Ogden's Own Distillery makes award-winning quality craft spirits.
Current Fundraise Summary
Investors of $500,000 or more will receive Platinum perks plus our staff will develop four specialty cocktails and serve at a one-day event of your choosing for up to 100 people anywhere in the continental US.
Investors of $200,000 or more will receive Gold perks, plus a catered cocktail party for up to 50 guests at a location of their choosing, and a named cocktail at the distillery bar.
Investors of $100,000 or more will receive the 1st Wife perks, plus a private cocktail party for up to 30 guests at a private location of their choosing. Name registered for a drawing to name a cocktail at the distillery bar opening in 2020.
Investors of $75,000 or more will receive the 2nd Wife perks, plus invite to participate in a regularly scheduled quarterly call with Ogden’s Own Distillery, Inc. senior management.
Investors of $50,000 or more will receive the 3rd Wife perks, plus “creating unique cocktails” class at the new distillery location in 2020. Then participate in a private R & D session creating the custom cocktail menu for the new bar in the distillery slated to open 1st Quarter of 2020.
Investors of $20,000 or more will receive the 4th Wife perks, plus invite to an exclusive private pre-launch event for new distillery location. A choice of bar sign from our brands for the “man cave.”
Investors of $7,500 or more will receive the 5th Wife perks, plus 15% off at our retail location on all items excluding spirits. First-hand bottling line experience for a day.
Investors of $2,500 or more will receive limited edition Ogden’s Own Distillery t-shirt, two shareholder Moscow mule mugs.
All investors will receive two tickets to the Annual Therapy Session (and presentation of the annual report.) They will also receive the Annual Owners Anniversary gift. All investors will receive invites to products launches, the new distillery location opening party, and many other events we are active participants in.
All investors who invest $7,500+ by 11:59pm on April 24th will receive the next level of perks! (one wife up from your investment amount. I.e., invest $20,000, and you get 2nd Wife status.)
This is an overview of the previous and planned financings of the business, including the capital needs the business is looking to cover in the current financing.
Do you have current customers?
Presently a majority of our business is in the State of Utah. Being a control state, Utah is a dependable customer from distribution through billing. We typically receive a monthly order which is paid within 2-3 weeks of delivery providing a consistent and dependable cash flow.
We also sell in Idaho, Michigan, Nevada, Oregon, Wyoming, Montana and California.
We've just recently launched in 38 Smith's grocery stores in Las Vegas. Smith's is a part of the nationwide Kroger system of grocery stores which include Ralphs, Kroger, Smiths and other retail outlets totaling about 1,680 stores nationwide.
Who are your target customers?
Target consumers are people in our target geographic markets who are of legal drinking age. We presently have several brands that hit different age and gender demographics.
What is your current customer pipeline?
All states in the US operate under the three-tier system where the manufacturer never sells directly to the consumer, but instead to a third party through a broker/agent relationship. We are currenly expanding our broker relationships on a state-by-state basis.
What market(s) are you in?
Utah, Idaho, Michigan, Nevada, Oklahoma, Oregon, Wyoming, Montana and California. We also have an online retailer in CA who can ship to approximately 25 states directly to the consumer.
Who are your competitors?
Competitors are wide-ranging in scope as well as the ability to execute. In Utah, like all states, the interest in craft spirits market has grown tremendously in the past few years. There are now about 13 distilleries in the local area. This is common in all states. In the US there are now over 1,600 small distilleries.
From American Craft Distillers Association -as of Oct. 2017 -There are 1,589 craft distilleries now in the US as of fall of 2017 - defined as doing less than 394,000 9L cases. The number of distilleries expanded by 20.8% August 2016 to 2017. Average # of cases by distillery 4,060. (Ogden’s Own 15,624)
Less than 2% (24 total or 1.7%) of craft distilleries are responsible for 57% of the craft cases sold. Leaves 43% for the other 98% That’s out of 5.8 million cases sold. It means the top 24 are averaging 139,000 cases per year. Or expressed another way: 43% equals 2.494 million cases split by 1,557 distillers = 1,601 cases as an average for the “ the 98%.”
92% are classified as 0-10,000 proof gallons (5,258 cases). They sell 566 cases per year as an average. We are in the 94–95th percentile as far as sales go.
6.3% of craft distillers sell between 5,258 and 52,576 cases. That’s us along with 90 other distilleries in the US. The average in this 6.3% group is 19,000 cases per year.
CA, NY, WA, TX, CO make up 34.2% of the locations of distilleries, five more states make up 17.8% making 20% of the states representing 50% of the sales. According to Google, 9 states make up 50% of the population.
Small distillers sell 92% of sprits in their home state.
Large craft sell about 50% in home state, (The 119,000 cases folk)
Average distillery is projecting 10% growth.
What is your competitive advantage?
We make quality, unique spirits at a reasonable price. The brands have an interesting history and story that piques the consumer's interest and they keep coming back for the quality.
How do you sell your product or service?
The approach to spirits sales is driven a lot by the state in which you are operating in given the varying laws. Our strategy is to maximize sampling opportunities as well as building strong interpersonal relationships with our partners in each state.
In Utah, we engage a small broker who supplements our in-house team. Most states require that we have a broker-relationship in the state. In Michigan, we supplement our broker arrangement with a contract employee who specifically represents our brands. In markets it is allowed, we strive to have direct to the consumer experience with our product through event sponsorship and in-store samplings.
How do you market your product or service?
Our main focus is by giving the consumer a direct experience with the product through tasting or sponsorship events.
Provide us with some background on your products and services.
Ogden’s Own was a concept for Timothy Smith for many years before it came to fruition. Toying with the idea of starting a distillery as early as 2004, Tim began learning about the legalities and through the year filed all the paperwork necessary to make it happen. In 2008 he began exploring the idea of bringing in partners to make the dream a reality, In July of 2008 Steve Conlin and Tim Smith met and developed a business plan that would allow for partners to come in and fund the launch.
Through already established relationships Conlin raised funds, and Ogden’s Own Distillery launched in 2009.
From a small 1,000 sq. ft. facility in 2009 the company introduced Underground Herbal Spirit to the Utah market. The quality of the product earned a Double-Gold medal at the prestigious 2010 San Francisco World Spirits Competition (Double-Gold indicates that all 20 judges rated it a gold-medal level winning product.)
In Dec. of 2012, the company introduced Five Wives Vodka which garnered international acclaim when Idaho banned it due to its name and the subsequent First Amendment battle over commercial free spirit.
The growth from the success of these two products resulted in the company having store raw goods in offsite locations and the search for a new place to make the notorious spirits.
2013 brought about the transition to a new 6,400 sq. ft. building where it currently operates at 3075 Grant Ave.
The room created the ability to introduce Porter’s flavored whiskeys, Madam Pattirini Gin, Five Wives Premium Potato Vodka as well as size extensions in all products.
As of present time products made by Ogden’s Own Distillery represent six of the top 10 spirits made and sold in Utah (There are currently 70 products made by 12 distilleries.) Five Wives Vodka has higher sales number than the bottom eight combined. All eight of our products are in the top 20 products by sales.
What is your product development timeline?
Product development times vary. Some products can be in development for years or can be turned in times as short as a few months. Typically we spend 6-9 months creating, testing and then releasing a new product.
What is your production process?
Our production process varies by product. In a nutshell, we are presently a rectifying/blending company who takes high alcohol percentage spirits produced at another location and take them further through our own processes including filtration, flavoring, bending with treated water, etc. to create unique products. Our partners include flavor houses like Kerry Foods, producers like Pharco-Aeper, MGP and others. Our bottles are produced by Berlin Packaging. Label by Litho-flexo.
What is the composition of your current team?
Our current team is lean and efficient.
Steve Conlin is the CEO/President who oversees daily operations, marketing, HR, etc.
Partner Timothy Smith is the production manager who manages production, inventory, shipping etc. he has two employees who assist in this area.
Partner Dean Dandenau is responsible for growing sales outside of Utah. He's just recently joined the daily operations.
We have a Utah sales rep., an administrative assistant who also coordinates special events and a part-time employee who operated our small retail outlet.
Management also reports to a three-partner executive team on a semi-monthly basis consisting of Andy Jorgensen, Michael Glasmann and Stu Smith.
Provide detail on your hiring plans
In 2019 we are aiming to increase specific market representation in regional markets such as we currently have in Michigan. We also plan to hire additional production staff to increase the efficiencies of developing additional products and brands.
Where is the property located?
Design and construction plans have been completed on a new 30,000 sq. ft. facility. Financing has been secured for the project through Zions Bank, Utah CDC, and Ogden City. Completely separate from this raise.
The existing building is part of Ogden's Own Distillery Inc. and will be sold upon completion of the new project.
CEO/President - Manages daily operations from payroll to marketing.
Production Manager, founding member, creates and bring our tasty spirits to market.
National Sales Development - charged with opening new markets as we continue to expand our reach in the West and Midwest.
Mitchell Moncur, CPA
Jones Simkins Certified Accountants
We have a new distribution agreement with Kroger for Smith's Supermarkets across the Southwest. A pilot has started with 35 stores around Las Vegas.
Vine Lore is a locally owned alcoholic beverage brokerage, made up of knowledgeable educators and passionate advocates for food and wine culture in the Mountain West.
Johnson Brothers is a family-owned wine, spirits, and beer distributor with headquarters in St. Paul, Minnesota.
Benchmark Beverage Company
Benchmark Beverage Company is an AFPD Company that was created on the idea that every brand matters and needs representation. We specialize in Michigan made, craft, hand crafted and boutique spirits which have the capability to grow and prosper within their categories.
Drink Think is a concierge brokerage firm and premier sales force representing local, national, and international distilleries.
As the newest broker of spirits in Idaho and Montana, we've partnered with select brands to bring the full spirits experience to our customers so they can bring your brands to life with their consumers.
About Ogden's Own
|Entity||Ogden's Own Distillery, Inc.|
|Location Type||Manufacturing Facility|
|Comments||6,400 sq. foot bottling and officing facility. Small retail space with Utah package agency for selling product on-site.|
Risks & Disclosures
Unpredictability of future revenues; Potential fluctuation in operating results
The Company's future financial performance and operating results may vary significantly from projected amounts and fluctuate substantially from period to period due to a number of factors, many of which are outside of the Company's control. These factors, each of which could adversely affect results of operations, financial condition and future valuation, include:
- demand for the Company's products;
- reliance on regulatory licenses and permits;
- dependence on the Company’s primary customer;
- introduction or enhancement of products by the Company and its competitors;
- actual capital expenditures required to bring the Company's products to market;
- market acceptance of new products of the Company and its competitors;
- price reductions by the Company or its competitors or changes in how products are priced;
- the Company's ability to attract, train and retain qualified personnel;
- the amount and timing of operating costs and capital expenditures, and the availability of capital resources, related to the development, expansion and funding of the Company's business, operations and infrastructure;
- unexpected costs and delays relating to the expansion of operations; compliance with federal and state laws and regulations affecting the Company’s business, and changes with respect to such laws and regulations;
- timing and number of strategic relationships that are established;
- loss of key business partners;
- changes in customer requirements and consumer preferences; and
- fluctuations in general economic conditions and consumer spending patterns.
The projections of the Company's future operating costs are based upon assumptions as to future events and conditions, which the Company believes to be reasonable, but which are inherently uncertain and unpredictable. The Company's assumptions may prove to be incomplete or incorrect, and unanticipated events and circumstances may occur. Due to these uncertainties and the other risks outlined herein, the actual results of the Company's future operations can be expected to be different from those projected, and such differences may have a material adverse effect on the Company's prospects, business or financial condition. Any projections that were prepared or provided by the Company were not prepared with a view toward public disclosure or complying with the published guidelines of the American Institute of Certified Public Accountants or the Securities and Exchange Commission regarding projected financial information. Under no circumstances should such information be construed to represent or predict that the Company is likely to achieve any particular results.
Reliance on key management employees and future personnel
The success of the Company is dependent on the efforts of a limited number of key people, including Steve Conlin, President and CEO, Andy Jorgensen, CFO, Secretary and Treasurer, Timothy Smith, Founder and Production Manager, and Dean Dandaneau, National Sales Manager. The Company has not made plans to purchase key person life insurance. The loss of key personnel could have a serious adverse effect on the Company's prospects, business, operating results, and financial condition. To fulfill its operating plans, the Company's future success also depends on its ability to identify, attract, hire, train, retain and motivate additional personnel to fulfill various roles within the Company. The failure to attract and retain the necessary personnel could materially and adversely affect the Company's business, prospects, financial condition and results of operations.
No assurances of sufficient financing; Additional capital may be required
Although the Company believes the proceeds of the Offerings, along with other planned financings, will provide adequate funding to develop and successfully support its business plans, there can be no assurances that such funds will be adequate. If the Company's cash requirements exceed current expectations, the Company may need to raise additional equity or debt capital, beyond what is being sought with current efforts. There can be no assurance that adequate additional financing on acceptable terms will be available when needed. The unavailability of sufficient financing when needed would have a material adverse effect on the Company and could require the Company to terminate its operations. The Company expects to raise up to $5 million in additional equity capital in the future to further finance expansion efforts. If the Company is unable to close the additional financing on the terms and the timeline that is currently anticipated, the Company's financial and operational results may be adversely affected, and if the Company is left without sufficient capital, Investors could lose all, or a significant portion of, their investment.
Competition from other businesses
The Company will compete in a highly competitive market with many competitors, including various established and early-stage distilleries. Moreover, the Company expects competition to increase in the future as competitors seek to expand their market presence and as new competitors enter the Company’s markets. As the Company expands the scope of its product offerings, it will compete with a greater number of companies across a wider range of products. Many of the Company's current competitors and potential new competitors may have longer operating histories, greater name recognition, larger customer and consumer bases and significantly greater financial, technical and marketing resources than the Company. These advantages may allow them to respond more quickly to new or emerging market dynamics, customer requirements, operating technologies, changes in laws or regulations, and changes in consumer preferences and spending patterns. There can be no assurance that the Company will be able to compete successfully in its chosen markets and competitive pressures may materially and adversely affect the Company's business, prospects, financial condition and results of operations. Any significant success of the Company's competitors can damage relationships with its customers and business partners, diminish the Company's market share, and present significant obstacles to the further development of the Company.
Existing and potential litigation
Management is unaware of any threatened or pending litigation against the Company or management. However, there can be no assurance that future claims will not be asserted and that, even if without merit, the cost to defend against such claims would not be significant, thus having a material adverse effect on the Company's business, financial condition and results of operations.
Need to maintain existing, and develop new products and services
The success of the Company is dependent upon the Company's ability to maintain a certain level of quality in, and enhance existing products as well as to develop and introduce in a timely manner new products that incorporate market and product developments, technological and operational advances, industry standards, changes in customer requirements, and fluctuating consumer preferences and demands. If the Company is unable to develop and introduce new products or enhancements in a timely manner in response to changing market conditions or customer requirements, while maintaining a certain level of quality in its existing products, the Company's business, financial condition and results of operations would be materially adversely affected.
Control of the Company
The officers and/or directors comprising the Company's management team will have sole management authority over the business and affairs of the Company, regardless of the opposition of Investors to pursue an alternate course of action. Investors will have no right to vote with respect to the management or to participate in any decision regarding management of the Company's business, other than the election of directors. On matters subject to a shareholder vote, including the election of directors, the Investors will represent a minority interest in the Company and may be overruled by the majority shareholders.
The Company is obligated to indemnify its management
Executive officers and directors of the Company owe certain duties to the Company they serve in connection with the use of its assets. Executive officers and directors are fiduciaries, and as such are under obligations of trust and confidence to the Company and shareholders to act in good faith and for the interest of the Company and its shareholders, with due care and diligence. Notwithstanding the foregoing, the Company is obligated to indemnify officers and directors of the Company for actions or omissions to act by such officers and directors of the Company on behalf of the Company that are authorized under the organizational documents of the Company. In addition, officers and directors may be entitled to advancement of expenses they may incur associated with or in defense of charges, claims or legal action arising from such person's position as an officer or director of the Company, which could result in a decrease in the assets available for Investors in certain circumstances. The assets of the Company will be available to satisfy these indemnification obligations. Such obligations will survive dissolution of the Company. There are very limited circumstances under which the management of the Company can be held liable to the Company. Accordingly, it may be very difficult for the Company or any Investor to pursue any form of action against the management of the Company.
Limited ability to protect intellectual property rights
The Company's business model is dependent on certain proprietary recipes, trade secrets, operating strategies and branding. As such, licensing, developing and protecting the proprietary nature of these assets is crucial to the success of the Company. The Company will rely on intellectual property laws and confidentiality agreements, all of which offer only limited protection. Competitors may infringe upon any trademarks and other intellectual property of the Company. If the Company resorts to legal proceedings to enforce the Company's intellectual property rights, the proceedings could be burdensome and expensive and could involve a high degree of risk. Failure to adequately protect its intellectual property from current competitors or new entrants to the market could have a material adverse effect on the Company's business, operating results, and financial condition. Additionally, the Company may become subject to third-party claims that it infringed upon their proprietary rights or trademarks. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against the Company or the payment of damages by the Company.
New geographical market
The Company is planning to expand its distribution into new geographical markets on a state-by-state basis. Although, the Company's management team has distributed into a number of states already, many of which have similar characteristics and regulations to the new states, each state is different. There can be no assurances that these new markets will respond to the product offering provided by the Company in the way that the Company has experienced in its other markets, or that state-level regulations will not limit the Company's operations and distribution abilities. There can be no assurance that actual results in the new markets will reflect past experience in other markets.
Regulatory environment and changes may adversely affect the Company; Principal Regulator
The Company operates as a craft distillery in a highly regulated environment and is subject to a comprehensive statutory and regulatory regime as well as oversight by governmental agencies and self-regulatory organizations. Federal and state laws, regulations and policies concerning the Company's industry heavily influence the Company’s operations and affect the market for the Company's products. Failure to comply with laws, regulations or policies could result in sanctions by regulatory agencies, civil money penalties and reputational damage, which could have a material adverse effect on the Company's business, financial condition and results of operations. This is particularly true since the Utah Department of Alcoholic Beverage Control, the Company’s principal regulator, is also the Company’s primary customer as discussed above. Although the Company takes specific actions to prevent any such violations, there can be no assurance that such violations will not occur. If violations do occur, they could damage the Company's sales and reputation and increase its legal and compliance costs, and adversely impact the Company's results of operations. Laws, regulations or policies currently affecting the Company may change at any time.
Regulatory authorities may also change their interpretation of these statutes and regulations. Therefore, the Company's business may also be adversely affected by future changes in laws, regulations, policies or interpretations or regulatory approaches to compliance and enforcement. A change in the current regulatory environment could make it more difficult or costly for the Company to operate as currently anticipated. The Company cannot predict how changes in regulation or other industry changes will affect the Company’s operations or the market for the Company's product offerings.
The Company is required to hold certain licenses and permits
As a craft distillery, the Company operates in a highly regulated industry. In order to operate, the Company must maintain various state and federal licenses to permit the activities contemplated by the business model, including a license to manufacture products issued by the State of Utah Department of Alcoholic Beverage Control. The Company has secured the regulatory permits and licenses necessary; however, the violation of the requirements associated with the provision of these permits and licenses could result in fines, a cease and desist order against the subject operations or even revocation or suspension of the Company's license to operate the subject business. In addition, as of the end of 2017, 88% of Company revenues were concentrated with one customer, the State of Utah Department of Alcoholic Beverage Control, because the State controls all retail sales, and such heavy dependence has continued since such time in the Company’s operations. Failure to maintain proper licensing with the State of Utah and other federal and state regulatory agencies would have a material adverse effect on the Company's business, financial condition and results of operations.
Need to establish new and maintain existing customer relationships
The market for the Company's products is rapidly evolving. The Company is unable to predict whether its products will continue to satisfy new and existing customer demands or if they will be supplanted by new products. The Company's efforts to market and sell its products could be significantly affected by competitive and other market developments. If this occurs and if the Company is unable to adapt quickly enough to the change, it may fail to develop additional customer relationships, and maintain those relationships, and its business, financial condition and results of operations could be materially adversely affected.
Employees or related third parties may engage in misconduct or other improper activities
The Company is exposed to the risk that employee fraud or other misconduct could occur. Misconduct by employees could include misappropriation of trade secrets or other intellectual property or proprietary information of the Company or other persons or entities and failing to disclose unauthorized activities. Employee misconduct could also cause the Company to lose the regulatory licenses and permits on which it relies. It is not always possible to deter or detect employee misconduct, and the precautions taken to prevent and detect this activity may not be effective in controlling unknown or unmanaged risks or losses. The misconduct of one or more of the Company's employees or key third party partners may have a material adverse effect on the Company's business, results of operations, prospects, and financial condition.
Reliance on third parties for product inputs
The Company will rely on various third parties to provide its product inputs and other goods and services. These third parties may become unable to or refuse to continue to provide these goods and services on commercially reasonable terms consistent with the Company's business practices, or otherwise discontinue a service important for the Company to continue to operate under normal conditions. If the Company fails to replace these goods and services in a timely manner or on commercially reasonable terms, the operating results and financial condition of the Company could be harmed. In addition, the Company exercises limited control over third-party vendors, which increases vulnerability to problems with goods and services those vendors provide. If the goods and services of the third parties were to fail to perform as expected, it could subject the Company to potential liability, adversely affect renewal rates, and have an adverse effect on the Company's financial condition and results of operations.
No audited financial statements
The Company has not yet sought to have its financial information audited by an independent certified public accountant and there is no assurance that it will do so in the future. All financial information provided in the Offering Materials has been prepared by the Company's management team. The Company’s 2016 and 2017 financial statements included in the Offering Materials have been reviewed by an independent public accounting firm. This review, however, is subject to certain limitations and does not meet the standards and requirements of an independent audit. The Company’s 2018 financial statements included in the Offering Materials have not been reviewed or audited by an independent public accounting firm. Investors must be aware the Company’s financial statements may not reflect all accounting principles, adjustments and reporting practices necessary to comply with U.S. generally accepted accounting principles.
The Company may not obtain sufficient insurance coverage
The insurance policies maintained by the Company to protect the Company's business and assets, including insurance intended to cover product liability claims, may not be sufficient. Furthermore, the price of such insurance could increase in the future. In addition, some types of losses, such as losses resulting from natural disasters, generally are not insured because they are uninsurable or it is not economically practical to obtain insurance to cover them. Moreover, insurers recently have become more reluctant to insure against these types of events. Should an uninsured loss or a loss in excess of insured limits occur, this could have a material adverse effect on the Company's business, results of operations and financial condition.
The Company's operating location may become insufficient
The Company owns its current operating location; however, it intends to relocate to a significantly larger facility within the next year. There is no assurance that the Company's current or future location will provide an adequate fit for the Company's operations. Should either location prove inadequate, the Company may be forced to find a different location or incur significant expenses to remodel its facilities. Should this need arise, the Company's operations and financial condition will be adversely affected.
The Company currently owns trademarks on two of its spirits: "Five Wives Vodka" and "Underground Herbal Spirit." These trademarks are critical assets and essential to the success of the branding of the Company’s product offering. As discussed below, the Company’s ability to protect its trademarks and other intellectual property is subject to various limitations. With respect to the Company’s "Underground Herbal Spirit" trademark, the Company has entered into a memorandum of understanding with London Underground regarding the use of this trademark. Pursuant to the terms of the memorandum of understanding, the Company is limited in the use of colors and the word "underground." Any loss or use of either of the Company’s existing trademarks or any potential future trademark could materially harm the Company.
The Company's revenues are highly dependent on one government customer
As described above, the Company is highly dependent on sales to its largest customer, the State of Utah Department of Alcoholic Beverage Control. If sales to this customer were to decrease materially, the Company’s revenues would be significantly impacted, the Company may not be able to replace such revenues, and the Company may be forced to terminate operations, thereby resulting in a complete loss of an investment in the Common Shares. If the Company is unable to meet the legal, regulatory, business or other requirements of the Utah Department of Alcoholic Beverage Control, the Company’s business, financial condition and results of operations would be materially adversely affected.
No market; Lack of liquidity
There currently is no public or other trading market for the Common Shares being offered or any other securities of the Company and there can be no assurance that any market may ever exist for the Common Shares being offered or any other securities of the Company. If a public market does develop, factors such as competitors' announcements about performance, failure to meet securities analysts' expectations, changes in laws, government regulatory action, and market conditions for the industry in which the Company operates in general could harm the price of the Company's publicly traded securities. The Company has no obligation to register the Common Shares being offered or any other securities under the Securities Act or any state securities laws. Investors should be prepared to hold their Common Shares for an indefinite period.
Restrictions on transferability
The Common Shares offered by the Company have not been registered under the Securities Act, nor any applicable state securities laws, in reliance on the exemptions from registration in (i) Section 4(a)(6) of the Securities Act and in accordance with Section 4A of the Securities Act and Regulation Crowdfunding promulgated thereunder with respect to the Regulation Crowdfunding Offering, and (ii) Section 4(a)(2) of the Securities Act and in accordance with Rule 506(c) of Regulation D promulgated thereunder with respect to the Accredited Investor Offering. As a result, the Common Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or exemption from these laws, or if the Company has received an opinion of counsel satisfactory to it that registration under such laws is not required.
Specific to the Investors participating in the Regulation Crowdfunding Offering, the Common Shares may not be transferred or resold by any Investor in the Common Shares during the one-year period beginning when the Common Shares were issued, unless the Common Shares are transferred (i) to the Company; (ii) to an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (iii) as part of an offering registered with the SEC; or (iv) to a member of the family of the Investor or the equivalent, to a trust controlled by the Investor, to a trust created for the benefit of a member of the family of the Investor or the equivalent, or in connection with the death or divorce of the Investor or other similar circumstance. The term "member of the family of the Investor or the equivalent" includes a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the Investor, and includes adoptive relationships. The term "spousal equivalent" means a cohabitant occupying a relationship generally equivalent to that of a spouse. In addition, there is no market for the Common Shares being offered and the Company does not expect that any market will develop in the foreseeable future.
In addition to the restrictions on transferability and resale outlined above, there are transfer restrictions contained in the Shareholders Agreement. These restrictions include certain rights of first refusal available to the Company and the Company's principal shareholders as well as certain "drag-along" provisions applicable to the Common Shares. These rights and provisions significantly limit an Investor's ability to make any transfer or resale of his, her of its Common Shares. Investors are encouraged to review fully the terms and conditions of the Shareholders Agreement before making a decision to invest in the Company.
Investors may not receive a return of their investment amounts and there is no guarantee of return
Investors will be entitled to receive a return on their investment only through the Common Shares. The only source of funds for the repayment of the Investors' investment amounts and a return on such investment amounts is the Company's operations. The return to Investors and the future value of the investment will depend on a number of factors which cannot be predicted at this time and which may be beyond the control of the Company. These include the various risk factors identified in these Offering Materials and other general, local, and industry-related economic conditions. In the event that the Company does not generate sufficient revenues from operations, the Investors may not receive any return at all and may lose a substantial portion (or possibly all) of their investment amounts. Neither the Company nor the Placement Agent makes any representations or warranties with respect to any return on an investment in the Company. There can be no assurance that an Investor will receive any return on an investment in the Company or realize any profits on such Investor's investment in the Company.
Purchase price of the Common Shares may not reflect the value of the Common Shares
The offering price of the Common Shares has been established by the management of the Company and is not necessarily indicative of the value of the Common Shares or the Company's asset value, net worth, or other criteria of value. There can be no assurance that this price accurately reflects the current value of the Common Shares.
No stock redemption or dividend
Investors are not entitled to a stock redemption or dividend on their investment, except as may be provided upon dissolution of the Company or as otherwise provided in the Shareholders Agreement. Investors will be entitled to receive a return of their investment only through a sale or merger of the Company or otherwise as contemplated by the Shareholders Agreement. The only source of funds for potential dividends and stock redemptions is cash flow from the Company's operations. Even if the Company generates sufficient cash flow from operations, however, such funds are expected to be used to support the Company's growth and operations and will not be available for stock redemptions or dividends to Investors.
The Company has never made any distributions or dividends to its Investors and does not anticipate making any distributions or dividends in the foreseeable future. The Company's current policy is to retain earnings, if any, to provide funds for the operation and expansion of the Company's business.
Potential for dilution
The issuance or sale of additional Common Shares or other equity securities of the Company in connection with acquisitions or additional rounds of equity financing or the issuance of incentive shares of the Company to employees or others will have a dilutive effect on existing shareholders of the Company. As a result, the percentage ownership of an Investor and/or such Investor's economic interest in the Company may be reduced in the future. In addition, subsequent investors may demand and receive terms more favorable than the terms of the Common Shares in this Offering. Please see the Capitalization of the Company section for detail on additional proposed capital raises, which may have a dilutive effect on the Common Shares being offered in this Offering.
Additional corporate actions may have a negative impact on Investors
Approval of the Investors is not required in order for the Company to issue additional shares or enter into any other material transactions. In addition to the issuance of additional shares, if the Company were to repurchase securities and there were fewer shares of Common Stock outstanding, the Company may not have enough cash available for marketing expenses, growth, or operating expenses to reach its goals. If the Company does not have enough cash to operate and grow, it is anticipated that the market price of the Common Shares would decline. A sale of the Company or of the assets of the Company may result in an entire loss of your investment. The Company cannot predict the market value of the Company or of its assets, and the proceeds of a sale may not be cash, but instead, unmarketable securities, or an assumption of liabilities.
No analysis has been done of potential state or local tax consequences
Investors should consider potential state and local tax consequences of an investment in the Common Shares and they are urged to consult their own tax advisor to determine the state and local income tax consequences of investing in the Common Shares. The Offering Materials make no attempt to summarize the state and local tax consequences to potential investors.
General tax considerations
Investors in the Common Shares are urged to consult their tax advisors concerning the federal, state, local and foreign income tax consequences of acquiring, owning, and disposing of, the Common Shares as well as the application of state, local and foreign income and other tax laws. Any federal tax discussion contained in these Offering Materials, including any attachments, was written in connection with the Offering of the Common Shares by the Company, and is not intended or written to be used, by anyone for the purpose of avoiding federal tax penalties that may be imposed by the federal government. Nothing in these Offering Materials shall be deemed tax or legal advice by the Company, its management or the Placement Agent.
The tax-related information herein summarizes certain material U.S. federal income tax aspects of the purchase and ownership of the Common Shares. This summary is based upon the Internal Revenue Code of 1986, as amended (the "Code"), the regulations thereunder, published administrative rulings, and judicial decisions in effect on the date of the Offering Materials. No assurance can be given that future legislative or administrative changes or court decisions will not significantly modify the statements expressed in these Offering Materials. Any such changes may or may not be retroactive with respect to transactions completed prior to the effective dates of such changes.
The tax-related information herein is a general discussion of U.S. federal income tax consequences of investing in Common Shares by individuals and does not purport to deal with all federal income tax consequences applicable thereto or the federal income tax consequences applicable to all categories of Investors, some of which may be subject to special rules (e.g., Investors who do not reside in or citizens of the U.S.). This discussion is not intended as a substitute for careful tax planning. Investors are urged to consult their own tax advisors, lawyers, or accountants with specific reference to their own tax situations.
Net investment income tax
Certain U.S. Investors that are individuals, estates or trusts will be subject to a 3.8% tax on all or a portion of their “net investment income,” which may include all or a portion of their income and net gains from the disposition of the Common Shares. If you are a U.S. Investor that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the net investment income tax to your income.
Distributions, if any, made to a shareholder with respect to the Common Shares generally will be included in the shareholder's income as ordinary dividend income to the extent of the Company's current or accumulated earnings and profits. A corporate shareholder may qualify for a dividends received deduction. Dividends paid to a non-corporate shareholder on or before will generally be taxed at a reduced maximum marginal tax rate. Distributions in excess of the Company's current and accumulated earnings and profits will be treated as a return of capital to the extent of the shareholder's basis in the Common Shares and thereafter as gain from a sale or exchange of the Common Shares. Such gain generally will be long-term capital gain if the shareholder's holding period in the Common Shares is more than one year at the time of the distribution. In addition to the foregoing, dividends paid to certain taxpayers who do not participate in the management of the Company and who have income in excess of applicable thresholds generally will be subject to a Medicare tax of 3.8% in addition to income taxes.
Gain or loss on disposition
A shareholder generally will recognize gain or loss upon the sale or exchange of the Common Shares equal to the difference between (1) the amount of cash and the fair market value of any property received upon the sale or exchange and (2) the shareholder's adjusted tax basis in the Common Shares. Such gain or loss generally will be long-term capital gain or loss if the shareholder's holding period in the Common Shares is more than one year at the time of the sale or exchange. Long-term capital gains of non-corporate taxpayers are generally taxed at a reduced maximum marginal tax rate. The deductibility of capital losses is subject to limitations.
Qualified Small Business Stock
Investors in the Company may be able to exclude certain gain upon the sale or exchange of the Common Shares subject to certain requirements contained within Section 1202 of the Code. Section 1202 of the Code allows taxpayers to exclude from income one hundred percent (100%) of the gain upon the sale or exchange of qualified small business stock, subject to certain rules and limitations.
Subject to satisfying certain individual requirements, Investors in the Company may be eligible for the Section 1202 exclusion as the Company will undertake reasonable efforts to qualify as a Qualified Small Business under Section 1202. Specifically, the Company is an eligible C corporation, its assets are not expected to exceed $50 million before or immediately after the issuance of the Common Shares, and at least eighty percent (80%) of the Company's assets are expected to be used in the conduct of one or more qualified businesses as detailed in Section 1202(c)(3).
To be eligible for the Section 1202 exclusion, the taxpayer (i) cannot be a corporate entity, (ii) must hold the stock for at least five years, and (iii) must obtain the stock in an original issuance from the Company. To qualify as an original issuance under Section 1202, the stock must be acquired from the Company for money, property other than stock or as compensation for services provided (other than underwriting). Notwithstanding the foregoing, gain may not be excluded from income if there have been any related or significant redemptions either before or after the stock issuance.
Investors are encouraged to consult their tax or financial advisor if they desire to utilize the Section 1202 exclusion. The analysis regarding current compliance for Section 1202 is complex, and many elements of the test are outside of the Company's control. In any event, compliance with numerous other requirements during the time the investor holds the Common Shares (as noted above) is needed for the Investor to qualify for the benefits of Section 1202. Neither the Company nor its directors or officers are making any representations or warranties regarding the Company's current and ongoing compliance with the requirements needed for Investors to qualify for the benefits of Section 1202, and in no event shall the Company or any of its directors or officers be liable to any purchaser of Common Shares or any other party for any damages or claims related to such purchaser's inability to qualify for the benefits of Sections 1202, whether as a result of actions or omissions by the Company or such purchaser, or otherwise.
An investment in the Common Shares is speculative and involves a high degree of risk
An investment in the Company should not be made by persons unable to bear the risk of loss of their entire investment or by persons who may have a need for liquidity from their investment. In making an investment decision, you must rely on your examination of the Company and the terms of the Offering, including the merits and the risks involved. Like all investments, an investment in the Company involves the risk of the loss of capital, and the Common Shares should not be purchased by anyone who cannot afford the loss of his, her or its entire investment. Investors must be prepared to bear the economic risk of an investment in the Company for an indefinite period of time and be able to withstand a total loss of their investment. Investors are encouraged to consult their own investment or tax advisors, accountants, legal counsel, or other advisors to determine whether an investment in the Common Shares is appropriate.
The Common Shares have not been registered under the Securities Act
The Common Shares offered by the Company have not been registered under the Securities Act, nor any applicable state securities laws, in reliance on exemptions from registration in (i) Section 4(a)(6) of the Securities Act and in accordance with Section 4A of the Securities Act and Regulation Crowdfunding promulgated thereunder with respect to the Regulation Crowdfunding Offering, and (ii) Section 4(a)(2) of the Securities Act and in accordance with Rule 506(c) of Regulation D promulgated thereunder with respect to the Accredited Investor Offering. The investment contemplated by the Common Shares has not been recommended, approved, or disapproved by the SEC, or any state securities commission, or other regulatory authority, nor have any of these authorities passed upon or endorsed the merits of the Offerings or the accuracy, completeness, or adequacy of the Offering Materials. Any representation to the contrary is a criminal offense.
Investors will be subject to certain suitability requirements
The Common Shares will not be sold to an Investor until such Investor delivers an executed representation, as contained in the applicable Qualified Investor Questionnaire and Stock Purchase Agreement, that he, she or it is a Qualified Investor with respect to the Offering applicable to such Investor and that such Investor meets certain standards. Persons who are not Qualified Investors are not permitted to invest. The fact that a person is a Qualified Investor represents the minimum suitability requirement for an Investor, and compliance with such standards does not necessarily indicate that this would be a suitable investment for such person.
The Company will have the right to refuse any subscription in its sole discretion
The Company will have the right to refuse any subscription in its sole discretion and for any reason (or no reason), including the Company's belief that an Investor does not meet the applicable suitability requirements or that exemptions from the registration requirements of any applicable jurisdiction are not available with respect to the issuance of the Common Shares to any Investor under this Offering. The Company may make or cause to be made such further inquiry and obtain such additional information as it deems appropriate with regard to the suitability of Investors. The Company reserves the right to modify the suitability standards with respect to certain Investors in order to comply with any applicable state or local laws, rules, regulations or otherwise.
The information presented in the Offering Materials was prepared by the Company and contains "forward-looking" statements
The Offering Materials (together with any amendments or supplements and any other information that may be furnished by the Company) includes or may include certain forward-looking statements, estimates, and projections with respect to the Company's anticipated future performance. Examples of forward-looking statements include statements regarding the Company's future sales, purchase orders, financial results, operating results, acquisitions, business and monetization strategies, projected costs, revenues, products, competitive positions and plans and objectives of management for future operations. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "would," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. Such forward-looking statements, estimates, and projections are not guarantees of future performance and reflect various assumptions of the Company's management that may or may not prove correct and involve various risks and uncertainties over which the Company may have no influence or control. No independent party has verified or confirmed the reasonableness of the assumptions that form the basis of the forecasts. These and many other factors could affect the Company's future financial and operating results, and could cause actual results to differ materially from expectations based on forward-looking statements made in the Offering Materials or elsewhere by the Company (or on its behalf). The likelihood of the Company's success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with growing a small business. There can be no assurance that the Company will generate any particular level of revenue or will be able to continue to operate profitably. The Placement Agent expressly disclaims any representation or warranty regarding involvement in or responsibility for any forward looking statements contained in the Offering Materials.
Only the Offering Materials may be relied upon in connection with this Offering
Only the information expressly set forth in the Offering Materials or contained in documents furnished by the Company upon request may be relied upon in connection with this Offering. No person has been authorized to give any information or to make any representations other than those contained in the Offering Materials and, if given or made, such information or representations must not be relied upon. Access to the Offering Materials at this time does not imply that information therein is correct as of any time subsequent to this date.
The Offering Materials do not purport to be all-inclusive
The Offering Materials provided to Investors do not purport to be all-inclusive or contain all of the information that you may desire in investigating the Company. You must rely on your own examination of the Company and the terms of the Offering, including the merits and risks involved in making an investment in the Common Shares. Prior to making an investment decision, you should consult your own counsel, accountants, and other advisors and carefully review and consider all of the Offering Materials provided and the other information that you acquire. You should not construe any statements made in the Offering Materials provided as investment, tax or legal advice.
The Company reserves the right to reject some or all of any prospective investment
The offer of the Common Shares by the Company is subject to prior sale and certain other conditions. The Company reserves the right, in the Company's sole discretion and for any reason, to withdraw, cancel, or modify the Offering and to accept or reject some or all of any prospective investment. The Company will have no liability to any Investor in the event that the Company takes any of these actions.
The terms, conditions and restrictions of the Common Shares are fully set forth in the Shareholder Agreement
The terms, conditions and restrictions of the Common Shares are fully set forth in the Offering Materials, including the Shareholders Agreement, which you will be required to execute if you decide to invest, the form of which has been provided to you in the Offering Materials section for this Offering on the Company Offering Profile. You should not invest unless you have completely and thoroughly reviewed the provisions of the Shareholders Agreement, the Bylaws, and the Articles of Incorporation. Any additional information or representations given or made by the Company in connection with the Offering, whether oral or written, are qualified in their entirety by the information set forth in the Offering Materials, including, but not limited to, the risks of investment.
No solicitation in any state or other jurisdiction in which such solicitation is not authorized
The Offering Materials do not constitute an offer to sell, or a solicitation of an offer to buy, any security in any state or other jurisdiction in which such an offer or solicitation is not authorized. Except as otherwise indicated, the Offering Materials speak as of the date the Offering was initiated. Neither access to the Offering Materials nor any sale of the Common Shares shall, under any circumstances, create an implication that there has been no change in the Company's affairs from the date the Offering was initiated.
Each investment is subject to the terms and conditions of the Investor Registration Agreement
Each Investor's subscription for and purchase of the Common Shares is governed by, and subject to, the terms and conditions of the Investor Registration Agreement entered into between the Placement Agent and such Investor, including, without limitation, the investment limits established by the Placement Agent for such Investor, the Placement Agent's rights to terminate the Offering or any Investor's registration with the Placement Agent.
The Company will be available to you to answer questions and furnish additional information
The Company will make available to you, upon request, copies of material agreements and other documents relating to the Company and will afford you the opportunity to ask questions and receive answers from the Company concerning its business and financial condition in order to verify statements and information contained in the Offering Materials. The Company will also provide you an opportunity to meet with representatives of the Company to obtain other additional information consistent with the foregoing.
The Common Shares are subject to significant transfer restrictions, including restrictions in the Shareholders Agreement; There is no market for the Common Shares
The Common Shares are subject to restrictions on transferability and resale and may not be transferred or resold by any Investor in the Common Shares except as permitted under the Securities Act and applicable state securities laws, pursuant to registration or exemption from these laws, or if the Company has received an opinion of counsel satisfactory to it that registration under such laws is not required.
Specific to the Investors participating in the Regulation Crowdfunding Offering, the Common Shares may not be transferred or resold during the one-year period beginning when the Common Shares were issued, unless the Common Shares are transferred (i) to the Company; (ii) to an "accredited investor" as defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (iii) as part of an offering registered with the SEC; or (iv) to a member of the family of the Investor or the equivalent, to a trust controlled by the Investor, to a trust created for the benefit of a member of the family of the Investor or the equivalent, or in connection with the death or divorce of the Investor or other similar circumstance. The term "member of the family of the Investor or the equivalent" includes a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother- in-law, or sister-in-law of the Investor, and includes adoptive relationships. The term "spousal equivalent" means a cohabitant occupying a relationship generally equivalent to that of a spouse.
In addition to the restrictions on transferability and resale outlined above under applicable securities laws, there are contractual transfer restrictions contained in the Shareholders Agreement. These restrictions include certain rights of first refusal available to the Company and the Company’s principal shareholders as well as certain "drag-along" provisions applicable to the Common Shares. These rights and provisions significantly limit an Investor’s ability to make any transfer or resale of his, her of its Common Shares. Investors are encouraged to review fully the terms and conditions of the Shareholders Agreement before making a decision to invest in the Company.
There is no market for the Common Shares, and the Company does not expect that any market will develop in the foreseeable future. Investors may be required to bear the financial risks of the investment in the Company for an indefinite period of time. Persons who desire liquidity from this investment should not invest.
Closing procedures for the Offerings
The Offerings shall be available to potential Investors until the final closing of the sale and purchase of the Common Shares (the "Final Closing"), which will occur upon the earlier of (i) the date the Company has closed on the purchase and sale of Common Shares for the Maximum Offering Amount, (ii) January 31, 2020 at 11:59 PM EST, or (iii) the Company terminates the Offerings in its sole and absolute discretion (the "Termination Date"). In accordance with Regulation Crowdfunding promulgated by the Securities and Exchange Commission, the Company may not sell more than $1,070,000 (the "Crowdfunding Maximum") of Common Shares in the Regulation Crowdfunding Offering. Therefore, if the Crowdfunding Maximum is reached prior to the Termination Date, the Regulation Crowdfunding Offering will be terminated and only the Accredited Investor Offering will continue thereafter.
The Common Shares are offered by the Company on a best efforts, minimum-maximum basis as specified herein. As such, the Offerings are contingent upon the Company's receipt of the Minimum Offering Amount, as well as the Company's receipt of a minimum of $49,995.52 in proceeds from the Regulation Crowdfunding Offering (the "Crowdfunding Minimum") prior to the Termination Date. All funds received from Investors will be held in an escrow account (the "Escrow Account") established with Kingdom Trust Company, as escrow agent (the "Escrow Agent"), until the Minimum Offering Amount and the Crowdfunding Minimum have been satisfied. Once the Minimum Offering Amount and the Crowdfunding Minimum have been received by the Escrow Agent in the Escrow Account (pursuant to the terms of an escrow agreement to be entered into between the Escrow Agent and the Placement Agent (as defined below)) and provided that (i) the Company has provided advance written notice to Investors of at least five (5) business days, (ii) the Regulation Crowdfunding Offering has been available on the Company Offering Profile for a minimum of twenty-one (21) days, (iii) there has been no material change that would require an extension of the Regulation Crowdfunding Offering and reconfirmation of the investment commitment, and (iv) the Escrow Account continues to meet the Minimum Offering Amount and the Crowdfunding Minimum at the end of the five business day period after Investors have been notified of the closing, the Escrow Agent will initiate the transfer of Investor funds (net of the placement fee to be paid to the placement agent, Localstake Marketplace LLC (the "Placement Agent")) from the Escrow Account to a deposit account maintained by the Company (the "Initial Closing"), which funds shall constitute net proceeds usable by the Company for the purposes outlined in the Offering Materials. After the Initial Closing, additional Investor funds will be held in the Escrow Account until, and at such time as, the Placement Agent chooses, in its sole discretion, to direct the Escrow Agent to release the additional Investor funds (each a "Closing"), to be facilitated using the same procedures identified herein for the Initial Closing. The Company will continue to accept investment commitments up until the occurrence of the Final Closing; provided, however, in the event the Crowdfunding Maximum has been reached prior to the Final Closing, the Regulation Crowdfunding Offering will be closed at such time and only the Accredited Investor Offering will continue until the Final Closing. If the Company receives investment commitments in the Regulation Crowdfunding Offering for greater than the Crowdfunding Minimum, the Company will accept such commitments up to the Crowdfunding Maximum on a first come-first served basis.
If the Minimum Offering Amount and the Crowdfunding Minimum have not been received by the Company into the Escrow Account prior to the Termination Date, no Common Shares will be sold in the Offerings, and neither the Regulation Crowdfunding Offering nor the Accredited Investor Offering will be consummated. In such instance, all investment commitments will be cancelled and the Escrow Agent will initiate a return of any Investor funds deposited in the Escrow Account to such Investors within ten (10) business days. Investor funds will not earn interest while in escrow and no interest will be returned with Investor funds if the Offerings are not consummated. Any Common Shares subscribed for by control persons of the Company or the Placement Agent (or their affiliates or related persons thereof) will not be counted in determining whether the Minimum Offering Amount and the Crowdfunding Minimum have been satisfied.
The Company's acceptance of investments and cancellations
The Company reserves the right to accept, through execution of a countersignature on the Subscription Documents (as described below), an Investor's subscription for Common Shares at any time prior to the Termination Date and may reject the Subscription Documents based upon the Company's review thereof for any reason or for no reason. Should the Company receive investment commitments for greater than the Maximum Offering Amount, the Company will determine, in its sole discretion, which subscriptions to accept up to the Maximum Offering Amount. If the Company receives investment commitments in the Regulation Crowdfunding Offering for greater than the Crowdfunding Minimum, the Company will accept such commitments up to the Crowdfunding Maximum on a first come-first served basis.
If an Investor has chosen to transfer its investment funds electronically, these funds will be transferred from its linked bank account as specified on the Company Offering Profile to the Escrow Account, forty-eight (48) hours after the Company's acceptance thereof. If the Investor has chosen another form of funds transfer, the Investor will receive a notice containing instructions for transferring funds to the Escrow Account. Investors may cancel their investment commitment in the Common Shares, using the methods made available on the Company Offering Profile, and have their investment funds returned (if applicable) for any reason prior to up to forty-eight (48) hours after the Closing applicable to the Investor's investment. If an Investor has not canceled its investment commitment in the Common Shares prior to such deadline, the Investor's subscription for the Common Shares shall be irrevocable by the Investor, and will be documented through the receipt of an executed copy of the Investor’s Stock Purchase Agreement, which will be recorded and maintained with the books of the Company.
Securities laws being utilized and investor qualifications
The Company is conducting the Offerings in reliance on the exemptions from registration under the federal Securities Act of 1933, as amended (the "Securities Act"). The Regulation Crowdfunding Offering is being made pursuant to the exemption set forth in Section 4(a)(6) of the Securities Act and in accordance with Section 4A of the Securities Act and Regulation Crowdfunding promulgated thereunder. The Accredited Investor Offering is being made pursuant to the exemption set forth in Section 4(a)(2) of the Securities Act and in accordance with Rule 506(c) of Regulation D promulgated thereunder. The Accredited Investor Offering will be made solely to persons who qualify as "accredited investors" as defined in Rule 501(a) of Regulation D ("Accredited Investors") and who provide sufficient evidence to verify that such persons are Accredited Investors.
Regulation Crowdfunding sets forth certain statutory investment limitations for purchasers of securities offered pursuant thereto. The Common Shares will be offered and sold in the Regulation Crowdfunding Offering only to persons whose investment in the Common Shares, together with any other investments made in any Regulation Crowdfunding offering during the 12-month period preceding the date of such transaction, does not exceed: (i) the greater of $2,200 or 5 percent of the lesser of the Investor's annual income or net worth if either the Investor's annual income or net worth is less than $107,000; or (ii) 10 percent of the lesser of the Investor's annual income or net worth, not to exceed an amount sold of $107,000, if both the Investor's annual income and net worth are equal to or more than $107,000. Investors who meet the foregoing requirements in the Regulation Crowdfunding Offering, together with Accredited Investors in the Accredited Investor Offering, are collectively referred to as "Qualified Investors."
Regulation Crowdfunding also contains other limitations and requirements, including a limitation on the dollar amount of securities that may be sold in a Regulation Crowdfunding offering. The Company may not sell more than the Crowdfunding Maximum of Common Shares in the Regulation Crowdfunding Offering. If this maximum is reached, the Regulation Crowdfunding Offering will be terminated and the Accredited Investor Offering will continue thereafter.
The Common Shares will be offered and sold in the Accredited Investor Offering only to Accredited Investors who provide sufficient evidence to verify that such Investors qualify as "accredited investors" pursuant to Rule 506(c) of Regulation D.
The minimum investment that will be accepted by the Company from a Qualified Investor in both the Regulation Crowdfunding Offering and the Accredited Investor Offering is $494.56 (44 shares of Common Stock).
Use of proceeds in the Offering
The Company intends to use the net proceeds of the Offerings for marketing and sales, increasing inventory, purchasing equipment, paying professional fees and the Placement Agent fees associated with the Offerings, and for general working capital purposes, as explained in further detail on the Funding tab of the Company Offering Profile.
Subscribing for an investment and transferring funds
Investors interested in subscribing for the Common Shares will be required to complete and return to the Company the Shareholders Agreement and the applicable Stock Purchase Agreement and Qualified Investor Questionnaire (collectively, the "Subscription Documents"). Payment of the investment amount is preferred via electronic ACH transfer, but may also be made by check or domestic wire in limited circumstances. Instructions for each method of payment will be provided upon investment via the Company Offering Profile.
Fees for placement agent services
As compensation for the Placement Agent's services in connection with the Offerings, the Placement Agent shall be entitled to receive a placement fee paid by the Company (the "Placement Fee") equal to 3.0% of the total amount of Common Shares sold in the Offerings, as described below. A breakdown of the Gross Proceeds, Estimated Placement Fee and Net Proceeds for the Offerings is as follows:For Minimum Offering Amount:
- Gross Proceeds: $500,000.16
- Estimated Placement Fee: $15,000 (1)
- Net Proceeds: $485,000.16
- Gross Proceeds: $1,900,009.60
- Estimated Placement Fee: $57,000 (1)
- Net Proceeds: $1,843,009.60
(1) The Company will pay the Placement Fee on all Gross Proceeds received by the Company from the sale of the Common Shares in the Offerings to Investors introduced to the Offerings by means other than private personal invitations from the Company. The estimated Placement Fee excludes a $15,000 offering preparation fee paid to the Placement Agent prior to commencement of the Offerings.
Securities to be offered to investors
The offering materials being accessed by you (the "Offering Materials") on the Company's profile page (located at https://localstake.com/businesses/ogdens-own) (the "Company Offering Profile") relate to the offer and sale of shares of Common Stock (collectively, the "Common Shares") in Ogden's Own Distillery, Inc., a Utah corporation (the "Company"). The Company is seeking to raise between a minimum of $500,000.16 (the "Minimum Offering Amount") and a maximum of $1,900,009.60 (the "Maximum Offering Amount") from potential investors (each, an "Investor" and collectively, the "Investors") through the offer and sale of the Common Shares in two combined but separate offerings: (i) a Regulation Crowdfunding offering (the "Regulation Crowdfunding Offering") and (ii) a Regulation D, Rule 506(c) offering (the "Accredited Investor Offering"). The Regulation Crowdfunding Offering and the Accredited Investor Offering are collectively referred to as the "Offerings." As the context requires, each of the Offerings may also be referred to as "an Offering" or "this Offering" with respect to the particular offering in which an investor participates.
The Company is offering up to 169,040 Common Shares in the Offerings, at a price of $11.24 per share. Investors will become shareholders of the Company and will have the rights and obligations applicable to the Common Stock of the Company set forth in the Company’s Articles of Incorporation and Bylaws and in the Shareholders Agreement, copies of which are provided in the Offering Materials. For a detailed summary of the Offerings and the Common Shares, see the Term Sheet included in the Offering Materials.
Material changes to the Offerings
Should a material change be made by the Company to the Offering Materials, including, but not limited to a change to the Termination Date, the Crowdfunding Minimum, or the Minimum Offering Amount, the Company will provide to all Investors who have made investment commitments notice of the material change. If the Investor does not reconfirm its investment commitment within five (5) business days of receipt of such notice, the Investor's investment commitment will be cancelled and the Investor will receive a notification verifying that the investment commitment was cancelled, the reason for the cancellation and the refund amount that the Investor should expect to receive. The Escrow Agent will initiate a return of the Investor's funds deposited in the Escrow Account to such Investor within ten (10) business days.
Ongoing reporting requirements associated with the Offering
The Company will file an annual report on Form C electronically with the Securities and Exchange Commission pursuant to Regulation Crowdfunding and post the report on its website, no later than 120 days after the end of each fiscal year covered by the report, until certain conditions are met as summarized below. Once posted, the annual report may be found on the Company's website at: http://www.ogdensown.com/investor_reports.
The Company must continue to comply with the foregoing ongoing reporting requirements until:
1. the Company is required to file reports under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended;
2. the Company has filed at least one annual report pursuant to Regulation Crowdfunding and has fewer than 300 holders of record;
3. the Company has filed at least three annual reports pursuant to Regulation Crowdfunding and has total assets that do not exceed $10,000,000;
4. the Company or another party repurchases all of the Common Shares issued in the Regulation Crowdfunding Offering, including any payment in full of the Common Shares; or
5. the Company liquidates or dissolves its business in accordance with state law.
In the event the Company is no longer required to provide an annual report pursuant to the foregoing requirements of Regulation Crowdfunding, the Company intends to continue preparing and posting a copy of its annual report for the benefit of Investors. The Company expects to notify Investors by email communication of the posting and availability of the annual report on the Company’s website, as noted above. Management anticipates that such annual reports will contain the Company’s financial statements for the prior fiscal year and other non-financial information related to the business, operations and financial condition of the Company.
In addition to annual reporting, the Company intends to provide Investors with regular quarterly reports for the first three quarters of the Company’s fiscal year. These reports are expected to contain financial data and other non-financial information related to the Company. The fourth quarter report will be included as part of the annual report.
As shareholders of the Company, Investors will also be entitled to certain shareholder information and inspection rights pursuant to applicable provisions of the Utah Revised Business Corporation Act, as amended. These rights include the ability (i) to inspect and copy certain corporate records maintained by the Company, and (ii) to request a copy of the Company’s most recent annual or quarterly financial statements.
Your status: No interest
Express interest to follow progress and access details.
Expressing Interest FAQ
Expressing interest covers a few different functions. First, it acts as your indication to the business that you have a potential interest in considering an investment. It is also the means by which you are able to access additional materials from the business. The reason you must express interest to view this information is so that the business can keep track of who has accessed their sometimes confidential information. Lastly, expressing interest allows you to keep in touch and stay updated on the progress of the business as they work through their fundraise.
An expression of interest is non-binding. Providing a dollar amount of interest to the business is exclusively a way for them to get a better understanding of whether there is sufficient aggregate interest from investors to support their fundraise goals. If you do not provide a dollar amount to the business, this is fine, but they may decide to cancel their fundraise if they do not have a clear enough picture as to whether there is enough interest to meet their goals.
Yes. Interest can be cancelled at any time, and after cancelling the business will have no means by which to contact you. If you cancel your interest, you can always express interest again if you change your mind.
Yes. The business will be able to contact you through Localstake Marketplace platform messaging. They will not receive any other personal contact information (i.e. email address, phone number, etc.).
When you express interest in a business, they will receive a notification that you are interested. On their investor management interface, they will see your name, state of residence, occupation, and amount of investment.
Once you've indicated interest, you can commit to invest.
Committing to Invest FAQ
Committing to invest should constitute a binding commitment on the part of the investor that you are going to follow through on investing the amount you have provided to the business. You should only commit to invest once you are sure that you want to invest in the opportunity.
Your commitment will make you eligible to receive any perks available to investors for which you meet applicable eligibility requirements. Note that you are not guaranteed a spot in the fundraise until the business has approved your investment. Once you have committed, you can continue on to complete your investment and submit it to the business for approval.
A commitment shoud be treated as binding. If you do not plan to move forward with an investment, you should not commit to doing so. However, you are not irrevocably committed to investing until 3 days after the business has approved your investment and countersigned your investment documents.
You can commit to invest at any time. Commitments help show traction in the fundraise to other investors, so the earlier you are ready to make your commitment, the better. This will help the business in its efforts to attract additional investors to their fundraise.
The business owners are the only people that will have this information. No other investors will know that you committed to invest, only that someone committed to invest. The aggregate amount of commitments is shared with other interested investors.
No. You will still need to provide an electronic signature on the investment documents and select a method to transfer your funds. You will need to wait to complete these steps until
Ogden's Own is offering equity at a share price of $11.24 per share. Ogden's Own has chosen to only allow investments at an interval of 1.0 shares, or $11.24, and therefore your investment will be rounded down to the nearest multiple of this amount.
Once you have committed to invest, you will review and sign the investment documents.
Signing Documents FAQ
When you make an investment in a business, you enter into legally binding contract that outlines your rights as an investor. The specific documents you sign will vary based upon the type of security you are investing in (i.e. debt or equity). Every investment will include an investor questionnaire document that will be pre-populated with information from your investment account that provides proof of your eligibility to invest in the offering. These documents act as your proof of investment and provide all of the details about your investment and your role as an investor. You should read these documents carefully before investing.
Your investment documents will be pre-populated with information from your investment account to help identify you, including your SSN which the business needs in order to produce tax documents for your investment. There will also be information about your personal financial situation on the documents to help provide proof of your eligibility to invest in the offering.
In order to sign the documents, you will use our proprietary e-signature tool. You will have the opportunity to review each document that you will be signing and then select a signature or create your own to be added to the documents.
Yes, once the business has accepted your investment and countersigned your investment documents, a copy of your signed agreement will be stored on your Investment Portfolio page on Localstake Marketplace.
We can help you complete an investment for the following investor types: self-directed IRA, joint with spouse, entities, and trusts. Contact us if you would like to make an investment of a type other than as an individual.
Once you have reviewed and signed investment documents, you will choose how you would like to transfer funds.
Transferring Funds FAQ
The business owner will then receive your proposed investment and accept and countersign it.
The business will wait to accept your investment until their funding target has been reached.
For most fundraises, there are three options to choose from when transferring investment funds.
- 1. Electronic Transfer - transfer your funds by electronic ACH transfer. You will need to connect a personal bank account in order to use this transfer method.
- 2. Wire Transfer - call your bank and give them instructions on where you would like your investment funds to be sent. With a wire transfer, you will receive instructions on where to transfer the funds after the business accepts your investment.
- 3. Check - When selecting to make your investment by check, you will receive instructions on where to mail your check after the business accepts your investment.
Note that, due to difficulty in tracking funds, the option to mail a check is typically only available for investment amounts of $5,000 or greater, and in some cases may not be available at all.
Fund transfers do not occur until the business has accepted your investment and the funding target has been reached.
Fund transfers do not occur until the business has accepted your investment and the funding target has been reached.
If you transfer your funds via electronic transfer, the funds will be transferred from your bank account as soon as the business reaches their fundraise target and accepts your investment. You will receive a notice two business days prior to the electronic transfer occurring. If you transfer funds via check or wire, you will need to complete the fund transfer outside of the Localstake Marketplace platform.
Your funds will be held in an escrow account at a bank until the business reaches their fundraise target. Consult the offering materials for more details on the escrow arrangement. If the business does not reach their funding goal, the funds will be returned to you by the escrow agent.
If you would like to change something about your investment, such as the information on your investment documents, or to decrease the amount of your investment, please contact us. If you only wish to increase the amount of your investment, you can make a second investment by clicking the 'Invest Again' button.
Investors may cancel an investment commitment until 48 hours prior to the deadline identified in the offering materials. Localstake Marketplace will notify investors when the target offering amount has been met. If the issuer reaches the target offering amount prior to the deadline identified in the offering materials, it may close the offering early if it provides notice about the new offering deadline at least five business days prior to such new offering deadline (absent a material change that would require an extension of the offering and reconfirmation of the investment commitment).
If an investor does not cancel an investment commitment before the 48-hour period prior to the offering deadline, the funds will be released to the issuer upon closing of the offering and the investor will receive securities in exchange for his or her investment.
If an investor does not reconfirm his or her investment commitment after a material change is made to the offering, the investor’s investment commitment will be cancelled and the committed funds will be returned.
Businesses send payments to investors over the Localstake Marketplace platform
If the business you invest in reaches their funding goal, they will be making payments to you over the Localstake Marketplace platform. If you use electronic transfer for your investment, these payments will be made back to the bank account you linked for your electronic transfer. If you do not set up an electronic transfer for your initial investment, you may do so on your bank account page once you log in.
If the business you invest in does not reach their funding goal, your investment funds will be returned to you. The escrow agent for the fundraise will return the funds to you typically via check or ACH.