Risks Specific to Maison Marcel
1. Entering a partnership with a distributor where the executive team and the sales rep enthusiasm about selling the product is not completely aligned. Our job is to support the sales teams with the proper incentive so that their motivation and enthusiasm are aligned with the executive team.
2. Since the wine is imported from France, there can be delays in delivering the product to clients
3. We buy in euros therefore are subject to currency fluctuations. If dollar weakens, gross revenue of the company will decrease.
4. Wine, and rosé in particular is a seasonal product therefore there is a risk when being picked up by large retail chains not to be able to supply on time. However, with sufficent leadtime we can fulfill orders of any size.
5. If the semi-sweet category becomes significant thanks to our brand, larger competitors may enter the market with similar offering. This risk exists for any brand that enters a market with a unique proposition.
6. Chosing the right distributor when entering multiple states can be challenging as there is a risk of getting lost in a large portfolio with a mid to large distributor, and not getting enough market reach with a small distributor
7. 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.
The holders of the SAFEs may not have control over when the SAFEs are converted into preferred stock.
The SAFEs will be converted into shares of our preferred stock upon certain circumstances, with no action on the part of the holder. As a result, the SAFEs may be converted at times or under circumstances that are out of the control of the holders. In certain circumstances, such as the sale of the company, an initial public offering or dissolution or bankruptcy, holders may only have a right to receive cash to the extent available, rather than preferred stock or other securities. In addition, if the SAFEs are so converted, the holders will lose any rights and preferences of the SAFEs that are not included in the terms of our preferred stock.
We are under no obligation to convert the SAFEs into preferred stock. We may never receive a future equity financing or experience a liquidity event, in which case, the holders could be left holding the SAFEs indefinitely. Unlike convertible notes and other securities convertible into or exchangeable for preferred stock, the SAFEs do not have any “default” provisions permitting the holders to demand repayment. We have the discretion as to whether or not to enter into a transaction that causes the conversion of the SAFEs into preferred stock, and the holders have no right to demand such a conversion. Only in limited circumstances, such as a liquidity or dissolution event, may the holders demand payment and even then, such payment will be limited to the cash available to us to make such payments.