JORO - ADVANCED UNDERWRITER REPORT - POST AUDIT & SUPPORT INFO

Project Blu Ltd

Prepared for: Underwriting Team
Date: April 7, 2025

COMPANY OVERVIEW

Project Blu designs and manufactures sustainable pet products, primarily beds, toys, and accessories made from recycled materials. The company was founded by Geryn Evans, who serves as CEO under a formal service agreement. Project Blu has international operations with connections to Italy through manufacturing partner Carbone Pet Products SRL, and distribution in the UK, Europe, and the United States.

The company is backed by several notable investors including:

• Central Garden & Pet Company (a major US pet products company)
• Companion Fund I, LLC
• MFAF Impact Investment Fund, LLC
• R/GA Ventures VII, LLC
• Metamorphosis Partners LLC

RISK ASSESSMENT TABLE

Risk Description	Initial Audit Result (out of 10)	Supporting Info Provided	New Recommended Risk Score	Further Notes
Product Safety Risk - Chemical Components	3	GRS certification for recycled materials RoHS compliance certificate for hardware components EC Declaration of conformity for cat beds	6	Testing documents confirm compliance with EU REACH directive and RoHS standards. Hardware components have been tested for hazardous substances with no detectable levels found. Multiple product lines show proper certification.
Product Safety Risk - Structural Integrity	4	Detailed test reports from TST Testing Technology Service agreement outlining quality control responsibilities Manufacturing partner (Carbone) quality certification	7	Buckle accessories and hardware components show appropriate testing. Carbone Pet Products holds CRIBIS certification for quality manufacturing. Documentation shows clear chain of responsibility for quality control.
Supply Chain Reliability	2	Shareholders agreement detailing manufacturing relationship with Carbone Marine cargo insurance covering Italy to UK/EU/US routes GRS certification confirming supply chain transparency	5	Clear contractual relationship with primary manufacturer. Marine cargo coverage adequate for current shipping routes. GRS certification validates recycled content claims and supply chain management.
Corporate Governance	4	Shareholders agreement with detailed governance structure Service agreement for CEO (Geryn Evans) Company articles Management liability insurance	7	Comprehensive governance documentation shows clear decision-making protocols, director responsibilities, and investor oversight. Management liability coverage appropriately structured with £2M limit. Board composition includes representation from major investors.
Regulatory Compliance	3	EC Declaration of conformity (2011/65/EU RoHS & REACH) Global Recycle Standard certification Multiple product certifications	6	Documentation demonstrates compliance with EU product regulations. Recycled content claims verified by third-party certification (GRS). Regular testing regime apparent from documentation dating patterns.
Intellectual Property Risk	5	Shareholders agreement containing IP provisions Service agreement with CEO covering IP creation	7	Clear contractual assignment of IP rights to company. Service agreement includes comprehensive IP clauses for new developments. Shareholders agreement protects company IP from founder departure.
Financial Stability	3	Cap table showing major industry investors Shareholders agreement detailing financing arrangements Insurance coverage for business interruption	6	Significant backing from industry leaders (Mars Pets Care, Pets at Home, Central Garden & Pet). Detailed cap table shows diverse investor base. Framework for additional financing outlined in shareholders agreement.
Product Liability Exposure	2	Multiple product compliance certificates EC Declaration of conformity RoHS test results Current products liability insurance	5	Documentation demonstrates systematic approach to product safety. Products liability coverage currently set at £5M which appears adequate for product type and distribution footprint.
Environmental/Sustainability Claims	4	Global Recycle Standard certification Material testing documentation EC Declaration of conformity	7	GRS certification specifically verifies recycled content claims (key to brand proposition). Documentation confirms pre/post-consumer recycled materials with specified percentages. Third-party verification mitigates greenwashing risk.
Cyber Security	4	Current cyber insurance policy with comprehensive coverage E-commerce operations detailed in documentation	5	Current cyber coverage appears appropriate with £1M limit, though limited documentation on internal security measures. US operations increase exposure.

DETAILED RISK ANALYSIS

PRODUCT SAFETY & QUALITY CONTROL

The additional documentation demonstrates a more robust product safety framework than initially assessed. Key points:

1. RoHS and REACH Compliance: The hardware components (buckles and accessories) have been tested for restricted substances with documentation showing no detectable levels of restricted chemicals. This significantly reduces toxic exposure risk.
2. Quality Certifications: Carbone Pet Products (manufacturing partner) holds a CRIBIS "Sales Leader" certification, indicating reliable manufacturing standards. This strengthens quality control assumptions.
3. Testing Regime: Documentation shows a pattern of regular testing, particularly for hardware components and recycled fabric materials. Test reports indicate compliance with multiple safety standards.
4. Material Source Verification: The Global Recycle Standard (GRS) certification specifically verifies recycled content claims, which is critical for Project Blu's brand proposition. The certification details exact percentages of pre-consumer and post-consumer recycled materials.

CORPORATE STRUCTURE & GOVERNANCE

The shareholders agreement and service contracts reveal a more sophisticated governance structure than initially apparent:

1. Board Composition: The shareholders agreement establishes board representation rights for major investors, ensuring professional oversight.
2. Decision Protocols: Schedule 4 of the shareholders agreement contains a comprehensive list of "Reserved Matters" requiring investor majority consent, creating checks and balances on major decisions.
3. Executive Accountability: The CEO service agreement contains detailed performance obligations, intellectual property provisions, and restrictive covenants.
4. Dispute Resolution: The shareholders agreement includes structured deadlock resolution mechanisms to prevent operational paralysis.

FINANCIAL STABILITY

The cap table and investor information indicate stronger financial backing than initially evaluated:

1. Industry Investors: Major pet industry players (Mars Pets Care, Pets at Home, Central Garden & Pet) are shareholders, providing both capital and strategic industry expertise.
2. Diverse Investor Base: The cap table shows a mix of venture capital, impact investors, and strategic industry partners, creating financial resilience.
3. Future Financing: The shareholders agreement includes provisions for additional fundraising, demonstrating foresight regarding growth capital needs.

CONTRACTUAL RISK MANAGEMENT

The legal documentation shows thoughtful allocation of key risks:

1. Supply Chain Responsibilities: The shareholders agreement clearly outlines the relationship with manufacturing partner Carbone Pet Products, including quality control obligations.
2. Intellectual Property: Both the service agreement and shareholders agreement contain robust IP provisions, ensuring company ownership of designs and innovations.
3. Non-Compete Provisions: Restrictive covenants in both the shareholders agreement and CEO service contract protect the company from founder departure risks.
4. Exit Mechanisms: The shareholders agreement contains structured processes for share transfers, reducing conflict risk during ownership changes.

INSURANCE IMPLICATIONS

Based on the additional documentation, I recommend the following insurance considerations:

1. Products Liability: The current £5M limit appears adequate given the product type (non-ingestible pet products) and documentation showing compliance with safety standards. The detailed testing regime and quality certifications strengthen the defensibility of potential claims.
2. Directors & Officers Coverage: The £2M limit appears appropriate given the governance structure and investor involvement. The shareholders agreement creates clear director responsibilities, reducing ambiguity in claim scenarios.
3. Business Interruption: Given the clear manufacturing relationship with Carbone in Italy, the primary supply chain dependency is well-identified. The business interruption coverage should specifically address this relationship.
4. Marine Cargo: Current coverage appears aligned with documented shipping routes (Italy to UK/EU/US). The policy limit of £60,000 per shipment should be verified against typical shipment values.
5. Cyber Coverage: The e-commerce operations mentioned in documentation suggest potential customer data exposure. The current £1M limit appears adequate, but additional information on security measures would be beneficial.

NOTABLE RISK IMPROVEMENTS

1. Product Certification: The EC Declaration of Conformity and RoHS compliance testing significantly strengthen product safety assumptions and reduce liability exposure.
2. Manufacturing Partner Quality: The CRIBIS certification for Carbone Pet Products provides third-party validation of manufacturing standards, reducing product defect risk.
3. Recycled Content Verification: The Global Recycle Standard certification provides third-party verification of sustainability claims, reducing the risk of allegations of greenwashing or false advertising.
4. Governance Structure: The comprehensive shareholders agreement establishes clear decision-making protocols and investor oversight, reducing management risk.
5. Intellectual Property Protection: The service agreement and shareholders agreement contain robust IP provisions, protecting the company's designs and innovations.

AREAS FOR FURTHER INVESTIGATION

1. US Regulatory Compliance: While EU compliance is well-documented, additional information on US-specific regulatory compliance would be beneficial given the documented US distribution.
2. Cyber Security Measures: Limited information on internal security protocols for e-commerce operations. Given the international nature of the business, additional detail would strengthen risk assessment.
3. Business Continuity Planning: While supply chain is documented, additional information on business continuity planning would help assess resilience to disruption.
4. Employee Safety Practices: Limited information on warehouse and operational safety practices for UK operations.

CONCLUSION

Project Blu presents a significantly stronger risk profile than initially assessed in the audit. The supporting documentation demonstrates a well-structured governance framework, validated product safety testing, and third-party verification of key sustainability claims. The company benefits from investment by established industry players and has structured legal agreements that appropriately allocate key risks.

I recommend viewing this risk favorably for underwriting purposes. The company has demonstrated a sophisticated approach to risk management through its legal documentation, testing regime, and certifications. While some information gaps remain, the overall impression is of a professionally managed operation with appropriate controls and safeguards.