Introduction to Pleasant Colony Capital

Operationally Focused Middle Market Investment Firm

• Pleasant Colony Capital (“PCC”) invests in and grows founder and family-owned businesses

• Invest in people and partner with management teams to help companies reach their fullest potential

• Flexibility and desire to own companies for extended periods of time to leverage our relationships and experience and add significant value

• Domain and industry expertise in consumer, B2B and service- related businesses in defensible niches in North America

Overview

Pleasant Colony Capital (PCC) is raising $21.5 million ($16.5MM debt, $5.0MM equity) to acquire a NJ-based supplier of consumer products to major North American retailers (fitness, sporting goods, toys). Key customers include Dick’s, Five Below, Dollar General, Target, Walmart, and Canadian Tire.

• Deal summary: Executed LOI to acquire at 4.1x 2025E EBITDA of $5MM, plus a seller earnout of up to 1.5x over three years upon significant EBITDA growth of 20% or more; financing targeted at ~3.3x debt / 1.0x equity, with a $21.5MM raise​

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• $35MM revenue and $5.0MM EBITDA in 2025E with improving margins; plan to scale to $75MM+ revenue / $15MM+ EBITDA with the above initiatives​

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• Plan to build an East/South Asia import powerhouse by penetrating new customer verticals, adding product adjacencies and scaling a higher-margin direct-fulfillment e-commerce model with existing retailers

• The Company’s business model has been unaffected by tariffs

Opportunity

• Market size/momentum: ≈$150B TAM (sporting-goods personal consumption expenditure (PCE) $121.8B + toys $28.3B); U.S. toy sales +6% in 1H25; attractions demand supportive per TEA/AECOM

• SAM & SOM: $65–77B SAM (Victory-relevant share of sporting-goods PCE plus Outdoor & Sports Toys); Victory at ~0.05% SOM on ~$35M 2025E revenue, with a path to ~0.10–0.12% at $75M+. (SAM based on PCE + Toy Association; SOM based on company materials)

• Commercial foundation: Blue-chip, recurring relationships across mass retail/sporting goods (e.g., Dick’s, Five Below, Target, Walmart, Canadian Tire) provide line-review access and cross-sell leverage

• Quantified whitespace: ~$15M channel expansion (theme parks, cruise lines, family entertainment centers, additional retailers) + ~$40M product adjacencies (print on demand, leather, plastics, décor, bedding, holiday, small beauty/electronics, gardening, pet, vending)

• Margin/ops levers: Retailer direct-fulfillment and logistics optimization, amplified by PCC’s Asia sourcing/manufacturer ties, to lower COGS and improve service levels

Traction/Milestones

• Scaled and improved profitability: Revenue rebounded from $25.0MM (2022) to $30.5MM (2024); gross margin expanded from 24.0% (2022) to 30.7% (2024); EBITDA reached $4.3MM (14.0% margin) in 2024 with $5.0MM 2025E

• Blue-chip customer base with durability: Long-tenured relationships with Dick’s, Five Below, Dollar General, Target, Walmart, Canadian Tire and no significant customer losses to competitors

• China-based product development/sourcing built in-house: Integrated team that develops with Chinese suppliers (beyond off-the-shelf), including proprietary molds, processes, and dedicated production lines

• Logistics/retailer integration moat: Established ties with international freight forwarders, domestic LTL carriers, logistics companies and GPOs; integration with retailer product-development teams makes the vendor relationship hard to replace

Solution/Strategy

• Channel expansion and licensing: Grow beyond current mass retail into theme parks, cruise lines, and family entertainment centers; deepen placements at existing anchors (Dick’s, Five Below, Target, Walmart, Canadian Tire) via line reviews and selective licensed programs

• Product roadmap and private label: Add adjacent SKUs in POD, leather/PU, plastics, décor, bedding, seasonal, small beauty/electronics, gardening, pet, and vending; co-develop private label assortments to secure shelf space and improve mix

• Margin expansion and fulfillment: Scale retailer direct-fulfillment/drop-ship, optimize freight and LTL, and leverage PCC’s Asia sourcing to lower COGS; concentrate volume with best-in-class factories and raise average contribution per SKU

• Supply chain resilience and compliance: Dual-source critical items, enforce QA/QC and social compliance, implement EDI and vendor scorecards, and manage FX/commodity exposure and inventory turns to protect service levels and cash

• Operating cadence and KPIs: Stand up category P&Ls and a weekly S&OP, track OTIF, return rates, gross-to-net, and cash conversion cycle, and run a 13-week cash flow with disciplined SG&A to support scale from ~$35M toward the $75M+ plan

• Victory represents a unique opportunity to invest in an integrated supplier to large retailers with significant growth opportunities

• Immediate 20-30% EBITDA uplift by eliminating Opex (headcount) and retirement plans ($1 to $1.5 million savings)

• Opportunity to grow revenue by
  • penetrating new customer verticals including theme parks, cruise lines, FECs etc.
  • adding product adjacencies from China where PCC partners have extensive expertise
  • adding other countries from SE Asia with new products to the platform

• Ecomm opportunity with direct fulfillment model with existing customers (with significantly better economics)

• The Company’s business model makes it hard to replace easily with integration at the retailer level’s product development teams through private label products

• The Company’s value add includes product development with Chinese suppliers (vs. just buying off the shelf product) and a sourcing team based in China that is able to procure best in class product with favorable pricing

• The Company is led by a high-quality management team that has built the Company from the ground up with relationships with leading manufacturers and retail customers

Investment Thesis/Deal Strengths

• Opportunity to acquire a growth platform with meaningful scale (> $33 million of revenue) and attractive margin profile (~30%+ Gross Margins combined with significant upside)

• Unaffected by tariffs: 78% of business is FOB and on other 22% act as conduit between customers and Chinese suppliers, getting each to absorb the extra cost

• Recurring and growing revenues from blue-chip customers, creating visibility in the projection period

• Long term relationships of many years with leading customers

• No significant customer losses where customers switched suppliers for their products

Recent Financial Performance

Demonstrates no impact from tariffs…Company having a record year in 2025!

• 78% of the business is FOB where the end customer (US retailers) is responsible for shipping, tariffs, last mile fulfillment etc

• On the remaining 22% of the business, the Company acts as a conduit between the end customer (US retailers) and Chinese suppliers getting each to eat some of the extra tariff costs…the Company is in a similar position to a real estate broker where even if the house price is higher or lower, the broker commission stays the same

• Also, neither end customer, nor Chinese suppliers have visibility into the company’s gross margins further insulating them from impact

Management

Faz Habib, Managing Partner

• 20+ years investing in, leading and operating companies
• Expertise in distressed debt/reorgs
• Portfolio Manager buyside, Operating Partner private equity and C-Suite roles in industry
• Extensive industry relationships

John Pilson, Managing Partner

• 20 plus years of investment banking and advisory experience
• Funded $10+ billion of leveraged buyout transactions
• Expertise in navigating middle market M&A processes and working with founder led businesses to achieve growth objectives

Specific Risks

• Customer concentration/contract optionality: Major customer risk: Five Below is ~50% of revenue; relationships are program-by-program with no long-term contracts, elevating churn risk at line reviews

• Asia sourcing dependence (policy + labor enforcement): Products are developed and sourced primarily from China, exposing the model to political risk, Section 301 tariff changes and UFLPA scrutiny/delays. USTR’s 2024 four-year review finalized tariff modifications; CBP reports ongoing UFLPA enforcement with thousands of shipments reviewed

• Freight/lead-time volatility: Global ocean rates have normalized from Red Sea spikes but remain variable, creating landed-cost and OTIF planning risk (Drewry WCI weekly index; 2025 outlook notes softer rates with elevated volatility.)

• Retailer compliance/DF ramp risk: Strategy leans on direct-fulfillment/drop-ship with big-box partners, missing OTIF/EDI/ASN targets can trigger chargebacks/deductions during scale-up

• Capital structure/earnout sensitivity may create incentive misalignment

• Private securities are speculative, illiquid, and carry a high degree of risk – including the loss of the entire investment