|1||Harvest is part of the farm-to-table chain outside ranchers’ control. BAR-C is the missing link.|
|2||As a rancher-owned cooperative, we are our own customers, creating stability for the business.|
|3||Our members are environmentally responsible ranchers, with our own successful meat businesses.|
|4||Our BOD has 100+ years of ranching & processing experience, giving BAR-C the expertise to thrive.|
|5||Most harvest trips will be under 50 miles, reducing animal stress & cutting CO2 emissions by 75%.|
|6||$117K seed money raised, expected to be profitable & paying dividends in year 3 (not guaranteed).|
|7||You get a return on your investment in cash and Co-Op Credit to use for meat from BAR-C Ranchers!|
|8||BAR-C investors are creating the solution for our regional food system and a model for others.|
We are a group of forward-thinking, entrepreneurial ranchers who have built independent ranching businesses, our own brands, and our own customer-bases. We share a commitment to humane husbandry that treats our animals with dignity and respect, to regenerative practices that sustain our land, and to serving our Bay Area community by providing responsibly-raised local meat. We are inviting you to invest in our venture, a recently-formed rancher-owned agricultural cooperative to create a much-needed local harvest option for our animals, in keeping with our values and those of our community.
For all of us, one of the most difficult aspects of our business is finding affordable harvest and processing options for our livestock that are in keeping with our values of environmental sustainability, animal welfare and fair labor practices. When the only facility in the Bay Area closed its doors to private-label clients in January, we all were forced to truck our livestock to harvest facilities 150 to 250 miles away, some of us making round trips of more than 500 miles every other week. This was unsustainable for our businesses, and the stress on the animals of the long trip, as well as the environmental impacts of all that travel, were unacceptable to us.
A group of us began discussing in January how we could take control of the processing element which is so essential to our businesses. Among us we not only have many years of experience running successful ranching businesses, but many of us have had careers in business outside ranching and bring all those skills to the table. By June we had done extensive market analysis and created a business model based on the operation of a mobile harvest unit (MHU). At a meeting for the local ranching community in late June, 16 ranchers signed up as founding members of our co-op and elected a board of directors. We incorporated as a California agricultural cooperative on July 28.
As part of our market analysis, we surveyed 96 ranchers in Northern California who direct-market meat under their own labels and need USDA-inspected harvest services, and found that they collectively harvest more than 10,000 head of livestock or 6200 beef-equivalents (BE) every year. This number is twice the maximum capacity of our MHU, operating five days per week, 52 weeks per year. Ninety percent of the respondents said they would use our MHU. More than 60% of these ranchers were less than 50 miles from the proposed location for our facility.
Details of our market survey:
90% of respondents say that they would use the MHU.
Of the 4% that would not use the MHU, 80% cite the closure of their business as the reason.
Reasons cited by potential customers for using the mobile unit:
1. For our market analysis, we reached out to all 96 ranchers and managed to speak with 48 of them. The annual estimate of livestock to be harvested (10,052) was achieved through statistical analysis using known data and additional factors to arrive at a number representing the entire private‐label potential. Thanks go to Dr. Normand St‐Pierre, Director of Research & Technical Studies at Perdue Agribusiness for his statistical counsel.
2. Based solely on the numbers from the 48 ranches who answered our questions ‐ making no allowance for the animals represented by all the ranches that couldn’t be reached ‐ the annual number is 4000 BE or 1.2 times the capacity of the mobile harvest unit.
Our market analysis also addressed the issue of seasonality. This is key because other MHUs have struggled to remain “full” at all times of year due to weather and regional patters of livestock management. Success for this unit would require confidence that the maximum daily throughput can be maintained year-round. Ranches interviewed provided the total annual numbers to harvest of each species and the timing of those harvests throughout the year. Analysis of these results showed an overall average of 96% of maximum capacity, with no month dropping below 84% and only two months below 92% capacity.
It’s noteworthy that the 38 ranches on which this analysis was based represent only 54% of the animals revealed in the market survey. If the full estimated marketplace is taken into account (2x annual capacity) as well as the potential that ranches in the region will *grow* as a result of the confidence that they can consistently, reliably access slaughter services, there is every reason to expect that each week will find the unit operating at full capacity with an additional waiting list.
There is no other USDA-inspected multi-species harvest option in the Bay Area. This MHU will operate from a centrally located site in Sonoma county, providing a private-label harvest for all species of livestock less than 50 miles from the majority of surveyed producers. The logistical and administrative savings to each ranch will change their viability and quality of life significantly for the better.
57% of the ranches surveyed are located in either Sonoma or Marin counties, and more than 60% of the animals come from the two counties. Additional counties anticipated to feed into the enterprise include Mendocino, Yolo, Napa, Contra Costa, San Mateo, Solano, and Nevada Counties.
Small-scale animal harvest under USDA inspection requires a highly-skilled, dedicated team. Staff turnover, high labor costs, and a business model that turns on narrow margins can sometimes lead processors to make decisions that are decoupled from the needs of their rancher customers. However, the dearth of options available to ranchers has left them vulnerable to the whims of the processor. The decision to establish this mobile harvest operation as a producer-owned agricultural co-op under California statute will ensure that the needs of the ranching community are always prioritized.
Producer-members elect a board of directors from among their ranks to hire and guide the staff. The staff will conduct daily operations and make most operational decisions to maintain the level of service, quality, and financial success required. The board shapes the bylaws which govern the cooperative as a whole. The entire body of producer-members will participate in an annual meeting where they will receive updates on the business and vote on major decisions. In this way, and through the accountability of the elected board to the membership, the producers themselves have ultimate authority over the business and cannot be arbitrarily shut out or placed at the mercy of a sole entrepreneur.
The efficient delivery of quality, USDA-compliant harvest services requires a skilled workforce, and retention of employees will be essential for success. Rates of compensation built into the financial models exceed Sonoma county averages for similar work. In other words, this business functions even under the assumption that workers will need to be paid well above the market rate. Additionally, we plan to offer health benefits and paid leave.
Even with the competitiveness of the compensation, however, turnover is inevitable. Over the long term, relationships with local workforce development programs and educational meat processors like the UC Davis Meat Laboratory and the CalPoly San Luis Obispo, CSU Chico, and CSU Fresno Meat Processing Centers will facilitate a reliable pipeline of skilled staff into the operation.
Case studies of efforts in other regions have shown that when an MHU fails, the enterprise typically falters due to either insufficient throughput to keep the business operating at full capacity, or inefficiencies of scale that lead to a cost/revenue imbalance that ultimately compromises the business.
In the case of the proposed enterprise, the marketing and financial analyses demonstrate that both of these challenges can be successfully met. Estimated market potential exceeds the annual capacity of the unit by 20-100% and is well distributed across the cycle of seasons. This means that equipment and staff will not sit idle. To combat any cost/revenue imbalance, the pricing for services has been structured to reflect a comprehensive accounting of inputs. This pricing structure not only meets the needs of the business, but it beats two out of five regional competitors and closely matches the average across all five.
With the confidence provided by a secure market and competitive pricing, the business will be cashflow positive in 17 months, with gross revenues of 1.196 million dollars in year two, 1.550 million dollars in year three, and 1.582 million dollars in year four. (Disclaimer: These are forward-looking projections and cannot be guaranteed).
How investors make a return. Beginning in 2021, and for the first five years after purchase, investors are entitled to annual dividends of 2% in retail credits redeemable for Co-op members’ products. After the initial five-year term, annual dividends are guaranteed at 4%, up to half in retail credits and the remainder in cash.
Bay Area Ranchers' Cooperative has financial statements ending August 31 2020. Our cash in hand is $102,252.52, as of October 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $5,000/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We are establishing a meat-processing plant using a USDA-approved Mobile Harvest Unit. We will provide USDA-inspected processing of cattle, sheep, goats and hogs for ranchers throughout the region so they can then sell the meat under their own brands and build their ranch businesses. These small family ranches are typically not well-served by larger harvest facilities.
In five years, we hope to be providing comprehensive processing services - cut-and-wrap, smoking, curing and other value-added production - within 50 miles of most Bay Area ranchers. Our projections show we will be profitable in year 3 and by year 5 paying dividends to our investors and patronage to our members. As an agricultural co-op, sharing our profits back to our rancher-members, we will be further strengthening the rural economies where we live. These projections cannot be guaranteed.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
Bay Area Ranchers' Cooperative, Inc. was incorporated in the State of California in July 2020.
Since then, we have:
Historical Results of Operations
Our company was organized in July 2020 and has limited operations upon which prospective investors may base an evaluation of its performance.
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $117,000 in equity.
We are also raising under a concurrent Reg D 506(c) and expect to have additional member contributions of at least $31,000 by end of this year.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 1 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 3 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Bay Area Ranchers' Cooperative, Inc. cash in hand is $102,252.52, as of October 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $5,000/month, for an average burn rate of $5,000 per month. Our intent is to be profitable in 17 months.
The only change in our operations since 08/31/2020 has been to add an attorney to assist with this offering and a concurrent Rule 506(c) offering. Estimated costs are between $15,000 and $20,000.
We expect $0.00 revenue in the next 6 months. During this period we will be ordering equipment and renovating our site for operation in May 2021.
Expected expenses in 3 months $35,700 and total expenses 6 months Oct- March is $136,700.
We believe we'll need approximately $1.2M in capital to reach reach a revenue generating point by May 2021. By end of 2021, we hope (but not guarantee), to be generating $88k/month in revenue and $105k/month in expenses.
For additional capital, we have the equity investments made from the cooperative members. As of Sept 30 2020 total membership equity is $17k and an excepted additional $31k by Dec 31 2020.
AN INVESTMENT IN THE COMPANY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK, INCLUDING THE POSSIBLE LOSS OF THE ENTIRE INVESTMENT, AND INVESTOR HAS CAREFULLY READ AND CONSIDERED THE FOLLOWING RISK FACTORS AND ALL MATTERS SPECIFIED IN THESE SUBSCRIPTION DOCUMENTS IN DETERMINING WHETHER OR NOT TO INVEST IN THE COMPANY AS SPECIFIED HEREIN. EACH INVESTOR UNDERSTANDS THAT THE FOLLOWING FACTORS ARE NOT AN ALL-INCLUSIVE LIST OF POSSIBLE RISKS INHERENT IN THE OFFERING.
Kevin Maloney and Adam Parks are part-time officers. As such, it is likely that the company will not make the same progress as it would if that were not the case.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
Company has a limited operating history. The Company is in a start-up phase and has not engaged in any significant operations to date. There is no certainty that the Company will be successful in overcoming the risks of development in order to advance beyond the start-up phase. The Company was incorporated on July 28, 2020 and has been operating only since that time. Because we have been operating for only a short period of time, we have not produced a profit. There is no assurance that we will ever produce a profit. As a new enterprise, we are likely to be subject to risks our management has not anticipated. The Company has limited resources and will not be able to continue operating without the proceeds from this offering. It is possible that the proceeds from this offering and our other resources may not be sufficient for us to continue to finance our operations.
No Guarantee of Return. No assurance can be given that an Investor will realize a substantial return on investment, or any return at all, or that an Investor will not lose a substantial portion or all of the investment. For this reason, each prospective investor should carefully read this memorandum and all exhibits attached hereto and should consult with an attorney, accountant, and/or business advisor prior to making any investment decision.
We have not retained an independent party to sell the offering and the failure of our officers to sell the offering may result in a shortage of operating funds. Officers and directors of the Company are offering our shares on a “best-efforts” basis. We have not contracted with an underwriter, placement agent, or other person to purchase or sell all, or a portion of our shares and there is no assurance that we can sell all or any of the shares. Further, if we had hired an underwriter, placement agent, or other independent person to sell the offering, that person would have conducted an independent due diligence examination into our business.
The Company could fail to finalize a key contract for use of land for its mobile facility. The Company is in negotiations for a lease which must be finalized before the Company can operate. Failure to obtain an appropriate lease would prevent the Company from operating.
Company May Require Additional Funds. The Company currently anticipates that the net proceeds of this Offering, assuming the Company raises a significant portion thereof and obtains other financing, will be sufficient to meet its anticipated needs for working capital and other cash requirements for the foreseeable future. However, the Company may need to raise additional funds to purchase key equipment, such as the mobile processing unit, or operate the project. There can be no assurance that additional financing will be available on terms favorable to the Company, or at all. If adequate funds are not available or are not available on acceptable terms, the Company’s ability to fund its project would be significantly limited. Such limitation may have a material adverse effect on the Company’s business, operating results and financial condition.
Company’s Operating Costs May Rise. The Company has budgeted for a wide range of operating costs based on current conditions; but unforeseen conditions could cause operating costs to rise substantially. For example, demand for animal processing may not be as strong as expected. An increase in labor costs or in other operating costs could cause the Company to be unprofitable and unable to pay dividends or interest.
Revisions to Use of Proceeds. It is possible that the use of the proceeds will be revised by management. Management will have significant flexibility in applying the net proceeds of this offering within the scope of the business of the Company. The failure of management to apply such funds effectively could have a material adverse effect on the Company’s business, prospects, financial condition, and results of operations.
The Company May Not Be Able to Compete Against Established Competitors. The Company will be competing with established businesses that have an operating history and greater financial resources, management experience and market share than we have. There can be no assurance that we will be able to compete or capture adequate market share. The Company will not be profitable if we cannot compete successfully with other businesses.
Control of the Company. Control of the Company and all of its operations are, and will remain, solely with its Board of Directors, which is controlled by the Company's producer members. Investors must rely upon the judgment and skills of such persons. Purchasers of the securities will have no vote and no control over the management and affairs of the Company.
It may be difficult to attract qualified staff due in part to housing costs in the Bay Area. In order for the Company to grow as anticipated, it will need to hire additional staff with the unique skills that will be necessary. While the Company believes that candidates with the necessary education, skills and experience are available, there is no guarantee that the Company will be successful in hiring and retaining the necessary staff.
Our failure to comply with government rules and regulations may harm our business. Our business must comply with local, state and federal rules and regulations including environmental, safety, animal and food processing regulations We believe that we can comply with the rules and regulations with which we will be required to comply. If we fail to comply with a rule or regulation we may be subject to fines, or other penalties, or our permit or license may be lost or suspended. We may have to stop operating and our investors may lose their entire investment.
The Company could fail to obtain necessary regulatory approvals. The Company must obtain certain state and federal regulatory approvals for operation of the project. These approvals must be obtained in order for the project to proceed as described.
Unfavorable weather, earthquakes and other natural disasters as well as disease or pathogens in animals or humans could impact the Company’s success. The Company intends to build its project in a geographic area which is exposed to earthquakes, weather-related problems, and other natural disasters. Such disasters could cause damage to the project; interrupt power supplies; hamper delivery of water to or from the plant; or otherwise lead to a loss of revenue or an increase in costs to the Company. The Company works to prepare animals for market and as such disease or pathogens in the facility in animals or humans can impact the Company's ability to provide its services.
The offering price of the Class C Preferred Stock has been arbitrarily set by the Company. The offering price of $10 per share bears no relationship to established value criteria such as net tangible assets, or a multiple of earnings per share and accordingly should not be considered an indication of the actual value of the Company.
Because there is no market for the Company’s stock, you may not be able to sell your shares. There is currently no, and there may never be any, secondary market trading in the Class C Stock, and investors’ ability to sell their shares are further limited by transfer restrictions under applicable securities laws and the terms of the subscription agreement. The primary exit event contemplated by this investment is repurchase. However, there is no guarantee that the Company will be able to repurchase the stock. You may never be able to sell your shares and recover any part of your investment, unless we are able to complete a subsequent public offering or we are able to sell the Company for cash or merge with a public company.
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