110% of Principal + 50% of Net Proceeds
Investors are paid back first from proceeds of the Pop-Up + 10% premium. The remaining profits from the pop-up are then split 50/50 between DIVERTbrands and the investor pool. Major Investors are given the option to convert the value of their returns from the pop-up into DIVERTsessions 1 which will construct and manage the first DIVERTsessions permanent facility.
|1||We raised $500k in the first 10 days of our campaign making us a top company on WeFunder.|
|2||Experts call us mission driven TopGolf for Action Sports like Skateboarding, Surfing & Snowboarding|
|3||Team is comprised of leaders from TopGolf, Disney, Nike, Universal, Red Bull, X-Games and others.|
|4||We combat social inequities by providing accessibility to Action Sports and Education|
|5||Site and operations designed to specifically support social distancing and all COVID safety measures|
As a real estate investor, I think there will be a continued decline in the need for retail real estate. I believe that location based entertainment concepts like DIVERT are a great solution to transition that deteriorating retail real estate into productive and valuable assets.
Given our current climate surrounding COVID and crowd restrictions, people are eager to get outside and try something new or build on the action sports skills they have acquired in the past. Additionally, the introduction of more action sports in the Olympics will bring more eyes on and interest in the world of action sports possibly encouraging people to try new sports or pick up where they left off.
Most importantly, I prefer to invest in entities that I feel good about, companies that are not just looking at the bottom line but also looking for ways to improve the wellbeing of people. I love that DIVERT has an awareness of social inequalities and strives to make the action sports experience available to everyone no matter what their financial situation may be.
The DIVERTsessions pop-up is an outdoor Action Sports and Education facility designed for safe, affordable and accessible participation during COVID to anyone and everyone interested in trying these sports or learning something new. Our program is made up of 6 key attractions. A skatepark, a ski/snow hill, a wave machine, a creative education studio, a live event venue and food and beverage service. The program is very exciting, but why is now the right time to launch something like this?
Action Sports like Skateboarding, Surfing, Skiing Snowboarding and more are growing exponentially in popularity and only stand to continue to grow with the induction of Skateboarding, Surfing and Freestyle BMX into the Olympics isn 2021.
This popularity is met with very challenging barriers to entry for most of the population because these sports are expensive, they are located far away from urban centers and let's be honest, they can be a little intimidating. This makes accessibility socially and financially inequitable for most, and we are here to change that.
The DIVERTsessions pop-up was created by an industry leading team of experts from TopGolf, Nike, Red Bull, Disney, Universal and more to create a convenient, affordable, supportive and COVID safe answer to this pain in the market.
DIVERT has a proven track record of success and has scaled into this opportunity by showing it's ability to develop action sports facilities around the world, build a strong brand that led to ~$400k in revenue in merchandise and apparel sales in the first 6 months it was launched, and running national educational programing with companies like Red Bull.
If you have interest in becoming an investor in the DIVERTsessions Pop-Up, you will invest alongside industry accredited investors and share in the same financial terms as they do. You will receive all profits from the project until you are fully paid back on your initial investment + an additional 10%. After you have made this 10% return on your investment, the investor pool will then split the additional profits 50%/50% with DIVERTsessions 1 Inc. the company.
After this first Pop-Up, we plan to use the capital the company earned to expand to multiple permanent sites across the country, and as an early stage investor, you would be given the option to take your returns from the pop-up and cash out, or leave your money in the company and grow your investment and impact along with us. We would love to welcome you into the DIVERT family and so please read more below if you are interested, or feel free to reach out directly to the founders with any questions at email@example.com and firstname.lastname@example.org.
There is a massive untapped market between the number of people who are interested in Action Sports and who can participate. Currently, there are over 52,000,000 potential new Action Sports participants in the US alone which only stands to grow after the induction of Skateboarding, Surfing and BMX into the 2021 Olympics.
... especially underserved youth or previously excluded populations.
At DIVERT, our Founder’s lives were positively DIVERTED by the fortunate interjection of Actions Sports right when they needed it most. These sports taught them valuable life lessons — such as creativity, motivation, resilience, a passion for progression, and appetite for calculated risk, which eventually laid the groundwork for their entrepreneurial futures. 15 years later, DIVERT was born when they realized that they were part of a small, fortunate segment of the population that was able to access, afford and be welcomed into the Action Sports community.
After recognizing the apparent social inequality occurring in the very industry they thought so highly of, they set out to create a brand that would make Action Sports and creative education more accessible to underserved populations. The seed for DIVERT was planted and since then we have created a platform that uses action sports to educate, entertain, and empower anyone to "Achieve Their I’mpossible".
This is seen by media viewership, event attendance, and lifestyle product consumption. Even before being inducted into the Olympics, Action Sports, like skateboarding, snowboarding, and surfing, already enjoy massive attention and mainstream appeal as shown by media viewership, event attendance, and consumption of lifestyle products.
… Now with skateboarding, surfing and freestyle BMX being added to the Summer games in 2021, experts are predicting that these sports are going to explode in popularity due to something we call the “Olympic Effect”.
Despite the overwhelming interest Action Sports, there are high barriers that make Action Sports inaccessible to most. These sports are expensive, geographically distant from urban centers, they lack organized programming and they can be intimidating. As a result, only 1% of kids in the United States are able to surf, only 4% are able to snowboard and only 9% are able to skateboard.
Companies like Flowrider, Neveplast and a ton of others have created new technologies like wave machines and dry ski slopes that allow Action Sports like surfing and snowboarding to locate anywhere. The best part is that these technologies have the capacity to dramatically bring down the cost of participation and make them convenient and affordable to large urban populations.
Big box specialty and retail stores are closing— about 100,000 stores closing with an estimated 75,000 more to close by 2026. This has only been accelerated with the impacts of COVID-19 shutdowns. Yikes. Now, there's ample real estate in dire need of revitalization.
Well-capitalized retail landowners are turning to location-based entertainment (LBE) venues to attract guests and save the day. As a result, we are able to get favorable terms and in most cases, financing from the landlords to build out in the empty spaces.
Addressing the elephant in the room - the global health pandemic. DIVERTsession was actually designed in direct response to the global health pandemic. We realized we could design and develop a site plan and operating standards that intentionally supported 6' social distancing, enabled simple and straight forward sanitation, and made the New Normal part of the everyday at DIVERT. So that is exactly what we did. Our DIVERTsessions park is an outdoor recreation experience, the safest option of any location based offerings.
Add it up— There is a ton of interest in Action Sports, but participation is restricted, this interest only stands to grow substantially with the induction of these sports into the Olympics. There are new technologies that make it affordable and convenient to participate in Action Sports. There is a surplus of retail real estate and financial support for location-based entertainment concepts. There is more demand for social connection and activity than ever and the DIVERTsessions Pop-up program is intentionally designed to thrive in a post-COVID world.
This creates a major opportunity for someone to create an Action Sports and entertainment concept that uses these new technologies to make Action Sports more accessible and capitalize on the massive demand for participation in these sports.
The DIVERTsessions Pop-Up is an Action Sports and Entertainment outdoor recreation experience where anyone and everyone can benefit from the life lessons, community, and positivity of Action Sports and the surrounding lifestyles. The facilities are made up of 6 critical components. A surf machine, skatepark, artificial snow slope, music, art and media studio, food and beverage program, and event venue. Let’s have a look:
Each athletic area comes with a guide to ensure safe and comfortable progression and we supplement the athletic activities with education in videography/photography, art/design, music production and more, so even if you are not the athlete, there is a place for you to learn and progress at DIVERT.
We've worked long and hard to put together an All-Star Executive, Advisory and Project team with the accolades and experience that are unmatched in the Action Sports industry.
Our executive and advisory team is comprised of former executives, leaders and operators from TopGolf, GameStop, Disney, Universal, X-Games, Red Bull, Nickelodeon and more.
We have partnered with the world's top real estate, architectural, experiential, engineering, construction, operations, and legal professionals who brought you entertainment destinations and themed attractions like Disney World, Universal Orlando, TopGolf, Putt Shack, iFly, X-Games, Ferrari World, Wet'n'Wild, The Crayola Experience, Kidzania and much more.
Last but not least, we have acquired contracts with incredible athletes who hold multiple X-games gold medals, Olympic medals, and Guinness Book World Records.
(Check our deck for more information.)
If action sports have taught us anything, it is how to take calculated risks. You can't just ride up to a massive jump without working your way up to it. We've approached developing DIVERT with the same mindset by testing and validating key aspects of the business.
We spun up a merchandise brand called DIVERTcollective. Within the first 5 months, we generated over $350,000 in revenue and sold over 45,000 units of merchandise and apparel. We developed an entrepreneurship program to test out ability to create engaging programming. It immediately got picked up by Red Bull and used across all their college campuses across the country. We tested our ability to build and manage an Action Sports facility by building a skatepark and community center in San Rafael Costa Rica. To date, it has serviced over 500,000 sessions and is a centerpiece of the community. To test our operations, DIVERT partnered with Vans to produce a single day action sports and lifestyle event that taught over 160 at-risk youth skateboarding, music production, street art, photography, and videography.
Our actions to date have caught the eye of multiple accredited investors who have thoroughly vetted our team, concept, business model and timing, and decided this is a smart move with their most valuable asset, their money.
To date, the DIVERT team has been supported by its friends, family, advocates, and supporting community who sincerely believe in its founders and the profound impact that DIVERT will have. It only feels right to give the same group of individuals the opportunity to financially benefit from that support versus relinquishing all of it to anyone else who may not have the same beliefs and motivations to see DIVERT be successful. We want DIVERT to be built by the community, for the community.
DIVERTsessions revenue comes from the following key sources:
DIVERTsessions’ financial model is based on facility utilization of the capacities of our major attractions which is how many guests are using the attractions or otherwise occupying the space in non-peak times (like weekdays) and peak times (like weekends).
The DIVERT business model drives attendance, and revenue, in a handful of ways that enable people of all races, genders and socioeconomic backgrounds to be able to participate in the Action Sports and Creative Education.
The DIVERT programming model offers a number of alternative athletic and educational programs to help youth discover and develop a passion, turn it into a skill and eventually apply it to a successful career and life.
Now, we're ready to hit the ground running. We need your help to grow DIVERT. We currently have all vendor and partner agreements in place, a lease for our pop-up activation at the Del Amo Mall in Torrance, CA, the majority of the financing in place, and we are awaiting approval from the city to launch the concept once it is deemed safe and opportunistic post-COVID by government agencies and our own internal network of executives and advisors. Only once we receive green lights from the City and industry experts, as well as gather positive data around other similar concepts performance will we responsibly launch the pop-up to meet the pent up demand for meaningful places of connection.
We have thought long and hard about this question, consulted with industry experts, crunched the data and numbers and have come out on the other end with some clairty.
First, the good news is, our program is already designed to be a COVID safe outdoor recreations experience no matter when it is launched. That said, we wanted to take extra precautions because our guest safety is always our priority. Spring 2021 is a projected safe zone according to all of the cdc's projections regarding a second wave of COVID-19 (See this article for more information https://www.businessinsider.com/second-wave-of-coronavirus-infections-may-peak-in-fall-2020-5). In addition, it seems that by Spring 2021, a vaccine for COVID-19 will have been developed, which will drastically increase general comfort and sense of safety with going to places like DIVERT.
In addition to considerations around COVID-19, our alignment with the 2021 Olympics is an absolute game changer for the success of the business. By launching in Spring 2021 it allows us to get up and running, refine our operations, and align ourselves directly with the pre-marketing and rescheduled 2021 Olympics where Skateboarding, Surfing, and freestyle BMX will make their debut. As a result, we will be able to ride the metaphorical wave of Olympic hype and be the go-to place for future Olympic hopefuls to try these sports in their own community.
For as little as $100, you can invest in DIVERTsessions and join us in our mission to create positive change in countless lives and communities through the power of action sports. Back our project, share our story with your community on your socials and no matter what you do, always push yourself and others to...
DIVERTsessions Pop-Up has financial statements ending December 31 2019. Our cash in hand is $400,000, as of April 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $0/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.
DIVERTsessions make Action Sports more accessible and affordable. Action Sports like skateboarding, surfing, and snowboarding are currently out of reach to many because they are too expensive and too far away. What's worse is that most are shut out from the positive life lessons and community benefits that come with being a part of the Action Sports Lifestyle. DIVERTsessions changes this by situating participation facilities near urban metros and dramatically reducing costs to participate.
In 5 years, our goal is to have multiple DIVERT facilities across the country. Action Sports already have a global presence and we plan to continue its expansion. The DIVERT team currently has an active pipeline of over a dozen projects in and around major US metros and even more abroad. All with active development partners and active financing partners eager to bring DIVERT to their city. With a little help from you, the DIVERTsessions Pop-Up can turn all of these opportunities into a reality.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
DIVERTsessions 1 Inc was incorporated in the State of Delaware in June 2019. DIVERTbrands LLC is the parent company of DIVERTsessions 1 inc. DIVERTsessions 1 inc. is wholly owned by DIVERTbrands LLC. The DIrectors and Managers of DIVERTbrands LLC are the same as DIVERTsessions 1 Inc.
Since then, we have:
Historical Results of Operations
Our company was organized in June 2019 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
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 3 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 6 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
DIVERTsessions 1 Inc cash in hand is $0, as of April 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $0/month, for an average burn rate of $0 per month.
There have not been material changes to the expenses associated w/ DIVERTsessions 1 since the date our financials cover.
Our expenses will ramp up as we will move into development of the Pop-Up and we use these fund to further the project. During this phase, we will be spending the money from the WeFunder, and other equity sources. We believe we need at least $600k to open the Pop-Up.
At this point, it's difficult to predict when we'll be able to open the Pop-Up, as we're dependent on permits from the city. Once that permit is issued, we believe we'll be able to do so quickly. Our projected (but not guaranteed) monthly revenue, once operating, ranges from ~$650k - $1.1M.
Insufficient Capital. The Company’s capital is limited. Unless future capital is raised in future offerings, the Company may be unable to carry out its business plan. The Company may also be unable to open future locations and carry out its business plan as a result of cost overruns, construction delays or other unforeseen circumstances. If such circumstances occur, there can be no assurance that other funds will be available or available on acceptable terms for the establishment of DIVERTsessions and the other expenses that will be incurred in carrying out the business plan.
Non-Liquidation - The Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity.
Employees, officers and directors of the Company are a group of highly qualified professionals and are integral to the success of the Company. The Company’s ability to attract and retain qualified, motivated and talented staff contributes to the Company’s success and failure to recruit and retain such persons might have a material adverse effect on the performance of the Company.
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.
Dilution. To carry out its business plan, the Company will likely need to raise capital in the future in addition to 2020 offerings. Such additional capital may be raised through the sale of securities with a price less than, and rights superior to, those offered to the investors in the Offering. The investors in the Offering will not have any preemptive rights to invest in future securities offerings of the Company. As a result, the Shares may be diluted, perhaps substantially, by other investments in the Company.
Reliance on Management Team. The Company is dependent upon the efforts of the members of its management team. If the services of those members cease to be available to the Company, or become available to competitors, this could have a material adverse effect on the business, financial results and prospects of the Company.
Some members of the management team have limited operating experience in a project of this nature, such as opening new locations in other cities and other qualities from the Company’s business plan.
Potential Conflicts of Interest. Investors should be aware that there may be occasions when the Company, its principals and their affiliates will encounter potential conflicts of interest in connection with the Company’s activities. There may be, for example, a conflict between the interest of the principals to maximize their income from salary and similar payments from the Company and the interest of stockholders of the Company in maximizing the value of their shares.
Competitive Marketplace; Industry Risks. The Company generates the majority of its revenue from a single industry and, will be in a single geographic market. An investment in the Company could be considered an undiversified investment with a high concentration of risk. The business of providing location based entertainment of the type contemplated by the Company is competitive. The Company will be competing for market share in that field against other providers, some of whom are more established and better financed than the Company. The market for such experiences may also be subject to negatively impacted by general economic trends, global pandemics, downturns at times of heightened terrorism concerns, and competition from the emergence of new forms of entertainment, among other such risks.
Lack of Significant Operating History. The Company has limited operating history. As a result, potential investors may find it difficult to evaluate likely performance.
No Assurance of Profit or Distributions; Long-Term Investment. There can be no assurance that the investments of the Company will be profitable or that any dividends or other distributions will be paid to the investors. An investment in the Company is a long-term commitment and there is no assurance of any distribution to the investors prior to or upon liquidation of the Company.
Illiquidity. No market in the Company's stock is expected to develop. In light of the fact that the Company's common stock is not tradable, an investment in the Company is an illiquid investment. Investments in the Company's common stock should therefore be considered only by investors financially able to maintain their investment for an extended period of time and who can afford a loss of all or a substantial part of their investment. Investment in the Company's common stock is a long-term commitment, and there is no assurance of any distribution to the investors. The Company has no current plans to be acquired or to sell its securities in a public offering. The Company's common stock has not been registered under federal or state securities laws and is subject to restrictions on transfer contained in such laws.
Unequal Dissemination of Information. In the normal course of business, it is anticipated that the Company’s management team conduct meetings, provide reports or otherwise share information with investors and potential investors with varying degrees of frequency and specificity or at various points in time. As a result, certain investors may receive a greater depth of information than others regarding the Company’s activities.
Power of Attorney. For the Crowdfunding and related 506c offering to accredited investors from that time - and only those two offering, the Lead Investor will hold an irrevocable proxy and power of attorney to vote the holder’s stock.
Redemption. For the Crowdfunding and related 506c offering to accredited investors from that time - and only those two offerings, If an investor holds fewer than 1,000 shares of the Company's common units, the Company may, at any time and from time to time, redeem any or all of the investors' shares of common units at a price per share equal to the fair market value thereof as determined in good faith by the Company's board of directors.
Force majeure - There are unforeseen circumstances and external forces that could potentially stall, or halt entirely the development of the DIVERTsessions Pop-Up Experience including but not limited to global pandemics, forces of nature, acts of god and more.
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