2017 Report Meow Wolf
Filed on May 01, 2018
Dear investors,
We are pleased to share this Meow Wolf financial report year in review. We are legally required to send this to all our great Crowdfunders, and we are making it available to the rest of our investors and partners, as well.
2017 was a GIANT year for Meow Wolf! The company realized $9.2M in revenues, with nearly 500,000 visits at the Santa Fe location. Profit Margins increased over the year to exceed 40% on annualized basis. This eclipses 2016’s strong showing of $5.5M in revenue. And, 2018’s numbers continue to climb.
There are many milestones and ACCOMPLISHMENTS; a few accolades to share include:
- Thea Award for Outstanding Achievement in Connected Immersion from the Themed Entertainment Association
- Trip Advisor Certificate of Excellence for sustained high ratings from customers over a year
- Yelp Top 10 Music Venue in the U.S. to see a show
Investors were central to our success and fueled our growth. We raised $17M in equity capital over the year. This included the explosive WeFunder summer Crowdfunding Campaign. More than 600 people across New Mexico, throughout the U.S. and in dozens of countries own shares in our company.
Your INVESTMENT enabled us to advance our business plan at light speed. We nearly tripled in size, adding scores of more creatives to our team and ending the year with a staff of 289. Locally in Santa Fe, we acquired a HQ to house our Creative Studios. Company cohesion and culture has never been better. We have started making the next generation of the coolest things you’ve ever seen for our future locations in Denver and Las Vegas. These projects will blow your mind.
We launched MEOW WOLF ENTERTAINMENT, shaping our future from ‘just’ location based entertainment to a trans-media, digital, technology enterprise. Exciting entertainment projects began development - a documentary film, animated shorts, virtual reality/augmented reality, digital media content, and more.
MERCHANDISE!!! Just before Black Friday, we launched our online store, https://shop.meowwolf.com/, where folks can purchase Meow Wolf merchandise no matter where they are. Gift shop sales increased over the year and reached $181K in December sales, $1.38M on the year. This supports more than 50 artists, whose works we carry.
We’ve expanded FOOD AND BEVERAGE service, too. We have coffee and pastries by day and a full range of adult beverages in the evening and during special events. Trinity Kitchen, Meow Wolf’s food truck, brings customers yummy eats, along with our other onsite food partners.
We certified as a ‘B-Corp’, in recognition of our efforts to the triple bottom line. This is in addition to our existing legal status as a Delaware registered public benefit corporation. Our community activities supported other artists with our DIY (Do It Yourself) Fund, donations made to dozens of local charities, and provided 1,000s of free tickets. We also made environmental strides. Solar panels installed now account for 40% of House of Eternal Return energy and energy efficiency upgrades including waterless urinals cut water usage 25%.
Look for even more in 2018. Come visit Santa Fe and say hi. We hope to see you soon and often.
We need your help!
Investors can help by spreading the good word of Meow Wolf and our expansion plans to friends and family. Inviting folks to visit Santa Fe to experience the exhibit first-hand is invaluable. We know its a place you have to see to believe.
Friends can buy tickets now to the future openings in Denver and Vegas. We are selling a limited run of Lifetime Passes. Visit https://meowwolf.com/ and select each city for purchasing details.
Visit our social media platforms, post about your visit, and share what you see with others: Facebook and Instagram. Leave a review on sites like Trip Advisor and Yelp.
Meow Wolf Merchandise is going nation-wide: get your cool stuff. https://shop.meowwolf.com/.
Sincerely,
How did we do this year?
☺ The Good
Meow Wolf tripled our number of creative employees, ending the year at nearly 300 people.
Our Santa Fe location hosted nearly 500,000 visits in 2017, generating nearly $9 million in revenue.
WeFunder campaign: more than $1 million raised in 2 days; fastest equity crowdfunding on their platform in their history.
☹ The Bad
Can’t meet demand: the Santa Fe location is so popular, we had lines literally to the street over Christmas.
We intended to secure permanent financing on our new HQ and manufacturing building. This took longer than planned; scheduled in 2018.
We are growing so fast, we need our systems to keep growing with us.
2017 At a Glance
January 1 to December 31
$14,620,986 +58%
Revenue
-$16,472,749
Net Loss
$19,694,231 +412%
Short Term Debt
$17,045,000
Raised in 2017
$7,307,679
Cash on Hand
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 create immersive, colorful, magical, and unique worlds for audiences to explore. In 2016, we opened our first permanent experience in Santa Fe, New Mexico - The House of Eternal Return - which attracted nearly 500,000 visitors and $13.4 million in revenues in 2018. We built a full-time creative studio headquartered in Santa Fe to expand into major markets.
Meow Wolf's vision is to become a global leader of creative brands, and one of the world's largest employers of artists. Our unique, immersive experiences serve as the core of this growth, but we envision expanding into additional areas including a media and entertainment studio, and worldwide merchandising.
Milestones
Meow Wolf, Inc. was incorporated in the State of Delaware in November 2016.
Since then, we have:
- ~$13.4 million revenue in Santa Fe location in 2018
- Nearly 500,000 visits in last 12 months
- In January 2018, we announced an expansion site in Las Vegas, Nevada, within the Area 15 complex currently under construction. Meow Wolf Las Vegas is slated to open in spring of 2020.
- In January 2018, we announced an expansion site in Denver, Colorado. This will be a building built and occupied exclusively by Meow Wolf and construction is well under way. We're expecting to open Meow Wolf Denver in Spring 2021. While construction of the building in Denver is underway, Santa Fe headquarters is also busy designing and creating key structures and creative elements of the Denver experience.
- In December 2018 we announced that we will expand to Washington, DC. The newest project will be a three-level, 75,000-square-foot structure and will feature a new immersive narrative in the Meow Wolf story. We are targeting Washington, DC to open 2022.
- In March 2018, Meow Wolf released the documentary, “Meow Wolf: Origin Story.” The film has played at SXSW Film Festival, received 89% on the Rotten Tomatoes, “Tomatometer”, and is available on iTunes.
- 6,500,000+ website visits in last 12 months
- Meow Wolf gained 562,000 followers across Social Media in 2018
- Average rating of 4.6/5 ON TripAdvisor, Facebook, and Google
- Notable creative partners include George RR Martin, author of Game of Thrones, and Jared Tarbell, co-founder of Etsy
Historical Results of Operations
Our company was organized in November 2016 and has limited operations upon which prospective investors may base an evaluation of its performance.
- Revenues & Gross Margin. For the period ended December 31, 2018, the Company had revenues of $14,620,986 compared to the year ended December 31, 2017, when the Company had revenues of $9,226,550. Our gross margin was 88.58% in fiscal year 2018, compared to 92.23% in 2017.
- Assets. As of December 31, 2018, the Company had total assets of $29,605,463, including $7,307,679 in cash. As of December 31, 2017, the Company had $17,446,799 in total assets, including $6,727,716 in cash.
- Net Loss. The Company has had net losses of $16,472,749 and net losses of $7,700,618 for the fiscal years ended December 31, 2018 and December 31, 2017, respectively.
- Liabilities. The Company's liabilities totaled $36,766,675 for the fiscal year ended December 31, 2018 and $11,957,667 for the fiscal year ended December 31, 2017.
Liquidity & Capital Resources
To-date, the company has been financed with $17,403,709 in equity and $19,368,411 in convertibles.
After completing the convertible debt round, we anticipate raising equity within the next 6-9 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. 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 capital from investors.
Runway & Short/Mid Term Expenses
Meow Wolf, Inc. cash in hand is $7,307,679, as of December 2018. Over the last three months, revenues have averaged $1,377,053/month, cost of goods sold has averaged $258,096/month, and operational expenses have averaged $1,212,861/month, for an average burn rate of $93,904 per month. Our intent is to be profitable in 0 months.
With the increase in our employee count since 2017 our expenses have increased and overall cash has increased slightly due to the 1st phase of the convertible debt.
In April we closed our convertible debt round and raised $19.4M.Another round of equity was raised in 2Q2019 and proceeds from the debt offering and equity are focused on funding expansion opportunities as well as funding continuing operations.
- Net Margin: -113%
- Gross Margin: 89%
- Return on Assets: -56%
- Earnings per Share: -$10.34
- Revenue per Employee: $36,371
- Cash to Assets: 25%
- Revenue to Receivables: ~
- Debt Ratio: 106%
We Our 622 Investors
Thank You For Believing In Us
Thank You!
From the Meow Wolf Team
President & CEO
Director for all major Meow Wolf projects since 2010. Leads organization.
Sean Di Ianni
Secretary & COO
Sean leads construction of the exhibition and oversees operations and adminstration.
Financial Analyst
Financial Analyst
Details
The Board of Directors
| Director | Occupation | Joined |
|---|---|---|
| Stewart Alsop | Venture Investor @ Alsop Louie Partners | 2017 |
| Vince Kadlubek | President & CEO @ Meow Wolf | 2016 |
| Sean Di Ianni | Secretary & COO @ Meow Wolf | 2016 |
| Winston Fisher | Director of Finance and Investments @ Fisher Brothers | 2017 |
| Peter Zandan | Global Vice Chairman @ Hill and Knowlton Strategies | 2017 |
Officers
| Officer | Title | Joined |
|---|---|---|
| Vince Kadlubek | President, CEO | 2016 |
| Sean Di Ianni | Secretary, COO | 2016 |
| Carl Christensen | CFO | 2018 |
Past Equity & Loan Fundraises
| Date | Amount | Security | Exemption |
|---|---|---|---|
| 03/2017 | $4,000,000 | Common Stock | Regulation D, Rule 506(b) |
| 06/2017 | $3,500,000 | Preferred Stock | Regulation D, Rule 506(b) |
| 07/2017 | $1,069,938 | 4(a)(6) | |
| 08/2017 | $252,067 | 506(c) | |
| 11/2017 | $723,709 | Common Stock | Regulation D, Rule 506(c) |
| 12/2017 | $7,500,000 | Common Stock | Section 4(a)(2) |
| 02/2019 | $19,446,400 | Section 4(a)(2) | |
| 02/2019 | $19,368,411 | Section 4(a)(2) | |
| 05/2019 | $158,613,855 |
Convertible Note Outstanding
| Issued | Amount | Interest | Discount | Valuation Cap | Maturity |
|---|---|---|---|---|---|
| 02/28/2019 | $19,446,400 | 6.0% | 19.0% | None | 10/02/2019 |
| 02/28/2019 | $19,368,411 | 6.0% | 19.0% | None | 10/02/2019 |
Outstanding Debts
None.Related Party Transactions
None.Capital Structure
| Class of Security | Securities (or Amount) Authorized |
Securities (or Amount) Outstanding |
Voting Rights |
|---|---|---|---|
| Common | 10,000,000 | 1,592,496 | Yes |
| Preferred | 1,000,000 | 0 | No |
| Securities Reserved for Issuance upon Exercise or Conversion |
|
|---|---|
| Warrants: | 15 |
| Options: | 355 |
Form C Risks:
Benefit Corporation. The Company is organized as a public benefit corporation. Unlike a corporation that is not a public benefit corporation, whose purpose is to maximize shareholder value, a public benefit corporation’s purpose includes societal benefit, which may conflict with maximization of shareholder value.
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.
Power of Attorney. 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 stock, the Company’s CEO will hold an irrevocable proxy and power of attorney to vote the holder’s stock in the manner voted by a majority of the holders of the Company’s common stock. This applies to common stock issued pursuant to Crowdfunding.
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.
Reliance on Management Team. The Company is dependent upon the efforts of the members of its management team, none of whom has a contract with the Company. 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. 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. The 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. Vince Kadlubek, the Company’s Chief Executive Officer, was arrested for shoplifting in 2012, pleaded no contest to a misdemeanor charge and paid a fine.
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.
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 the Studio and the other expenses that will be incurred in carrying out the business plan.
Dilution. To carry out its business plan, the Company will likely need to raise capital in the future in addition to 2017 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 Company also plans to convert certain debt of the Company into capital stock, which conversion may be at a conversion price per share less than the current price per share. 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.
Superior Securities. The Company incurred debt to purchase the building that will house the Studio. That debt is secured by the building and the real property on which the building sits. While the Company expects the debt to be refinanced by more conventional financing in 2018, the debt was not borrowed from a conventional commercial lender and bears a high interest rate. The Company has also issued preferred stock, which will carry an accrued dividend of 7% per annum and is subject to redemption at the option of the holder in certain circumstances. $1.5 million has been invested in preferred stock to date. The debt and the preferred stock may constitute a drain on the Company’s available cash, and must be paid before any payment is made on the shares in a liquidation of the Company.
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.
Lack of Significant Operating History. The Company has limited operating history. The operating history of the Prior Company is limited to a short period. As a result, potential investors may find it difficult to evaluate likely performance.
Competitive Marketplace; Industry Risks. The Company generates the majority of its revenue from a single industry and, currently, 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 immersive experiences 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, downturns at times of heightened terrorism concerns, and competition from the emergence of new forms of entertainment, among other such risks.
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 stock, the Company may, at any time and from time to time, redeem any or all of the investors' shares of common stock at a price per share equal to the fair market value thereof as determined in good faith by the Company's board of directors.
Description of Securities for Prior Reg CF Raise
Additional issuances of securities. Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured. The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.
Issuer repurchases of securities. The Company may have authority to repurchase its securities from shareholders, which may serve to decrease any liquidity in the market for such securities, decrease the percentage interests held by other similarly situated investors to the Investor, and create pressure on the Investor to sell its securities to the Company concurrently.
A sale of the issuer or of assets of the issuer. As a minority owner of the Company, the Investor will have limited or no ability to influence a potential sale of the Company or a substantial portion of its assets. Thus, the Investor will rely upon the executive management of the Company and the Board of Directors of the Company to manage the Company so as to maximize value for shareholders. Accordingly, the success of the Investor’s investment in the Company will depend in large part upon the skill and expertise of the executive management of the Company and the Board of Directors of the Company. If the Board Of Directors of the Company authorizes a sale of all or a part of the Company, or a disposition of a substantial portion of the Company’s assets, there can be no guarantee that the value received by the Investor, together with the fair market estimate of the value remaining in the Company, will be equal to or exceed the value of the Investor’s initial investment in the Company.
Transactions with related parties. The Investor should be aware that there will be occasions when the Company may encounter potential conflicts of interest in its operations. On any issue involving conflicts of interest, the executive management and Board of Directors of the Company will be guided by their good faith judgement as to the Company’s best interests. The Company may engage in transactions with affiliates, subsidiaries or other related parties, which may be on terms which are not arm’s-length, but will be in all cases consistent with the duties of the management of the Company to its shareholders. By acquiring an interest in the Company, the Investor will be deemed to have acknowledged the existence of any such actual or potential conflicts of interest and to have waived any claim with respect to any liability arising from the existence of any such conflict of interest.
Minority Ownership
An Investor in the Company will likely hold a minority position in the Company, and thus be limited as to its ability to control or influence the governance and operations of the Company.
The marketability and value of the Investor’s interest in the Company will depend upon many factors outside the control of the Investor. The Company will be managed by its officers and be governed in accordance with the strategic direction and decision-making of its Board Of Directors, and the Investor will have no independent right to name or remove an officer or member of the Board Of Directors of the Company.
Following the Investor’s investment in the Company, the Company may sell interests to additional investors, which will dilute the percentage interest of the Investor in the Company. The Investor may have the opportunity to increase its investment in the Company in such a transaction, but such opportunity cannot be assured.
The amount of additional financing needed by the Company, if any, will depend upon the maturity and objectives of the Company. The declining of an opportunity or the inability of the Investor to make a follow-on investment, or the lack of an opportunity to make such a follow-on investment, may result in substantial dilution of the Investor’s interest in the Company.
Exercise of Rights Held by Principal Shareholders
N/A
The securities offered via Regulation Crowdfunding may not be transferred by any purchaser of such securities during the one year period beginning when the securities were issued, unless such securities are transferred:
- to the issuer;
- to an accredited investor ;
- as part of an offering registered with the U.S. Securities and Exchange Commission; or
- to a member of the family of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of a member of the family of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.
Valuation Methodology for Prior Reg CF Raise
The offering price for the securities offered pursuant to this Form C has been determined arbitrarily by the Company, and does not necessarily bear any relationship to the Company’s book value, assets, earnings or other generally accepted valuation criteria. In determining the offering price, the Company did not employ investment banking firms or other outside organizations to make an independent appraisal or evaluation. Accordingly, the offering price should not be considered to be indicative of the actual value of the securities offered hereby. Because there is no public market for our securities, $24.86 has been determined by our board of directors. Among the factors we have considered in determining the $24.86 are prevailing market conditions, our financial information, market valuations of other companies that we believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant. In the future, we will perform valuations of our common stock that take into account factors such as the following:
- unrelated third party valuations of our common stock;
- the price at which we sell other securities, such as convertible debt or preferred stock, in light of the rights, preferences and privileges of our those securities relative to those of our common stock;
- our results of operations, financial position and capital resources;
- current business conditions and projections;
- the lack of marketability of our common stock;
- the hiring of key personnel and the experience of our management;
- the introduction of new products;
- the risk inherent in the development and expansion of our products;
- our stage of development and material risks related to our business;
- the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the prevailing market conditions and the nature and history of our business;
- industry trends and competitive environment;
- trends in consumer spending, including consumer confidence;
- overall economic indicators, including gross domestic product, employment, inflation and interest rates; and
- the general economic outlook.
Company
Meow Wolf, Inc.- Delaware Public Benefit Corporation
- Organized November 2016
- 402 employees
Santa Fe NM 87507 https://meowwolf.com
Business Description
Refer to the Meow Wolf profile.
EDGAR Filing
The Securities and Exchange Commission hosts the official version of this annual report on their EDGAR web site. It looks like it was built in 1989.
Compliance with Prior Annual Reports
Meow Wolf has previously not complied with the reporting requirements under Rule 202 of Regulation Crowdfunding.
In 2018, Meow Wolf had a change of CFOs. During the changeover, the Rule 202 requirement was not fully communicated. Consequently, Meow Wolf is filing this report in order to fulfill the firm's Rule 202 requirement.
All prior investor updates
You can refer to the company's updates page to view all updates to date. Updates are for investors only and will require you to log in to the Wefunder account used to make the investment.
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