INVESTOR REPORT November - December 2019 TABLE OF CONTENTS

Foreword 3 Executive summary 4 Industry news 5 Company news 7 Sales update 8 Retail services update 10 Product development update 11 Team news 12 Fundraising update 13

Avanti Con Amore! 2 www.osahp.com FOREWORD

Dear Partners,

Warmest Holiday Greetings from OSA Hybrid Platform, an AI- driven and industry-proven platform that solves on-shelf product availability issues in real time and provides immediate actions to drive availability, sales and store labor!

With this November-December 2019 Investor Report, we are completing yet another successful year and reporting on our most recent developments, such as sales and product updates, team and company news, along with industry news relevant to our key markets, customers and lines of business.

Should you have any questions or require more information, please do not hesitate to contact our CEO Alex Isaiev at [email protected].

As we say goodbye to 2019, we would like to express our sincere appreciation and gratitude for your unwavering support this year. Thank you for believing in our team and our product!

We wish you a Merry Christmas and a happy and prosperous New Year! Go forward with love!

Sincerely, OSA Hybrid Platform Team

Avanti Con Amore! 3 www.osahp.com EXECUTIVE SUMMARY

The months of November and December have been highly productive for OSA Hybrid Platform, bringing new clients, such as Mars, Efko, ASG, Unilever and others, new functionality to our product, such as the iOS version of our mobile application and OSA Academy application based on Equio framework, along with a number of new additions to our and Kiev teams and, last but not least, new funding to support our further business and product development.

Thanks to these latest events, the company is well poised to start 2020 in good shape: provide excellent service to our current customers, sign up new manufacturing clients, and be ready to renew negotiation process with potential retail clients in Russia and the United States, strengthen our product team, develop new product features and explore new opportunities in collaboration with our strategic partners.

Read on to get a closer look at these developments, get company and industry news, sales updates, and more!

Avanti Con Amore! 4 www.osahp.com INDUSTRY NEWS

In December, retail chain has opened its first innovative mini-store in Kazan (Tatarstan Republic, Russia). Among other innovations, the new concept includes video monitoring of a limited number of shelves and checkout lines in order to provide adequate levels of product availability for a small trial set of product categories.

Also in December, has announced its decision to stop investing in its hypermarket format known as Karusel stores. The existing stores will either be rebranded as Perekrestok or repurposed as the so called “dark stores” for X5’s growing e-commerce business. The growth of online share of grocery sales continues to be a trend for Russian retail, with online sales showing up to 50% growth in 2019, while the traditional offline sales continue to decline. With e- commerce acquiring a larger share year after year, the brick-and-mortar stores will need to become even more efficient in satisfying the customers, and on-shelf availability continues to be on the forefront of the industry’s agenda.

In November, it was announced that Johannes Tholey would succeed François Remy as the new General Director of Russia. At the recent press conference, the new head of the company announced his commitment to a full- scale transformation project starting in 2020. Auchan sales in Russia have been on a sharp decline in recent years, and the company is planning a complete turn-around to slow down and reverse the negative trend. The effort will be helped by a massive influx of investment from Auchan’s headquarters in France. The plans are still in the making, but the new leadership has a number of prospective projects and new formats they are considering. OSA Hybrid Platform has been in negotiations with the retailer for the last few months, and we continue to align the deployment of our on-shelf availability solution as one of the key directions of the upcoming transformation campaign.

The latest global consumer confidence research, conducted in collaboration with Nielsen, has indicated that in the third quarter of 2019, consumer confidence index in Russia has reached 73 points, its maximum since 2015. Consumer confidence index is a combination of job confidence, outlook on consumer spending, and positive/negative expectations regarding consumers’ individual financial situation. Growing consumer confidence means retailers and manufacturers will look for every opportunity to capture the positive trend in consumer spending. With that said, on-shelf availability is one of the driving forces behind sales and has a direct impact on shopper loyalty. We expect that this trend will also stimulate the interest in solutions, allowing retailers to sell more while also cutting their expenses, solutions such as OSA Hybrid Platform.

Avanti Con Amore! 5 www.osahp.com INDUSTRY NEWS (continued)

X5 Retail Group introduced an automated service allowing its partners to access segmented shopper data such as cumulative purchase history, which can be further used for targeted marketing campaigns. This new service has been developed in-house by X5’s big data laboratory. X5’s partners and clients will be able to construct the shopper segments of unlimited complexity across more than 1300 product categories on their own and run campaigns through Mail.ru, VK, Yandex, Facebook, Instagram and GPMD. This new development shows a growing interest in big data solutions for targeted campaigns, which incidentally is the new service that is currently being developed by OSA HP in collaboration with OKS (Dentsu).

Earlier in November, Dixy announced a number of new appointments in its commercial department, which stand to complete the department transformation under the new VP of Commerce Alexey Klochkov. Sergey Serkov (formerly, of Pyaterochka, part of X5 Retail Group, where he was in charge of beverage and grocery departments) was appointed the new Director of Category Management, and Alexander Sitnikov (also a former X5 Retail Group’s top manager, who was in charge of big data and advanced analytics projects) was appointed the new Analytics, Promo and Pricing Director. We consider these new appointments as very positive development, since Mr. Serkov was an active supporter of OSA HP’s first pilot project at X5 Retail Group in 2016, and is familiar with the platform and its many advantages. We expect to enjoy his continued support in OSA’s rollout project that is currently underway at Dixy.

Nielsen has reported that online sales of FMCG (fast moving consumer goods) products have grown 120% since the beginning of this year, while offline sales have stayed pretty much the same. The tendency is most pronounced in coffee, shampoo, laundry detergent, diapers and pet food categories. This trend means that the offline stores will have to look for ways to optimize costs, grow sales through better availability and potentially reduce shelf space for the product categories that demonstrate better performance via online sales.

Avanti Con Amore! 6 www.osahp.com COMPANY NEWS

On December 6, OSA Hybrid Platform project at Dixy stores received recognition as the best solution in retail at the “Smart City” award ceremony and forum conducted by ComNews. The award was received by Vadim Makarenko, Dixy’s Marketing Director and coordinator of OSA HP project at Dixy stores. Read more about the award ceremony on ComNews website. OSA HP project at Dixy has received favorable media attention over the last few months from ComNews, ForkLog, Retail Life and other news outlets.

On November 9, the Russian Direct Investment Fund (RDIF, Russia’s sovereign wealth fund), published a press release reporting that the Fund is “considering investments in promising projects in Artificial Intelligence (AI), including the Botkin.AI platform, developed by Intellogic LLC, and the OSA Hybrid Platform, one of Russia’s leading companies in RetailTech.” As cited in the press release, “The investments under consideration are part of the strategy to develop AI technologies in Russia. RDIF has signed a corresponding agreement with the Russian Government, established partnerships with five leading companies in this sector and attracted more than $2 bn from foreign partners for joint investments in Russian AI projects. The Fund implements AI technologies in portfolio companies, and to date has analyzed more than 100 projects and intends to invest in 20 of the most promising ones.” The press release quoted Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), who said that “The OSA Hybrid Platform has already been acknowledged both in Russia and internationally. Artificial intelligence in sales supports a significant increase in retail chains’ revenue and provides a number of other advantages for retailers and consumers.” Read more on RDIF website, RIA News website and Finam News website. OSA Hybrid Platform has been in negotiations with RDIF for the last few months as one of the members of the investment syndicate for OSA HP’s first round.

On December 20, ECR Board of Directors selected OSA Hybrid Platform as one of the two best supply chain solutions deployed in Russia in 2019 and shortlisted our service as the best market practice. The presentation of OSA case at the Board meeting was conducted by Vadim Makarenko, Dixy’s Marketing Director and coordinator of OSA project at Dixy. ECR (Efficient Consumer Response) is the leading industry organization representing the interests of the leading FMCG retail and manufacturing companies. ECR is present in 40 countries around the world, including Russia. ECR Board of Directors membership consists of CEO’s of the industry leaders, such as PepsiCo, Metro Cash&Carry, Nestle, L’Oreal, Dixy, X5 Retail Group, Danone and others. We are proud that the leading market experts chose OSA HP as an exemplary solution that brings value to all industry participants.

Avanti Con Amore! 7 www.osahp.com SALES UPDATE

In November, OSA Hybrid Platform has signed a contract with ASG (Alcohol Siberian Group), one of the largest alcohol producers in Russia, with $308 million in revenue (data for 2018). The company’s portfolio includes 6 leading brands of vodka and 4 brands of other hard liquor products. The company’s leading brand “Five Lakes” is recognized as #1 vodka in the world.

Early in December, we signed a contract with Unilever Rus, the Russian subsidiary of Unilever, a multinational producer of consumer products, a #2 company by sales volume in its segment. Every day, the company’s 400 brands are used by 2.5 billion people around the world. The company’s revenue in Russia is $1,137 million (data for 2018).

Another new client coming on board in December, was Efko, a fast-growing Russian producer of milk and vegetable oil-based products and the owner of a popular Sloboda brand with $1,753.85 million revenue (data for 2018).

Our returning client, Mars Pet Care (the owner of Pedigree, Royal Canin, Whiskas, IAMS, Sheba and other popular pet food brands), has signed a second contract for OSA HP services at Magnit stores, and has also referred Mars Chocolate (Mars, Snickers, Milky Way, Skittles, Twix, M&M’s, Orbit, and other widely known brands) as a client.

Other new clients are Splat, a Russian producer of oral care products, and Iceberry, a Russian ice cream producer and vendor.

Together with these new contracts, the company stands to reach $655,000 in revenue by the end of 2020, including a $150,000 contract with Magnit - our first for-profit contract with a retailer.

With that said, we are very close to signing new contracts with PepsiCo, Nestlé, Mondelez, Progress, Danone and SunInBev. The new contracts have passed almost all levels of approval, and we expect them to be signed in January and early February 2020. Out of this group of soon-to-be clients, PepsiCo, Nestlé and Progress have already signed letters guaranteeing their first payments under the new contracts, and the provision of OSA services to them will start on January 1, 2020.

Avanti Con Amore! 8 www.osahp.com SALES UPDATE (continued)

OSA Hybrid Platform’s sales team is tirelessly negotiating new contracts with grocery manufacturers planning to benefit from a massive rollout of our platform at Russia’s major retail chains. Please refer to the table below for the current status of these negotiations:

Client Demo Negotiations in Contract under Contract signed progress signing 1 PepsiCo* 2 Mars 3 Coca-Cola 4 Nestlé* 5 Cherkizovo 6 L’Oreal 7 Henkel 8 Efko 9 Progress* 10 Danone 11 Mondelez 12 Procter & Gamble 13 SunInBev 14 Unilever 15 ASG 16 Global Spirits 17 Campina 18 Sady Pridonia 19 Borjomi 20 Iceberry 21 Baltika 22 Heineken 23 United Confectioners 24 Splat 25 Savushkin Product

* A letter guaranteeing the first payment under the new contract has been signed by this client, and the provision of OSA services to them will start on January 1, 2020.

Avanti Con Amore! 9 www.osahp.com RETAIL SERVICES UPDATE

In November, we have completed the rollout project at Dixy retail chain, and now we are servicing more than 2500 stores, or every store under Dixy brand.

Our Magnit rollout project in Moscow and Moscow region has been completed, and as of the time of this writing, over 1500 stores under Magnit brand are receiving out-of-shelf alerts from OSA HP and following up with remedial actions according to the Platform’s recommendations.

As far as future plans go, OSA plans to deploy the platform at Verniy retail chain in February next year. Vernyi retail chain operates more than 815 stores in 9 regions across Russia.

There has also been a considerable interest in OSA HP service expressed by Auchan, O’Key, Lenta and X5 Retail Group. With the new funding becoming available to the company (more on this in “Fundraising Update” section of this report), we plan to move forward in our negotiation process with these potential retail clients.

Avanti Con Amore! 10 www.osahp.com PRODUCT DEVELOPMENT UPDATE

In December, we conducted a two-day workshop for our entire team in order to create a common product vision and set our priorities for the upcoming year. The new vision the team came up with, is a Smart Task Management application for store staff and office employees, which includes the functionality supporting the key business processes, such as on-the-job training and employee motivation. This application will become the focus for our product development in 2020.

Another big piece of news from our product development team is the release OSA HP iOS mobile application, which is now available at Apple AppStore. The mobile app will be used by floor staff, merchandisers and office staff at the stores where OSA HP is used for shelf and inventory management.

Below is the latest on our product development effort in the last two months:

Web Platform and Mobile Application Development:

November December Week 45 46 47 48 49 50 51 52 53 New “targets” for the store interface

Adapting the office interface for mobile app

Communication tool with the in-store systems

Barcode reading functionality

Continuous updates to the mobile application

Machine Learning Development:

November December Week 45 46 47 48 49 50 51 52 53 Demand Estimation and ”Razor” models

Audit system based on price tag recognition

ETL (Extract, Transform and Load) Development:

November December Week 45 46 47 48 49 50 51 52 53 Development of the new ETL 3.0 architecture

Support of Dixy and Magnit rollouts

Avanti Con Amore! 11 www.osahp.com TEAM NEWS

In November and December, there have been four new appointments within OSA HP core team: • Kristina Bessonova, formerly of JTI, was appointed as Project Manager for Retail Integration with the focus on Dixy in our Moscow office • Marina Peresadchenko was appointed as the new Analyst in our Kiev office, and will be charged with the task of performing retail analytics. • Dmitriy Ivanchenko was hired to our Kiev team as the new Frontend Developer. • Dmitriy Vengeresh stepped on board in our Kiev office as the new Senior PHP Developer.

OSA HP has also been busy hiring merchandisers to support our platform and work on out-of-shelf alerts at participating stores. At the end of November, 10 new merchandisers joined our field force.

Earlier in November, our Moscow team has moved into the new office space at IQ Tower in Moscow Business District (also known as Moscow City).

Avanti Con Amore! 12 www.osahp.com FUNDRAISING UPDATE

On December 16, DaVinci Capital and MIR, have signed the term sheet for the first round of funding. It means that out of $15 million projected for the round, we already have a firm commitment for $7.5 million.

On November 15, the third investor has signed a contract for the final portion of finance bridge. To date, OSA HP has raised $3,475,000 in bridge investment. The first two transfers of funds under this newly signed contract were received at the end of November.

OSA HP continues to confer with the syndicate of funds participating in the main investment round. As of the time of this writing, the funds have agreed on the initial term sheet, and a final determination has been made as to the size of the contribution of each participating fund. The next steps at this stage will be (1) the preparation of legal opinion in collaboration with the legal services provider, recommended by the syndicate of investors, (2) the signing of the term sheet by all parties, (3) the agreement on the scope for the upcoming due diligence and (4) the selection of the due diligence provider.

Avanti Con Amore! 13 www.osahp.com