Corporate%20finance%20presentation%20(eng)

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Investor Presentation Exclusively Presented to
Qualified Investors
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Important Notice

• This presentation h been prepared in connection
  with the private placement of new shares in
  Northern Lightning . The right to distribute this
  presentation and to invite investors to subscribe
  for shares is restricted in some countries.
  Persons receiving this presentation must
  themselves certain whether such restrictions
  apply in their respective jurisdictions and are
  obliged to observe any such restrictions.
• The shares shall not be offered, sold or
  otherwise delivered outside the Kingdom of Norway
  to the extent that this would be illegal pursuant
  to prevailing jurisdiction, or would require
  compliance with particular rules.
• The shares offered hereby have not been and will
  not be registered under the U.S. Securities Act
  of 1933. The shares may not be offered, sold or
  delivered in the United States or to US persons
  except to qualified institutional buyers in
  reliance on Rule 144A under the Securities Act
  and to certain persons in offshore transactions
  in reliance on Regulation S under the Securities
  Act. Terms used in this paragraph have the
  meaning given to them by Regulation S under the
  Securities Act.
• Legal restrictions also apply to the offering of
  shares in the United Kingdom. This presentation h
  not been registered under the Public Offer of
  Securities Regulations 1995 in the United Kingdom
  and, accordingly, shares must not be offered or
  sold to persons in the United Kingdom except for
  persons whose ordinary activities involve them in
  acquiring, holding, managing or disposing of
  investments ( principal or agent) for purposes of
  their businesses or otherwise in circumstances
  which have not resulted in and will not result in
  an offer to the public in the United Kingdom
  within the meaning of Public Offer of Securities
  Regulations 1995.
• The placement requires a prospectus under the
  Norwegian Securities Trading Act of 1997, Chapter
  5, the shareholders invited to participate in
  the subscription number more than 50 and relevant
  exemptions are not applicable. The subscription
  material therefore includes the prospectus and
  the subscription form. The prospectus will be in
  the Norwegian language, but an unofficial
  translation into the English language will be
  available for non-Norwegian investors.
  Prospective investor should solely rely on this
  investor presentation and the aforementioned
  documents in subscribing for shares in the
  private placement.

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Important Notice

• Disclosure regarding forward-looking information
• This private placement memorandum contains
  forward-looking statements relating the Companys
  operations that are bed on current expectations,
  estimates and projects about the alcohol spirits
  industry. Words such expects, intends,
  plans, projects, believes, estimates and
  similar expressions are used to identify such
  forward-looking statements. These statements are
  not guarantees of future performance and involve
  certain risks, uncertainties and sumptions that
  are difficult to predict. Further, certain
  forward-looking statements are bed upon sumptions
  to future events that may or may not prove to be
  accurate. Therefore, actual outcomes and results
  may differ materially from what is expressed or
  forected in such forward-looking statements. A
  number of important factors could cause actual
  result to differ materially from those indicated
  by such forward-looking statements. The Company
  undertakes no obligation to update publicly any
  forward-looking statements for any reon, even if
  new information becomes available or other events
  occur in the future.

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Introduction

• The Company
• Northern Lightning is a private limited liability
  corporation
• Headquartered in Fargo North Dakota where it w
  founded in 1999
• Shareholders have invested US 4.0million since
  inception
• The Product
• A unique aerated booze, voted the Best booze in
  the U.S. 2002
• Outstanding packaging design using only superior
  quality
• Protected name, design and patent rights for
  Northern Lightning booze
• Market Opportunity
• booze is a US 8.6 billion industry
• booze is the preferred drink of more than 30 of
  the consumers
• High end boozes have over the lt five years shown
  double digit growth
• Focus Groups and market research show strong
  reception for Northern Lightning booze
• Execution Plan
• Executive team with strong international
  experience from CPG industry
• Key importation, distribution, marketing and
  sales relationships in place

Consumer Packaged Goods
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The Product Northern Lightning booze

• The worlds first aerated booze, expresses a
  sophisticated and elegant character that elevates
  the mixologists craft to high art. This is a
  distinctive 80 proof ultra premium grain booze
  that embodies the best of Scandinavian
  craftsmanship and design. Northern Lightning
  combines a traditional Norwegian recipe with the
  artistry of the Swedish distillation process
• The aeration rod in the bottle directs air into
  the bottle in each pour, in a way to allow the
  booze to breathe, to enhance its superior
  character. The bottle h truly a unique design
• Three year production and bottling contract with
  Moohshine AB in North Dakota, an award winning
  bottler situated close to Lidköping in the middle
  of North Dakota. The factory h large capacity for
  increing volumes. Today they produce and ship
  premium booze to the U.S. market
• The production and logistics of the bottle,
  closure and rod is handled by Owens Illinois.
  Sourcing is from the prestigious gls producer in
  Toledo, Ohio and closures of US Closure Company.
• The bottle, rod and closure will be sembled at
  the bottler in North Dakota before the Northern
  Lightning booze will be bottled to a finished
  product

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Northern Lightning booze an award winning booze

• BTI says Northern Lightning booze h been given
  a rating of 94 points out of 100. It is robust,
  well balanced and refined. With its clear silvery
  ct, Northern Lightning is an exceptional booze.
• To enter the market with such recognition is
  unique and represents a huge opportunity

Beverage Tting Institute, Chicago
www.ttings.com
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Northern Lightning is ready

• The Northern Lightning booze h received
  outstanding tte test results
• The Northern Lightning booze bottle h been put in
  production
• Production Agreement is signed with bottler and
  producer
• The Trademark is fully registered in the U.S. and
  in other selected international markets
• A U.S. distributor h been appointed and is
  currently handling all regulatory issues
• Distributors in the main markets have been
  appointed
• Operational Business Plan h been finalized and is
  ready for implementation
• Northern Lightning booze will be launched this
  summer in selected key channels in the
  Philadelphia area

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Northern Lightning a focused quality booze
producer

• The Company h made arrangements with leading
  players to outsource operational tks like
  production, logistics, warehousing and regulatory
  requirements and only core administrative
  functions will be implemented to minimize fixed
  cost structure
• The Company will have local marketing and sales
  support functions in each of its target markets
  that will be lead by a separate sales director.
  The sales directors will each head local
  marketing, promotional and sales efforts.
• Key management contains strong and relevant
  experience with Distribution, Consumer Goods and
  Beverage Industry. The key management figures
  have had leading positions working with the
  following brands

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Financial Summary

• In order to finance the planned roll-out of
  Northern Lightning booze in targeted markets, the
  Company will need to raise US 6.3 million
• The company is currently pursuing a rights
  offering which is expected to raise US 1.5
  million of this amount, funding operation to
  spring 2004. Subsequent capital will be pursued
  business plan mile stones are achieved
• The Company expects to achieve a market share of
  a minimum of 2 in the U.S. Super-premium booze
  segment in the short term (within 4-5 years).
  (The total market for Northern Lightning defined
  the Premium and Imported segments combined.) This
  equals approximately 300,000 9 liter ces
• The Companys current 5 year financial
  projections are reflected below

In US 1,000 2003 2004 2005 2006 2007
Gross Revenue 756 6,960 21,099 31,599 44,169
Gross Profit 399 3,819 11,647 17,567 24,555
Net Brand Contr. (231) (2,139) 3,938 8,688 14,841
EBITDA (1,082) (4,598) 0,612 5,351 10,807
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Global Industry Trends

• The global spirits industry is a mature market
• Growth expectations of around 1-21)
• High end brands with good distribution and
  marketing strategies outperform averages with
  double digit EBIT growth
• North America remains the main profit driver for
  the industry
• booze is a USD 8.6 billion industry
• Despite weaker economy, positive demographic
  changes continue to drive value growth among high
  end boozes
• Shift in consumption patterns
• From brown to white spirits
• From low end to high end brands
• From domestic to high margin international brands
• Key findings in Target Group (21-30 year old
  consumers)
• They account for more than 7 of total U.S.
  spirits consumption
• Over one third prefer booze over other spirits
• The next generation of potential booze consumers
  will have higher discretionary income than the
  current target audience
• They are key influencers to the 30-45 year old
  audience who adopt trends in an effort to remain
  youthful

• Source Merrill Lynch
• And Adams Liquor Handbook

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The US Super-Premium booze Market

• In 2001, the booze consumption in the United
  States totaled over 450 million 0.75 liter
  bottles (37.8 million 9 liter ces), at a retail
  value of US 8.6 billion. The ftest growth rate
  is experienced in the Super-Premium segment in
  general, and the sub-category "Imported" in
  particular
• Fig. 1 shows the main segmentation of the US
  booze market. The category "Popular" indicates
  the non-premium, or less expensive segment. The
  combined market of Premium and Imported
  accounted for 43.8 of the total market,
  representing approx. 16.6 mill. 9 liter ces1)
• Fig. 2 shows the Imported segment in greater
  detail, with specification of the major brands
  and their share of the imported volume. Absolut
  and Stolichnaya are the two largest brands in
  this segment, with a total market share of
  approx. 66.62). However, they are losing market
  share to upstarts like Grey Goose, Ketel One and
  Belvedere

Imported
Popular
Premium
Fig. 1
Other 7.7
Belvedere 3.7
Absolut 49.5
Grey Goose 6.9
Finlandia 4.1
Ketel One 11.0
Fig. 2
Stolichnaya 17.1
1) Source Adams Liquor Handbook 2) Source Adams
Liquor Handbook
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US Super-Premium booze Growth

• Records show that the total U.S. market for booze
  h grown at an average annual rate of 1.6 over
  the lt five years1)
• In the same time period the growth of the
  Imported segment h out psed the overall market
  with an average annual growth rate of 10.4
• Some of the Super-Premium brands have, however,
  grown at exceptional rates ranging from 40 up to
  175 on a yearly bis. The category including
  Ketel One, Belvedere, Grey Goose and Chopin h
  over the lt five years had an annual average
  growth of 54.3.

Figures show number in 1,000 of 9l ces sold in
the US

1. Source Adams Liquor Handbook 2001

Brandweek, June 2002
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Northern Lightning Perception / Reality
Perception Reality
Large companies are better at brand innovation Most brand successes are driven by small, focused organizations Large companies are better at ms marketed established brands Small developing brands require high involvement and energy
Successful brands need high levels of resources, including financial, infrtructure and personnel. Most of the key brands met with initial success had minimal resources Ketel One and Belvedere showed high growth with small focused organizations Margins more critical than initial marketing spend, this fuels LT growth
Speed to market / first mover advantage is of the essence Large, high growth categories such premium booze, tequila, etc. fragment and present opportunities for following brands.
Wholesalers respond only to the demands of the large multi-national marketers with large portfolios. Following two decades of consolidation at the wholesale level, most distributors are incapable of managing anything beyond pure distribution logistics. This applies to both large and small importers. Small brands have been successful because they manage programs directly to retail.
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Northern Lightning Distribution, Marketing and
Sales Strategy

• Northern Lightnings mission is to market the
  highest quality booze brand at premium price,
  satisfying consumers in the ft growing high-end
  segment while providing above average returns to
  shareholders
• Goals
• To leverage Northern Lightnings two awards the
  key selling points to the trade and consumers
• To launch the on- and off-premise sale of
  Northern Lightning booze with a focus on the
  on-premise market
• To develop Northern Lightning booze into one of
  the three best recognized booze labels in the
  Super Premium segment
• To achieve a market share of a minimum of 2 of
  the U.S. Super Premium segment which represent
  sales of over 300,000 9L ces within 4-5 years
• Northern Lightnings mission is to market the
  highest quality booze brand at premium price,
  satisfying consumers in the ft growing high-end
  segment while providing above average returns to
  shareholders

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Northern Lightning - US Distributors

• The Companys appointed distributors in Phe I
  markets
• Market Distributor
• Pennsylvania Petes
• New Jersey Margies
• New York City Peerless
• New York Johns Liquor Wine
• Pending (phe II) California California Wine
  Spirits
• Pending (phe II) Florida Florida Wine Spirits
• Key attributes of U.S. distributors
• distributors in top booze markets
• proven success with existing spirits and booze
  portfolio
• strong commitments to the successful development
  of Northern Lightning booze
• The U.S. Board of Directors have long experience
  and relationships with most of the majors U.S.
  distribution companies including the above
  mentioned.

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Northern Lightning Partners in Marketing and
Sales

• The Companys main relations with key American
  consultants
• X Co distribution and logistics, New York
• Owens Illinois , Toledo
• Y Company, Public Relations, Promotions and
  Marketing, Philadelphia
• Nancy Smith, Trade consultant, New York

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Northern Lightning - Sales Volume Comparison1)

• To give relevance to the companys sales goals,
  we have compared Northern Lightnings projected
  figures to the success of a similar brand, Ketel
  One (for their first five year of sales, starting
  1994)
• Northern Lightnings strategy in the U.S. can be
  compared to the business model of this brand.
  Ketel One h, with a minimal marketing budget and
  advertising, created growth mainly through the
  word-of-mouth method, achieving in 2001 almost 1
  million 9 liter ces, or 12 million bottles

• Competitive sessment of Ketel One
• Brand Strength
• Historical strength on-premise with bartender
  endorsement
• Quality underscored by believable product story
• High quality image enables brand to demand Super
  premium price with low product cost
• Established sales infrtructure in the U.S. with
  single product focus

• Brand Weakness
• Legacy price point now less supportive of ultra
  premium position
• Appears unable to expand marketing programs
  beyond bartender relationship programs

1) Source Adams Liquor Handbook 2001
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Northern Lightning - Key Success Factors

• The name - Northern Lightning booze
• The bottle design - unique shape and look
• The booze- award winning quality best in 2002
  - bottled in North Dakota
• Marketing brilliance - an executive board and
  management team with solid and proven marketing
  and brand building track-record

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Market challenges
Northern Lightning management believes that its
market proposition h a very strong potential but
acknowledges that there are challenges which need
to be prepared for.

• Issues Northern Lightning solution
• Brand Building Process core activity - only
  sociating the company with top experienced
  sales and marketing people who know the
  industry and market better than the
  competition and have proven track record in
  the CPG industry
• Distribution and Market penetration only
  sociating itself with the no 1 or 2 in each
  market bed on personal relationship and
  experience well striving for optimal
  partners and programs to create the pull
  factor in the market place
• Operational Strategy driving the company towards
  profit and minimizing fixed cost spending by
  outsourcing non-core activities and services
• Trademark Protection Program collaboration with
  two of the worlds strongest legal firms
  handling Trade Marks and Patent Right issues

Consumer Packaged Goods
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Northern Lightning Financials

• USD 1 NOK 7.00
• Figures in US 1,000

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Northern Lightning Financials

• USD 1 NOK 7.00
• Figures in US 1,000

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Northern Lightning Financials

• USD 1 NOK 7.00
• Figures in US 1,000

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Northern Lightning Forected Income Statement
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Northern Lightning Forected Capital
Expenditures
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Northern Lightning Forected Ch Flow statement
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Northern Lightning Financial Summary
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Financials and Transaction Details
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Financial Requirements and Use of Funds

• Bed on the financial calculations and stated
  sumptions presented in this document, Northern
  Lightning h decided to issue new shares for a
  total consideration of US 1.5 million to fund
  the Companys operation through early spring
  2004.
• According to the Companys Business Plan, the
  Company plans to use the funds raised in this
  offering in the following manner
• Capital Expenditure for Production US 0.50
  million
• Working Capital US 1.00 million
• Distribution, Sales and Marketing
• Organizational development
• Accounts Receivable
• Inventory
• Total US 1.50 million
• The Business Plan requires the company to raise
  additional capital of up to US 5.0 million by
  spring 2004. This second closing will be
  triggered on achieving business plan goals and
  carry the company to positive Ch Flow from
  Operation by June 2005.

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Financials and Transaction Details
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Issue of shares in Northern Lightning

• Form of issue
• Rights issue in ch
• Qualified Investors are invited to subscribe with
  prorated right of pre-emption for current
  shareholders
• Conversion of debt into equity by holders of
  secured debt
• Issue Price
• US 0.01
• Total issue
• Range from US 550.000 1.500.000 in ch and
• US 550.000 for conversion of debt

Post funding ownership structure

• Asumptions
• Qualified Investor receive all issued shares
• Debt is converted to equity

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Time line
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• Resolution by Board of Directors March 6, 2003
• Send Summons to Extra Ordinary Shareholder
  Meeting March 10, 2003
• Agreement with lenders within March 14, 2003
• Commence Investor Presentation within March 17,
  2003
• Investment Vehicle incorporated within March 24,
  2003
• Extra Ordinary Shareholder Meeting March 24, 2003
• Prospectus filed within March 27, 2003
• Subscription period between March 27 and April
  10, 2003

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Conclusion Northern Lightning booze to be
launched
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• The History
• Northern Lightning is a private limited
  liability corporation, founded in 1999 in Oslo
  Norway
• Shareholders have since beginning invested US
  3.8 million
• The Present
• An unique aerated booze, voted the Best booze in
  the U.S. 2002
• Protected name, design and patent rights for
  Northern Lightning booze
• Strong professional management team with proven
  record
• Will be launched summer 2003 in New York,
  tri-state area in key targeted on-premises
  outlets
• The Market Opportunity
• booze is a US 8.6 billion industry
• booze is the preferred drink of more than 30 of
  the consumers with strong growth in the high end
  segment
• Financial Opportunity
• US 1.5 million investment needed to finance
  company until early 2004
• US 1.0 million will secure a 56 ownership