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1 | Over $1.24M in revenue in less than 11 months (Dec 2018 – Oct. 2019). |
2 | Held the largest poker tournament in Texas history with a record-breaking $790,000 prize pool. |
3 | Over 4,000 customers in 9 months. |
4 | Over $63K in profitability by the end of Q3 2019. |
5 | Compliant with Texas State Laws. |
6 | Lead Investor: Private Equity Investors invested $525,000 |
The FreeRolls Poker Club business model is based on a two-fold premise: Go Big and Go Fast! FreeRolls Poker Club has attracted poker players from all over the world for its big events such as WPT Deepstacks Houston and The Texas Showdown Ladies Poker Series.
As we have continued to offer a fun, safe and exciting venue for the play of poker we have seen our numbers increase consistently since our launch in December of 2018.
The chart below shows the progression of our flagship location in Katy, Texas in 2019. The September revenue numbers are after the reopening of a located in Houston that had closed down for 3 months. Once the club reopened on Sept. 5th, displaced players who lived closer to that location migrated back.
While we cannot guarantee any specific result of our business plan, we are focused on the achievement of the following goals over the next 18 to 24 months.
Our flagship location located at 24025 Katy Freeway in Katy, Texas is a 10,000 plus square foot facility that spans the entire second floor of the famous Robert's Carpet Building. Other club amenities are:
Our revenue model is very simple and extremely effective. On top of revenue generated from membership and security access fees, we will generate new revenue from advertisers who want to put a message in front of our members because those members have some very important things in common -- 1. They have disposable income 2. they spend a lot of time at the tables (in front of the ads) and 3. they love to play poker without it costing them anything!
One of the things that every advertiser is looking for is a way to get in front of an attentive audience and they are looking for repetition. Interactive advertising at the poker table and across our establishment does both.
Now that FreeRolls has successfully established itself as a pioneer in the Texas poker scene, it is now moving into its Phase 2 which is an expansion on the current business and the introduction of the in-table advertising systems.
“Despite a rake-free model, the state-of-the-art poker room is as comfortable as any you’d find further west in Las Vegas.”
CardPlayer Magazine - September 2018 Edition
FreeRolls Entertainment has financial statements ending October 1 2019. Our cash in hand is $43,000, as of October 2019. Over the three months prior, revenues averaged $180,000/month, cost of goods sold has averaged $15,000/month, and operational expenses have averaged $120,000/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.
Overview
We are one of the largest and fastest-growing poker clubs in the State of Texas!
While we cannot guarantee this, our plan is to open 5 more clubs in the State of Texas over the next 2 years and sell the company to a major casino chain, gaming, or entertainment chain.
Milestones
Freerolls Entertainment, Inc. was incorporated in the State of Utah in September 2017.
Since then, we have:
Historical Results of Operations
Our company was organized in September 2017 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
To-date, the company has been financed with $1,062,734 in debt and $390,000 in equity.
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 12 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
Freerolls Entertainment, Inc. cash in hand is $43,000, as of October 2019. Over the last three months, revenues have averaged $180,000/month, cost of goods sold has averaged $15,000/month, and operational expenses have averaged $120,000/month, for an average net margin of $45,000 per month
The primary change in the business is that we have opened our flagship location and the revenue generated has exceeded over $1 million in sales since Jane 2019. The primary reason for the increase in revenues is the median income of the area the club is located in. Katy, Texas boasts a median income of over $88,000 which comes inherent a larger base of poker players.
Our expectations for revenues come from the expansion and new construction of homes in the immediate area. This area covers a radius of fewer than 10 miles from the club and at current, there are 5 new development projects at various stages of completion. By the end of the year, we will have two loans reach maturity. Our plan is to use this raise to help pay off said loans. If our raise is not sufficient, we will pursue refinancing to procure more favorable terms, especially given our recent increase in revenue.
Many of our convertible notes are due on demand. In the event of a large and unexpected call on capital, the Company's Founders will infuse capital to cover the demand, assuming the Company does not have enough operating capital to use instead.
Over the next two years, we plan on opening 5 more poker clubs in Texas. Each location will cost approximate $40,000.
1 | Although we have identified what we believe to be a desire in the market for our legal poker playing venues, there can be no assurance that demand or a market will develop or that we will be able to create a viable business. Our future financial performance will depend, at least in part, upon the introduction and market acceptance of our business offering. Potential poker players may be unwilling to accept, utilize or recommend play at our poker clubs. If we are unable to commercialize and market when planned, we may not achieve any market acceptance or generate revenue. |
2 | 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. |
3 | Our success depends on our ability to predict, identify, and interpret the tastes and habits of consumers. If we do not appeal to a large player base, our sales and market share will decrease. If we do not accurately predict which shifts in consumer preferences will be long-term, or if we fail to introduce new and improved methods of gameplay to satisfy those preferences, our sales could decline. If we fail to expand our offerings successfully across broader categories, or if we do not rapidly develop products in faster growing and more profitable categories, demand for our products could decrease, which could materially and adversely affect our product sales, financial condition, and results of operations. |
4 | Our operating results, business and financial condition could be significantly harmed by an extended economic downturn or future downturns, especially in regions or industries where our operations are heavily concentrated. Further, we may face increased pricing pressures during such periods as customers seek to use lower cost or fee services, which may adversely affect our financial condition and results of operations. |
5 | We may face pricing pressure in obtaining and retaining our clients and in the securing of new advertising contracts in our clubs. On some occasions, this pricing pressure may result in lower revenue from a client than we had anticipated based on our previous agreement with that client. This reduction in revenue could result in an adverse effect on our business and results of operations. Further, failure to renew client contracts on favorable terms could have an adverse effect on our business. If we are not successful in achieving a high rate of contract renewals on favorable terms, our business and results of operations could be adversely affected. |
6 | The success of our poker clubs largely depends on our ability to provide superior customer experience and high-quality customer service, which in turn depends on a variety of factors, such as our ability to continue to provide a reliable and user-friendly website interface for our customers to browse and purchase our products, reliable and timely delivery of our products, and superior after-sales services. If our customers are not satisfied, our reputation and customer loyalty could be negatively affected. |
7 | There could be a change in the current laws in the State of Texas to completely eliminate the play of poker. While this is a very slim likelihood in our assessment it possibly could happen if the Texas legislature votes on such a measure but it would not happen quickly as it would have to go through the legislative process. |
Director | Occupation | Joined |
---|---|---|
Russell Breland | Pest Control Systems @ Self | 2019 |
Charles Potter | Engineer @ NASA | 2017 |
Joanne Melton | Partner @ Bundlefly Media | 2017 |
Officer | Title | Joined |
---|---|---|
Charles Potter | CEO | 2017 |
Joanne Melton | CFO | 2017 |
Date | Amount | Security |
---|---|---|
$0 | Priced Round | |
09/2019 | $10,000 | Loan |
03/2019 | $26,000 | Loan |
12/2018 | $65,000 | Priced Round |
12/2018 | $80,000 | Priced Round |
03/2018 | $7,478 | Convertible Note |
12/2018 | $15,000 | Loan |
12/2018 | $26,200 | Loan |
12/2018 | $150,000 | Loan |
12/2018 | $10,000 | Loan |
12/2018 | $30,000 | Loan |
12/2018 | $70,000 | Loan |
12/2018 | $7,200 | Loan |
12/2018 | $230,000 | Loan |
12/2018 | $10,000 | Loan |
12/2018 | $25,000 | Loan |
12/2018 | $92,056 | Loan |
05/2019 | $215,000 | Priced Round |
09/2018 | $150,000 | Loan |
10/2018 | $30,000 | Priced Round |
Issued | Amount | Interest | Discount | Valuation Cap | Maturity |
---|---|---|---|---|---|
03/13/2018 | $7,478 | 14.0% | 20.0% | None | 03/13/2019 |
Lender | Issued | Amount | Oustanding | Interest | Maturity | Current? |
---|---|---|---|---|---|---|
Katy Investment Solutions, LLC | 09/30/2018 | $150,000 | $160,000 | 7.5% | 12/30/2019 | Yes |
Rakel Alvarez | 12/31/2018 | $26,200 | $26,200 | 0.0% | 02/26/2020 | |
Russel & Jennifer Fuchs | 12/31/2018 | $230,000 | $230,000 | 10.0% | 11/01/2020 | |
Manny Gonzalez | 12/31/2018 | $15,000 | $15,000 | 100.0% | 10/27/2020 | Yes |
Bruce Roloff | 12/31/2018 | $10,000 | $10,000 | 14.0% | 12/31/2019 | Yes |
Bruce Roloff | 12/31/2018 | $25,000 | $24,000 | 6.0% | 10/31/2020 | Yes |
Carol Litchult | 12/31/2018 | $92,056 | $80,000 | 24.0% | 01/01/2021 | Yes |
Carolyn Gel | 12/31/2018 | $70,000 | $70,000 | 5.0% | 12/31/2019 | |
Chris Ebner | 12/31/2018 | $7,200 | $5,000 | 10.0% | 12/11/2018 | |
Katy Investments, LLC | 12/31/2018 | $150,000 | $160,000 | 8.0% | 10/31/2020 | Yes |
Julian Walker | 12/31/2018 | $10,000 | $10,000 | 20.0% | 11/01/2019 | Yes |
Tristan Potter | 12/31/2018 | $30,000 | $30,000 | 10.0% | 12/31/2019 | |
Rodney Derbigny | 03/15/2019 | $26,000 | $26,000 | 9.0% | 03/15/2021 | Yes |
Joe Eckford | 09/17/2019 | $10,000 | $10,000 | 8.0% | 11/17/2019 | Yes |
$50,000 | 93.5% to building out our second location--property lease, equipment, furniture, fixtures, and equipment; 6.5% to Wefunder. |
$999,998 | 60% toward debt reduction; 15% to marketing and advertising technology development; 10% to software development; 8.5% towardbuilding out our second location--property lease, equipment, furniture, fixtures, and equipment; 6.5% to Wefunder. |
Class of Security | Securities (or Amount) Authorized |
Securities (or Amount) Outstanding |
Voting Rights |
---|---|---|---|
Preferred Stock | 1,000,000 | 0 | Yes |
Common Stock | 100,000,000 | 5,202,000 | Yes |
The Securities and Exchange Commission hosts the official Form C on their EDGAR web site.
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