|1||The rare opportunity to invest and enjoy the potential upside of a growing pro soccer team in the US|
|2||Our fans love us. 83% recruited a friend to come to a game in 2019|
|3||Have a say in shaping the culture and values of one of America's most distinctive clubs as an owner|
|4||You love the beautiful game, you love an iconic city, or you just love being part of the fun|
|5||We experienced double digit growth in attendance and revenue for 7 of our first 8 seasons|
|6||You can add "Professional Sports Team Owner" to your LinkedIn or Match.Com profile|
Everywhere I go all my life when people ask me where I’m from, I feel a surge of pride when I can say Detroit. That blessing has always been my bedrock. Futbol is a great game, and this is really cool. Iggy Pop
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What started as an effort over a decade ago to bring together Detroiters through the world's game has grown into a professional team that has consistently redefined what an American soccer club can be. Detroit City FC is more than a soccer team. DCFC is memorable, fun, rabid, community-oriented, winning, authentic, professional, affordable, inspiring . . . and now something you can be a part of as an owner.
Detroit City FC is Detroit’s soccer team. Never settling for just being a third division, pro soccer team, DCFC is rooted in the community and committed to being the sporting embodiment of the revival of Detroit, one of the world's most notorious, iconic, and lovable cities. As a business entity, DCFC is focused on promoting the beautiful game, creating an accessible sporting event for all, and being around for generations to come through prudent management and a fiscally conservative approach.
Our fans are who we are. A sense of ownership in the creation and growth of the club exists among our supporters. And rightfully so. From mowing the pitch at our original stadium in the middle of the night to cooking meals for players to traversing the country to support the team on the field, the supporters have been there for the club every step of the way. In 2015, when it came time for the club to find a new home, we purposely engaged our greatest asset, our supporters, in the largest community investment campaign in Michigan history. Thanks to their efforts, both financially and with volunteer work, we were able to secure a 8,000 seat stadium under a long term lease and gave the most passionate soccer fans in the region an even greater emotional (and financial) interest in the success of the club. As a result of the supporter culture around the club and our grassroots approach, Detroit City FC has seen growth in attendance and revenue each year with minimal spending on marketing. A fall 2019 survey of 750 fans found that 83% had recruited a friend or family to attend their first DCFC match in the past year. Our fans define our club and now they have a chance to own a piece of it.
DCFC has achieved tremendous growth since its founding in 2012, regularly attaining double-digit increases in annual home match attendance and gross revenue. The club has always been committed to a fiscally conservative approach to budgeting and strict management of expenses. These values will stay core to the club's leadership as it seeks new investment to expand revenue generators through additional staff and stadium improvements as well as to help the club navigate the impact of the coronavirus on professional sports.
In many ways our club is defined by the culture that has emerged around the organization and its supporters over the years. The organizations and causes that the club and fans have embraced over the years, as well as those individuals who have represented the club on and off the field, have helped to define DCFC culture. As an owner, you'll have an opportunity to attend the annual owners' meeting and help determine matters central to club culture, such as annual charity partners, honors for past players, stadium policies, and many of the other elements that make DCFC such a special club.
Detroit City Football Club has financial statements ending December 31 2019. Our cash in hand is $1,081,011.22, as of July 2020. Over the three months prior, revenues averaged $22,370/month, cost of goods sold has averaged $20,737/month, and operational expenses have averaged $73,739/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.
Rooted in the community we call home, we are Detroit's professional soccer team.
As the sporting embodiment of the resurgence of one of the world's most iconic cities, we believe we're building an organization that will be around for generations to come, while continuing to redefine what an American soccer club can be.
DCFC Holdings, LLC was incorporated in the State of Michigan in January 2015.
Since then, we have:
Historical Results of Operations
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 $1,540,500 in debt.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 24 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 24 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
DCFC Holdings, LLC cash in hand is $1,081,011.22, as of July 2020. Over the last three months, revenues have averaged $22,370/month, cost of goods sold has averaged $20,737/month, and operational expenses have averaged $73,739/month, for an average burn rate of $72,106 per month. Our intent is to be profitable in 24 months.
The coronavirus pandemic has had a significant impact on our operations. We rely on the ability to play matches in front of large groups of fans. In 2020, we do not anticipate being able to play matches in front of fans so it has impacted our three main revenue streams: ticket sales, sponsorship, and merchandise sales. We have implemented contingency plans to reduce operating costs as much as possible during this period.
Gross operating revenue is anticipated to be $175,000 over the next six months with the majority coming from merchandise sales and a smaller portion coming from sponsorship payments. Operating expenses are expected to be $696,000 over the next six months largely due to fixed operating costs that will allow us to maintain operations so that we are better positioned to emerge following coronavirus pandemic.
The net loss in 2019 can be attributed to higher than budgeted expenses related to joining NISA. League entrance fees and travel costs for our fall season were higher than budget expectations. We also had several matches in the 2019 season with bad weather that resulted in lower than expected ticket sales.
Our ownership group has provided additional funding over the past six months to cover short-term losses. We have also applied for government loan and grant programs. We secured $150,000 in PPP loans and another $150,000 under the SBA EIDL loan program.
DCFC does not anticipate being in a position to offer dividends for the foreseeable future. Investors could see a return through a sale or acquisition of the company at some point in the future.
HIGH RISK INVESTMENT. INVESTOR UNDERSTANDS THAT AN INVESTMENT IN THE UNITS INVOLVES A HIGH DEGREE OF RISK. THE UNDERSIGNED IS AWARE THAT AN INVESTMENT IN THE COMPANY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK, INCLUDING THE POSSIBLE LOSS OF THE ENTIRE INVESTMENT, AND HAS CAREFULLY READ AND CONSIDERED THE FOLLOWING RISK FACTORS AND ALL MATTERS SPECIFIED IN THESE DISCLOSURE MATERIALS IN DETERMINING WHETHER OR NOT TO INVEST IN THE COMPANY AS SPECIFIED HEREIN. THE UNDERSIGNED UNDERSTANDS THAT THE FOLLOWING FACTORS ARE NOT AN ALL-INCLUSIVE LIST OF POSSIBLE RISKS INHERENT IN THE OFFERING.
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.
No Guarantee of Return. No assurance can be given that the undersigned will realize a substantial return on investment, or any return at all, or that the undersigned will not lose a substantial portion or all of the investment. For this reason, each prospective investor should carefully read the Disclosure Materials and all exhibits attached hereto and should consult with an attorney, accountant, and/or business advisor prior to making any investment decision.
The Company relies heavily on key personnel. The Company’s success depends substantially on the efforts of its Managing Board. The Company does not have an established plan to replace these persons in the case of death or disability, although this risk is mitigated to some extent by the skills and experiences of the other members of the Managing Board. The Company’s success also depends on its ability to recruit, train, and retain qualified staff. The loss of the services of any of key personnel, or the Company’s inability to recruit, train, and retain qualified staff, may have a material adverse effect on the Company’s business and financial condition.
Control of the Company. Control of the Company and all of its operations are, and will remain, solely with its Managing Board and Class A 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.
The Company is not required to pay cash distributions to members. The Company is not required to, and there is no guarantee that the Company will, pay cash distributions on the Units in any year or at all. The undersigned could be required to hold their investment indefinitely without receiving any cash distributions.
Investors have limited opportunities for exit. It is unlikely that there will ever be substantial secondary market trading in the Company’s Units, and investors’ ability to sell their shares are further limited by significant transfer restrictions under applicable securities laws and the terms of this Subscription Agreement. As a result, investors may be required to hold their Units indefinitely, with little or no ability to resell their shares or otherwise recover their investment amount.
Investors have very limited voting rights. Except as required by law, the Units have no voting rights and all voting rights belong to holders of Class A Membership units. Investors must rely on Class A Members to elect qualified managers and on the Company’s Managing Board to make strategic and operational decisions that will enable the Company to succeed.
The offering price of the Units is arbitrary. The offering price of $125.00 per Unit 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.
The Company may revise the use of proceeds of this offering. The Offering Materials describe the Company’s current intentions regarding use of proceeds of this offering. However, the Company will remain free to use such proceeds in a different manner, based on the judgment of its officers and directors. Failure to use such proceeds effectively could harm the business and financial condition of the Company.
Unfavorable weather, earthquakes other natural disasters as well as health matters, including pandemics, could impact the Company’s success. Such disasters could cause damage to the Company’s business and otherwise lead to a loss of revenue or an increase in costs to the Company.
The Company’s success depends on our ability to obtain, maintain, defend and enforce intellectual property rights. The Company’s ability to compete against other businesses selling similar products depends on our ability to secure and enforce intellectual property rights, including trademark and trade secret rights. Currently, the Company has a license agreement for the trademarks it uses to conduct its business. The Company’s use of this intellectual property is subject to the terms of that license and there is no guarantee that the Company’s licensed trademark registrations that have issued (or may in the future issue) could be held invalid due to our conduct or challenges by third parties. We could lose our trade secret rights if we fail to properly protect our confidential information. Even to the extent that our intellectual property rights are valid, enforcing those rights could involve costly legal processes that we may not be able to bring to a successful conclusion.
The Company could be held to violate intellectual property rights of third parties or to be in breach of the license agreement for the trademarks. Although the Company is not aware of any third party rights that are infringed by our existing or contemplated business activities nor is the Company aware of any breach of the licensing agreement, there is no guarantee that we will not be sued for infringement by third parties, sued for breach of the license agreement or that we will not need to modify our brand or products to avoid infringement or to respond to any breach of the licensing agreement.
Temporary Rule 201(z)(2) provides temporary relief from certain financial information requirements by allowing issuers to omit the financial statements required by Rule 201(t) in the initial Form C filed with the Commission. This offering has commenced in reliance of Temporary Rule 201(z)(2) and, as a result, the following must be disclosed: (i) the financial information that has been omitted is not otherwise available and will be provided by an amendment to the offering materials; (ii) the investor should review the complete set of offering materials, including previously omitted financial information, prior to making an investment decision; and (iii) no investment commitments will be accepted until after such financial information has been provided.
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