Answers for Accessarator by Copacetic Group on May 20, 2019

Competition

Question: You have an overview of the competitors which are currently on the market. Do you have any numbers on the
total market and how it is divided amongst the market players at present and what you expect for the coming 5 years?

Answer: Information and literature on current market size in terms of who has what share of the market is hard to come by
if I will be frank and honest. What I can do though is to shed just a little more light on the current "heavyweights" of the
building materials market which should be able to give you more details to make an informed decision and ask questions
as to how we would slide in the market as Copacetic.

From my perspective, the kingpins of the market and the "heavyweights" in building material production are 3: La Farge;
Eco Bricks, and BeeHive.

La Farge are considered to be the heaviest out of all of these because as an operation, they are cement producers first and
then brick and block makers second through their subsidiary, Durabric. With this setup, they are considered to be in a very
advantageous position which affords them the chance to price their products (pictured below) very competitively and
thereby get a good chunk of the market.

As one can see, their pricing of products are very competitive with them actually pricing their product in our same price
range! This is a change as to their previous pricing as they have just recently (this month!) adjusted their pricing of SSB
from K400 to K245 (this is the brick that we are/will be competing with) and concrete blocks from K800-K1200 to K530-
K640.

On the outset this can look like a big reason to worry but for us it really isn’t an issue at all. I would even go so far as to say
that we would seriously consider adjusting our brick from K250-K270 in light of their new change! the reason for this
confidence is due to the fact that when our brick, the Interlocking SSB (ISSB) is compared to the non interlocking SSB (SSB),
they are similar in that they both require 32 bricks to make a square meter but the additional costs of mortar for cement as
well as the speed of build are not the same and this is where the ISSB trumps the normal SSB.

The building costs associated with the ISSB are significantly reduced because of the interlock feature which allows less
need for cement when building wall superstructures. This basically means that if a building project using normal SSBs
requires 50 bags of cement to build the superstructure, utilizing ISSBs would require 15-20 bags therefore reducing
building costs heavily.

The speed of building is also significantly reduced when using ISSBs as compared to normal SSBs. In construction, when
doing what is called "pointing" (which is the alignment of bricks when laying them for a superstructure), each brick and
each layer of bricks has to be manually aligned when using normal SSBs as well as have mortar mixed and applied which
makes the building processes cumbersome whereas when using the ISSB, the lock feature of the ISSB does the pointing for
the builder which allows one to get it right at the foundation, and then essentially "play Lego" with the rest of the wall
superstructure which also allows less usage of mortar.

Also, in terms of the mobility of their operations, due to the size of their machinery, they are rooted in Lilongwe and only
churn out bricks on site which means that clients have to factor In transport costs when purchasing their bricks from them
which with our mobility, isn't a problem at all.

For these very reasons, I am more than confident that Copacetic will be producing a product that is cost effective and more
sustainable for a client than the Durabric crew!

The next heavyweights under observation are EcoBrick. They are a large cement block making operation that deal
exclusively with cement blocks. They have a large operation, but are not mobile which brings on the same transportation
issues for clients. Alongside this, they also have a much higher priced product than we do which also has more building
cost than we do which all plays factors in the mind of a client. Pictured below is a quotation from EcoBricks about their
products which should help in your valuation of the market.

The next heavyweight that will be considered is BeeHive. These make the same exact product we will be making which
means that they will be the main competitors. The advantage for us is that due to their heavy building requirements for
their university and social projects, they are making bricks for their own purpose rather than for market. They are
scheduled to finish their building in 2021 which gives Copacetic 2 years to get public perception aligned to our brand when
it comes to ISSBs which is a major opportunity.

With that being said, there are numerous other small players in the building material market but most are into cement
products, and if they are in SSB production, they are not using mechanized ISSBs (which are what we are aiming at) and
they are aligned to SSBs and not ISSBs.

As for 5 years from now, the housing market in Malawi will continue to grow if our annual population growth of 2.8% is
maintained. What this therefore means is that reputable and sustainable contractors will be more in demand, especially
those who would have been ever present from here on out which will mean business.

As it stands, the capacity of one company to satisfy such demands is impossible hence it being an opportune time to
establish ourselves as trusted providers now to accommodate for the growth to com
Barriers to entry
Q: How difficult is it for others to enter this market with a similar idea and buy a large machine of many smaller ones?

A: It really isn't a major hurdle to get ANY machine (let alone an ISSB machine) if ones financial muscle is strong. The main
barrier to entry would be a strategy to enter the market with and be commercial. I say this because looking at the manual
machine that we have, some people when looking to reduce their building costs, purchased a manual machine which did
the job for them. Where they found difficulties was in finding and hustling to get business AFTER they had done their own
project. the beauty for us is that we have already been implementing it commercially at our current small scale and will be
re-initiated if our capacity were to increase as detailed with our flood relief housing plan (amongst other Ideas). Personally,
I'm not bereft of ideas of how to position Copacetic in the market and make it a success, but to do so means we would
need to match ideas and vision with the capacity to execute which is our challenge.

With that being said, Malawi has a huge copy cat issue when it comes to business and there is always someone with
enough financial power to join in. The problem for such businesses is that due to the lack of vision, they tend to lack the
fire to keep the business burning which results to massive losses in the long run. For me, my confidence to expand the
business and be a trusted stakeholder in the building materials industry is not in question and need only to be tested to
prove.

I would even be bullish enough to say give us 2 machines and we’ll be good but I’m not going to push my luck just yet!! LOL
hahaha

Raw materials
Q: Where do you get the soil from? Do you have enough suitable soil around to produce bricks for the next 5 years? And
if you go to another place, how do you know if there is suitable soil there as well? And if not, how do you solve that?

A: To start off, I will say that there is always suitable soil at every landscape but what is needed is the right proportioning of
cement to soil ratio which is done with a soil compression test. Saying this, I will suppose that part of the reason for this
question is due to the fact that in the business plan, It was stated that we would transport soil on site which may sound
puzzling in light of the previous assertion that "there is always suitable soil" but there is an explanation for that and It has
more to do with leveraging time, finances and machine productivity if anything.

In light of our start up goal of wanting to be selling 80,000 bricks a month, and also wanting to be in the market by the end
of the construction period this year (December) we have figured out that to make 80,000 bricks, we need 80 tons of soil to
be dug up which with our guys can be done, but at a sacrifice to time. Due to it being manual, it will eat Into our goals of
selling within 2 months of funding and also missing the construction period, which is why we want to take advantage of the
massive government construction projects around our area that have freed up hundreds of tons of suitable soil for making
bricks with.

With this understanding, our plan is essentially to kill many birds with one stone by having a massive soil collection project
in the first month which will ultimately save us time, give us more opportunity to make more bricks and essentially give us
more opportunity to make more revenue. As we speak, a 30km bypass road is being established that has one of its ends no
more than 3km from our brick making site and there are TONS of soil just waiting to be moved from the site.

Saying all this, we have no worry that we will have a shortage of soil to utilize for our projects in the next 5 years both
around our site and around the country.

Rural areas where we will be working in have suitable soil for the most parts due to there not being a lot of building
projects that require the murram (or sub soil) and In this there Is massive opportunity too when looking at it from a bigger
picture so let me explain with one example.

Currently, when NGOs like BuildOn (who I mentioned briefly in the document) work in their school building projects, they
like to involve the community in one way or another and in most cases, they get the community to provide the bricks and
they (BuildOn) bring everything else. This concept has been going on for a while and as such, It encourages the community
to make bricks but in unsustainable manners.

The community makes bricks using 1) the topsoil of soil which is the agricultural soil and 2) chopped trees which are burnt
for the brick kilns. Using these materials furthers environmental degradation and the NGOs have noticed this and seek
alternatives which will still include the community somehow, which is where we come in!

Based on the experience in making bricks for a school building project In an area called Ntcheu for an Aussie ngo, what we
did was incorporate the community in the project by having them dig soil (for a small price) and be part of the brick curing
process, which involves stacking bricks, watering them and giving them their required daily dosage of sunlight and covering
them with plastic sheeting. This was a win-win for both the community and the ngo which is something that can be
replicated the country over!

Human resources
I can see you have the basis for a team already. Do these people have other jobs at the moment? What is the track
record and experience of your team members? And are they available to work with you when needed? Have you
worked with each other before?

A: I forgot to mention the last time that personally, although I have a background in the culinary arts, in the last 2 years I
have made inroads in soil science and actually have a certificate from the University of Wageninngen MOOC in soil science
which I got last year.

As for my other team members, Christopher is the one I currently work with at the moment on a full time/Part-time basis
(i.e. when there are projects) for the business. While his background is In hospitality, his strength of working with people
means that he has developed into a team leader able to operate and delegate our projects when we are doing one.

The other two gentlemen are more on a consulting basis. We would love to have them on board full time but with the
financial demands that come with full time employees, we have had to result in utilizing their skills on a consultancy basis.
Goldean is a free lance architect and has provided house plans to clients who we had found and sold the house plans to,
but we lost the business brick wise due to lack of capacity to guarantee a fast delivery of brick production. The other
brother has a job already but if a project requiring his skill would be needed, which will be when we get into construction,
he will be there for us as we have built other working relations.

Saying this, my goal is to have a full time team dedicated to Copacetic but that will come with time as we grow the
business. Adding weight to that goal is that I’m a huge supporter of giving hungry youth a chance just as It is in Europe and
other parts of the western world and as such, our recruitment drive will be such that we get top grade fresh graduates into
Copacetic and have them work alongside experienced consulting partners when on projects as they learn the ropes up
until they are comfortable in their craft and can lead for Copacetic.

With that being said, the practice of making bricks is not rocket science although requiring care, but where more skilled
"artisans" will be needed will be when we do delve into construction and building for clients. On the same tangent, we
have an experienced builder who we have worked with on the projects we have done who we will incorporate to be part
of Copacetic full time sooner than later.

Machine
I have lived in Hong Kong, China for 12 years and have experienced many issues with stuff ordered from mainland China.
Do you know your supplier is reliable and is there a guarantee on the machine? And if so, how will you be able to call
under the guarantee when you are in Malawi and the producer in China?

A: Ultimately, without us traveling to the site where the machine is being manufactured, we will only have a glimpse of
what we will be ordering which is why we need to a site visit to the manufacturer to establish physical dialogue. Having
said this, utilizing Ali-babas merit based scoring of suppliers has meant that our contact, David Liu, and the company he
represents have been scored in the top 3 category of supplying the machines In question and delivering. Without wanting
to waste peoples time previously (due to not having the resources to carry forth the transaction), I did not take up the
option of utilizing the Malawian Embassy in China's service of verifying suppliers before transactions are made. This service
allows us to fact find the suppliers by trusted sources which will be what we would do first if selected to partner with
Accesserator.

As for the guarantee/warranty, a 12 month warranty has been put on the quotation but I’ll be honest enough to say that
we haven’t discussed the nuances just yet.

Legal
Do you need to get any additional licenses when you purchase the machine? I assume not, as you are already working with
the smaller press at the moment? Is that correct?

A: We actually would need to register with the National Construction Industry Council (NCIC) as trusted suppliers of
building materials and one who can work in certain ranges (monetary. i.e. from K10 million kwacha, to Billions of kwacha)
of construction projects. We would also need to register with the Office and Department of Public Procurement (OPDD) as
people who can work with the government and supply goods and services and after these, we will be clear to operate. One
thing that would be beneficial but isn't required would be to get certification from Malawi Bureau of Standards, which as I
said is not necessary but would add weight to our image.
Currently as I portrayed in the document, we are small time status and are afforded the chance to fly under the radar in
some regards like building material supplier registration which is why we were yet to get such certification. Having said
this, where we would like to be requires that we are trusted on all fronts and that comes with being part of such bodies
(NCIC) and therefore, it is vitally important that we push to get ourselves in that exclusive club!

To end

You had mentioned that you put sticky notes on the document which I did find but without content…Can you send those
questions over by email if possible?

Thanks

Sincerely
Chiku