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THRYV™

The first premium healthcare footwear brand

UNCOMPROMISING STYLE IN WELLNESS™

Sabot Hill Group, LLC 978-973-1451 Sabot Hill Group, LLC

THE OVERVIEW of THRYV™

UNCOMPROMISING STYLE IN WELLNESS™

Investment Considerations

THRYV unites want-to-wear style with need-to-wear therapeutic construction.

 There are 29.3mm diabetic consumers in America. (CDC) o That population will surge to 35mm in the next 20 years. o The U.S marketplace is conservatively estimated to be $300mm annually.

● Many diabetics are making bad decisions, choosing style over function, and putting their health at risk. o Diabetics must take extraordinary care of their feet to live a full life. o The Medicare reimbursement sales model is broken.

 Our Insight: Affluent diabetics are the forgotten demographic. o According to the U.S. Census, 40% of diabetics have the means and taste level to buy better grade footwear, and are seeking alternatives. o Our platform offers footwear that marries taste, style and diabetic function. We unite a patentable want-to-wear style with need-to-wear therapeutic construction. o No competitor meets this standard or addresses this high profit opportunity.

 There are 3 distinct distribution channels we’ll attack: Web, Retail and Practitioner. o Web - or vertical sales - will yield significant gross margin dollars as well as drive specialty retail’s trail and stocking. o Specialty retailers enthusiastically support exclusive, keystone + programs. o Practitioners are looking for an alternitive to ugly, therapeutic footwear solutions. o Sales will be evenly split by gender, and is expected to be 50/50 men-to-women. o Product strategy includes a propiritary D3 sizing methodology that industry practitioners (influencers) embrace and we believe to be patentable.

 Founders are accomplished in the footwear space. o Andy Simonds is a 20 year footwear industry veteran, including time at New Balance Athletic Shoe, and has spent 10+ years in healthcare footwear space. He’s an expert in brand management and product development. o NorthStar Management Partners are associates in Sabot Hill, seasoned executives in footwear and small- and mid-market financial & operational management.

 Thryv expects to capture a MINIMUM of 2% of this market within 5 years. o $15mm annual revenues within five years. o EBITDA is expected will be 15% in five years. o Produce 235,000 pair annually.

The plan provides that 100% of the initial investment will be available to return to investors in 54 months and an ROI of ~500% based on a conservitive 4x EBITDA valuation at 60 months.

Call to Action: We are petitioning for $1.8mm in equity investment.

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The Situation: Diabetics must take care of their feet to live a full and healthy life. The main circumstance of diabetes is neuropathy of the extremities or a loss of circulation and sensation in their legs and feet. Neglect of foot care, like wearing poorly fitted shoes, can lead to blisters, wounds and ultimately ulcerations and infections and in extreme cases, amputation. This population fears for their long term health and mobility, almost as much as they fear being considered or perceived as old. They are looking for footwear solutions for their health, comfort and sense of self-worth and need to break the compromise of ugly “medical” shoes that fit and fashion forward shoes that don’t.

The conventional view of this market is that diabetics are poor and sedentary and plan to use Medicare subsidies to get free shoes, but the fact is that 40% of diabetics are affluent according to the US Census standards (or consumers with an annual household income over US$60,000).

Positioning: Two words capture Thryv brand’s aspirations: uncompromising wellness. These simple themes are the cornerstone of our brand (The name “Thryv” is a placeholder - once funded, we will either validate “Thryv” or create an appropriate brand name. A creating brand standard is a task for marketing professionals –this management is experienced in driving marketing agency relationships to create new brands and standards). Diabetics are looking to live longer and in better health than any previous generation. Thryv brand breaks the compromise between medical/functional (ugly) footwear and fashion forward styling. It will be differentiated from traditional therapeutic competitors by offering a more consumer friendly wellness/preventative message, and separate itself from comfort brands that cannot offer precision fit. It’s comfort that fits!

Customer & Consumer Base and Market Acceptance

Channels: We will launch the brand BOTH vertically - direct-to-consumer - and traditionally through high service, sit & fit retailers who can deliver the precision fit promise. Delivering precision fit is a “high touch” proposition making high quality consumer and customer service a keystone in delivering the brand promise.

Vertical: Our goal is to have a minimum of 25% of sales through online sales. We will build a powerful e-commerce website that explains the brand promise, describes its products features and benefits, and provides direct-to-consumers sales opportunities. Well-trained Customer Service Representatives (“CSRs”) will spend the time necessary to help consumers to precisely fit shoes and work with them to be sure that fit works for the long term. We will aggressively pursue target consumers and drive trial and purchase. We will also target a subset audience - the diabetic caregiver - generally a family member or medical professional who has a powerful influence over treatment and ongoing care of diabetes sufferers. Segments of the population, such as affluent diabetics, are easy to find online and market directly to by using the power of web-based research and outreach, and by using and SEO/SEM/PPC marketing.

Retail: The Store-in-Store model will drive dealer support. The target retail channel is the “sit & fit” dealers that provide “high touch”, full service for specialty footwear. These dealers are high value influencers in their marketplace and generally members of the National Shoe Retailers Association. This segment buys and holds inventory and forecasts their future product needs. They expect pricing programs to offer keystone plus $10 margins and substantial marketing support. Our intent is to build aggressive rebates and sales incentives to attract and keep these dealers as customers. Limited distribution, sell-in, sell-through and restocking programs, as well as flexible manufacturing programs that keep the right products in stock, will attract and keep dealers dedicated to the brand.

These dealers are seeking branded footwear solutions for health oriented consumers.

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Who is NSRA?: From their website www.nsra.org:

Today, the typical NSRA member owns two to four stores, employs seven full-time- equivalent employees per store and carries an inventory that tops $250,000+, with an average per-pair price of $135. Most members sell shoes for adults and children, as well as accessories and add-ons.

Many NSRA members have a website, which they use for both e-commerce and as a quick and easy information place for regular customers. As retailers, NSRA members stay competitive through high-quality and focused customer service: Store employees know their products and their customers, and take pride in measuring and fitting their customers properly. The typical NSRA member’s goal is to make sure the customer is pleased, not only with the purchased product, but also with the overall purchasing experience.

Together, independent retailers make up approximately 20% of U.S. footwear retail sales, conducting more than $7.4 billion worth of business in a $54 billion per year industry.

Practitioners: The medical practitioner channel is made up of approximately 3,000 Orthopedic & Prosthetic facilities, Durable Medical Equipment suppliers, Podiatrists and Certified Pedorthist's offices, all commonly referred to as “practitioners”. This channel is comprised of “care givers” who purchase products on an as-needed basis based on immediate patient requirements, and has its own population of influencer, or product guru’s, that build trends and create market acceptance. We will select a small group of high value guru’s that will build brand acceptance in the medical channel. They do not hold inventory and do not forecast future needs, but use suppliers’ warehouses as their own, expecting suppliers to be in stock. It is our intent to allocate a portion of the line as locker-stock or “never out” inventory to select/key partnership accounts.

Product: The unique selling proposition is based on precision fit footwear. We offer shoes in multiple widths, multiple depths and in ½ sizes. This is a distinctive offering that diabetics must take advantage of for continued health.

We are dedicated to supporting retail partners, medical and pedorthic dealers, by providing precision fitting shoes to every consumer seeking a high quality, perfect fit. Thryv brand has a proprietary, 3 depth fitting system that we believe to be patentable. Every style will be available in 3 depths, 3 widths and a minimum of 14 sizes (women) and 15 sizes (men). Thryv brand construction DNA includes, but is not limited to, these features:

● Fitting: ½ sizes, 3-5 widths and 3 depth options make Thryv brand the go-to product. ● Heel counter: Long, firm, asymmetrical inside counter for control ● Cup sole with 2.5mil recess for “hidden” extra depth. ● Collar height: Consistent and asymmetrical collar heights for proper fit ● Comfort: Padded collar & tongue for comfort. ● Soles: Biomechanically designed outsoles for easy gait ● Smooth Linings: Seamless lining construction ● Inserts and foot-beds: Proprietary design for comfort and longevity ● Removable Insoles: Full length, removable anatomical insole

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● Breathable: Materials in linings are breathable ● Orthotic ready: Easily accommodates custom orthotics ● Micro-fit Shim: An additional 1/8th micro fit shim is in every box

Price points: $120 to $280 - We plan to offer shoes at competitive Euro-comfort price points.

Inventory: Just-in-time production/inventory system is a key to customer service. Shoe uppers will be developed to be lasted over each of the 3 depths of lasts offered. Bottoms (mid-soles/out-soles) are universal and can be used with any depth last. Upper will be stitched and “hung” uniformly and produced as demand dictates.

Three Depths of each style

D1 (depth 1)

● 1 mil removable footbed ● Traditional “fashion” depth profile ● “Thin toe” orthodic compatible

D2 (depth 2)

● 5 mil removable footbed ● Microfit shim ● Traditional diabetic depth profile ● Full size orthodic compatable

D3 (double depth)

● 5 mil removable footbed ● 5 mil removable insert (flat) ● Microfit shim ● Traditional “medical” depth ● Full size orthodic compatible ● Special needs product

Design: Product design is based on a “fast follower” styling using Thryv brand construction DNA. By maintaining a “trend relevant” vs. fashion forward styling, we can hold inventory longer and turn styles over several seasons if not years. We will also offer a generous in-stock policy and first-in- class consumer and customer service. The product line can be quickly developed using this design philosophy.

Shoes design will, at a minimum, follow the Therapeutic Footwear Bill construction standards as required for Medicare reimbursement and carry the American Podiatric Association Seal of Approval.

Accessories: We also plan to sell our proprietary inserts, shims and foot-beds over-the-counter as these products are high margin accessories and no shoe sale should happen without an add-on sale. In addition, a line of socks or other footwear products will be added as we roll out our footwear brand. We plan to have 10% of sales in accessories. Winter 2015 Page 5

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Competitive Brand Map:

$$$ Mephisto

Finn Comfort THRYV Naot

Aravon Drew Clarks SAS p.w. minor $ Propet Dr. Comfort Apex Orthofeet $138 Medicare threshold Medical Fashionable

The combined sales of brands in the chart exceed $300mm annually. Popular comfort brands like Ecco, Finn Comfort, Naot, Clarks and Mephisto steal attention with great fashion and styling, but cannot be “precision fit” because they do NOT offer ½ sizes, multiple widths or three dimensional fit. Therapeutic footwear brands such as Orthofeet, Apex, Dr. Comfort, and p.w.minor solve medical issues for practitioners but leave consumers wanting a better looking solution. It’s not a solution if the patient won’t wear it.

There is no direct competition for Thryv. No rival brand is looking at this marketplace the way we are and have missed the important fact that diabetes is a classless affliction. Wealthy and middle class sufferers need a champion brand and underprivileged sufferers want an aspirational brand.

Medicare: There is a sea change occurring within the Medicare reimbursement marketplace. Medicare has required practitioners to manage significantly more paperwork in order to be reimbursed for patient shoes and inserts which have made the $138 reimbursement ceiling unprofitable. At this moment there are more practitioners getting OUT of reimbursement model than are getting into it and these brands are being hurt badly. Practitioners must become care-givers once again and cease offering only inexpensive brands solely to puff up margins. We will offer quality shoes at a fair price we will own the upper moderate and high end diabetic position.

We believe that Thryv’s products will be demographically well positioned, top quality and unique in nature and fill the gap between ugly therapeutic and fashion-forward comfort segments. Our expertise combined with the innovative nature of our marketing approach will set Thryv apart from its competitors.

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Penetration Model:

The affluent suffer diabetes and that population is almost 12m people in the USA alone. Thryv plans to capture 2% of the affluent diabetic market in 5 years and take possession of the aspirational brand space.

If we had 2% today we’d be selling 235,000 pair annually earning over $15mm

Year USA Diabetics Affluent Proposed Potential of USA Population Diabetics Penetration Sales @ Population 9.30% 40% 2.00% $65

2013 316,128,839 29,399,982 11,759,993 235,200 $15,287,990

Gender: It is management’s experience that sales will be split roughly 50/50 between genders. While women clearly purchase many more pair of shoes annually than men, the price points are generally about ½ of that of men’s shoe purchases. Uncompromising Wellness shoes will be more expensive than the average price paid for casual shoes. Consumers expect therapeutic shoes to be more expensive than comfort product. Brand ‘C’ will be considered a “value” in combining wellness functionality with uncompromising style. Most women will always value fashion and many wear shoes that are bad for their feet, but as they age they’ll wear them for shorter periods of time. Thryv brand are the shoes they’ll wear most of the time.

Overall Numbers

Updated ’14 projections for US are 29.3mm

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Prevalence: In 2012, 29.1 million Americans, or 9.3% of the population, had diabetes. In 2010 the figures were 25.8 million and 8.3%.

Amputation ● More than 60% of nontraumatic lower-limb amputations occur in people with diabetes. ● In 2006, ~ 65,700 nontraumatic lower-limb amputations were performed on diabetics. Demographics:

This is a marketplace category that is 1) big, 2) surging 3) well defined and easy to reach and 4) in need of a champion footwear brand.

Source: Center for Disease Control

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And as we go global the market expands exponentionally. Diabetes is growing rapidly in Asia, Europe and the Middle East. The international marketplace is not contemplated in this review.

o Source: International Diabetes Federation

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Key Insight:

Our key insight is that diabetes is a classless affliction. It is a disease of the affluent as well as the underprivileged. The marketplace has missed that fact. The conventional wisdom is that diabetics are poor, destitute and are reliant upon Medicare to pay for their care. In fact, in America, diabetes is nearly as widespread in affluent households. Forty percent of diabetics are considered prosperous by US Government census economic measure.

Source: International Diabetes Federation

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Company/Operations:

The company will operate under a variable cost model for the initial 6 years, keeping all operational costs tied to growth. It is our policy to reject any and all fixed cost operation programs unless and until proven that a fixed cost program is economical.

Sourcing: Footwear will be sourced via sourcing agents that are paid a % of FOB costs. We have identified sourcing partners in China, finding the best factories for planned construction methods. We may consider factories in Mexico, Portugal or Brazil, depending on taste level requirements and construction expertise.

Fulfillment: Thryv brand will use an outsourced pick & pack w’house for inventory management, product storage, order and returns fulfillment, and QC inspections. Fulfillment expense as a percentage of sales is expected to remain static while avoiding the need for material capital expense.

Web: Web sales will reap 70% initial margins. Over time, Brand ‘C’ will achieve 25% of sales from direct-to-consumer web sales. The expectation is that it will take 24-36 months for web sales to build to that level.

Sales reps: Sales reps will be paid on a commission-only basis, on dealer and practitioner sales (not B2C sales). As much as possible reps will be recruited from the Aetrex, PWM and Drew competitors who know target dealers and how to position this new offering against the competition. As sales increase so will commission paid, but not until sales occur.

Budgets: Spending will be driven by a best-practices model as a % of projected sales. Marketing, warehousing, travel & entertainment, trade shows and sales meetings will be budgeted based on forecasts.

Margins: Web-based sales will insure that maintained markup will be in the mid-to-high 50% range after sales commissions are paid. We plan that between 20% and 25% of total sales will be high margin, direct-to-consumer via the website.

Women’s shoes will be priced from $120-$225 a pair while men’s will range from $140- 280 a pair. We expect most of the volume to be under $200, with men’s shoes skewing somewhat higher in margin dollars. Men’s average price point will be $175.00; women’s will be $140.00.

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Forecast: This model assumes funding in early 2015 and first delivery in Q2 of ‘16 and a full year in ‘17. 2015 2016 2017 2018 2019 2020 2021 Total PAIRS 10,000 27,500 40,000 57,500 85,000 147,500 367,500 SALES SHOES $ 1,000,000 $ 2,667,923 $ 4,411,692 $ 6,546,308 $ 9,580,385 $ 15,601,923 $ 39,808,231 OTHER - (Sock & Inserts) $ 133,396 $ 330,877 $ 654,631 $ 958,038 $ 1,560,192 $ 3,637,135 ------TOTAL SALES $ 1,000,000 $ 2,801,319 $ 4,742,569 $ 7,200,938 $ 10,538,423 $ 17,162,115 $ 43,445,365

COST OF SALES PRODUCT COST $ 406,250 $ 1,105,500 $ 1,742,000 $ 2,567,000 $ 3,795,000 $ 6,387,500 $ 16,003,250 OTHER $ - $ 66,698 $ 165,438 $ 327,315 $ 479,019 $ 780,096 $ 1,818,567 ------TOTAL COST OF SALES $ 406,250 $ 1,172,198 $ 1,907,438 $ 2,894,315 $ 4,274,019 $ 7,167,596 $ 17,821,817 ------GROSS PROFIT - $ $ 593,750 $ 1,629,121 $ 2,835,131 $ 4,306,623 $ 6,264,404 $ 9,994,519 $ 25,623,548 GROSS PROFIT - % 59% 58% 60% 60% 59% 58% 59%

Management: Andy Simonds has been operating in the healthcare footwear space for over 10 years and a 20 year footwear industry veteran and an associate at brand management consulting firm, Firebrand, LLC. He’s worked at Saucony, launched the Aravon healthcare brand at New Balance Athletic Shoe, and purchased and funded his own footwear company JiBS After-Sport, a sports oriented comfort brand. Most recently he was Executive Vice President of the therapeutic footwear company p.w.minor, driving product development, sales, marketing communications and import sourcing. He also recently served on the Board at the Pedorthic Footcare Association. He estabished Sabot Hill Group, LLC in an effort to purchase the assets of p.w.minor in 2013. While the pursuit of p.w.minor was unsuccessful the marketplace opportunity is very compelling. Andy is the president and manageing partner of Sabot Hill Group, LLC.

NorthStar Management Partners – Michael Fine over 30 years’ experience prior to NMP in retail & consumer products including senior positions at Filenes, Edison Bros, J Baker Footwear & Payless Shoe Source. Peter Nawrocki’s pre- NorthStar experience includes Deloitte, Boston Management Advisors, the Recovery Group and Coopers & Lybrand. They are associates in Sabot Hill and provide managerial and financial counsel.

Summary

THRYV unites want-to-wear style with need-to-wear therapeutic construction.

 There are 29.3mm diabetic consumers in America. (CDC) o That population will surge to 35mm in the next 20 years. o The U.S marketplace is conservatively estimated to be $300mm annually.

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 Thryv expects to capture a MINIMUM of 2% of this market within 5 years. o $15mm annual revenues within five years. o EBITDA is expected will be 15% in five years. o Produce 235,000 pair annually.

The plan provides that 100% of the initial investment will be available to return to investors in 54 months and an ROI of ~500% based on a conservitive 4x EBITDA valuation at 60 months.

Call to Action: We are petitioning for $1.8mm in equity investment.

Respectfull submitted:

[email protected] phone: 978-973-1451

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