|1||Customer Validation - Over 3,000 online customers, with 6,000+ bottles sold.|
|2||All Star Team - Led by pharmaceutical industry veteran and former Unilever Executive, former Brand Manager for Wish-Bone and Bertolli.|
|3||Huge Market Potential - Low FODMAP has the potential to exceed the Gluten Free Market by 7x. Irritable Bowel Syndrome affect 1 in 7 people.|
|4||Grocery Validation - Stocked in 100+ stores, receiving monthly reorders. Carried by KeHe distributors and in talks with UNFI.|
|5||Wholesale Demand - Major USA grocery chains are presently fast-tracking Low FODMAP products into their lineup and waiving slotting fees.|
|6||Early Mover Advantage - Only US Based brand focused on Low FODMAP currently on store shelves in the USA.|
Live Free Foods is passionate about giving people the tools to manage their Irritable Bowel Syndrome through delicious Low FODMAP food products and immediately actionable education.
Technically speaking, FODMAP stands for "Fermentable Oligo-, Di-, Mono-Saccharides And Polyols". More simply, a FODMAP is a group of short chain carbohydrates that are poorly absorbed by the body.
For most people, these short chain carbs go entirely unnoticed and pose zero health concerns. For sufferers of Irritable Bowel Syndrome (IBS), however, they wreak havoc throughout their intestinal journey. This often means frequent, urgent and painful trips to the bathroom throughout the day as well as feeling bloated and gassy. Sufferers are often afraid of leaving the house and are forced to plan their days around access to immediate bathroom facilities (or else risk embarrassing consequences.)
This is the everyday reality for the roughly 1 in 7 people that suffer from IBS. That's 46 Million people in the USA alone! Doctors prescribe a myriad of pharmaceutical options to these people but many of them are imperfect solutions and frequently introduce new problems or frustrations caused by the medication.
A diet low in FODMAPs has been clinically proven to manage the symptoms of IBS, and is more effective (and safer) than the leading drugs on the market. Unfortunately, FODMAPs are in most store-bought products and very few options presently exist that cater to a Low-FODMAP diet. Similarly, educational resources have been scarce to help build awareness and help people thrive with this new way of eating.
That’s where Live Free Foods comes in. Our founder has worked in the pharmaceutical industry for over 6 years and saw first-hand how people were being set up for failure to manage their symptoms. That’s why he founded Live Free Foods - to help people effectively treat their debilitating IBS symptoms with good food and education, rather than medication, so they can live healthy and normal lives again.
When deciding which foods to introduce first to the market, we collaborated with a very close-knit, science-focused support group on Facebook for sufferers of IBS. We looked at the foods people missed most and conducted formal and informal surveys to see where the most urgent demand was. With that, we learned that condiments and sauces were urgently needed and desired. One user went so far as to echo the sentiment of the entire group and proclaim, “make anything and we’ll buy it now!” (that’s a real quote, and a common sentiment among the survey responses)
We then teamed up with a food scientist, dietitians, bloggers, and most importantly, an independent laboratory in Australia (the birthplace of Low FODMAP) to create our first products. We went the extra mile to officially certify all of our products as Low FODMAP so that our customers would immediately know that our products are guaranteed safe and that our brand puts their gut health first.
In February of 2018, we launched our first product, Ranch dressing. To our dismay, we discovered we weren’t the first Low FODMAP Ranch on the market. But the rave reviews started rolling in for our Ranch’s taste and quality and our competitors pulled their entire line of salad dressings, and never re-released a Ranch dressing.
As we picked up steam we launched two more salad dressings and sold out several times on Amazon and our website as we struggled to meet the demand that was growing in the market for our products. We've also expanded our distribution into over 100 physical grocery stores such as Hy-Vee, HEB, and Kroger.
One amazing fact we discovered was that grocery stores were ALREADY eyeing Low FODMAP products before we came along. Nearly every store we talked with said some variation of “Don’t worry about slotting fees and onboarding, if its Low FODMAP we’re fast tracking it”. This has helped us get into KeHe Distributors and we're currently in talks with UNFI. With these partnerships Live Free Foods will have full coverage of grocery stores within the USA.
To date, we’ve also sold over 6,000 bottles of salad dressing online to over 3,000 customers. Some of which have ordered over 10 times and counting. We constantly receive messages from customers saying how our Ranch dressing alone has changed their lives (yes, really!).
It’s one thing to just make great food and sell it to people, but that’s not our whole mission. We started Live Free Foods to help people suffering from IBS to Live Symptom Free. Foods are only half of the equation. And exclusion diets only work if you are equipped with the right knowledge.
Part of our expansion plan is to be THE trusted source for all information and guidance Low FODMAP and Gut Health related. We are building a website library stocked with great recipes, meal plans, diet guides, and helpful articles about all aspects of the diet journey. Additionally, we’re building our community bigger every day. We’re all in this together and being able to talk in real time helps people make better decisions about their health and brings new ideas to both sides of the equation.
We’re also partnering with top food bloggers, dietitians and doctors to ensure that every piece of content is informative, up to date and most importantly - scientifically accurate.
Scot Savarese, the founder of Live Free Foods, spent over 6 years in the pharmaceutical industry as a gastroenterology representative and regional trainer. Everyday, he educated physicians on how to diagnose and treat patients with Irritable Bowel Syndrome. Experiencing first hand how the industry was letting people down everyday, and having seen how the new Low FODMAP diet was helping real people, he made the decision to start Live Free Foods as an effective non-pharmaceutical option for IBS sufferers.
In 2019, Walton Clark joined our team as our COO, bringing over 20 years of experience in the CPG industry to our team. Walton is the former director of marketing at Unilever where he managed brands such as Wish-Bone, Ragu, Bertolli, and Lipton. At Unilever he launched over $100 million in new products led the turnaround of several legacy brands, including Wish-Bone and Ragu.
The Future is FODMAP
We’re not just building a brand, we’re building a market. Low FODMAP has the potential to be 7x larger than Gluten Free. Did you know Celiac Disease, the primary reason to eat gluten free only affect an estimated 1.9% of the population?
Irritable Bowel Affects 14%. Additionally, new evidence suggests that a large portion of people following a Gluten Free diet, those with Non-Celiac Gluten Intolerance would be better served by a Low FODMAP diet.
Given the incredible Low FODMAP market potential, we’re currently researching new products to launch not only in the sauce and condiment space, but also in a wide array of other grocery products where a quality Low FODMAP equivalent doesn't presently exist.
The proceeds of this investment round specifically will be focused on the launch of new products and building out a strong ecommerce sales channel. Within 6 months, with targeted marketing and optimization, we are projected to hit $40,000/mo in online sales alone. This will result in a far stronger cash flow situation and far greater brand awareness. This will allow us to further expand our grocery footprint.
Up until now, we’ve struggled to keep products in stock due to market demand, financial restrictions, and supplier lead times. This has led to spotty availability online and delays in supplying reorders for our wholesale clients. We’ve since found a new manufacturer that can keep up with our demand, produce better quality, and have increased our margins by 6x! Having a reliable supply chain plus the confidence in our cashflow will allow us to pursue the 2,500+ stores currently stocking Low FODMAP products.
We’re also pursuing a partnership with the NIH. Not only will this allow us to conduct our own research to further cement our commitment to being an education partner, it will also provide grant funding to further fund our growth.
There are still millions of people who haven’t heard about how a Low FODMAP Diet can manage their digestive disorder. We’re on a mission. To provide people with the food and resources to take their Gut Health into their own hands. Not only will this become the next global market trend in the Natural Food space, but Live Free Foods will be one of the first brands to help people Live Symptom Free.
Do you want to be part of the Future of Gut Health?
Live Free Foods has financial statements ending December 31 2019. Our cash in hand is $5,126, as of January 2020. Over the three months prior, revenues averaged $1,825/month, cost of goods sold has averaged $2,494.48/month, and operational expenses have averaged $2,269.60/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 create food products for people following a Low FODMAP diet, so that they can eat with confidence and manage their symptoms. Our products are sold direct to consumers and through traditional grocery stores.
Low FODMAP is a clinically studied diet, proven to be more effective at managing the symptoms of Irritable Bowel Syndrome than the leading drugs on the market. Irritable Bowel Syndrome effects 1 in 7 people in the world.
In 5 years, we hope to have helped Low FODMAP become synonymous with Gut Health. Most grocery stores will have a Low FODMAP section and Live Free will be a prominent feature. Around this time, larger brands will start turning more attention towards Low FODMAP certifications for their products and introducing their own line of Low FODMAP products. Live Free Foods will likely partner with one of these brands through acquisition.
Live Free Foods LLC was organized in the State of Delaware in July 2017. In February 2020, the Company underwent a complete conversion (all assets and liabilities) to a corporation, forming Live Free Foods Inc., which is the entity conducting this Offering. The previous LLC was dissolved.
Since then, we have:
Historical Results of Operations
Our company was organized in July 2017 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, 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
Live Free Foods Inc. cash in hand is $5,126, as of January 2020. Over the last three months, revenues have averaged $1,825/month, cost of goods sold has averaged $2,494.48/month, and operational expenses have averaged $2,269.60/month, for an average burn rate of $2,939.08 per month. Our intent is to be profitable in 6 months.
In 2018, the company launched and saw an upward trend in growth in our three main sales channels: Website, Amazon, Wholesale. In 2019, we gained a large wholesale partner, KeHe. That, combined with several reorders from our other wholesale customers, saw an increase in wholesale revenue. However, in 2019, we started to run out of inventory. Due to our products poor margins at our original copacker, we did not have the capital to produce more inventory. As a result, 2019 has lower revenues than 2018, as our major sales channels Amazon and Website were unable to generate revenue.
The first change we will make when receiving capital is to change our manufacturing. Our new copacking partner will have significantly better margins, which will allow us to be profitable. With our previous copacker, we often would break even on online sales and lose money for wholesale orders.
Our margins will increase to an average of:
41% for wholesale to distributors
64% for ecommerce orders on our website
24% for Amazon orders (this accounts for Amazon's shipping fees)
There will also be significant cuts to overhead costs to improve profit margin. Additionally, with the major focus on ecommerce, we expect our higher margin sales channel to become the larger share of our total revenue.
Short term operations will be funded by my personal contributions as long as necessary until the Crowdfunding is completed. Additionally, certain parts of our expenses are paid via credit card. We have also made large cuts to our expenses which should further reduce burn rate until we are funded. We are also applying for a science research grant from the NIH for additional capital.
Revenue projections (cannot be guaranteed) put us at $130,000 at the end of 6 months, with monthly run-rate being $39,000 by month 6. Month 3 revenue projected at $16,000. Expense projections (also cannot be guaranteed) total at $108,000 at the end of 6 months, with an average burn rate of $18,000. Largest expense is COGS, at $87,000. A new manufacturing partner has significantly improved our margins on product which completely change our expense/profit over the previous years. This new partner has not been utilized as of yet, as the capital needed to run production will come from this raise.
This business operates under the assumption that the Low FODMAP diet will continue to grow in awareness and acceptance as a diet. If this diet does not become mainstream and grow into its own market, there will be a cap on the amount of revenue that can be gained. Additionally, if Low FODMAP does not gain wide spread use, many grocery stores will discontinue carrying products on their shelves, severely limiting our wholesale revenues.
When distributing food products, there is a general risk of illness or injury related to the food product. This is typically mitigated by general liability insurance on the part of our organization as well as the manufacturer of our products.
Long term success of this venture depends on wide distribution through grocery retail locations. Most distribution is controlled by large interests like grocery chains and large distributors. Maintaining distribution in these stores and distributors depends on a multitude of factors including but not limited to: sales velocity, terms, spoilage, order fulfillment time. Not being able to maintain one of these or other unforeseen events can jeopardize large portions of the grocery wholesale channel.
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.
Both the founder and the COO are working part time in this business until future funding or revenue can support full time salaries. While both are committed to dedicating as much free time as possible to the business and its progress, there are risks that opportunities for sales could be missed due to not having a full time employee.
There is the risk that cashflow will not be sufficient to maintain the solvency of the company. Due to the nature of wholesale grocery sales, the cycle of accounts receivables with the production of large quantities of product present significant difficulties with maintaining liquid cash in the organization. Failure to maintain a healthy cashflow could lead to increased debts on the organization or termination by customers and clients.
Walton Clark is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.
Scot Savarese is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.
There is always the risk of choosing the wrong product lines to pursue. The cost associated with developing and producing a run of products is not insignificant, and poor acceptance can lead to spoilage.
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.
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