|1||Our 1st product is an award-winning tequila with back-to-back gold medals from San Francisco World Spirits Competition.|
|2||Our team of seasoned advisors and industry professionals has experience guiding billion-dollar companies to exit.|
|3||US retail sales of spirits are up 32% in 2020 with online alcohol sales growing at almost 500% from last year.|
|4||Our Direct-To-Consumer model leverages the increase in consumer demand and will quickly build brand enthusiasts.|
|5||We are a California Benefit Corporation, a Pending B Corp, and a member of 1% for the Planet.|
I like the concept (Artisanal formulations utilizing top quality components), I like the Founder/CEO, Howard Cao (he’s a winner with all the drive and ingenuity needed for success), I like the market (it may seem crowded, but with proper positioning, there is a very profitable niche for Kokoro) and most importantly, it is a great product. All of the elements are there for great success. The business plan is sound and eminently executable.
Howard has a real knack for surrounding himself with good talent and has already formed a high quality advisory council to help him build the business.
This is an excellent opportunity to get in at the very beginning of what will surely be a fun and exciting venture.
Three years ago on National Tequila Day, our founder, Howard Cao, dug around in our studio’s cupboard and stumbled upon an old bottle of tequila that had been inadvertently neglected over the years. Dusting it off, he popped open the bottle, took a sip, and was absolutely moved. He thought of the people and hard work that went into making such a fine tequila, not to mention the agave and beautiful regions they were sourced from. Above all, he wondered how the spirits we drink today could bring so many people together but with so little appreciation for the spirits’ culture and heritage. This insight inspired him to design something he could share with his friends and family.
What initially began as a clever holiday gift, evolved into KOKORO Spirits, a company that curates a collection of premium spirits and a brand that celebrates communities and cultures from around the world.
As a California Benefit Corporation and Pending B Corp, we are focused on the triple bottom line: profit, people, and the planet. Doing our part as an independent bottler, we are mindful of how we source and procure our spirits by partnering only with like-minded distilleries who align with our values of social and environmental responsibility. We are also a member of 1% for the Planet, a non-profit that has given more than a quarter of a billion dollars back to society in the last 20 years.
We believe in a world that not only appreciates our connected humanity but also celebrates our individualism as well. As part of that belief, we use ancestral distillation techniques to craft innovative and traditionally-untraditional spirits to share with the world.
Once we defined our purpose, we started on the design. First and foremost, the bottle. We wanted a shape that was iconic, catchy, but not indulgent and garish. And of course, Howard’s Midwest upbringing probably had something to do with our bottle’s similarities to a moonshine jug. For our logo, we started with a minimalist approach, placing XXX XXX as a substitute for our yet to be named brand. The six X’s looked so good that we decided to keep them. We intend to use the same bottle and design across our entire collection of spirits as a symbol and reminder that it’s not the vessel, but what’s inside that matters most. As we took a deeper dive into what that meant, we were introduced to KOKORO.
Our brand celebrates communities and cultures from around the world, and so we chose a name that eloquently describes this sentiment. KOKORO is a Japanese expression that unites the notions of heart, mind, and spirit; which are considered indistinguishable from one another. Interestingly enough, a mindfulness practitioner recently explained that our placeholder “X’s” are actually a rune for *gebō or “gift” which symbolizes the relationship between giving, receiving, and learning to give responsibly. All the pieces serendipitously fell into place as we embraced our mash-up of cultures. Not as appropriations, but as an inspiration of how disparate ideas can beautifully merge together into one, fulfilling the meaning behind KOKORO Spirits as our namesake.
Given National Tequila Day was the initial spark for our KOKORO journey, the choice for our first release was obvious. Considering the hundreds of distilleries we could have partnered with, we were drawn to Destiladora Bonanza, a vibrant, family-owned distillery based in the highlands of Jalisco with a heritage of tequila making that dates back to 1886. Even more impressive is their focus on social and environmental responsibility and gender equality, echoing our mission.
Their master distiller, Rocío Rodriguez, one of only a handful of female tequila master distillers, has a passion for crafting with ancestral techniques, allowing us to develop an innovative, traditionally-untraditional tequila plata that will surprise and delight both new and experienced tequila lovers. Our relationship with Bonanza & Rocío solidified when we independently selected the same tasting notes for our final tequila. That is when we knew that we crafted a tequila that both KOKORO Spirits and Bonanza would be proud to share with the world
The first introduction of Rocio’s tequila expression was presented by KOKORO Spirits at the 2019 San Francisco World Spirits Competition as Tequila Plata. Our hard work and research did not go unnoticed as we were awarded a gold medal. Merely our first milestone, we didn’t stop there. With the help of our partnership with Destiladora Bonanza, we continued to immerse ourselves in all things tequila and kept exploring expressions to perfect the taste. As a result, we were awarded our second gold medal at the 2020 San Francisco World Spirits Competition.
Two gold medals, back-to-back. Wow. It was truly an honor to be recognized not only for our unique taste but also for the time and effort that we put into creating an exceptional tequila. After two successful industry awards, the time to launch our Tequila Plata was next. Moving forward, we will continue to master our proven abilities to find and curate the rest of our collection of impeccable spirits. We have already begun drawing plans and setting timelines for our next spirit and intend to launch it within a few months of shipping our tequila.
Our Tequila Plata starts with the traditional slow roasting of the piña - the heart of the blue agave plant. After 48 hours of roasting, the piña is crushed by a tahona to extract the aguamiel for fermentation. Our tequila provides an inviting aroma of cooked agave, ripe apple, and dusted pineapple that leads you to sweet herbal and caramel flavors. Made to be sipped, the light alcohol impact and lingering notes of floral, citrus, and light ginger allow for a smooth, harmonious experience.
We feared that the current world issues would slow down our launch, but the market is telling us otherwise. US retail sale of spirits is up 32% in 2020 and online alcohol sales are skyrocketing at almost 500% from last year. It became apparent that our eCommerce model is ideal in the current climate for delivering our spirits directly to our customers’ doorsteps. Moreover, our distributors, American Spirits Exchange, and online fulfillment partner, Speakeasy Company, are the reliable anchors in supporting our online sales and distribution needs. There’s no better time to launch KOKORO Spirits than now.
As we shake up the traditional three-tiered system of selling alcohol, our direct-to-consumer model will allow us not only to maximize gross margins but will create a unique, firsthand experience that can quickly build a community of KOKORO enthusiasts and advocates.
Investing in KOKORO Spirits will not only give our investors the chance to be a part of curating a collection of exceptional spirits, but it is also a gateway for anyone to invest in. You shouldn’t have to be a millionaire or a celebrity's best friend to have the opportunity to invest in a new company that you truly believe in. That’s why we’re setting our minimum investment at only $100. We’ve already had a fair amount of large, private funding offers, but as a company that focuses on the celebration of community and camaraderie, keeping the opportunity of KOKORO Spirits within a small, exclusive network just doesn’t fit our core beliefs and values. While we certainly won’t turn down any large crowdfunding investments, our main goal is to democratize and diversify our shareholders and to provide all investors an opportunity to join our community and cause.
Entering the tequila market provides us with a pretty safe bet. US tequila sales have been prosperous - reaching almost $9.3B in 2018 and continuing to grow. Even capturing a small fraction of that could grow our company beyond the point of financial sustainability.
While our award-winning tequila leads by example, we can promise that our next spirit categories will be just as exceptional in both the quality and our sourcing methodology, staying true to our core beliefs and values. Reaching these distinguishable heights will require meticulous planning and dedication; something KOKORO Spirits thrives on. In turn, investors will get to be a part of this culture by having the opportunity to communicate with us directly and provide their input. Our current priority may be getting our award-winning tequila to the doorsteps of our customers, but our long term goal is to expand our collection of spirits and experiences that will speak to enthusiasts across the world. We can’t wait for you to join us on the adventure of selecting our next spirit. Be it Scotland, the Caribbean, Southeast Asia, the Netherlands, or even our home country, The United States, our opportunities to explore and share the world’s spirits are boundless.
With your investment, KOKORO Spirits will be able to officially take flight. We have built a plan to get to market as efficiently as possible, by leveraging our creative partners and advisors. Our largest use of capital will go to fulfill the initial run of our first product line - tequila. A significant portion of the funding will be utilized to support hyper-targeted marketing activities (e.g., social media and email marketing) to raise brand awareness and generate customer trials, and includes the procurement of our one-of-a-kind collection of swag for consumers. The remaining share will go towards operating costs and working capital.
We hope you share the same enthusiasm for premium spirits and our desire to celebrate cultures and communities from across the globe. Let’s start this journey together and
xxx EXPLORE THE WORLD WITH US, ONE SPIRIT AT A TIME xxx
KOKORO Spirits has financial statements ending December 31 2019. Our cash in hand is $0, as of July 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.
We curate premium spirits from around the world not only to honor a region’s traditional distillation methods but also to celebrate and share their culture and communities.
We intend to be the premier destination for spirits enthusiasts who are looking for highly curated and multicultural experiences. We see ourselves transcending from a premium independent bottler to an international lifestyle brand, all while doing our part in preserving the legacy and richness of different cultures from across the world.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future, if any.
KOKORO Spirits, Inc. was organized as a single member LLC in the State of California in June 2018. In June 2020, the Company converted to a California C Corporation.
Since then, we have:
Historical Results of Operations
Our company was organized in June 2018 and has limited operations upon which prospective investors may base an evaluation of its performance.
Liquidity & Capital Resources
After the conclusion of this Offering, should we hit our minimum funding target, we plan on raising capital again in approximately 12 months.
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
To date, the company has been financed with $141,350.93 in equity.
KOKORO Spirits, Inc. cash in hand is $0, as of July 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. Our intent is to be profitable in 6 months (this is cannot be guaranteed).
One of the most significant changes is our change from LLC to a C-Corp.
Until recently, KOKORO had been incubated within Form & Fiction, a creative & venture studio. F&F has paid all of KOKORO's expenses up till now in exchange for equity.
As of this fundraising KOKORO is now an independent company with its own expenses. Monthly costs for American Spirits Exchange (importer) and Speakeasy (ecommerce distribution) as well as all production, marketing, fulfillment and other operating expenses will be incurred by KOKORO directly as of August.
In the next 3-6 months, KOKORO will begin selling its first product to customers (premium Tequila). We estimate an initial sharp increase in sales driven by launch marketing. After this initial wave, we expect stable but growing sales going forward. With success in the initial 6 months, KOKORO will start planning for the launch of our second product line. In six months we hope (but not guarantee) to generate $150,000 in revenue, $113,000 in cost of goods old, and $83,000 in operating expenses. We aim to start generate revenues as soon as we receive funds from this offering.
We expect a similar trend for expenses. We will need to spend on an initial production run, and then continue building inventory to keep up with demand. Launch costs (legal, accounting) and marketing expenses will also have an initial peak in the first 3 months post-launch. After that, we will increase spend on marketing once the data shows that incremental spend drives customer demand. With success, we will bring in additional full-time employees and develop our second product line.
Other sources of capital will include our partnership with Form & Fiction. They will continue to collaborate and engage with the brand, and contribute marketing, advertising, and operational support. The founders have a large network of interested investors that we will tap once KOKORO shows momentum.
We have a limited operating history.
We have preferred suppliers and any interruption in their operations could impact our operations.
We have relationships with suppliers for our all aspects of our spirits, bottles, packaging, and additional products. While we would be able to find alternative suppliers if required, any disruption in the operations of our current suppliers could negatively impact our operations.
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.
We could experience licensing, legal, or regulatory problems. We are subject to federal regulation of our products.
In the U.S., there is an extensive body of law and regulation covering alcoholic beverages. Among other things, these regulations control the alcohol content of our spirits and the labels we use on our packaging. Should any of these provisions be violated, we could incur fines or other penalties that would negatively impact our financial results. Additionally, in the event of government shutdowns, we may not receive timely approval for packaging labels, potentially delaying the release of new and seasonal products.
The amount of capital we are attempting to raise in this offering under Regulation Crowdfunding may not be enough to sustain our business plan, and we intend to raise additional capital in the future. As we intend to undertake additional equity or debt financing in the future, that may dilute your investment in this offering. You will not have a significant influence on the management of the company.
We may not be able to maintain and enhance our product image. We need to increase brand awareness.
The image and reputation of our products may be impacted for various reasons including litigation, complaints from regulatory bodies, or consumers resulting from quality failure, illness, or other health concerns. Such concerns, even when unsubstantiated, could be harmful to our image and the reputation of our products.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, 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. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.
Our management has broad discretion in regards to the use of proceeds in this offering.
Our management is entrusted to make decisions in the best interest of the company. That includes using their discretion when applying the proceeds of this offering to our operations. While we state what our intended uses might be, changed circumstances and the emergence of opportunities may result in uses of proceeds that differ from what is disclosed here.
COVID-19 can materially impact our business.
It is unclear how long the COVID-19 pandemic will last and to what degree it could hurt our ability to generate revenues. For example, it could complicate our ability to procure materials and partnerships needed for production, or impact our ability to distribute to customers. There may be other effects stemming from this pandemic that are deleterious to our company which we have not yet considered.
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