Details
1 | We are the only whiskey distillery open to the public in SF. |
2 | Recently completed flagship Distillery expansion in the heart of SF. |
3 | Revenues have grown by 50-100% every year. |
4 | Survived COVID |
5 | .We make whiskey from craft beer. |
Between 2013 and 2017 we focused exclusively on whiskeys made from craft beer and a craft vodka. In 2018 we decided to "bridge the gap" by beginning to produce our own line of craft beers. By May of 2018 the craft beer arm had surpassed spirits in terms of gross sales and presented a massive growth opportunity for our company.
We purchased a canning line and increased our brewing capacity by 5x to keep up with the demand.
Craft seltzer has taken the market by storm. We are risk takers, but calculated risk takers. To bridge the gap for a second time, we are looking to enter into this space by launching our own line of Ready to Drink (RTD) canned cocktails. RTD is one of the fastest growing segments in spirits. We are able to use the equipment, infrastructure and teams we have in place to add a line of RTD cocktails on, and are using our existing sales and distribution channels to plug the line in
March 9, 2020
Dear Investors,
Sincerely,
Tim Obert
CEO
Seven Stills has financial statements ending December 31 2017. Our cash in hand is $50,000, as of June 2018. Over the three months prior, revenues averaged $250,000/month, cost of goods sold has averaged $60,000/month, and operational expenses have averaged $130,000/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
For centuries, whiskey distillers believed that the flavor of the base beer didn't impact the finished whiskey so they'd use low-quality barley ingredients. Clint and I proved them wrong. In 2013, we started brewing high-quality craft beers to distill into whiskeys. The flavor profiles are drastically different between our products – and people love it. Now you can find Seven Stills craft beer and whiskey at our three San Francisco taprooms and more than 2,500 retail stores.
We've seen steady growth since launch and are on track to reach $3.5 million in sales this year, a 190% increase from last year. In five years, we aim to be the number one brewery and distillery in San Francisco with distribution throughout the United States.
Milestones
Seven Stills, Inc was incorporated in the State of Delaware in May 2018.
Seven Stills, LLC will merge into Seven Stills, Inc. upon issuance of all necessary licenses to do business. Upon the merger, Seven Stills, Inc. will absorb the entity Seven Stills, LLC and all equity purchased in the LLC will be reflected in the new corporation.
The objective of the merger is to act as a non-pass through entity, meaning investors will not receive an annual K-1 requiring them to pay taxes on any phantom income due to their ownership in the company. All taxes will be paid upon the eventual dissolution of the investors' equity.
The company plans to authorize class E common stock prior to the closing of this offering.
The milestones, historical results of operations, and liquidity and capital resources listed below are those of Seven Stills LLC, not Seven Stills Inc. Upon the completion of the merger, Seven Stills, Inc will gain these historical results of operation and resources.
The financial statements attached to this Form C are those of Seven Stills, LLC, not Seven Stills, Inc. Upon the completion of the merger, Seven Stills, Inc will gain the financial conditions of Seven Stills, LLC.
Since organization, Seven Stills LLC has:
Historical Results of Operations
Liquidity & Capital Resources
To-date, Seven Stills, Inc. has been financed for $790,500 in equity and Seven Stills LLC has been financed for $375,000 in equity.
The Seven Still business has been financed with $3,461,006 in debt.
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 any investments from investors.
Runway & Short/Mid Term Expenses
Seven Stills, LLC cash in hand is $50,000, as of June 2018. Over the last three months, revenues have averaged $250,000/month, cost of goods sold has averaged $60,000/month, and operational expenses have averaged $130,000/month, for an average net margin of $60,000 per month.
The company has raised 2.5million in debt for this most recent project that will go towards the opening of the new facility. Kilroy Realty Group, the developers, have also given us $1.2million to complete the project in exchange for being in their building. We've also raised $600k from existing investors for this recent project. If we reach our maximum goal on Wefunder we will not seek further funding. If we only reach our minimum funding target we will seek investments from more traditional investors and VCs. The total cost of the project is $5.5mil.
If our Wefunder campaign is successful, we plan to open in November of 2018. We generally do 53% of our total sales in Q4 of the year. Because our expenses for the first 18 months will be nominal, as our rest estate company is covering our rent, we expect the new location to become profitable within a month. When we opened our satellite facility in 2016 it was profitable within the first week.
1 | Consumer demands can change, and decreases in alcohol consumption could result in decreases in 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 | Consumer disposable income could change, affecting the amount spent on premium beers and spirits. |
4 | If a violent or catastrophic incident occurred near our facility we could risk losing tourist and destination traffic. |
5 | In the case that several competitors opened up in the vicinity there is a chance we would lose foot traffic and revenues to our business. |
6 | Social media influencers could begin to dislike our products and discourage others from buying from us, which would result in a loss of revenues. |
7 | An increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company. The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment. |
8 | Purchasers will not have voting rights, and therefore may have limited control over company operations. In addition, the two co-founders control 100% of the total voting power of the company as of July 2018, and prior to the closing of the offering will control over 85% of voting power. |
9 | Expanding our geographic footprint is an important aspect of our plans for growth. With those efforts come potential costs and risks that could affect our business success. We may not be able to meet our goals for expansion and see impacts to our business operations as a result. |
10 | Companies in the beverage alcohol industry are, from time to time, exposed to class action or other litigation relating to alcohol advertising, product liability, alcohol abuse problems or health consequences from the misuse of alcohol. It is also possible that governments could assert that the use of alcohol has significantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type. |
11 | The Company is in the process of merging with Seven Stills, LLC, and expects this to be finalized prior to the closing of this offering. Should this merger not be completed on time or at all, it may affect investor's ability to be issued stock, as well as the overall operations of the Company. Furthermore, the Class E Common stock sold in this offering has not yet been authorized by the Company. |
12 | The Company has significant outstanding debt, totaling over $3 million. Should the company's revenues or costs vary from their predicted outcomes, the Company's financial position may be harmed. The Company is not prohibited from taking on more debt in the future. |
13 | Investors in this subscription agreement may forfeit their right to the shares if they violate the terms listed in the contracts provided. |
Director | Occupation | Joined |
---|---|---|
Tim Obert | CEO @ Seven Stills | 2018 |
Clint Potter | COO @ Seven Stills | 2018 |
Officer | Title | Joined |
---|---|---|
Tim Obert | CEO | 2018 |
Clint Potter | COO | 2018 |
Holder | Securities Held | Voting Power |
---|---|---|
Clint Potter | 1,035,000 Class A Common stock | 50.0% |
Tim Obert | 1,035,000 Class A Common Stock | 50.0% |
Date | Amount | Security |
---|---|---|
05/2020 | $500,000 | Loan |
04/2019 | $1,016,834 | Priced Round |
09/2019 | $1,750,000 | Loan |
01/2020 | $250,000 | Loan |
10/2015 | $375,000 | Convertible Note |
07/2018 | $1,065,602 | Convertible Note |
06/2015 | $150,000 | Loan |
10/2017 | $593,000 | Priced Round |
06/2015 | $187,006 | Loan |
05/2018 | $2,604,000 | Loan |
10/2017 | $520,000 | Loan |
11/2015 | $375,000 | Priced Round |
Issued | Amount | Interest | Discount | Valuation Cap | Maturity |
---|---|---|---|---|---|
10/01/2015 | $375,000 | ||||
07/01/2018 | $1,065,602 | 5.0% | 15.0% | None | 07/01/2021 |
Lender | Issued | Amount | Oustanding | Interest | Maturity | Current? |
---|---|---|---|---|---|---|
PCV | 06/01/2015 | $187,006 | $85,408 | 7.0% | 01/01/2020 | Yes |
First Finance | 06/01/2015 | $150,000 | $71,979 | 10.0% | 06/01/2020 | Yes |
Live Oak | 10/01/2017 | $520,000 | $481,589 | % | 09/01/2024 | Yes |
Live Oak | 05/01/2018 | $2,604,000 | $2,604,000 | % | 05/01/2031 | Yes |
Kilroy Realty | 09/01/2019 | $1,750,000 | $1,750,000 | 8.0% | 01/01/2032 | Yes |
Mez Financing | 01/01/2020 | $250,000 | $250,000 | 8.0% | 03/15/2025 | Yes |
SBA | 05/01/2020 | $500,000 | $500,000 | 3.75% | 05/01/2020 | Yes |
$50,300 | 95% -- Contributing to construction costs for 100 Hooper
5% -- Wefunder Intermediary Fee |
$1,066,360 | 95% -- Complete construction and buildout for our new distillery and space, 100 Hooper
5% -- Wefunder Intermediary Fee
|
Class of Security | Securities (or Amount) Authorized |
Securities (or Amount) Outstanding |
Voting Rights |
---|---|---|---|
Class D Common Stock | 450,000 | 0 | No |
Class C Common Stock | 250,000 | 0 | No |
Class B Common Stock | 300,000 | 0 | Yes |
Class A Common Stock | 4,000,000 | 2,070,000 | Yes |
The Securities and Exchange Commission hosts the official Form C on their EDGAR web site.
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