Thank you to everyone who has invested so far and everyone interested in investing soon!  I wanted to shed some light on our business strategy and the potential return on investment.  

Over the last five years we have “backed into” the craft beer industry by making an extremely unique line of whiskeys made from craft beers.  We have established our brand, marketing and distribution throughout California as a craft distillery and were able to fund all of our growth with cash flow and a small amount of friends and family investment, in addition to establishing a distribution network of over 2,500 stores throughout California.  

Just 10 months ago we began producing our line of craft beers and had no idea the demand we would receive for our product.  In addition to receiving requests from a large portion of the 2,500 accounts that carry our whiskeys we began receiving over 50 requests per week from new stores, bars, and restaurants looking to carry our craft beers.  

Within four months we were able to grow our beer business from 800 barrels to a projected 5,000 barrels by the end of 2018.  These 5,000 barrels are currently being allocated to the roughly 75 accounts that we are able to service with our production.  

Our goal is to continue to grow our beer brand to satisfy the demand for our products throughout the greater Bay Area with a target of producing 75,000 barrels per year within the next 2-5 years, which we anticipate will satisfy the demand of 1,125 of our accounts.  

At this point in time we will take one of two directions: 1) We will seek a strategic partner, i.e. a larger regional or national brewery in a new territory to help us continue to build our company, at which point your shares would convert into equity in the acquiring company, or 2) We will issue an Initial Public Offering in which we will seek to buy a regional brewery in a strategic territory in order to continue growing our brand internally, and your shares will be converted into the public entity with the option to liquidate or continue to grow with our company..

In either case the largest factor to consider when looking at your potential Return on Investment (ROI) is the multiple valuation we will achieve, which is determined by our velocity of growth.

At a production of 75k barrels per year we are anticipating to generate $400/barrel in distributed beer sales, in addition to roughly $12m per year in direct to consumer (DTC) retail locations giving us a projected gross annual income of $42m.  

The simplest way to think about your ROI is that the faster we can reach this goal, the higher our multiple valuation will be.  I.e. if we are able to reach our goal in 5-7 years we will likely receive a 6x multiple and an implied enterprise valuation of $252m.  If we can reach this level in 3-5 years we will likely receive an 8x multiple and implied enterprise value of $336m. If we can reach this level in less than three years we anticipate receiving a multiple valuation of 13x and an implied enterprise value of $546m.  

All of these scenarios are of course hypothetical and are in no way a guarantee.  However, in each of these instances a $1,000 investment at our current level would yield $8,936 at a 6x valuation, $11,914 at an 8x valuation, and $19,361 at a 13x valuation.  

Although these numbers may seem surprisingly high at first glance, they are comparably low to what other large regional breweries have sold for in the recent past.  I.e. Lagunitas $2B, Ballast Point, $1B, Goose Island $285M, Golden Road $160M, as well as a recent offer to Knee Deep in Auburn for $450M.

Thank you again for all of your continued support and we look forward to sharing the journey with you all!

Tim Obert

CEO, Seven Stills Brewery & Distillery