G-RO INVESTOR NEWSLETTER NOVEMBER 2018

Hello G-RO Investors!

Welcome to the new G-RO monthly Investor Newsletter. Each month, we will share updates on our successes, challenges, opportunities, and future plans. I welcome your candid feedback and appreciate any ideas for how you can help support us. Please feel free to contact me anytime....I am always excited to discuss anything G-RO!

Jerry Gross
CEO
Jerry@G-RO.com
310-567-5787

THE FUTURE OF G-RO IS NOW!

G-RO 2.0

My sincere apologies that it has been some time since my last update. But it's not because we have been idle. On the contrary, our team has been hard at work crafting a vision and a plan for G-RO's future. We have consolidated that vision and plan into an internal deck titled G-RO 2.0. Since we launched the Hero Carry-On in October 2015, many things have changed and many have remained the same. G-RO 2.0 takes our accumulated learnings into account and refocuses them into an updated strategic plan for 2019 and beyond. With a focus on continuing to bring innovative products to market and on building the G-RO brand, we are creating our own new vertical in the luggage industry. We call it Performance Travel. It is a breakthrough idea that will be unique and powerful in the marketplace and supports our groundbreaking new products. Please review the attached deck at your convenience, and contact me with your thoughts or ideas on implementation. Some of the information is proprietary and confidential, so please do not distribute.
Anchor anchor anchor anchor

Positioning for 2019 A Round Financing

A bridge round is called a bridge round for a reason. Our recent $5 million convertible note bridge financing, gives us sufficient runway for operations through June 2019. Which means that our number one objective as a company, is to position ourselves for a successful A Round financing by mid-2019. All of our efforts over the next 8 months will be focused on this existential goal. We are currently in the process of interviewing investment bankers to partner with us for the fund raising process. We are seeking a firm with experience in financing for consumer products companies, that has a solid investor base, and an interest in pursuing an A round of $10-$20 million. Our goal is to retain a banker by year-end. If you have any referrals for bankers that meet these criteria, please contact me immediately.

SUCCESSES

$5 million Bridge Round Almost Fully Subscribed

Thanks to a small group of our key investors, we have closed $4.75 million out of a total of $5 million in our most recent convertible note financing. The round remains open as we seek to fund the final $250k. Please contact me directly (Jerry Gross) if you are interested in investing, or know someone who might be interested – this round has extremely favorable terms.

Second Crowd Funding Campaign Fulfilled

With the final bags in transit to backers in Australia and the Middle East, our second crowd funding campaign will soon be 100% fulfilled. We shipped a total of almost 5,000 bags to 59 countries for a total of $1.4 million in pre-sales.
Anchor anchor anchor anchor

New Products in the Mix

For most of its history, G-RO has been a one product company. That changed with our second crowd funding campaign in 2017. The original G-RO Hero carry-on has now sold almost 30,000 units. The new Check-In bag has received rave reviews and completely sold out its first production run within a few weeks. Likewise for the new Backpack XV. We have small quantities remaining of the new Multitasker day use/overnight bag, as well as the new Backpack Lite. You can see these products on G-RO.com. Please contact me directly (Jerry Gross) for special investor pricing.

With these new products in the line, we now have the opportunity to offer discounted pricing to encourage purchases of multiple products. We will be offering special bundle pricing for purchases of a G-RO Hero Carry-On and Check-In during our holiday promotions. The goals are to increase Average Order Value (AOV), Increase Return on Ad Spend (ROAS), and increase Lifetime Customer Value (LCV.)

CHALLENGES

Our Second Sell-Out in Six Months

This may seem like a high class problem, but it is a problem nonetheless. We have been sold out of our key products since September. This marks the second time in nine months that we have not been able to keep up with demand, due to being under-capitalized. With our new financing in place, we will be able to maintain a consistent inventory position well into 2019. But as stated above, we will need to close an A Round in order to maintain a truly stable inventory.

2018 Holiday Inventory

Based on the timing of closing our bridge financing and production lead times from China, we are going to have product available for our Q4 holiday promotion – but only barely. The first containers just started arriving last week. We will have Hero Carry-Ons and Check-Ins available - the first skus were available to ship on November 10th and more are arriving weekly. We will be back in stock with all current G-RO products in January 2019.

China Tariffs

Effective August 30, 2018, a punitive tariff of 10% was imposed on travel products imported from China. (Currently, 100% of G-RO’s products are manufactured in China.) This is IN ADDITION to the normal duty of 17.6%. On January 1, 2019, the punitive tariff will be raised to 25%, making the total duty 42.6%. The biggest impact of these tariffs will be the short-term liquidity consequences. These unbudgeted expenses will shorten our runway by nearly two months to approximately June 2019. We are working with our manufacturing partners to source products from countries outside of China, including Vietnam and Indonesia. However, this will not begin until at least May 2019. Our product development and sourcing team is also aggressively looking at opportunities to manufacture certain new products in the U.S., as we seek multiple remedies to the tariff issue.

OPPORTUNITIES

Anchor anchor anchor anchor

goop Partnership

From November 15th – January 1st, G-RO will be featured for direct purchase in the goop Gift Guide online, as well as in the following goop and goop pop-up stores:
  • Americana Manhasset, New York
  • Highland Park Village, Dallas
  • The Grove, Los Angeles
  • goop LAB in Brentwood, CA
  • goop LAB in New York, NY
  • goop Pop-up in London, UK
As most of you undoubtedly know, goop is a company owned by actress Gwyneth Paltrow. It was launched as a "lifestyle brand" in September 2008 and features cutting-edge wellness advice from doctors, vetted travel recommendations, and a curated shop of beauty, fashion, and home items.
Anchor anchor anchor anchor

b8ta Store Launch

G-RO bags will be featured in the following b8ta stores (www.b8ta.com) beginning November 15th, as well as on b8ta.com:
  • Palo Alto
  • Houston
  • Seattle
  • Short Hills Mall, New Jersey
  • Brookfield Place (lower Manhattan - opening 12/1)
  • Virgin Upper Class Lounge b8ta pop-up at JFK airport
b8ta stores are designed for discovering, trying, and buying innovative new products and are a great fit for G-RO.
Anchor anchor anchor anchor

Holiday Promotions

As part of Phase I of the G-RO 2.0 marketing implementation, we have created new assets, and will be expanding our paid social media advertising on Facebook to additional channels including:

Instagram - We will be adding paid advertising on Instagram to the mix for holiday. The new ads will feature updated videos and stories tailored to the IG audience. We will also be testing snappic.io, a new retargeting program.

Podcasts - Listen for us on:
  • CBS 48 Hours on November 5th, 12th, 19th, 25th and December 3rd and 10th
  • How Stuff Works – Tech Stuff on certain episodes between November 19th and December 8th
  • How Stuff Works – Movie Crush on certain episodes between November 19th and December 8th
Uber - Look for G-RO ads on the tablets inside your Uber when heading to NYC area airports beginning November 20th.

What You Can do to Help

  • We are seeking introductions to potential investment banking partners for our 2019 A Round.
  • We are seeking collaboration opportunities with brands that can help reinforce our new positioning as “Performance Travel.”
  • We are seeking investors to fill the remaining $250k piece of our current Bridge Round.
  • We are seeking any opportunities for any earned media, endorsements, etc.