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In our view, California-based Trimax Corporation, Inc. (OTC – TMXN – Speculative Buy) is on the cusp of significant penetration of the natural personal care market. Through its primary operating subsidiary, Saavy Naturals Inc., the Company offers a complete line of high quality, Natural Skin Care products. Saavy Natural products can be found in some of the largest natural retail stores and exclusive boutiques and spas across the nation, including Whole Foods in the Northeast and Southern California regions, Gelson's Market, Vitamin Cottage, Bristol Farms, Erewhon, Earth Fare, and Lazy Acres. Saavy Natural products can also be purchased online at the Company’s website, the Saavy Naturals Neptune Beach Florida retail store, as well as on Amazon.com (NASDAQ – AMZN – NR). With a unique, widely appealing offering, and future big box retail penetration on the horizon, we anticipate significant top-line growth in 2018 and beyond.
An Enviable Positioning
Saavy Naturals offers dozens of products in body care, hair care, candles, and natural hemp offerings. Saavy Naturals products are 100% natural, vegan, gluten-free, soy free, cruelty-free, non-GMO, and food-grade. Designed by the Company’s founders who have a storied history as chefs in some of the most famous restaurants on the West Coast, the Saavy Naturals line is noteworthy for its food base and fragrant aromas. In fact, all of the offerings are even edible!
Serving as the second iteration of a line of personal/body care products, the married founders and Saavy Naturals line gained broad popularity after being spotlighted and appearing on ABC's hit show Shark Tank and the Home Shopping Network. The Sharks and the audience around the country took an instant liking to Hugo and Debra, their love story, their previous success in the body care industry, and the superior quality of their all natural product. Hugo and Debra have successfully leveraged this rare opportunity to increase the company's product line exposure and availability in retail chains across the country.
In addition, the founders followed up the appearance with several highlighted television features on The Home Shopping Network and are currently working on additional television marketing opportunities, given their widespread appeal.
Clearly, Saavy Naturals is hitting the market with the right product at the right time. According to a recent industry report issued by Inkwood Research, the Global Beauty and Personal Care Products Market (in which the Company participates) is projected to grow from $432.7 billion in 2016 to $750 billion in 2024. It should be noted that the report cites several factors which affirm and underscore our thesis that the Company is primed to reach a major sales growth inflection point. It is as if the authors had Saavy Naturals in mind when publishing the report. The noteworthy comments/trends driving growth include:
“Recent trends comprise amplified use of natural products…”
The Beauty & Personal Care Products market is primarily driven by following factors:
The largest segment of the Company’s product offerings are in the Body Care arena. These include more than 60 separate products such as soaps, body wash, creams, bombs, and others. The Hemp Care line was just introduced in 3Q17 and is already the fastest growing product line in terms of online sales.
Figures 1 & 2: Body Care and Hair Care Samples
Figure 5: Bath Bomb Gift Set
In the past 90 days, a great deal has occurred which bode well for the Company, its investors, and customers. It is no secret that the key to success in this space is broad brand awareness and availability. To that end, Trimax’s Saavy Naturals, Inc. subsidiary is well on its way.
In order to more accurately reflect the Company’s primary operating business, management plans to change the Company’s name from Trimax Corporation to Saavy Naturals, Inc. Not only will this aid in the overall branding efforts, but with a new symbol that matches the business, investors will benefit as well as the current name may be confusing to some. The Company has also applied for trademarks in some of the world’s largest markets, including China, France, Germany, and Japan.
The Company has also secured new key hires, including a director of international sales and marketing, and a chief marketing officer.
In October, management announced that it has created a new line of quality cost effective body care products geared towards big-box retailers and their consumers. Saavy Naturals Everyday is the company's answer to repeated demands for a quality, all-natural body care line, that will set the bar for luxurious body care products that can be purchased at a cost conscience price. Saavy Naturals expects Saavy Naturals Everyday and its new soaps, lotions and bath bombs to be easily accessible to consumers under its own brand and marketing label at various big-box retailers in the near future. Moreover, it is likely that this offering is serves as the door opener and catalyst to drive awareness and sales for the Company.
Although the current retail relationships are impressive, we believe that additional, major relationships are in the offing, which could dramatically enhance the awareness and drive sales. The Company recently appointed US Merchants as their exclusive representative for the branding, marketing, packaging and distribution to Walmart® (NYSE – WMT – NR). US Merchants has extensive knowledge and contacts with buyers at Costco, Sam's Clubs, Target (NYSE – TGT – NR) and Walmart®. This recent meeting which included representatives from US Merchants, was for the purpose of introducing Saavy's new body care product line "Saavy Naturals Everyday" aimed specifically for big-box retail consumers and to negotiate stand-alone palletized displays for the marketing and sales of the product line in Walmart® stores nationwide. The Company is happy to report that the product line was well received, the Company is currently in the process of receiving final vendor approval and expects to receive multiple purchase orders over the next several weeks.
Separately, management began implementing on-site roadshows at Costco warehouses. During 3Q17, the Company received approval from Costco to begin a series of on-site roadshows in order to establish brand awareness of Saavy Natural products in their warehouses. Costco is a multi-billion dollar global retailer with retail warehouse club operations in 8 countries. With hundreds of locations worldwide, Costco provides a wide selection of merchandise. Costco road shows are designed to allow a company and its products to interact with Costco members, answer questions, establish brand awareness and allow for Costco to survey what products are most popular within that company's product lines.
Importantly, until most recently, COSTCO has not entered into the consumer brand All Natural Body Care market and Saavy Naturals looks to be the first vendor to target their consumer base.
The company has recently secured distribution for Central & South America and the Caribbean. The company also reported significant interest from international online consumers and a successful response to ongoing sales specials and online marketing campaigns. SaavyNaturals.com now ships internationally to Canada, France, and the United Kingdom.
Separately, the Company has achieved deeper penetration in some of its existing channel partners such as Gelson’s, and executed new deals with key chains in the organic and natural products space in the U.S.
EXECUTIVE LEADERSHIP TEAM
Hugo Saavedra, Founder, CEO
Originally from Argentina, Hugo came to the states 40 years ago. He worked in Louisiana for many years as a chef, eventually opening two of his own restaurants. In the early ‘80s, he moved to Los Angeles, where he operated a 20-acre herb farm that supplied ingredients to up-and-coming chefs like Wolfgang Puck and Joachim Splichal, the chef behind the gourmet French restaurant Patina in downtown Los Angeles. Hugo is a pioneer in the space, as he began selling his soaps at the Hollywood Farmer’s Market in the early ‘90s. The response was so enormous that Hugo quickly sold the herb farm so that he and Debra could concentrate on producing their rapidly expanding line of natural products full time. Thus, the genesis of Saavy Naturals was born.
Debra Q. Saavedra, President
Debra has spent the last 11 years as an entrepreneur and creator of two national top-selling personal care (HBA) brands and companies in the All-Natural Product Industry. Mrs. Saavedra brings strong leadership in all areas of operation including business strategies, sales, marketing, manufacturing, and accounting. Mrs. Saavedra holds a BA from the University of North Florida and an MA from the University of Santa Monica.
Justin Miloro, Chief Operating OfficerJustin brings over 25 years of sales and executive level management skills holding key executive positions with Whole Foods Markets, Mineral Fusion Natural Brands and Hugo Naturals. During his 9 year tenure with Whole Foods Market, Mr. Miloro was the Global Associate Whole Body Coordinator and was instrumental in launching their industry changing Premium Body Care Standards with their Quality Standards team while also creating over 250 exclusive products with national partners. Other responsibilities included leading a team of 50 regional buyers and coordinators, overseeing monthly national category reviews and resets, national new item processes, and work with their internal data team while providing direction on all store planograms. Prior to Whole Foods, Mr. Miloro was also the National Director of Sales for Mineral Fusion Natural Brands. As Vice President of Sales for Hugo Naturals, Mr. Miloro was in charge of growing sales of new and existing products through the building of account relationships and the strategic penetration into domestic retailers and international distributors.
In our view, the Company’s biggest risks are related to the timing and magnitude of sales expansion, growth and profitability with current and future retail relationships in the U.S. and abroad. A related risk is the sustainable popularity of its unique offerings---is it a fad or does it have legs? A secondary risk could be the access to and the availability of capital to fund consistent marketing campaigns and product development advances.Volatility and liquidity are typical concerns for microcap stocks that trade on the over the counter market and especially those that are not generating meaningful revenue. Finally, the shares outstanding of this stock could increase due to potential capital needs or to execute future acquisitions. However, since the proceeds of any future funding would likely be used in large part to fund its marketing or product development activities, we believe that any dilutive effect from such a funding would be nullified by a related increase in overall market value. In our view, all of these risks are consistent with firms of similar standing and status to Trimax.
Trimax’s Saavy Naturals subsidiary is on the cusp of significant sales growth and expansion in 2018 and beyond. Leveraging its popular appearance on Shark Tank, the Company has made significant strides to increase its reach through some of the biggest big box retailers in the country. In recent months, management has embarked on roadshows at Costco warehouses and have had positive meetings with WalMart executives.
The Company’s broad personal care/skin care product line is notable for being 100% natural, food-grade, and for having a pleasant fragrant aroma. In fact, they are even edible.
Awareness and availability for these relatively new products are impressive. Saavy Natural products can be found in some of the largest natural retail stores and exclusive boutiques and spas across the nation, including Whole Foods in the Northeast and Southern California regions, Gelson's Market, Vitamin Cottage, and others.
With a unique offering, enviable visibility and big box sales potential, we believe sales could grow from an estimated $600,000 in 2017 to $6 million in 2018. Once critical mass is achieved TMXN could even emerge as a potential takeover target. Using a 3x sales multiple, we derive a near term price target of $0.05. We rate TMXN Speculative Buy.
RECENT TRADING HISTORY FOR TMXN
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Senior Analyst: Robert Goldman
Rob Goldman founded Goldman Small Cap Research in 2009 and has over 25 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
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