|1||Distribution secured in 8 U.S. and international markets for 2021|
|2||3,000 cases sold in more than 200 accounts in four markets|
|3||Seasoned team of entrepreneurs: Diageo, Heineken, and Cruzan Rum success stories|
|4||Have forged strategic partnership with Florida Distillers over 4 years|
|5||Pending partnership with MHW, the company that helped build Casamigos Tequila a $1B exit|
|6||$86 billion global liqueur market in 2018. 1.8% CAGR between 2020 - 2025|
Women and some men complain of harshness and the artificial ingredients in their drinks.
They're not getting the desired experience when drinking.
For decades alcohol companies have traditionally created products for men.
We use REAL tropical fruits, natural flavors and spices, blended with our proprietary formulation of Caribbean barrel-aged rums.
Our premium liqueurs are authentically Caribbean, refreshing and comfortable on the palate.
We replaced the harsh alcohol taste with a memorable experience designed specifically for women.
Since our founding we've sold 18,000 bottles and achieved $200,000 in revenue, mostly to women looking for a new and better drinking experience... a trip to paradise without leaving home.
Our top 10 accounts placed 29 reorders, while our top 60 accounts placed 98 reorders during our primary market test in Georgia between 2017 and 2019.
At a ratio of 4 to 1, customers bought our liqueurs more often than a major competitor's product, even after it was placed next to ours with a price reduction.
Founder Nigel Walwyn quit his Emmy award-winning television career to commit full-time to developing and introducing the brand in his home market and overcame many obstacles to successfully prove his model.
Team members inspired by Nigel's passion and sacrifice have started working on this project without salary to help the company transition from early stage to growth stage.
As a business owner of color in an industry where people of color in ownership have been absent for decades, my accomplishments are notable for the 'Black Owned Movement'.
Distribution established or secured in Georgia, Florida, Puerto Rico, US Virgin Islands, Bermuda, The Bahamas, Belize and St. Maarten.
Strategic partnerships established or lined up with Florida Caribbean Distillers, MHW Distributors and BevStrat Sales Force.
A 5-year/10 stage milestone plan will be launched in 2021 in domestic and overseas markets.
58% of female drinkers in the U.S. are choosing liqueurs over other spirit categories.
8.2 million of them are African-American and Latina between the ages 25 and 34.
Millennial drinkers are driving the liqueur and cocktail market which is expected to grow 1.8% CAGR.
Ou-Oui! Premium Liqueur has financial statements ending December 31 2019. Our cash in hand is $11,324, as of August 2020. Over the three months prior, revenues averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $907/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.
Caribbean Smooth manufactures and markets our Ou-Oui! Premium Liqueur to bring a splash of paradise into your lifestyle. Created in the backyards and kitchens of the Caribbean, we are bringing a REAL Taste of the Islands to the rest of the world. Ou-Oui! is delivering a better tasting, more authentic, ready to drink and ready to mix alternative to traditional fruit flavored spirits.
In five years, we hope to produce annual sales of 150,000 (9L) cases or more, which could position us to become an acquisition target for major suppliers. We also hope to achieve distribution in 35 U.S. states and about 25 countries. Ultimately we would like to become a household brand name and the go-to-bottle when at-home and professional mixologists want to create magical tasting cocktails for their friends and customers.
Given the Company’s limited operating history, the Company cannot reliably estimate how much revenue it will receive in the future.
Caribbean Smooth, LLC was organized in the State of Georgia in March 2014.
Since then, we have:
Historical Results of Operations
Liquidity & Capital Resources
To-date, the company has been financed with $221,000 in debt and $20,000 in convertibles.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 8 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 require additional financing in excess of the proceeds from the Offering in order to produce new inventory and 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
Caribbean Smooth, LLC cash in hand is $11,324, as of August 2020. Over the last three months, revenues have averaged $0/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $907/month, for an average burn rate of $907 per month. Our intent is to be profitable in 18 months following the close our campaign.
We have mostly depleted our inventory that's available to our distributors and we are now focused on marketing the brand during the pandemic. As our product sales funded our operations and brand marketing/awareness, our operations slowed down significantly in 2019 as our inventory declined toward the end of our market tests. We also began talks in late 2019 with the financiers of a vodka brand to fund our scale and help distribute our liqueurs in the Asia Pacific region, but plans to meet and present our brand with the principals in Q1 2020 were scuttled due to the pandemic. Thus the pandemic has had a negative impact on our operations and has contributed to a slow down in growth.
In part due to the pandemic we will not have any additional revenues until we produce new inventory in 2021. Over the next 6 months we plan to keep expenses low as we maintain minimal operations while continuing our capital raise. Following our first, new production run scheduled for April 2021, we expect to earn average revenues of $104,000/month, and see our operational expenses rise to $45,839/month.
We will need outside funding beyond the crowdfunding minimum raise size ($50K) to get us to production. That’s why we’re running a simultaneous Reg D 506(c) offering with accredited investors. We plan to raise $3.5M under the Reg D in order to fund our 5-year expansion plan. Of the total funds raised, we will need $650,000 to fund our initial production run in 2021.
The company's formulations are protected trade secrets with confidentiality agreements. There are no patents. We may not be able to prevent the unauthorized disclosure or use of our proprietary knowledge or other trade secrets by consultants, vendors, former employees and current employees, despite the existence of nondisclosure and confidentiality agreements and other contractual restrictions. These individuals may breach these confidentiality agreements and our remedies may not be adequate to enforce these agreements. Disputes may arise concerning the ownership of intellectual property or the applicability or enforceability of these agreements, and these disputes may not be resolved in our favor. Furthermore, our competitors may independently develop trade secrets and proprietary products similar to ours.
The Company is dependent upon its management team as described in this Form C. Without the services of these individuals (especially Nigel Walwyn, the creator of the Company’s product formulations and the Company’s Founder and Chief Executive Officer), the growth, progress, and overall success of the Company may be adversely affected. The Company has not purchased any insurance policies with respect to Mr. Walwyn or any of other key personnel in the event of their death or disability. Therefore, if any of these personnel die or become disabled (especially Mr. Walwyn), the Company will not receive any compensation to assist with such person’s absence which may materially jeopardize the Company’s continued operations.
Our products use real fruits that are subject to market forces that impact commodities. They include seasonal and climatic factors and market prices.
In the United States, we will sell our products principally to wholesalers for resale to retail outlets including grocery stores, package liquor stores, club and discount stores and restaurants. The replacement or poor performance of our major wholesalers, retailers or chains or our inability to collect accounts receivable from our major wholesalers, retailers or chains could materially and adversely affect our results of operations and financial condition. Distribution channels for beverage alcohol products have been consolidating in recent years. In addition, wholesalers and retailers of our products offer products which compete directly with our products for retail shelf space and consumer purchases. Accordingly, there is a risk that wholesalers or retailers may give higher priority to products of our competitors. In the future, our wholesalers and retailers may not continue to purchase our products or provide our products with adequate levels of promotional support.
Scaling our operations starting with our next production run will depend on securing additional outside capital to meet consumer demand.
Temporary Rule 201(z)(2) provides temporary relief from certain financial information requirements by allowing issuers to omit the financial statements required by Rule 201(t) in the initial Form C filed with the Commission. This offering has commenced in reliance of Temporary Rule 201(z)(2).
The Company can offer no guarantee that future results will conform to the projections. Our operations are subject to all risks inherent in an early stage business enterprise operating in a competitive market. Our financial projections represent our expectations of future performance based on assumptions, estimates and judgments; however, actual future Company performance may be significantly different and will depend on future conditions and events which cannot be reliably forecast. Accordingly, these projections should be considered solely illustrative and should not be relied upon for the purpose of making investment decisions.
A variety of factors may cause our operating results to fluctuate significantly. Many of these factors are outside of our control. They include: the effectiveness of our product launch and sales and marketing campaign; market acceptance of our product; our ability to develop new products; the amount and timing of operating costs and capital expenditures; introduction by competitors of new or enhanced products; price competition; and fluctuations in general economic conditions as well as economic conditions specific to our industry. One or more of these factors could materially and adversely affect our operating results in future periods. These factors could have a material adverse impact on our ability to implement our business plan, achieve our financial projections or achieve profitability.
Although the Company believes that our business goals are achievable, there can be no assurance that our business model will be an accurate representation of future events or that the business goals will be achieved. If such goals are not achieved, we may suffer severe financial hardship.
In the United States and in other countries in which we may operate, we will be subject to excise and other taxes on beverage alcohol products in varying amounts which have been subject to change. Significant increases in excise taxes on beverage alcohol products could materially and adversely affect our financial condition or results of operations. Recently, many states have considered proposals to increase, and some of these states have increased, state alcohol excise taxes. In addition, the beverage alcohol products industry is subject to extensive regulation by federal, state, local and foreign governmental agencies concerning such matters as licensing, trade and pricing practices, required labeling and advertising. New or revised regulations or increased licensing fees, requirements or taxes could have a material adverse effect on our financial condition or results of operations.
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.
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.
Although there have been modest increases in consumption of beverage alcohol products in our product category, there have been periods in the past in which there were substantial declines in the overall per capita consumption of beverage alcohol products in the United States and other markets in which we may participate. A limited or general decline in consumption in one or more of our product categories could occur in the future due to a variety of factors, including: a general decline in economic conditions; increased concern about the health consequences of consuming beverage alcohol products and about drinking and driving; a trend toward a healthier diet including lighter, lower calorie beverages such as diet soft drinks, juices and water products; the increased activity of anti-alcohol consumer groups; and increased federal, state or foreign excise and other taxes on beverage alcohol products.
The Company presently has limited operating capital and is dependent upon receipt of proceeds from this offering or elsewhere, to develop its business as intended. Upon completion of the offering, even if the maximum aggregate offering amount is received, the amount of capital available to the Company will be limited to the amount raised.
In order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount raised in the offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we may not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer all or substantially all of our remaining assets, which could cause investors to lose all or a portion of their investment.
We are in a highly competitive industry and the dollar amount and unit volume of our sales could be negatively affected by our inability to maintain or increase prices, changes in geographic or product mix, a general decline in beverage alcohol consumption or the decision of our wholesale customers, retailers or consumers to purchase competitive products instead of our products. Wholesaler, retailer and consumer purchasing decisions are influenced by, among other things, the perceived absolute or relative overall value of our products, including their quality and pricing, compared to competitive products. Unit volume and dollar sales could also be affected by pricing, purchasing, financing, operational, advertising or promotional decisions made by wholesalers and retailers which could affect their supply of, or consumer demand for, our products. We could also experience higher than expected selling, general and administrative expenses if we find it necessary to increase the number of our personnel or our advertising or promotional expenditures to maintain our competitive position or for other reasons.
The Company may not have the internal control infrastructure that would meet the standards of a public company, including the requirements of the Sarbanes Oxley Act of 2002. As a privately held (non-public) Company, the Company is currently not subject to the Sarbanes Oxley Act of 2002, and it’s financial and disclosure controls and procedures reflect its status as a development stage, non-public company. There can be no guarantee that there are no significant deficiencies or material weaknesses in the quality of the Company’s financial and disclosure controls and procedures. If it were necessary to implement such financial and disclosure controls and procedures, the cost to the Company of such compliance could be substantial and could have a material adverse effect on the Company’s results of operations.
As an early-stage company, we may implement new lines of business at any time. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. We may not be successful in introducing new products and services in response to industry trends or developments in consumer demand, or those new products may not achieve market acceptance. As a result, we could lose business, be forced to price products on less advantageous terms to retain or attract customers or be subject to cost increases. As a result, our business, financial condition or results of operations may be adversely affected.
Management of the Company may, out of funds lawfully available therefor, declare distributions to be distributed to members of the Company. Any capital used to pay distributions detracts from the capital available for the Company to deploy in developing its business. Diverting the funds from the Company’s operations may put the Company at a significant disadvantage in comparison to its competitors who do not make similar distributions or dividend payments. This disadvantage may have an adverse impact on the operations and financial conditions of the Company.
Operational risks, such as misconduct and errors of the Company’s employees or entities with which we do business, are difficult to detect and deter and could cause us reputational and financial harm. The Company’s employees and agents could engage in misconduct which may include conducting in and concealing unauthorized activities, improper use, or unauthorized disclosure of confidential information. It is not always possible to deter misconduct by the Company’s employees and independent contractors, and the precautions the Company takes to prevent and detect this activity may not be effective in all cases. The Company’s ability to detect and prevent errors or misconduct by entities with which we do business may be even more limited. Such misconduct could subject the Company to financial losses or regulatory sanctions and materially harm our reputation, financial condition, and operating results.
Our reputation and the quality of our brand are critical to our business and success in existing markets and will be critical to our success as we enter new markets. Any incident that erodes consumer loyalty for our brand could significantly reduce its value and damage our business. We may be adversely affected by any negative publicity, regardless of its accuracy. Also, there has been a marked increase in the use of social media platforms and similar devices, including blogs, social media websites and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate as is its impact. Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate and may disseminate rapidly and broadly, without affording us an opportunity for redress or correction.
Macroeconomic conditions and fluctuations in industry capacity can create changes in prices, sales volumes, and margins for our products. Prices for our products are driven by many factors, including demand for our products, industry capacity and decisions made by other producers with respect to capacity, and other competitive conditions in our industry. These factors are affected by general global and domestic economic conditions. We have little influence over the timing and extent of price changes of our products, which may be unpredictable and volatile. If supply exceeds demand, industry operating conditions deteriorate or other factors result in lower prices for our products, our earnings and operating cash flows would be harmed.
Our primary product ingredients are fruit and rum. The cost of our product’s ingredients may, at times, fluctuate greatly because of factors such as shortages or surpluses created by market or industry conditions. Although we may raise the selling prices of our products in response to ingredient price increases, sometimes ingredient prices may increase so quickly or to such levels that we may be unable to pass the price increases through to our customers on a timely basis, which may adversely affect our operating margins. We cannot give assurance that we will be able to pass such price increases through to our customers on a timely basis and maintain our margins in the face of ingredient cost fluctuations in the future.
General global and domestic economic conditions directly affect the levels of demand and production of consumer goods, levels of employment, the availability and cost of credit, and ultimately, the profitability of our business. If economic conditions deteriorate and result in higher unemployment rates, lower disposable income, unfavorable currency exchange rates, lower corporate earnings, lower business investment, and lower consumer spending, we may experience lower demand for our products, which is largely driven by demand for products of our customers which utilize our products. If economic conditions result in higher inflation, we may experience higher production and transportation costs, which we may not be able to recover through higher prices or otherwise.
Our business depends on continuous operation of our contracted facilities. Any of our productions facilities, or any of the machines within such facilities, could cease operations unexpectedly for a significant period of time due to a number of events, including: unscheduled maintenance outages; prolonged power failures; equipment or information system breakdowns or failures; disruption in the supply of raw materials, such as fruits, rum or other ingredients; a spill or release of pollutants or hazardous substances; closure or curtailment related to environmental concerns; labor difficulties; disruptions in the transportation infrastructure, including roads, bridges, railroad tracks, and tunnels; fires, floods, earthquakes, hurricanes, pandemics or other catastrophic events; terrorism or threats of terrorism; and other operational problems.
Unless the Company has agreed to a specific use of the proceeds from an offering, the Company's management will have considerable discretion over the use of proceeds from their offering. You may not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The Company’s success will be substantially dependent upon the discretion and judgment of its management team with respect to the application and allocation of the proceeds of this offering. Any “Use of Proceeds” information presented herein represents the Company’s current intentions and is subject to change based on a number of factors, including the amount of funds raised, industry developments, government regulation, or other factors that are difficult to predict. The Company has absolute discretion regarding the use of the proceeds raised in the offering and may use such proceeds for any purpose, whether or not addressed herein without notice to any Investor that it is changing its intended approach. There can be no assurance that such determinations ultimately made by the Company, which relate to the specific allocation of the proceeds of the offering, will permit the Company to achieve its business objectives. In the event that the Company’s plans change, its assumptions change or prove to be inaccurate or the proceeds of the offering prove to be insufficient, it may be necessary or advisable to reallocate proceeds or to use proceeds for other purposes.
The Company may extend the offering deadline beyond what is currently stated herein. This means that your investment may continue to be held in escrow while the Company attempts to raise the target offering amount even after the offering deadline stated herein is reached. While you have the right to cancel your investment in the event the Company extends the offering, if you choose to reconfirm your investment, your investment will not be accruing interest during this time and will simply be held until such time as the new offering deadline is reached without the Company receiving the target offering amount, at which time it will be returned to you without interest or deduction, or the Company receives the target offering amount, at which time it will be released to the Company to be used as set forth herein. Upon or shortly after release of such funds to the Company, the securities will be issued. The Company may also end the offering early; if the offering reaches its target offering amount after 21 calendar days but before the deadline, the Company can end the Offering with 5 business days’ notice. This means your failure to participate in the Offering in a timely manner, may prevent you from being able to participate – it also means the Company may limit the amount of capital it can raise during the offering by ending it early.
In a dissolution or bankruptcy of the Company, Investors in the securities which have not been converted will be entitled to distributions as described in the Convertible Note. This means that such investors will be at the lowest level of priority and will only receive distributions once all creditors as well as holders of more senior securities, including any preferred members, have been paid in full. If the securities have been converted into equity securities, investors will have the same rights and preferences as the holders of the units issued in the equity financing upon which the Convertible Note is converted subject to the terms of the Company’s operating agreement then in effect. Neither investors in the offering nor holders of units upon conversion into equity securities can be guaranteed a return in the event of a dissolution event or bankruptcy.
Investors will not have the right to inspect the books and records of the Company or to receive financial or other information from the Company, other than as required by Regulation CF. Other security holders of the Company may have such rights. Regulation CF requires only the provision of an annual report on Form C and no additional information – there are numerous methods by which the Company can terminate annual report obligations, resulting in no information rights, contractual, statutory or otherwise, owed to investors prior to conversion of the Convertible Note into equity securities. This lack of information could put Investors at a disadvantage in general and with respect to other security holders.
The Company may prevent Investors from committing more than a certain amount to this Offering based on the Company’s belief of the Investor’s sophistication and ability to assume the risk of the investment. This means that your desired investment amount may be limited or lowered based solely on the Company’s determination and not in line with relevant investment limits set forth by the Regulation Crowdfunding rules. This also means that other Investors may receive larger allocations of the offering based solely on the Company’s determination.
If the Company meets certain terms and conditions an intermediate close of the offering can occur after reaching the target offering amount, which will allow the Company to draw down on the proceeds of the offering committed and captured during the relevant period. The Company may choose to continue the offering thereafter. Investors should be mindful that this means they can make multiple investment commitments in the offering, which may be subject to different cancellation rights. For example, if an intermediate close occurs and later a material change occurs as the offering continues, Investors previously closed upon will not have the right to re-confirm their investment as it will be deemed completed.
Investors should not rely on the fact that our Form C is accessible through the U.S. Securities and Exchange Commission’s EDGAR filing system as an approval, endorsement or guarantee of compliance as it related to this offering.
The production processes required to produce our products depend upon a significant degree of technical expertise. If these third-party vendors and facilities fail to produce to our products to our specifications or inadvertently use defective ingredients in the production process, the quality and consistency of our products will be compromised.
The production and marketing of our products involves an inherent risk that our products may prove to be defective. In that event, we may voluntarily implement a recall or market withdrawal or may be required to do so by a regulatory authority. A recall of one of our products, or a similar product produced by another production facility, could impair sales of the products we market as a result of confusion concerning the scope of the recall.
Policing the unauthorized use of proprietary rights is difficult and time-consuming. The Company cannot guarantee that no harm or threat will be made to our intellectual property. If a third party infringes on our intellectual property and we fail to pursue legal action against them (or pursue such an action and are unsuccessful), we may be unable to execute our business plans, and Investors may lose some or all their investment.
Already have a Wefunder account? Login
Don't have a Wefunder account? Signup