseasonandcouldn’taffordtobringonanewbrand.Theyclaimedthatinternetsaleswerehamperingtheirabilitytomoveproductonprice.

Whilepartiallytrue,webelievethattheconsumerisalsomovingawayfrompricepointandcommodityproductpurchasingtoafocusonqualityandvalue.Thisisvalidatedbythe2017SIMAreportmentionedearlier.Inotherwords,consumersarenolongerinterestedinthebrandsandproductsretailershavetraditionallystocked.

Bytheendof2016itbecamequiteclearthatretaildistributionwasnotlikelytogrowataratethatwillgetKOTAtosustainableprofitability.Whileretailersarenotasaleschanneltobeignored,wepivotedinearly2017tofocusingonCo-Brandsanddirectsales.Nevertheless,wedidcloseinitialorderswithRonJonandScheelsin2017,andcontinuetopickupvarioussmallerspecialtyretailers.


CORPORATE PARTNER PROGRAM (CoBrands): InJanuary2017wemovedourdistributionstrategytofocusonCoBrandsinthreemarkets;(1)Brewery&Distillery,(2)Hotel&Resort,and(3)Automotive.We’dgainedclientsineachofthesemarketspreviouslywhichhasgivenusinsightastotheirnear-termpotential.

Brewery & Distillery:Thebreweryanddistillerymarkets,withtheemergenceofcraftbrewersanddistillers,catertothesameactivelifestyledemographicthathasanappealforKOTA.Quality,valueandbrandareallstrongpurchasemotivesforconsumersinthismarketplace.Infact,ourfirstCoBrandpartnerwasEpicBrewingbackin2013.WerecognizesignificantpotentialforCorporatePartnersinthissector.

InJune2017wesecuredanopenendedlicenseagreementwithAnheuser-BuschInBev(ABI).We’recurrentlyproducingaBudweiserdesignhighlightingFoldsOfHonorFoundation.

Staples,Inc.facilitatesallofABI’smerchandisedandpromotionalproduct.KOTAsellsunitstoStapleswhointurnpromotesandsellsthemtoABIdistributorsaspromotionalitems.Thereareover400ABIdistributorsinNorthAmerica.

ThestructureofourlicenseagreementwithABIincludes(a)theabilitytoproducefollow-ondesignsforotherbrandswithinInBev,(b)alicensefeeconsistingofa$20donationtoacharityofABI’schoosing,and(c)theabilityforKOTAtoselldirecttothepublic.Todate(July2017)we’vefulfilledpurchaseordersfor200units.Budweiseranticipatespurchasing1,000unitsin2017.

OurrelationshipwithABIrepresentsanewscaleinourCorporatePartnersprogram.We’verecentlybeencommissionedbyABI’s‘HighEnd’teamtoproduceaGooseIslanddesign.TheHighEndteamoverseesbrandingforABI’s10craftbreweriesaswellasotherbrandssuchasStellaArtois,Becks,Kirin,ShockTop,etc.We’reindialoguewithotherdecisionmakerswithinABIaboutLandshark,MichelobUltraandBusch(whoholdstheABINASCARcontract).

InadditiontoABI,we’vebroughtonaChicagobasedBreweryIndustrysalesrepgroup,CraftBrandAmbassadors(CBA),whohasforgedrelationshipswithanumberofmidwestbreweries.CBAhasalreadybroughtKOTACoBrandpartnerssuchasBurOakandTightheadBrewing.


Locally,we’veco-brandedwithEpic,DenverBeerCo.,ChainReactionandothers.We’vealsoexpandedintodistilleriesrecentlylandinglocalVANJAKVodkaandareindialoguewith10thMountainWhiskey.

WhilewecontinuetoaggressivelypursueadditionalCorporatePartnersintheBrewery/Distillerymarket,it’sourbeliefthatourexistingrelationships,particularlyABI,havethepotentialtopropelKOTAtoprofitability.

Hotel & ResortHalcyon,aSageHospitalityhotelinCherryCreek,hashadgreatsuccessrentingKOTAco-brandedlongboardstotheirguests.Sagepilotedtheir‘GearGarage’conceptwithHalcyonwhereourboardsarefeatured.KOTAhasparticipatedintwo‘activation’eventswithHalcyonwithstronghotelguestparticipation.Sagehasindicatedtheir intention to implement Gear Garage system-wideiftheyarepleasedwiththeoverallreactionatHalcyon.

We’recurrentlyindialoguewithHyattHotelsconcerningtheirFloridaandMauilocations.OtherhotelchainssuchasJWMarriott,Ritz-CarltonandCrownPlazaareallpotentialCoBrandpartners.

WecontinuetosellproducttoVailResorts’Kirkwood,Northstar,HeavenlyValleyandParkCityresorts.Todatethese boards have been used for rewards giftsforEpicPasssalespeopleorpromotionalitems.

ThroughourinteractionwithVailResortswe’verepeatedlybeentoldthattheybelievethey’vesaturatedwintersportsactivitiesinalloftheirresortareas.Asaresult,bothwinterandsummer,VailResortsisemphasizingnewsummeractivitiestoattractguests.

Resortareashavealloftheinfrastructureneededtopromotelongboardingasalifestyleactivity.WiththeKOTAsimulator,webelieveresortscouldhavegroup/familyprivatelessonsandlongboardingtourssimilarinstructuretoprivatelessonsduringtheskiseason.Todatewehaven’thadaccesstoresortoperationsdecisionmakerstomakethiscasebutcontinuetodevelopcontactsinthisarea.

AutomotiveOurworkwiththeFerrariOwner’sClubofAmericainparticularhasledustobelievethatluxuryautomotiveandracecarbrandsarealsotargetsforco-brandingwithKOTA.OurFerraricontactsindicatethatluxurybrandshaveseentheaverageageoftheirclienteleincreasesignificantlyinthepastdecade,indicatingthey’renotattractingyoungerconsumerstotheir


brands.Mostallareattemptingtore-positiontheirbrandswithintheactivelifestylesectorinordertoattractmiddleaged,affluentconsumers.4

WefeelthatbrandssuchasBMW,Mercedes,AstonMartin,RangeRover,Porsche,NASCAR,etc.allhavepotentialasCoBrandpartners.ThisisfurtherevidencedbyAudi’sfeaturecaratthe2016ShanghaiAutoShow(seepicturebelowright).

Other Notable Corporate PartnersKOTALongboardsistheexclusiveskateboardofDeweyWeberSurfboards.ThisiconicsurfbrandhassignificantpresenceintheSurfLifestylemarketandhashelpedidentifyKOTAasaSurfLifestylebrand.Today,ourDeweyWeberCollectionfieldssomeofourmostpopulardesignswithretailersanddirectsales.

Retailmarketsforhighendsurfboardshavebeensoftforseveralyearsbuthaverecentlyshownsignsofaturnaround.DeweyWeberiscurrentlyre-toolingitsexistingdistributionchannelstomeetchangingsurfenthusiastbuyingpatterns.AsDeweyWeber’ssaleschannelsmature,weexpecttohavejointdistributionnetworkswithDeweyWeberdomesticallyandinternationally.

Inthemeantime,ourassociationwithDeweyWeberbringssignificantstaturetotheKOTAbrand.We exhibited with Dewey WeberatSurfExpoinJanuaryand Dewey Weber has includedthefulllineofKOTAlongboardsintheir2017retailercatalog.

4 TheFerrariOwnersClubdesiredtomerchandiseourco-brandedboards,however,FerrariN.V.wouldnotauthorizethemtouseFerraribrandassets.


DIRECT SALES DirectsalesforKOTAproductaredrivenbymarketexposure,easeofpurchase(particularlyonmobiledevice)andacompellingproductmix.

Digital MarketingInDecember2016andagaininFebruary2017welaunchedlimiteddigitalmarketingcampaignsutilizingFacebookads,re-targetingandre-marketing.Budgetforeachcampaignwas$10,000.Thisfirstcampaignhadahighrateofconversions,however,thesecondcampaignhadahighrateofshoppingcartabandonment.

LessonslearnedfromthesemarketingspendsindicatedthatoureCommerceplatform(i.e.,shoppingcart)hadsignificantinertialeadingtopurchase.We’venowreplacedoureCommerceplatformwithWooCommerce,dramaticallystreamliningthepurchaseexperienceparticularlyonmobiledevice.

KOTA’ssocialmediareachandourabilitytooptimizeonlinesaleshavebeenlimitedbyalackofmarketingcapital.Historically,we’vegottenmoredirectsalesfromcall-insandemailsthanthroughourwebsite.We’verecentlyengagedanSEOexpertwhobelieveshecandrivemoreconversionsthroughourwebsitewithkeywordandSEOoptimization.Whilethiseffortmaytakeafewmonthstoseeresults,theimmediategoalistogenerate2salesperday(60/month)viaourwebsite.

Google Concierge ProgramGooglehasselectedKOTAasoneof5startupschosenquarterlytoreceivecomplimentary‘conciergeservice’.Criteriaforselectionwasthe‘coolfactor’ofthebrandandtheabilitytoscalerapidly.Googlewilldesign,implementandprovidedailylaborandmanagementforathree-monthdigitalmarketingcampaignatnocosttoKOTA.Googledataindicatethecampaignwillreachnearly3millionpeopledrivingover100,000totheKOTAwebsite.

KOTAisresponsibleforadwords,clickthroughandYourTubevideoviewchargesduringthecampaign.Therequiredbudget(setbyGoogle)forthiseffortis$50,000.Todate,KOTAhaslackedthecapitaltoimplementthisprogramwithGoogle.Thismarketingspendisapriorityoncecapitalized.

Board Designs & Branded ProductWe’vetakenstepstodiversifyourlongboarddesignsandoffermorebrandedproductatavarietyofpricepoints.InJune2017wesignedalicenseagreementwithMichaelSchwab,aniconicAmericangraphicartistwho’sworkincludeslogosforseveralNapaValleyvineyards,TurnerClassicMoviesandPete’sCoffee,andartworkfortheMLBAllStarGame,Amtrack,NationalParks,etc.Inrecentweekswe’velaunchedtheMichaelSchwabCollectioninthreeseries,AmericanIcons,AmericanWestandAmericanJazz.Additionalseriesareintheworks.

Mr.SchwabalsocreatedthelogoforDenverMountainParks(DMP).We’vecreatedadesignforDMPthatincludesa$15donationtoDMPforeveryunitsold.

TheengagementwithMr.SchwabgivesKOTAfansagenrewelloutsideofourtraditionalaviationthemedboards.ItalsosetsaprecedentforKOTAtoworkwithandfeatureothergraphicartistswithfollowingsthatcanextendKOTA’sreach.

Wecontinuetoexpandourbranded‘logoproduct’lineswithsmalllotsofalternativecaps,surfshirts,HydroFlaskwaterbottlesandotherproducts.We’veseenajumpinsalesofwallhangersandskatetoolsaswell.

Optimallyoursuiteofbrandedproductsneedstoincludealargerdiversityoflogoappareland


accessoriestoreachourgoalof$10,000inmonthlybrandedproductsales.We’reexploringadditionalitemssuchasperformancepulloversandalternativet-shirtdesigns,andwilladditemsaswehavecapitaltoobtainsmalllotsofinventory.Luckily,logoproductsuppliersaretrendingtowardsmallerlot,just-in-timeproduction.Weexpectthiswillenableustocarryalargervarietyoflogoapparelwithouttyingupsignificantcapitalininventory.

MARKETING SPENDUntilcapitalized,KOTAisseverelylimitedinourabilitytomarketourproductsandbrand.Nevertheless,ouractivitiestodatehavegivenusincreasedclarityastowhatmarketingspendswillproducedesiredresults.

Social MediaTheGooglespendmentionedearlierwouldbeourtopprioritytoinvigoratedirectsales.We’dalsocommitadditionalcapitaltofollow-on,targetedFacebookandGoogleadwordscampaignstosustainthemomentumweexpecttogainfromtheConciergeProgram.

TradeshowsTradeshowsrepresentanopportunitytoexposeourproducttopotentialretailersandCorporatePartners.We’vehadsomesuccessinclosingretailers(RonJonforexample)butnotenoughtojustifytheexpense.WiththeformalizationofourCorporatePartnerProgram,we’repro-activelypursuingCoBrandpartnersandarelessreliantontradeshowsforthatexposure.

Ourstrategyfortradeshowsistoattendfewer,moretargetedshowswherewe’vehadsuccesswithretailerssuchasSurfExpo,andthosethatmightopenupnewmarketstoKOTAlikeCAMEX(collegiatelogoproduct).


Domestic Travel Havingameaningfultravelbudgetwouldenhanceourabilitytolandadditional,moresubstantialCorporatePartnerssuchasABI.Securingco-brandingrelationshipswithotherlargecompanieswouldbeapriorityfortravel,however,we’dleverageanytravelintoadditionalspecialtyretailrelationshipswhereverpossible.WeknowfullwellthepotencyofshowingthephysicalproducttopotentialCorporateandretailpartners.

Traditional MediaKOTAhasbeenfortunatetohavebeenrecognizedinseveralnationalmediasegmentsincludingFOXNews,ABC,Men’sJournalandOutsideMagazine.Thisexposurehashadasignificantimpactonsales,particularlymediathatisdirectedattheactivelifestyleorveteranscommunities.

We’vetraditionallyenjoyedthisexposureforfreeoratwellbelowmarketcostduetomediaconnectionsandtheenthusiasmfortheKOTAstoryandbrand.Asthecompanymatures,however,weincreasinglyhavetobuyourexposureinthesemediaoutlets.Accessingnationalandworldwidemediaisextremelyexpensivewithalong(6monthsplus)leadtime.Anyspendsinthisareawouldbeverytargeted.

Oneareathatwe’reexploringispayingforKOTAproductplacementincommercials,movies,television,etc.Thisprovidesgoodexposureforproductsonalocal,nationalandeveninternationalbasis.Atthistime,webelievethattheROIonthistypeofspendwouldbehigherandmoreimmediatethanwithtraditionalmedia.


Local Events, Levitt Pavilion & the KOTA Escadrille Wecontinuetohaveapresenceatasmanylocaleventsaspossible.Ourwomen’sridingclub,LongboardingBetties,holdsregulareventsthroughoutthesummer months and our new relationship with Denver Mountain Parks maysparkadditionalKOTAevents.

LevittPavilionisa10,000+personcapacityamphitheaterlocated1/2blockfromtheKOTAfactoryandshowroom.LevittPavilionopenedinJuly2017andwillfeatureover45concertseachsummer(mostofwhicharefree).Wefeelthereisasignificantopportunitytodrawconsumersintoourshowroompriortothesescheduledevents.

We’reexploringaliquorsalespermitthroughournon-profit,CarveItForLife!(CIFL!),thatwouldallowustohaveadvertisedKOTAshowroomeventsfeaturinglocalcraftbreweriespriortoselectconcerts.LevittPavilionisshortonparkingfor10,000peoplesoconcert-goersalreadyhaveanincentivetoshowupearly.KOTAistheonlyretailspacewithinwalkingdistanceoftheconcertvenue.

Withamarketingbudgetwe’dliketofurtherformalizeourteamofriders,theKOTAEscadrille.Thiswouldgiveustheabilitytopurchaseteamgearforridersandpaythemanominalhourlyrateforparticipationinweekendevents.

KOTAEscadrilleridersengageineventsandclinicsas“BrandAmbassadors”,andaretheprimaryparticipantsinKOTAlocationvideos.Ranginginagefrom20sto50s,ourteamridershavebeeninstrumentalinattractingotherstotheKOTAbrand.

In2016wesignedourfirsttwoproriders,AlyssaHawleyandKevinDonoghue,proathletesfromSpartanRacing.AlyssaandKevinleveragetheirrespectivesocialmediafollowingswithvideos


andcontentaboutKOTA.DebbieWalker,professionalsurferandDeweyWeberTeamsurferisalsoaKOTABrandAmbassador.LocatedinCocoBeach,Florida,Debbieprovidesoursocialmediateamwithhighqualitycontentonaregularbasis.

Recognition & Reality TVChase Mission Main Street Grant: In2014KOTAwasselectedasaChaseMissionMainStreetGrant(MMSG)winner.Wewereoneof20companiesnationwideselectedfromover15,000applicantstoreceivea$150,000grant.

Fromtheclassof20MMSGwinners,KOTAwasselectedbyChasetobethetelevisedadvertisementforthe2015MMSGprogramwhichairedinspring/summer.KOTAwasthenselectedasthecompanytobeprofiledinChase’sInkCardandSmallBusinessBankingcommercialsthatairedonnationalTV,radioandinprint.

Googlewasaprimarygrantsponsorofthe2014MMSG.AsawinneroftheMMSG,KOTAwasgivenathreedaytriptoGoogleheadquartersforconsultationonKOTA’smarketingandmediastrategy.ThisinteractionwithGooglepromptedustooverhaulourwebsite,makingitfullyresponsivetomobiledevices.Googlealsogaveusinvaluableinsightsintohowtomarketourbrandwithdigitalmedia.GooglefeaturedKOTAintheir2015marketreport.

The Profit Throughout2015ourrelationshipwiththeseniorexecutivesatJPMorganChasegrewstronger.Inthesummerof2015,MikeandNikkiMaloneywereinvitedtojoinJamieDimon,Chairman,JPMorganChase,JenPiepszak,CEOChaseBusinessBankingandGordonSmith,CEO,JPMorganChaseonMr.Dimon’spublicrelationstouroftheColoradoFrontRange.


Shortlyafter,wewerenotifiedbyMs.PiepszakthatMarcusLemonishadvisitedherofficeandindicatedhewantedKOTALongboardsonhis‘reality’TVshow,TheProfit.We’dturneddownTheProfitbeforeandexpressedourdeepreservationstoChaseaboutbeingassociatedwiththeshow.Ms.Piepszakwasinsistentand,asasponsoroftheshowChaseeventuallypressuredustoaccept,assuringusthatwe’dbegivenakindtreatmentduetotheirrelationshipwithLemonis.

InSeptember2015,LemonisandMacheteProductionsstartedfilmingatourRiNOfactory.LemonisrefusedtomeetwiththeKOTAExecutiveTeamandneverdiscussedourbrand,marketstrategy,personnel,orsalesanddistribution.WeweretoldthatTheProfithadneverfilmedastart-upandLemonisadmittedhe’dneverbeeninvolvedinanearlystageentity.YetheassumedhekneweverythingaboutKOTA,ourmarketandproductwithouteverconsultingseniormanagement.

Withinashortperiodoftime,Lemonishadmanipulatedourproductionstaffintoturningononeanotherwhileimplyingthatmanagementwasdissatisfiedwiththeirperformance.Onebyone,ourproductionstaffquit.Duringthesixweeksoffilmingwelostfiveofoursixemployees.Lemonisalsopromotedsuchideasasourproductwasoverpriced.Havingneverdiscussedcostofgoodswithmanagement,heactuallyadvocatedwesellatapricepointthatwasbelowcost.

Asisstandardontheshow,LemonisofferedusanequityinvestmentinKOTA.Mr.MaloneywasinregularcontactwithKOTA’sAdvisoryBoardandshareholdersthroughoutthefilming.Whenfilmingbegan,weallfeltthatdoingsomesortofdealwithLemoniswouldbebeneficialtoKOTA.

Asweanalyzedthestructureofhisoffer,however,theBoardandmajorityofshareholdersdeterminedLemonis’proposalwasnotinthebestinterestsofthecompanyanditsshareholders.DuringthistimeMs.PiepszakandherstafffromChasewereindirectcontactwithKOTAmanagement,attemptingtopressureusintoacceptingLemonis’offer.

Mr.MaloneyandtwoKOTABoardmemberssuccessfullyre-negotiatedthedealstructurewithLemonis.Lemonislaterdeniedthathe’dmadeusthatdealandwentbacktohisoriginalterms.Mr.MaloneymadeitcleartoLemonisthathiscrewcouldfinishfilmingbutthatKOTAwouldrejecthisproposedinvestment.KOTAneveracceptedanymoneyfromLemonis.

Filmingwrappedupandtheproductioncrewleft.Wewerenotinvolvedinanypost-productionoftheepisode,werenotgivenanypreviewandhadnofurthercontactwithMr.LemonisorMachete.

Whentheepisodeaired,Mr.Maloneywasmadeouttobeaogrewhoabusedhisemployees.ThisnarrativeallowedLemonistosaythedealneverwentforwardbecausethefoundersofKOTAweresuchhorridpeople,he’dneverinvesthismoneyinacompanylikeKOTA.TheentirestorylineandnarrativewasaliecraftedtoprotectLemonis’personalbrand.ItisfairtosaythatLemonis’singularbusinessacumenishisabilitytomanipulatepeoplethroughdeceptionanddeceit.

TheMaloney’schildrenwerebulliedatschoolfollowingtheairingofTheProfitandwereceivedanearlyoverwhelmingonslaughtofvitrioliccommentsonsocialmediaandthreateningemail.We’venothadanycommunicationwithorsupportfromChasesincetheairingoftheshowinDecember2015.MacheteProductionsneverreimbursedusfortravelexpensesweincurredduringtheshow.

TheMaloney’sandKOTAmanagementtookastandtoprotectKOTAshareholdersandpaidanawfulpriceforit.Yetwesurviveditall,successfullymovedourfactoryandhavesteeredKOTAbacktoarevenuegrowthpaththatwillpropelthecompanytoprofitability.SuchisourcommitmenttoKOTAshareholdersinkeepingwithallthattheKOTAbrandstandsfor.


Community Outreach & CSRFromdayone,we’vecommittedourselvestoengagewithandgivebacktoourcommunity.Wesupportmanyveteran’sandchildren’shealthcharitiesprovidingcustomdecksforauctionsale.TypicallythecharityauctionpriceforaKOTAlongboardiswellover$1,000andourrecordtodaystandsat$3,100forasinglecomplete.

Carve It For Life! (CIFL!):CIFL!isaPostTraumaticStress(PTS)healingprogramdevelopedbyKOTA.CIFL!waspilotedin2015withWoundedWarriorProject(WWP)achievingexcellentresults.Theprogramisopentoveterans,firstrespondersandtheirfamilies.

UniqueaspectsofCIFL!arethattheprogramispeer-to-peerwiththeintentthatwequicklyachievealeveloftrustandopennesswitheachparticipant.Theprogramisalsopricedsuchthateachparticipantreceivestheirownpersonalizedlongboardtocontinuetheirhealingpost-program.

CIFL!received501(c)(3)statusinDecember2015.We’reindialoguewithWWPregardingexpanding the program nationally under WWP administration utilizing the KOTA simulator and demodecks.WhileKOTA’sveteranstaffvolunteerstheirtimeascounsellors,KOTAispaidforKOTAEscadrilleriderparticipationandpersonalizedlongboards.

KOTAandCIFL!werefeaturedinOutsideMagazineonlineonVeteransDay,2016.

Denver Public Schools: DenverPublicSchools(DPS)hasadoptedaKOTAsponsored,for-creditlongboardingclassattheMiddleSchoollevel.Nowinits8thsemesteratMerrillandGrantBeaconMiddleSchools,theprogramhasbeenaspectacularsuccess.Theprogramcurriculumincludeslifecoachingelementswiththethemeofachievingphysicalbalanceonthelongboardandhowthatrelatestoachievingmentalandemotionalbalanceinlife.


Environmental Stewardship KOTAusesAmericanHardRockMaplefromaForestryStewardshipCouncilCertifiedmill.FSCcertificationensuresresponsiblymanagedforeststhatprovideenvironmental,socialandeconomicbenefits.

KOTA’smanufacturingprocesscreatesrelativelylittlewaste.Tothegreatestextentpossible,weutilizeourwastewoodforotherproductssuchastaphandlesforlocalcraftbreweries.KOTAhasacultureofcontinuousimprovementintermsofreducingourenergyandresourceconsumption.


JOIN OUR WORLDKOTA LONGBOARDSAPPENDICES

•

Appendix AKOTA Pricing & Terms


Appendix AKOTA Pricing & Terms

Price Comparison of Longboards Over 39 InchesThischartshowsthedistributionofpricingforcompletelongboardsover39inchessoldontheinternet.

Thelabelingoflongboardcompaniesindicatesgenerallywheretheirboardsarepriced.Boardcompaniesingreenseemtobetargetingtheolder,mainstreamactionsportsmarket.

Observations:

1. TheKOTAPremiumlineprice(MSRPof$329)isatthe75th percentileinthemarket.Wearegenerallythelowestpricedlongboardtargetingthemainstreamactionsportsmarket.

2. TheKOTA“MacchiM.40”40inchlongboardproposedprice(MSRPof$275)isatthe50th percentileoflongboardsover39inches.

3. ThecompaniesonthelowerendofthepricerangemanufactureinChina(Sector9andArbor).Boardsinthemidtohigh-rangeinpricearemadeintheU.S.orCanada.

Conclusions:

1. PricingforboththeKOTAPremiumLineandMacchiM.40isveryreasonableincomparisontomarketprices.Infact,Premiumlinepricingcouldbeconsidered‘disruptive’incomparisontoboardcompaniestargetingthemainstreamactionsportsmarket.

2. Productsoldintothetraditionalskateboardmarket(i.e.,skateboardshopssellingtothe9-24yearoldmale)spansapricerangefromthemid$100stothehigh$300swiththebulkofproductsofferedpricedinthemid-high$200s.


Appendix BKOTA WeFunder


KOTA Factory Move:KOTAFactoryandShowroom1400SouthLipanSt.,Denver,CO80223

InSeptember2016wemovedourfactorytotheup-and-comingsouthDenverneighborhoodofRubyHill.This7,700sffacilityisidealforscalingKOTA’sproduction,withalargeshowroomandretailspaceandspraybooth.Weestimatecapacityatover20,000boardsperyear.

ThisRubyHillfactoryisarareandvaluablespaceinthegreaterDenverareaasthecannabisindustryhascausedaseverescarcityoflightmanufacturingspaceinColorado.

RubyHillisanestablishedneighborhoodwithamixofsingle-familyhomesandlightmanufacturingwithagrowingnumberofcraftbreweriesandretailers.Locatedabout10minutessouthofDenver’sLoDo(LowerDowntown)areaandadjacenttothePlatteRiver,RubyHillwillseesignificantgentrificationoverthenextdecadeasDenverproperexpandstothesouth.RubyHillisalsolessthanthreemileswestoftheUniversityofDenver.

Levitt PavilionTheKOTAfactoryislocatednexttoRubyHillParkandOverlandGolfCourse.RubyHillParkfeaturesamountainbiketerrainpark,snowboardinghillandthenewlyopenedconcertvenue,LevittPavilion.LevittPavilionreportedlyseatsupto17,000peopleandhostsover50concertspersummer,mostofwhicharefree.LevittPavilionwilldrivesignificanttraffictoourneighborhood.KOTA is the only retail space walkable from the concert venue.

KOTA WeFunder Campaign:KOTA’sWeFundercampaignoffersownershipinKOTAviaSAFE(SimpleAgreementforFutureEquity).Ourminimumcapitalraisedis$90,000,however,ourtargetis$400,000to$1,070,000.Withcapitalinexcessof$400,000,webelievewecangettocashflowwithin12-18months.

Useofcapitalisworkingcapitaltocoveroperatingcostsandmarketingcapitaltogrowsaleswellbeyondourorganicgrowth.Ourgoalistoreachsustainablecashflowand/orprofitabilitywithouttheneedforfurthersaleofequityinthecompany.

Weestimateourcurrentfactorylocationiscapableofachievingamanufacturingrateofover20,000unitsannually.KOTAisestimatedtoachievebreakevenatbetween2,200and2,400unitsperyear.


Appendix BKOTA WeFunder

WHAT BROUGHT US TOGETHER WAS THE BELIEF THAT WE COULD DO AND BUILD SOMETHING EXCEPTIONAL.

Documents

JOIN OUR WORLD KOTA LONGBOARDS BUSINESS PLAN 2018 · riding the slopes of dry swimming pools and drainage canals. The introduction of ‘kicktail’ boards with turned-up ends in