EXHIBIT 1A-2A
CHARTER AND AMENDMENTS
1A-2A
1A-2B
ARTICLE I
OFFICES
Section 1.1 Registered Office.
The registered office of BrewDog USA Inc. (the"Corporation") shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 1.2 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
Section 2.1 Place of Meetings. Meetings of the stockholders of the Corporation shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors. In the absence of any such designation, a meeting of the stockholders shall be held at the principal executive offices of the Corporation.
Section 2.2 Annual Meetings. An annual meeting of the stockholders of the Corporation, for the election of directors and for the transaction of such other business as may properly come before of the meeting, shall be held each year on such date and at such time as shall be designated from time to time by the Board of Directors. The first annual meeting of the stockholders shall be held within thirteen (13) months of the date of the incorporation of the Corporation.
Section 2.3 Special Meetings. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, special meetings of the stockholders of the Corporation, for any purpose or purposes, may be called by (i) the Chairman of the Board, if there be one, (ii) the President, or (iii) any officer of the Corporation at the request of a majority of the Board of Directors. A special meeting of the stockholders so called shall be held on such date and at such time as is designated by the Board of Directors. Business transacted at any special meeting of the stockholders shall be limited to the purposes stated in the notice of the special meeting.
Section 2.4 Notice of Meetings. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, written notice of each meeting of the stockholders stating the place, date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten (10) nor more than sixty (60) days before the date of such meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to each stockholder at such stockholder's address as it appears on the stock records of the Corporation or its transfer agent, unless such stockholder shall have filed with the Secretary of the Corporation a written request that notices to such stockholder be mailed to some other address, in which case it shall be directed to such stockholder at such other address.
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Section 2.5 Quorum. At each meeting of the stockholders, the presence, in person or by proxy, of the holders of not less than a majority of the outstanding shares entitled to vote thereat shall constitute a quorum at such meeting for the transaction of business, except as otherwise required by law, the Certificate of Incorporation or these Bylaws. In the absence of a quorum at any meeting of the stockholders, either the chairman of the meeting or the holders of a majority of the outstanding shares present, in person or by proxy, and entitled to vote thereat may adjourn such meeting from time to time, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Section 2.6 Adjournment. Any meeting of the stockholders, whether or not a quorum is present, may be adjourned from time to time, either by the chairman of the meeting or by the vote of holders of a majority of the outstanding shares present, in person or by proxy, and entitled to vote thereat, to reconvene at the same or some other place. Notice of any properly adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken and the adjournment is for no more than thirty (30) days and a new record date is not fixed for the adjourned meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, then notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting. At an adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called if a quorum has been present thereat.
Section 2.7 Vote Required. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, (i) at any meeting of the stockholders for the election of directors at which a quorum is present, the candidates receiving the greatest number of votes shall be elected as directors; and (ii) all other matters submitted to the stockholders at any meeting of the stockholders at which a quorum is present shall be decided by the vote of the holders of a majority of the outstanding shares entitled to vote and present, in person or by proxy, at the meeting. Where a separate vote by class or series is required, except as otherwise required by law, the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or series present, in person or by proxy, at the meeting shall constitute a quorum entitled to take action with respect to that vote on that matter and, except as otherwise required by law, the Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (or plurality, in the case of the election of directors) of the votes cast by the holders of shares of such class or classes or series shall be the act of such class or series. Every reference in these Bylaws to a majority or other proportion of shares of stock shall refer to such majority or other proportion of the votes to which such shares are entitled as provided in the Certificate of Incorporation or these Bylaws.
Section 2.8 Voting Rights. Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, each stockholder in whose name shares stand on the stock records of the Corporation as of the record date with respect to a meeting of the stockholders shall at such meeting be entitled to one vote for each share held by such stockholder as of such record date.
Section 2.9 Proxies. Each stockholder entitled to vote at a meeting of the stockholders, or to express consent to corporate action in writing without a meeting, may authorize another person or persons to act for him by proxy, if the proxy is set forth in writing or by a transmission permitted by law, but no such proxy shall be voted or acted upon after three (3) years from its date, unless such
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proxy provides for a longer period. Each proxy shall be filed with the Secretary of the Corporation prior to or at the time of the meeting.
Section 2.10 List of Stockholders. The Secretary or other officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before each meeting of the stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept open at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
Section 2.11 Organization of Meetings.
(a) At each meeting of the stockholders, unless another officer has been appointed by the Board of Directors, the Chairman of the Board, or, if a Chairman of the Board has not been appointed or is absent, the President, or, in the absence of the President, any Vice President, or in the absence of any Vice President, a chairman chosen by the holders of a majority of the outstanding shares present, in person or by proxy, at the meeting and entitled to vote thereat, shall act as chairman of the meeting. The Secretary, or, in his absence, an Assistant Secretary or, if an Assistant Secretary has not been appointed or is absent, any person appointed by the chairman of the meeting, shall act as secretary of the meeting.
(b) The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of meetings of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations and procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, (i) the establishment of an agenda or order of business for the meeting, (ii) rules and procedures for maintaining order at the meeting and the safety of those present, (iii) limitations on attendance at or participation in such meeting to stockholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the chairman of the meeting shall permit in the chairman's discretion, (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof, (v) limitations on the time allotted to questions or comments by participants, and (vi) the determination of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of the stockholders shall not be required to be held in accordance with, or to follow, any manual or rules of parliamentary procedure.
Section 2.12 Action By Written Consent Without a Meeting. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken and
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bearing the date of signature by each stockholder who signs the written consent, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all stockholders entitled to vote on such action were present and voted, and shall be delivered to the Corporation within sixty (60) days of the date of the earliest dated written consent. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented thereto in writing.
Section 3.1 Power and Authority. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which shall have and may exercise all the powers of the Corporation and do all such lawful acts and things, except as otherwise provided by law, the Certificate of Incorporation or these Bylaws.
Section 3.2 Number and Qualifications of Directors. Except as otherwise provided in the Certificate of Incorporation, the authorized number of directors of the Corporation which shall constitute the whole Board of Directors shall be fixed or changed from time to time exclusively by resolution adopted by the Board of Directors. Except as otherwise provided in the Certificate of Incorporation or fixed by resolution adopted by the Board of Directors, the authorized number of directors of the Corporation shall be three (3). No decrease in the authorized number of directors shall have the effect of shortening the term of any incumbent director. Directors need not be stockholders, unless the Certificate of Incorporation otherwise provides.
Section 3.3 Election and Term of Directors. The directors, other than the initial directors either named in the Certificate of Incorporation or elected by the incorporators, shall be elected at each annual meeting of the stockholders, except as provided in Section 3.4 hereof, and each director so elected shall hold office until the next annual meeting of the stockholders and until such director's successor is duly elected and qualified, or until such director's earlier death, resignation or removal. If, for any reason, the directors shall not have been elected at an annual meeting of the stockholders, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose.
Section 3.4 Vacancies and Newly Created Directorships. Vacancies occurring on the Board of Directors, whether resulting from death, resignation, removal, disqualification, failure of the stockholders to elect the whole authorized number of directors, newly created directorships resulting from any increase in the authorized number of directors or any other reason, may be filled by a majority of the directors then in office, even though less than a quorum, or by a sole remaining director, and any director so chosen shall hold office until the next election of directors and until such director's successor is duly elected and qualified, or until such director's earlier death, resignation or removal. If at any time there are no directors in office, then an election of directors may be held in the manner provided by Delaware law.
Section 3.5 Resignation. Any director may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board, if there be one, the President or the Secretary of the Corporation at the principal executive offices of the Corporation. Such resignation shall be effective at the time specified therein or, if no such specification is made, immediately upon its
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receipt by the Corporation. Unless otherwise specified in the notice, acceptance of a resignation shall not be necessary to make it effective.
Section 3.6 Removal. Except as otherwise provided by Delaware law or the Certificate of Incorporation, any director or the entire Board of Directors may be removed from office cause and only by the affirmative vote of the holders of a majority of the outstanding shares of the Corporation entitled to vote at an election of directors.
Section 3.7 Place of Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware.
Section 3.8 Regular Meetings. Unless the Board of Directors shall otherwise determine, a regular meeting of the Board of Directors shall be held immediately following the adjournment of each annual meeting of the stockholders at which directors are elected, and at the same place, and notice of such meeting need not be given (unless the time or place is changed). Additional regular meetings of the Board of Directors may be held at such other times and places as may from time to time be determined by resolution by the Board of Directors, and notice of any such additional regular meetings need not be given.
Section 3.9 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Board of Directors, by the Chairman of the Board, if there be one, by the President or by any two (2) or more directors and shall be held at such time and place as shall be stated in the notice of the meeting. Notice of the time and place of any special meeting shall be given orally or in writing to each director, in person or by facsimile, telephone, electronic mail, hand delivery, telecopy or other similar method involving immediate receipt, at least twenty-four (24) hours before the meeting, or by mail, if deposited in the United States mail properly addressed, with postage prepaid, at least seventy-two (72) hours prior to the meeting. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice of such meeting.
Section 3.10 Quorum and Voting. Except as otherwise provided by Delaware law or the Certificate of Incorporation, at all meetings of the Board of Directors, the presence of a majority of the directors then in office shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting of the Board of Directors at which a quorum is present shall be the act of the Board of Directors, except as may be otherwise specifically provided by Delaware law, the Certificate of Incorporation or these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.
Section 3.11 Meetings by Telephone. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, any member of the Board of Directors, or of any committee thereof, may participate in a meeting of the Board of Directors, or of such committee, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.
Section 3.12 Organization. At each meeting of the Board of Directors, the Chairman of the Board, if there be one, or, if a Chairman of the Board has not been elected or is absent, the
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President, or, if the President is absent, the most senior Vice President, or, in the absence of any such officer, a chairman of the meeting chosen by a majority of the directors present at the meeting, shall preside over the meeting. The Secretary, or in his absence, an Assistant Secretary or another person appointed by the chairman of the meeting, shall act as secretary of the meeting. At each meeting of the Board of Directors, the chairman of the meeting shall establish the order of business of and the procedures at the meeting, subject to the right of the Board of Directors to establish or modify the same.
Section 3.13 Action By Written Consent Without a Meeting. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if all members of the Board of Directors or of such committee, as the case may be, consent thereto in a writing or writings, and such writing or writings are filed with the minutes of proceedings of the Board of Directors or of such committee.
Section 3.14 Committees. The Board of Directors may, by resolution adopted by the whole Board of Directors, appoint one or more committees, each committee to consist of one or more of the directors of the Corporation as fixed or changed from time to time by the Board of Directors. The membership of a committee member shall terminate on the date of such member's death, resignation or removal from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any or all committee members and the Board of Directors may fill any vacancy on a committee created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee shall, to the extent provided by resolution of the Board of Directors, unless otherwise restricted by law, the Certificate of Incorporation or these Bylaws, have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation, if there be one, to be affixed to all papers which may require it. Each committee shall serve at the pleasure of the Board of Directors, shall act only in intervals between meetings of the Board of Directors, and shall be subject to the control and direction of the Board of Directors. Each committee shall act by a majority of its members at a meeting or by a writing or writings signed by all of its members. Each committee shall keep written minutes of its meetings and proceedings and report the same to the Board of Directors when required.
Section 3.15 Compensation. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, the Board of Directors shall have the authority to fix the amount and type of compensation that the Corporation shall pay to directors for their services as directors, if any. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or any committee thereof and shall receive such compensation for attendance at each meeting of the Board of Directors or any committee thereof and other services as shall be determined by the Board of Directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
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ARTICLE IV NOTICES
Section 4.1 Form of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these Bylaws, to be given to any director, committee member or stockholder, unless contrary provision is made as to how such notice shall be given, such notice may be given (i) in person, in writing, (ii) by mail, postage prepaid, addressed to such director, committee member or stockholder, at such person's address as it appears on the books or, in the case of a stockholder, the stock transfer records of the Corporation or its transfer agent, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail, (iii) by overnight courier service, and such notice shall be deemed to be given the day following the day it is delivered to such service with all charges prepaid, (iv) by facsimile, telecopy, telegram or other similar means, and such notice shall be deemed to be given at the time it is transmitted with all charges prepaid, or (v) by any other method permitted by law, and such notice shall be deemed to be given when it is received by the director, committee member or stockholder.
Section 4.2 Waiver of Notice. Whenever any notice is required to be given to any stockholder, director or committee member under the provisions of law, the Certificate of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to receive such notice, whether before of after the time stated therein, shall be deemed equivalent to the giving of notice to such person or persons. Attendance of a director, committee member or stockholder (in person or by proxy) at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting was not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting need be specified in any written waiver of notice, unless otherwise required by law, the Certificate of Incorporation or these Bylaws.
ARTICLE V OFFICERS
Section 5.1 General. The officers of the Corporation shall be elected or appointed by the Board of Directors and shall include a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also elect or appoint a Chairman of the Board (who must be a director), one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers, and such other officers as it shall deem necessary, convenient or desirable. Any number of offices may be held by the same person at the same time, unless prohibited by law, the Certificate of Incorporation or these Bylaws. No officer of the Corporation needs to be a stockholder of the Corporation, and no officer of the Corporation, except for the Chairman of the Board, needs to be a director of the Corporation.
Section 5.2 Term. Each officer of the Corporation shall hold office at the pleasure of the Board of Directors, until his successor is duly elected or appointed and qualified, or until his earlier death, resignation or removal.
Section 5.3 Removal and Vacancies. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the Board of Directors. Any vacancy occurring in any office of the Corporation, whether caused by death, resignation, removal, expiration of term or any other reason, may be filled by the Board of Directors.
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Section 5.4 Resignations. Any officer may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board, if there be one, the President or the Secretary of the Corporation at the principal executive offices of the Corporation. Any such resignation shall be effective when received by the person or persons to whom the notice is properly given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the contractual rights, if any, of the Corporation under any contract with the resigning officer.
Section 5.5 Compensation. The salaries and other compensation of the officers of the Corporation, if any, shall be fixed by or in the manner designated by the Board of Directors.
Section 5.6 Chairman of the Board. The Chairman of the Board, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. Except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board shall have all the powers and shall perform all the duties of the President. The Chairman of the Board shall also perform such other duties and have such other powers commonly incident to such office and as may from time to time be assigned to the Chairman of the Board of Directors by these Bylaws or by the Board of Directors.
Section 5.7 President. The President shall be the chief executive officer of the Corporation (unless the Board of Directors provides for another person to hold such office separately) and, subject to the control of the Board of Directors, shall have general and active charge, management, control and supervision of the properties, business, affairs, operations, officers, employees and agents of the Corporation, and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall have general authority to execute and deliver all bonds, deeds, mortgages, leases, contracts and other documents and instruments in the name and on behalf of the Corporation, except where required or permitted by law to be otherwise executed and except where the execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. Unless the Board of Directors otherwise determine, in the absence or disability of the Chairman of the Board of Directors, or if there be none, the President shall preside at all meetings of the stockholders and, if he is a director, of the Board of Directors. The President shall also perform such other duties and have such other powers commonly incident to such office and as may from time to time be assigned to the President by these Bylaws or the Board of Directors. Any of the powers or duties of the President may be assigned by the Board of Directors to a Chief Executive Officer elected or appointed by the Board of Directors.
Section 5.8 Vice Presidents. At the request of the President or in the absence of the President or in the event of the President's inability or refusal to act (and if there be no Chairman of the Board), the Vice President, if any, or in the event there is more than one Vice President, the Vice Presidents (in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election or appointment) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers commonly incident to such office and as may from time to time be assigned to such Vice President by these Bylaws, the Board of Directors, the Chairman of the Board of Directors (if there be one), or the President.
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Section 5.9 Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and shall record and keep the minutes of all the actions and proceedings of such meetings in books to be kept for that purpose and shall perform like duties for committees of the Board of Directors when required. Except as otherwise provided in these Bylaws, the Secretary shall give, or cause to be given, notice of all meetings of the stockholders and of all special meetings of the Board of Directors and of all committees that require notice The Secretary shall have custody of the seal of the Corporation, if any, and the Secretary, or an Assistant Secretary, if any, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation, if any, and to attest to the affixing by such officer's signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. The Secretary shall perform such other duties and have such other powers commonly incident to such office and as may from time to time be assigned to the Secretary by these Bylaws, the Board of Directors, the Chairman of the Board (if there be one) or the President, under whose supervision the Secretary shall be.
Section 5.10 Assistant Secretaries. The Assistant Secretary, if there be one, or if there be more than one, the Assistant Secretaries (in the order determined by the Board of Directors, or if there be no such determination, then in the order of their election) shall, at the request of the Secretary or in the absence of the Secretary or in the event of the Secretary's inability or refusal to act, perform the duties of the Secretary and, when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. Each Assistant Secretary, if there be any, shall perform such other duties and shall have such other powers as may from time to time be assigned to such Assistant Secretary by the Board of Directors, the President any Vice President or the Secretary.
Section 5.11 Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep or cause to be kept full and accurate accounts of receipts and disbursements of the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors otherwise so requires, an account of all his transactions as Treasurer and of the financial condition and results of operations of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such form, in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation. The Treasurer shall also perform such other duties and shall have such other powers commonly incident to such office and as may from time to time be assigned to the Treasurer by the Board of Directors, the Chairman of the Board (if there be one) or the President. Any of the powers or duties of the Treasurer may be assigned by the Board of Directors to a Chief Financial Officer elected or appointed by the Board of Directors.
Section 5.12 Assistant Treasurer. The Assistant Treasurer, if any, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, or if there be no such determination, then in order of their election, shall, at the request of the Treasurer, in the
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absence of the Treasurer or in the event of the Treasurer's inability or refusal to act, perform the duties of the Treasurer and, when so acting, shall have the powers and be subject to all the restrictions upon the Treasurer. The Assistant Treasurer, if any, shall also perform such other duties and shall have such other powers as may be assigned to such Assistant Treasurer from time to time by the Board of Directors, the President, any Vice President or the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of Assistant Treasurer and for the restoration to the Corporation, in case of the Assistant Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Assistant Treasurer's possession or under the Assistant Treasurer's control belonging to the Corporation.
Section 5.13 Additional Officers. The Board of Directors may elect or appoint such other officers as it shall deem necessary, convenient or desirable. Such other officers shall hold their offices at the pleasure of the Board of Directors for such terms and shall have such powers and perform such duties as shall be assigned to them from time to time by the Board of Directors. The Board of Directors may delegate to any officer of the Corporation the power to elect or appoint any subordinate officers and to prescribe their respective duties and powers.
Section 5.14 Delegation of Authority. Except where otherwise provided by law, the Board of Directors may from time to time delegate the powers or duties of any officer of the Corporation to any other person, and may authorize any officer to delegate specific powers and duties of such officer to any other person.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION
Section 6.1 Execution of Corporate Instruments. The Board of Directors may, except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, authorize any officer or officers, or other person or persons, to enter into any contract or to execute and deliver any instrument in the name and on behalf of the Corporation, which authorization may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or otherwise within the authority of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
Section 6.2 Voting of Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meetings, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman of the Board, if there by one, the President, any Vice President or any other officer authorized to do so by the Board of Directors, and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation
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might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
ARTICLE VII
STOCK AND STOCKHOLDERS
Section 7.1 Stock Certificates. Each stockholder shall be entitled to a certificate, which shall be in such form as is consistent with applicable law and the Certificate of Incorporation and as is prescribed by the Board of Directors, signed by, or in the name of the Corporation by, the Chairman of the Board (if there be one), the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number and the class or series of shares of stock of the Corporation owned by such stockholder. Any or all of the signatures on a certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of the State of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to Sections 151, 156, 202(a) or 218(a) of the General Corporation Law of the State of Delaware or a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
Section 7.2 Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate or certificates or uncertificated shares of stock of the Corporation in place of any certificate or certificates theretofore issued by the Corporation alleged by the owner thereof to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When issuing such new certificate or certificates or uncertificated shares, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner's legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such form and in such sum as it may direct to indemnify the Corporation
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against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 7.3 Transfers of Shares. Shares of stock of the Corporation shall only be transferable upon the books of the Corporation by the holders thereof, in person or by duly authorized attorney or legal representative and upon the surrender of a properly endorsed certificate or certificates for a like number of shares. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares of stock of the Corporation duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation or the transfer agent of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books; provided, however, that if the certificate contains any legend or other statement restricting or otherwise providing any condition on transfers of the shares represented thereby, then the Corporation or the transfer agent of the Corporation shall effect such transfer only upon the terms of such legend or other statement and only if the Corporation or the transfer agent of the Corporation is satisfied, in its sole discretion, that all conditions to transfer have been satisfied. Upon receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Corporation. The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation or any one or more classes owned by such stockholders in any manner not prohibited by law.
Section 7.4 Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, or entitled to consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights, in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may by resolution fix, in advance, a record date that does not precede the date upon which the resolution fixing such record date was adopted, and with respect to stockholder meetings, is not more than sixty (60) nor less than ten (10) days prior to the date of such meeting, and with respect to other actions is not more than sixty (60) days prior to any such other action. If no record date is fixed by the Board of Directors, the record date (i) for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (ii) for all other purposes shall be the close of business on the day on which the Board of Directors adopts the resolution relating thereto, except as otherwise required by Delaware law, the Certificate of Incorporation or these Bylaws. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
Section 7.5 Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in
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such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.
Section 7.6 Dividends. Dividends upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting, subject to the provisions of law and the Certificate of Incorporation. Dividends may be paid in cash, in property, or in shares of the capital stock of the Corporation, subject to the provisions of law and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation, or for such other purposes as the Board of Directors shall deem in the best interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.
Section 7.7 Regulations. The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration or replacement of certificates for shares of stock of the Corporation. The Board of Directors may appoint one or more transfer agents or one or more registrars, or both, and may require all certificates for shares to bear the signature of either or both.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 8.1 Execution of Other Securities. All bonds, debentures and other corporate securities of the Corporation, other than stock certificates (covered in Section 7.1), may be signed by the Chairman of the Board (if there be one), the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal, if any, impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal, if any, on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the Corporation or such other person as may be authorized by the Board of Directors, to bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before any bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the Corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not cease to be such officer of the Corporation.
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ARTICLE IX
INDEMNIFICATION
Section 9.1 Right to Indemnification. The Corporation shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that such person is or was a director or an officer of the Corporation or such director or officer is or was serving at the request of the Corporation as a director, officer, partner, member, manager, trustee, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter, an "indemnitee"), to the fullest extent permitted by Delaware law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than Delaware law permitted the Corporation to provide prior to such amendment), against all expenses (including attorneys' fees and expenses), judgments, fines, penalties and amounts paid in settlement actually and reasonably incurred by such indemnitee in connection therewith.
Section 9.2 Right to Advancement of Expenses. The right to indemnification conferred in Section 9.1 of these Bylaws shall include the right to be paid by the Corporation the expenses (including attorneys' fees) incurred by an indemnitee in defending any such proceeding in advance of its final disposition (hereinafter, an "advancement of expenses"); provided, however, that, if the General Corporation Law of the State of Delaware requires, an advancement of expenses shall be made only upon receipt by the Corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is not further right to appeal (hereinafter, a "final adjudication") that such indemnitee is not entitled to be indemnified for such expenses under this Section 9.2 or otherwise.
Section 9.3 Right of Indemnitee to Bring Suit. If a claim under Section 9.1 or 9.2 of these Bylaws is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also for the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the General Corporation Law of the State of Delaware. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including
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its Board of Directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article IX or otherwise shall be on the Corporation.
Section 9.4 Non-Exclusivity of Rights. The rights to indemnification and to the advancement of expenses provided by, or granted pursuant to, this Article IX shall not be deemed exclusive of any other rights to which any person may be entitled under any law, the Certificate of Incorporation, these Bylaws, any agreement, any vote of stockholders or disinterested directors or otherwise.
Section 9.5 Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, member, manager, trustee, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the General Corporation Law of the State of Delaware.
Section 9.6 Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors in its discretion, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article IX with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.
Section 9.7 Survival of Indemnification Rights. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article IX shall, unless otherwise provided when authorized or ratified, be contract rights and such rights shall continue as to a person who has ceased to be a director, officer, employee or agent of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such person.
Section 9.8 Certain Definitions.
(a) For purposes of this Article IX, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article IX with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.
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(b) For purposes of this Article IX, (i) references to "other enterprises" shall include employee benefit plans; (ii) reference to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; (iii) references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and (iv) a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article IX.
Section 9.9 Amendment or Repeal. Neither any amendment, repeal or other modification of any of the foregoing provisions of this Article IX nor the adoption of any provisions of these Bylaws inconsistent with this Article IX, shall eliminate, reduce or otherwise adversely affect any right or protection hereunder of any person in respect of any act or omission occurring or alleged to occur prior to the time of such amendment, repeal, modification or adoption.
ARTICLE X
GENERAL MATTERS
Section 10.1 Loans to Officers. The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiaries, including any officer or employee who is a director of the Corporation or any of its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at law.
Section 10.2 Disbursements. All checks, drafts, other orders or demands for payment of money, notes or other evidence of indebtedness of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time authorize.
Section 10.3 Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. If not otherwise so fixed, the fiscal year of the Corporation shall be the calendar year.
Section 10.4 Corporate Seal. The Board of Directors may, in its discretion, adopt a corporate seal. The corporate seal, if one is adopted by the Board of Directors, shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.
Section 10.5 Certificate of Incorporation. All reference in these Bylaws to the Certificate of Incorporation shall mean the Certificate of Incorporation of the Corporation, as amended or restated from time to time, and shall include any Certificates of Designation thereunder.
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ARTICLE XI
AMENDMENTS
Section 11.1 Amendments. Except as otherwise provided in the Certificate of Incorporation, these Bylaws may be altered, amended or repealed, in whole or in part, and new Bylaws may be adopted, by the Board of Directors or by the affirmative vote of stockholders holding at least a majority of the voting power of the Corporation.
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1A-2A
1A-11
Acknowledgement of Independent Registered Public Accounting Firm
We agree to the inclusion in this Regulation A Offering Circular, in Amendment No. 4 to the Registration Statement (Form 1-A/A), of our report dated March 1, 2016, with respect to the consolidated financial statements of Brewdog USA Inc. as of December 31, 2015 and for the period from April 22, 2015 (inception) to December 31, 2015, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Columbus, OH
July 13, 2016
65 E STATE ST, SUITE 1800
COLUMBUS, OH 43215
614-400-3077
www.BrewDog.com
1,052,632 Shares of Common Stock at $47.50 per Share
Minimum Investment: 2 Shares ($95.00)
Maximum Offering: $50,000,000.00
See The Offering - Page 12 and Securities Being Offered - Page 51 For Further Details
None of the Securities Offered Are Being Sold By Present Security Holders
This Offering Will Commence Upon Qualification of This Offering by
the Securities and Exchange Commission and Will Terminate on January 18, 2017,
Unless Extended Up to 180 Days By The Issuer
AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.
PLEASE REVIEW ALL RISK FACTORS ON PAGES 13 THROUGH 21 BEFORE MAKING AN INVESTMENT IN THIS COMPANY. AN INVESTMENT IN THIS COMPANY SHOULD ONLY BE MADE IF YOU ARE CAPABLE OF EVALUATING THE RISKS AND MERITS OF THIS INVESTMENT AND IF YOU HAVE SUFFICIENT RESOURCES TO BEAR THE ENTIRE LOSS OF YOUR INVESTMENT, SHOULD THAT OCCUR
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.
Because these securities are being offered on a "best efforts" basis, the following disclosures are hereby made:
| Price to Public | Underwriting discount and Commissions (1) | Proceeds to Company (2) | Proceeds to Other Persons (3) | |
| Minimum Investment | $95.00 | $4.75 | $90.25 | None |
| Maximum Offering | $50,000,000.00 | $3,325,000.00 | $46,675,000.00 | None |
(1) The Company shall pay FundAmerica Securities LLC a broker-dealer services fee equivalent to (i) 5% of capital raised up to the first $10 million raised, (ii) for all capital raised between $10,000,001 and $15,000,000, a fee of 5.5%, (iii) for all capital raised between $15,000,001 and $20,000,000, a fee of 6%, (iv) for all capital raised between $20,000,001 and $25,000,000, a fee of 6.5%, (v) for all capital raised between $25,000,001 and $30,000,000, a fee of 7%, (vi) for all capital raised between $30,000,001 and $35,000,000, a fee of 7.5%, (vii) for all capital raised between $35,000,001 and $50,000,000, a fee of 8%. See "PLAN OF DISTRIBUTION."
(2) Does not reflect payment of expenses of this offering, which are estimated to not exceed $75,000.00 and which include, among other things, legal fees, reproduction expenses, costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares, but which do not include fees to be paid to the escrow agent and administrative fees paid to FundAmerica. This amount represents the proceeds of the offering to the Company, which will be used as set out in "PLAN OF DISTRIBUTION."
(3) There are no finder's fees or other fees being paid to third parties from the proceeds, other than those disclosed below. See "PLAN OF DISTRIBUTION."
GENERALLY, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.
This offering (the "Offering") consists of Common Stock (the "Shares" or individually, each a "Share") that is being offered on a "best efforts" basis, which means that there is no guarantee that any minimum amount will be sold. The Shares are being offered and sold by BrewDog USA Inc., a Delaware Corporation ("BrewDog USA" or the "Company"). There are 1,052,632 Shares being offered at a price of $47.50 per Share with a minimum purchase of two (2) Shares per investor. The Shares are being offered on a best efforts basis to an unlimited number of accredited investors and an unlimited number of non-accredited investors only by the Company and through FundAmerica Securities LLC ("FundAmerica"), a broker/dealer registered with the Securities and Exchange Commission (the "SEC") and a member of the Financial Industry Regulatory Authority ("FINRA"). The maximum aggregate amount of the Shares offered is $50,000,000.00 (the "Maximum Offering"). There is no minimum number of Shares that needs to be sold in order for funds to be released to the Company and for this Offering to close.
The Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended, for Tier 2 offerings. The Shares will only be issued to purchasers who satisfy the requirements set forth in Regulation A. The offering is expected to expire on the first of: (i) all of the Shares offered are sold; or (ii) the close of business on January 18, 2017, unless sooner terminated or extended up to no more than an additional one hundred eighty (180) days by the company's CEO. Pending each closing, payments for the Shares will be deposited in an escrow account set up by FundAmerica to be held in escrow for the Company. Funds will be promptly refunded without interest, for sales that are not consummated. As partial compensation for serving as escrow agent, FundAmerica Securities, LLC will retain up to $5,000 of interest accrued from funds deposited in the escrow account, whether or not the offering closes. In the event more than $5,000 in interest accrues on funds deposited in the escrow account, the excess will be distributed to each subscriber in the same proportion as such subscriber's investment bears to the gross proceeds of the offering. Upon closing under the terms as set out in this Offering Circular, funds will be immediately transferred to the Company where they will be available for use in the operations of the Company's business in a manner consistent with the "USE OF PROCEEDS" in this Offering Circular.
THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS CONCERNING THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING CIRCULAR, OR OF ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES, AS INVESTMENT, LEGAL, FINANCIAL OR TAX ADVICE.
BEFORE INVESTING IN THIS OFFERING, PLEASE REVIEW ALL DOCUMENTS CAREFULLY, ASK ANY QUESTIONS OF THE COMPANY'S MANAGEMENT THAT YOU WOULD LIKE ANSWERED AND CONSULT YOUR OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISORS AS TO LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THIS INVESTMENT.
JURISDICTIONAL (NASAA) LEGENDS
FOR RESIDENTS OF ALL STATES: THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS OFFERING CIRCULAR HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED "BLUE SKY" LAWS).
4
TABLE OF CONTENTS
SUMMARY AND RISK FACTORS | 7 |
SUMMARY | 7 |
Investment Analysis | 13 |
The Offering | 13 |
RISK FACTORS | 13 |
DILUTION | 21 |
PLAN OF DISTRIBUTION | 22 |
USE OF PROCEEDS TO ISSUER | 24 |
DESCRIPTION OF BUSINESS | 25 |
Narrative | 25 |
Introduction to BrewDog USA Inc. | 25 |
Introduction to BrewDog plc: BrewDog's UK Company | 27 |
Two Punks, One Mission | 27 |
Equity for Punks in Europe | 29 |
BrewDog plc's Aberdeenshire Brewery | 29 |
BrewDog Bars | 30 |
BrewDog plc Future Plans | 31 |
BrewDog Beers | 32 |
Our Headliner Range Beers | 32 |
Our Amplified Range Beers | 33 |
BrewDog USA: The Why | 34 |
The U.S. Craft Beer Market | 35 |
Recent Acquisitions | 35 |
BrewDog in the U.S. | 36 |
BrewDog In The Media | 36 |
The New BrewDog USA Brewery in Columbus, Ohio | 38 |
Why We Selected Columbus, Ohio. | 41 |
Beer Sales | 41 |
BrewDog Bars | 42 |
BrewDog's U.S. Growth Plan | 43 |
DESCRIPTION OF PROPERTY | 45 |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL | |
CONDITION AND RESULTS OF OPERATIONS | 46 |
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES | 49 |
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS | 50 |
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN | |
SECURITYHOLDERS | 52 |
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN | |
TRANSACTIONS | 52 |
SECURITIES BEING OFFERED | 53 |
DISQUALIFYING EVENTS DISCLOSURE | 54 |
ERISA CONSIDERATIONS | 55 |
5
INVESTOR ELIGIBILITY STANDARDS | 57 |
| SIGNATURES & ACKNOWLEDGEMENT ADOPTING TYPED SIGNATURES | 58 |
FINANCIAL STATEMENTS | 60 |
PART III: EXHIBITS | |
Broker-Dealer Services Agreement with FundAmerica Securities LLC | 1A-1 |
Charter (including amendments) | 1A-2A |
Bylaws | 1A-2B |
Subscription Agreement | 1A-4 |
Material Contracts | 1A-6 |
Escrow Agreement with FundAmerica Securities LLC |
1A-8 |
Consent of Independent Auditors | 1A-11 |
Legal Opinion of Kendall Almerico - DiMuroGinsberg | 1A-12 |
| Testing The Waters | 1A-13 |
6
SUMMARY AND RISK FACTORS
SUMMARY
The following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular and/or incorporated by reference in this Offering Circular.
Introduction
BrewDog1 USA Inc. was formed to brew and distribute craft beer, as well as operate Brewpubs, in the United States. BrewDog USA plans to build on BrewDog plc's success as Europe's leading craft brewer, by turning our attention stateside. We are going to combine Europe's most explosive craft brewery with the world's most explosive craft beer market.
We have already started to build a distribution network in the U.S. and have brand recognition on the back of our hit TV show BrewDogs that airs on Esquire Network. Our management team, our beers and our business model are tried and tested in Europe and soon will be unleashed on the United States of America.
BrewDog USA's American brewery in Columbus, Ohio is already being built. we have a team in place and our route to market is close to being locked down with two distribution deals in place and others being negotiated. BrewDog USA plans to scale our american business even faster than was done in the uk, as we plan to roll out distribution of our range of beers and also look to build a brewpub operation with a nationwide footprint.
BrewDog USA is currently 100% owned by BrewDog plc, Europe's leading craft brewer and creator of Europe's largest chain of craft beer bars with 44 outlets. BrewDog USA will share the same senior management team as BrewDog plc and will brew the same beers for the U.S. market that are currently leading the way in Europe. BrewDog's flagship beer,
1 BrewDog USA Inc. ("BrewDog USA" or the "Company" or "We" or "Our") was formed on April 22, 2015, as a Delaware Corporation, for the general purpose of brewing and distributing craft beer as well as operating Brewpubs in the United States. BrewDog USA is, prior to the Shares being sold in this Offering, wholly owned by BrewDog plc ("BrewDog plc") a United Kingdom company. The BrewDog brand, in general and without specific reference to either BrewDog USA or BrewDog plc, is herein referred to as "BrewDog" with no additional wording.
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Punk IPA, is the UK & Europe's best selling craft beer, and it is BrewDog USA's intention to make it one of America's best selling craft beers, too.
We will take advantage of BrewDog plc's infrastructure, expertise, intellectual property and experienced people as we look to turbo-charge our American business. Despite only starting in 2007, BrewDog plc has grown exponentially, and we believe BrewDog USA can enjoy a much steeper growth trajectory given the starting point our distribution plans and brand awareness give our U.S. business.
BrewDog in Europe
BrewDog plc is the largest and fastest-growing craft brewer in Europe and has been the fastest- growing food and drink company in the UK for the last 4 years consecutively. In addition to brewing beer, BrewDog plc also has 44 BrewDog bars of which we own and operate 30 based in the UK and we run the 14 international sites in conjunction with our local partners. We plan to take all we have learned from BrewDog plc's UK business and build a business in the United States - the largest, fastest growing and most vibrant craft beer market in the world.
The story of BrewDog began in 2007. In a derelict shed in an industrial park in Northeast Scotland, BrewDog was founded by best friends and home-brewers
James Watt and Martin Dickie. Before starting BrewDog, James was the captain of a North Atlantic fishing boat while Martin was working as a brewer and distiller. James and Martin both quit their jobs, got a £20,000 bank loan and some second hand stainless steel tanks, and set out to turn the UK beer scene on its head. They bootstrapped a tiny ramshackle brewery together on a shoestring budget. They did most of the set-up and building work themselves because they could not afford to get anyone to help them.
James and Martin had a very simple mission when they founded BrewDog: to make other people as passionate about great craft beer as they are. As a company, BrewDog plc focuses on two key things: its beer and its people. BrewDog plc not only wants to brew the best beers in the world, it also strives to be the best company to work for in the world. BrewDog USA has inherited those same traits and qualities, and plans to extend those qualities that make the BrewDog brand so special to our brewery and Company in the United States.
For the first 12 months of its existence, BrewDog plc was just two humans and one dog. The fledgling enterprise started to grow quickly as more customers wanted to stock their beers. By 2009, BrewDog was the largest independent brewery in Scotland and was already exporting its beers to 15 countries in Europe and selling to major retail chains in the UK.
Today, BrewDog plc employs more than 600 passionate
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people, ships its beer to more than 50 countries around the world, owns and/or operates 44 craft beer bars and also owns one of the world's most advanced craft breweries from its base in Aberdeenshire in Northeast Scotland. Its flagship beer, Punk IPA is the leading craft beer in the UK and in Europe and BrewDog plc has been solidly profitable every year since 2008. BrewDog plc is also a public company in the UK and has a community of more than 35,000 shareholders.
Crowdfunding
The growth of BrewDog plc was fueled and funded by its radical crowdfunding model which first launched in 2010 as BrewDog plc tore up convention, turned the traditional business model on its head and launched "Equity for Punks" giving thousands of people a front row seat to the craft beer revolution.
By the end of 2015, BrewDog plc held the world record for the biggest online equity based crowdfunding campaign and, to date, has used Equity for Punks to raise more than £20m of investment into BrewDog plc, while building a community of more than 35,000 investors.
BrewDog plc led the way in crowdfunding in Europe, and BrewDog USA plans to do the same in the U.S. BrewDog USA is now looking to replicate this equity crowdfunding model in the U.S. The launch of the JOBS Act and Regulation A+ makes it possible for us to raise capital from thousands of people who love craft beer.
BrewDog USA Overview
BrewDog beers have been available in limited quantities in the U.S. since 2008 but BrewDog plc's Scottish brewery has simply not been able to keep up with the demand for our beers in America. BrewDog USA plans to change all of that. By opening our new brewery in Ohio, we will be able to meet the American demand and give ourselves a great platform and infrastructure for growth in the world's biggest craft beer market.
We already have two distribution agreements finalized and others being negotiated with craft beer distributors in several states that will lock down our route to market and ensure we will hit the ground running. Furthermore, we already have a sales history with retailers such as Whole Foods. Our TV show BrewDogs has run for three seasons on the Esquire Network giving our brand further national exposure in America.
We are well on our way to completing our new state of the art brewery in Ohio on a 42 acre site which is just over 10 miles from downtown Columbus. Our initial 100,000 square foot brewery building will feature a tap room, an 8,000 square foot restaurant, an outdoor patio with additional
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customer space, a bottle shop and a visitor centre offering tours on site. We will also have 17,000 square feet of office space, a 16,000 square foot brewhouse, a packaging hall of 11,000 square feet and a warehouse featuring 7,000 square feet of refrigerated space.
Everything about BrewDog USA is set up for growth and rapid expansion. From our 42 acre Columbus brewery site primed for future expansion in terms of space, transport links, utilities, infrastructure and brewing equipment to our team's UK experience, we have the contacts and people to make expansion happen quickly and efficiently. We already have plans for a potential 200,000 square foot extension; with plenty of space on the site for further building work thereafter, too.
Additionally, all of the equipment is also designed with expansion as the main focus. The initial brewhouse can support an annual capacity of 426,000 barrels by adding more fermentation tanks to the system and the building has been designed to take a second brewhouse when we fully utilize the capacity of the initial brewhouse. We will use all that we have learned at BrewDog plc's European site about quickly growing production in a craft brewery to maximize efficiencies and minimize equipment costs when growing our American operation.
We already have confirmed volumes and have two distribution agreements in place for our beers. For a brand new operation, we believe BrewDog USA is in a strong position in terms of initial sales, orders and volumes. This is a position of strength we will look to build from quickly. With the U.S. craft beer market booming and projected to continue doing so for some time, we see enormous potential for BrewDog to grow and to grow very quickly in the U.S.
We have a team of people who are determined to ensure BrewDog fulfils its American potential. Our BrewDog USA team is made up of U.S. and UK craft beer industry veterans who will provide a wealth of local knowledge combined with the key people who have driven the success and growth of BrewDog plc's European business.
BrewDog Beers
All the beers BrewDog USA will brew in the U.S. have been successfully developed and launched in Europe and many are now established global brands. Our range is split between our Headliner and
our Amplified line-ups, and we will use what we have learned to date to optimize our U.S. portfolio.
Punk IPA is BrewDog's flagship beer and the cornerstone of our Headliner Range. Punk IPA accounts for 60% of BrewDog plc's production and sales in Europe, and we anticipate this beer also being our flagship in the U.S. It is the first beer we ever made and has been BrewDog plc's best selling beer ever since. Layered with new world hops to
create an explosion of tropical fruit and an all-out riot of grapefruit, pineapple and lychee before a spiky bitter finish, this beer is a transatlantic fusion. Punk IPA is the number one selling craft beer in the UK and is also the number one selling craft beer in Europe.
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Other Headliner Range beers include:
Our Amplified Range beers include:
These beers will make up around 95% of our production from BrewDog USA's Columbus, Ohio brewery; the remaining 5% will be small batch, seasonal and experimental brews.
BrewDog Bars
In 2010, BrewDog plc opened BrewDog Aberdeen, its first craft beer bar and has now opened BrewDog bars all over the planet. BrewDog plc has been the fastest-growing food and drink company in the UK for the last four years consecutively. During this time, BrewDog plc's management team has learned a lot about rapidly growing brewing production, scaling infrastructure and building teams to meet the demands of its ever-expanding business. That same management team now brings their knowledge and experience to BrewDog USA.
BrewDog plc's bar division has grown rapidly to 44 sites, with 30 in the UK and flagship sites internationally such as BrewDog Tokyo, BrewDog Barcelona and BrewDog Sao Paulo.
BrewDog Bars allow customers to indulge in everything that is great about craft beer. With knowledgeable staff who are passionately evangelical when it comes to craft beers, the BrewDog
Bars pride themselves on showcasing the best, most exciting and flavorsome craft beers that BrewDog plc can get its paws on from all corners of the planet.
As in Europe, BrewDog bars will be a key part of BrewDog USA's operation. Our first BrewDog bar in America, scheduled to open in late 2016, will be the onsite bar at our Columbus brewery. Our bars will enable us to sell more beer, increase our visibility, build our community and assist in getting the BrewDog brand into as many people's hands as
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possible. The BrewDog bar is a new spin on a craft beer bar, and the model for BrewDog bars has honed across the existing 44 international sites. Originally inspired by American bars, each BrewDog bar infuses European beer cafe culture, highly trained expert staff, contemporary Scottish food, and craft cocktails with board games into the mix. Our spaces are stripped back, raw, industrial and utilitarian using reclaimed materials and furniture.
Our combined brewing and retailing approach with a national ambition is a new business model in the U.S. craft beer industry. We intend to use this vertical integration to accelerate our growth, bolster our profitability and build deep and lasting connections with our customers. At BrewDog, we aim to shorten the distance as much as possible between ourselves and the people who enjoy our beers. Our BrewDog Bars enable us to do just that.
Key People
James Watt, Managing Director of BrewDog plc and Chief Executive Officer of BrewDog USA has been named Scottish Entrepreneur of the Year three times. He won the Great Britain Entrepreneur of
the Year award in 2015. Penguin Publishing recently published his best selling business book Business for Punks. James is one of only eleven Master Cicerones in the world. Martin Dickie, BrewDog plc's Brewing Director and Chief Operations Officer of BrewDog USA, has won two gold medals for BrewDog beers at the World Beer Cups as well as four gold medals at the World Beer Awards, making BrewDog's beers amongst the highest rated and most decorated on the planet. James and Martin also host BrewDogs - the longest running beer television show in history - which is broadcast in the U.S. by the Esquire Network.
BrewDog's Columbus brewery will be run by Brewmaster Tim Hawn. Tim spent just under five years as Brewmaster at the renowned Dogfish Head craft brewery. In addition to brewing world-class craft beers at Dogfish Head, Tim oversaw a massive expansion in their production and brewing facilities.
Let's Go America!
We plan to duplicate BrewDog plc's European successes in the far larger craft beer market of the U.S. We plan to take advantage of the brand recognition BrewDog already has stateside from our beer sales, our online footprint and our television show. We plan to build on the sales and distribution contracts we already have in place. We plan to build on the sales and distribution contracts we already have in place and those we are negotiating. We plan to take our team's experience of rapidly expanding a craft beer brewing and retailing business, and apply it to the U.S. market.
We want you to be along for the ride. And your investment will enable us to grow even faster.
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Investment Analysis
The Company believes that it has strong economic prospects by virtue of the following dynamics of the industry, the success of BrewDog plc in the United Kingdom and elsewhere, and other reasons:
Despite Management's beliefs, there is no assurance that BrewDog will be profitable, or that management's opinion of the industry's favorable dynamics will not be outweighed in the future by unanticipated losses, adverse regulatory developments and other risks. Investors should carefully consider the various risk factors below before investing in the Shares.
The Offering
Common Stock outstanding (1) (2) | 6,315,789 Shares |
Common Stock offered by us | 1,052,632 Shares |
Common Stock to be outstanding after the offering (3) | 7,368,421 Shares |
All Shares of Common Stock are held by BrewDog plc.
There is only one class of stock in the Company at present - Common Stock.
The total number of Shares of Common Stock assumes that the maximum number of Shares are sold in this offering.
RISK FACTORS
The purchase of the Company's Common Stock involves substantial risks. You should carefully consider the following risk factors, in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on the Company's
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business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.
The discussions and information in this Offering Circular may contain both historical and forward- looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company's business, please be advised that the Company's actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results may differ from the Company's current expectations.
Before investing, you should carefully read and carefully consider the following risk factors:
Risks Relating to the Company's Business
The Company Has Limited Operating History
The Company has a limited operating history and there can be no assurance that the Company's proposed plan of business can be developed in the manner contemplated and, if it cannot be, Shareholders may lose all or a substantial part of their investment. There is no guarantee that it will ever realize any significant operating revenues or that its operations ever will be profitable.
The Company Is Dependent On Its Management, Founders and Sponsors to Execute the Business Plan
BrewDog is dependent on its management, founders and sponsors to execute the business plan. The success of the Company will depend on its ability to compete for and retain additional qualified key personnel to enhance the growth. The Company's business would be adversely affected if it were unable to recruit qualified personnel when necessary or if it were to lose the services of certain key personnel and it were unable to locate suitable replacements in a timely manner. Finding and hiring such replacements, if any, could be costly and might require the Company to grant significant equity awards or incentive compensation, which could have a material adverse effect on the Company's financial results and on your investment. The loss, through untimely death, unwillingness to continue or otherwise, of any such persons could have a materially adverse effect on the Company and its business.
The Company's Bank Accounts Will Not Be Fully Insured
The Company's regular bank accounts and the escrow account for this Offering each have federal insurance for only up to $250,000. It is anticipated that the account balances in each account may exceed $250,000 at times. In the event that either bank should fail, the Company may not be able to recover all amounts deposited in these bank accounts.
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The Company's Business Plan Is Speculative
The Company's present business and planned business are speculative and subject to numerous risks and uncertainties. There is no assurance that the Company will generate significant revenues or profits.
The Company Faces Significant Competition in the United States
The Company will face significant competition in the United States craft brew marketplace. According to the Brewers Association, a not-for-profit trade association dedicated to small and independent American brewers, in November, 2014, U.S. brewery count passed the mark of 3,200 brewers in the country and the number of brewery licenses reached the highest ever, topping 4,500 in the first sixth months of 2014. Thirteen states (CA, CO, WA, OR, MI, NY, PA, TX, FL, WI, IL, NC, OH) had more than 100 breweries each and breweries were opening at a rate of 1.5 per day. In addition, as of November 2014, there were more than 2,000 breweries in planning. Competition in the brewpub, microbrewery and bar market is also significant.
A Disruption In Brewing Activities Could Have A Material Adverse Effect
A prolonged disruption to brewing activities (e.g., due to fire, industrial action or any other cause) at its brewing site could have a material adverse effect on the Company's ability to brew its products. This could have a material adverse effect on the Company's financial results and on your investment.
The Brew Pubs Could Have Licensing, Legal or Regulatory Problems
Some or all of the Brew Pubs could lose their licenses to sell alcoholic beverages or have their hours of operation curtailed as a result of hearings of the licensing boards in jurisdictions where they are located or as a result of any changes in legislation governing licensed premises in the various jurisdictions in which Brew Pubs are located or may be located, with a material adverse effect on the Company's financial results and on your investment.
The Cost of Establishing and Operating The Brew Pubs May Be Higher Than Expected
The costs of establishing and operating the Brew Pubs may be higher than expected. Although management of BrewDog plc has undertaken projections and opened similar sized licensed premises in cities outside the U.S. in the past and has made such information available to the Company, costs may be greater in the U.S. locations and may increase as a result of economic or other factors beyond the Company's control, with a resulting material adverse effect on the Company's financial results and on your investment.
The Company Intends To Incur Debt
The Company expects to incur debt secured by the land and/or the assets of its brewery, and it may incur debt (including secured debt) in connection with opening and/or operating Brew Pubs. Complying with obligations under such indebtedness may have a material adverse effect on the
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Company and on your investment.
The Company May Have Obligations Under a Line of Credit
BrewDog plc will as necessary extend a line of credit to the Company to be drawn as needed to build and equip the U.S. brewery and to cover operating losses until the Company becomes cash flow positive. The Company intends to reduce reliance on this line of credit with debt from banks or lenders, secured by liens on the land, brewery building, and equipment. The Company expects to evaluate such loan or credit options during or following the closing of this Offering. Complying with obligations under the line of credit or the loans may have a material adverse effect on the Company and on your investment.
The Company's Expenses Could Increase Without a Corresponding Increase in Revenues
The Company's operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on the Company's financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to
(1) increases in the rate of inflation; (2) increases in taxes and other statutory charges; (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies; (4) significant increases in insurance premiums; (5) increases in borrowing costs; and (5) unexpected increases in costs of supplies, goods, materials, construction, equipment or distribution.
The Company Will Be Reliant On Key Suppliers
The Company intends to enter into agreements with key suppliers and will be reliant on positive and continuing relationships with such suppliers. Termination of those agreements, variations in their terms or the failure of a key supplier to comply with its obligations under these agreements (including if a key supplier were to become insolvent) could have a material adverse effect on the Company's financial results and on your investment.
Increased Costs Could Affect The Company
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.
Inability to Maintain and Enhance Product Image
It is important that the Company maintains and enhances the image of its existing and new products. The image and reputation of the Company's products may be impacted for various reasons including litigation, complaints from regulatory bodies resulting from quality failure, illness or other health
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concerns. Such concerns, even when unsubstantiated, could be harmful to the Company's image and the reputation of its products. From time to time, the Company may receive complaints from customers regarding products purchased from the Company. The Company may in the future receive correspondence from customers requesting reimbursement. Certain dissatisfied customers may threaten legal action against the Company if no reimbursement is made. The Company may become subject to product liability lawsuits from customers alleging injury because of a purported defect in products or sold by the Company, claiming substantial damages and demanding payments from the Company. The Company is in the chain of title when it manufactures, supplies or distributes products, and therefore is subject to the risk of being held legally responsible for them. These claims may not be covered by the Company's insurance policies. Any resulting litigation could be costly for the Company, divert management attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on the Company's business, results of operations, and financial condition. Any negative publicity generated as a result of customer complaints about the Company's products could damage the Company's reputation and diminish the value of the Company's brand, which could have a material adverse effect on the Company's business, results of operations, and financial condition, as well as your investment. Deterioration in the Company's brand equity (brand image, reputation and product quality) may have a material adverse effect on its financial results as well as your investment.
If The Company Does Not Enter Into An Agreement With BrewDog Plc To License Or Otherwise Have Rights To Use Their Intellectual Property, It Would Significantly Decrease Our Opportunities For Success
Because our parent company BrewDog plc or others related to our parent company own all intellectual property rights related to our business (including to the trademarks we will use) we are reliant on entering into an agreement with our parent company or others to have the rights to use such intellectual property in our business operations, and have not yet done so. If such an agreement is not entered into, or if such an agreement was entered into and then terminated or we were otherwise unable to fulfill our obligations under such an agreement, it would significantly decrease our opportunities for success and could have a material adverse effect on your investment.
If We Are Unable To Protect Effectively Our Intellectual Property, We May Not Be Able To Operate Our Business, Which Would Impair Our Ability To Compete
The names and/or logos of Company brands (whether owned by the Company or licensed to us) may be challenged by holders of trademarks who file opposition notices, or otherwise contest, trademark applications by the Company for its brands. Similarly, domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name or URL. Such challenges could have a material adverse effect on the Company's financial results as well as your investment.
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Computer, Website or Information System Breakdown
Computer, website and/or information system breakdowns as well as cyber security attacks could impair the Company's ability to service its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on the Company's financial results as well as your investment.
Changes In The Economy Could Have a Detrimental Impact
Changes in the general economic climate could have a detrimental impact on consumer expenditure and therefore on the Company's revenue. It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest rates, higher unemployment and tax increases) may decrease the disposable income that customers have available to spend on beer and/or alcohol consumption and may adversely affect customers' confidence and willingness to spend. Any of such events or occurrences could have a material adverse effect on the Company's financial results and on your investment.
Volatility of Agricultural Commodities
The Company uses agricultural commodities in the manufacturing of its beer. Commodity markets are volatile and unexpected changes in commodity prices can reduce the Company's profit margin and make budgeting difficult. Many factors can affect commodity prices, including but not limited to political and regulatory changes, weather, seasonal variations, technology and market conditions. Some of the commodities used by the Company are key ingredients in its beer and may not be easily substituted. In particular, the Company uses large quantities of hops and may be reliant on a single supply contract for this ingredient. Any of such events or occurrences could have a material adverse effect on the Company's financial results and on your investment.
Regulatory and Legal Hurdles
The operation of a brewery, wholesale and retail distribution of beer, and operation of Brew Pubs will each be subject to obtaining a liquor license or other licensure in the states in which such operations take place. An unanticipated delay or unexpected costs in obtaining or renewing such licenses, or unanticipated hurdles which have to be overcome or expenses which have to be paid, could result in a material adverse effect on the Company's business plan and financial results and on your investment.
Government and Other Campaigns and Laws Could Reduce Demand
Government-sponsored campaigns and campaigns by other third parties against excessive drinking, licensing reforms relating to the sale of alcoholic beverages and changes in drunk driving laws and other laws may reduce demand for the Company's products and any change in the brewing legislation and other legislation could have an impact upon present and future products which the Company may produce, which could have a material adverse effect on the Company's financial results and on your investment.
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Risks Relating to This Offering and to Ownership of the Shares
The Company May Undertake Additional Equity or Debt Financing That May Dilute The Shares In This Offering
The Company may undertake further equity or debt financing which may be dilutive to existing Shareholders, including you, or result in an issuance of securities whose rights, preferences and privileges are senior to those of Shareholders, including you, and also reducing the value of shares subscribed for under this Offering.
The Shares Are Offered On A "Best Efforts" Basis And The Company May Not Raise The Maximum Amount Being Offered
The Company is offering the Shares through on a "best efforts" basis. In a "best efforts" offering, there is no assurance that the Company will sell enough Shares to meet its capital needs. If you purchase Shares in this Offering, you will do so without any assurance that the Company will raise enough money to satisfy the full use of proceeds the Company has outlined in this Offering Circular or to meet the Company's working capital needs.
The Company May Not Be Able To Obtain Additional Financing.
Even if the Company is successful in selling the maximum amount of Shares in the Offering, the Company may require additional funds to continue and grow its business. The Company may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force the Company to delay its plans for growth and implementation of its strategy which could seriously harm its business, financial condition and results of operations. If the Company needs additional funds, the Company may seek to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to the Company‘s current Shareholders and to you, if you invest in this Offering.
The Offering Price Has Been Arbitrary Determined
The offering price of the Shares has been arbitrarily established by the Company based upon its present and anticipated financing needs and bears no relationship to the Company's present financial condition, assets, book value, projected earnings, or any other generally accepted valuation criteria. The offering price of the Shares may not be indicative of the value of the Shares or the Company, now or in the future.
The Management Of The Company Has Broad Discretion In Application of Proceeds
The management of the Company has broad discretion to adjust the application and allocation of the net proceeds of this offering in order to address changed circumstances and opportunities. As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of the management of the Company with respect to the application and allocation of the net proceeds hereof.
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An Investment in the Company's Shares Could Result In A Loss of Your Entire Investment
An investment in the Company's Shares offered in this Offering involves a high degree of risk and you should not purchase the Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason in the near future.
There Is No Assurance The Company Will Be Able To Pay Distributions To Share Holders
While the Company desires to pay distributions at some point in the future to its Shareholders when and if the Company is profitable, there can be no assurance that cash flow and profits will allow such distributions to ever be made.
There is No Public Trading Market for the Company's Shares
At present, there is no active trading market for the Company's securities and the Company cannot assure that a trading market will develop. The Company's Common Stock has no trading symbol. In order to obtain a trading symbol and authorization to have the Company's securities trade publicly, the Company must file an application on Form 211 with, and receive the approval by, the Financial
Industry Regulatory Authority ("FINRA") of which there is no assurance, before active trading of the Company's securities could commence. If the Company's securities ever publicly trade, they may be relegated to the OTC Pink Sheets. The OTC Pink Sheets provide significantly less liquidity than the NASD's automated quotation system, or NASDAQ Stock Market. Prices for securities traded solely on the Pink Sheets may be difficult to obtain and holders of the Shares and the Company's securities may be unable to resell their securities at or near their original price or at any price. In any event, except to the extent that investors' Shares may be registered on a Form S-1 Registration Statement with the Securities and Exchange Commission in the future, there is absolutely no assurance that Shares could be sold under Rule 144 or otherwise until the Company becomes a current public reporting company with the Securities and Exchange Commission and otherwise is current in the Company's business, financial and management information reporting, and applicable holding periods have been satisfied.
The Company Has Made Assumptions In Its Projections and In Forward-Looking Statements That May Not Be Accurate
The discussions and information in this Offering Circular may contain both historical and "forward- looking statements" which can be identified by the use of forward-looking terminology including the terms "believes," "anticipates," "continues," "expects," "intends," "may," "will," "would," "should," or, in each case, their negative or other variations or comparable terminology. You should not place undue reliance on forward-looking statements. These forward-looking statements include all matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Offering Circular, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. To the extent that the Offering Circular contains forward- looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company's business, please be advised that the Company's actual financial condition, operating results, and business performance may differ materially from that projected or
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estimated by the Company. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results to differ from its current expectations. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital, inability to raise capital or financing, failure to obtain customers, loss of customers and failure to obtain new customers, the risk of litigation and administrative proceedings involving the Company or its employees, loss of government licenses and permits or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of the Company's operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be referred to in this Offering Circular or in other reports issued us or third party publishers.
DILUTION
The term "dilution" means the reduction of any one Share as a percentage of the aggregate Shares outstanding. If all of the Shares in this offering are fully subscribed and sold, the Shares offered herein will constitute approximately 14.29% of the total Shares of Common Stock of the Company. The Company anticipates that subsequent to this offering the Company may require additional capital and such capital may take the form of Common Stock, other stock or securities or debt convertible into stock. Such future fund raising will further dilute the percentage ownership of the Shares sold herein in the Company.
If you invest in our common stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Common Stock and the pro forma net tangible book value per share of our Common Stock after this offering.
As of December 31, 2015, the net tangible book value of the Company was $1,497,241. Based on the number of shares of Common Stock issued and outstanding as of the date of this Offering Circular (6,315,789), that equates to a net tangible book value of approximately $0.24 per share of Common Stock on a pro forma basis. Net tangible book value per share consists of stockholders' equity adjusted for the retained earnings (deficit), divided by the total number of shares of Common Stock outstanding. Without giving effect to any changes in such net tangible book value after December 31, 2015, other than to give effect to the sale of 1,052,632 shares of common stock being offered by the Company in this Offering Circular for the subscription amount of $50,000,000, the pro forma net tangible book value, assuming full subscription, would be $51,497,241. Based on the total number of shares of Common Stock that would be outstanding assuming full subscription (7,368,421) that equates to approximately $6.99 of tangible net book value per share.
Thus, if the Offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current stockholder BrewDog plc will have immediately increased by approximately
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$6.75 without any additional investment on its part and the net tangible book value per Share for new investors will be immediately diluted to $40.51 per Share. These calculations do not include the costs of the offering, and such expenses will cause further dilution.
The following table illustrates this per Share dilution:
Offering price per Sharex | $47.50 |
Net Tangible Book Value per Share before Offering (based on 6,315,789 shares) | $0.24 |
Increase in Net Tangible Book Value per Share Attributable to Shares Offered Hereby (based on 7,368,421 shares) | $6.75 |
Net Tangible Book Value per Share after Offering (based on 7,368,421 shares) | $6.99 |
Dilution of Net Tangible Book Value per Share to Purchasers in this Offering | $40.51 |
x Before deduction of offering expenses
There is a material disparity between the price of the Shares in this Offering and the effective cash cost to BrewDog plc for Shares acquired by them in a transaction during the past year, or that they have a right to acquire. As set out in the Consolidated Statement of Stockholder's Equity in Section F/S Financial Statements below, BrewDog USA Inc.'s operations are funded by BrewDog plc as an interest free intercompany balance repayable on demand. Total funding provided during 2015 amounted to $1,796,095 and of which $1,750,000 was converted to additional-paid in capital. As a result, the average effective cash contribution of BrewDog plc for shares acquired by them in a transaction during the past year was approximately $0.28 per share, whereas the public contribution under this public offering will be $47.50 per share.
PLAN OF DISTRIBUTION
None of the Shares being sold in this offering are being sold by present securities holders. All of the Common Stock is newly authorized and issued by the Company. The Company has engaged FundAmerica Securities, LLC ("FundAmerica"), a broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority ("FINRA"), to perform the following broker-dealer services and administrative functions in connection with this Offering in addition to acting as the escrow agent:
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The Company shall pay FundAmerica a broker-dealer fee equivalent to (i) 5% of capital raised up to the first $10 million raised, (ii) for all capital raised between $10,000,001 and $15,000,000, a fee of 5.5%, (iii) for all capital raised between $15,000,001 and $20,000,000, a fee of 6%, (iv) for all capital raised between $20,000,001 and $25,000,000, a fee of 6.5%, (v) for all capital raised between $25,000,001 and $30,000,000, a fee of 7%, (vi) for all capital raised between $30,000,001 and $35,000,000, a fee of 7.5%, (vii) for all capital raised between $35,000,001 and $50,000,000, a fee of 8%. FundAmerica has agreed to pay Source Capital Group Inc. a referral fee of 0.25%.
In addition, we will pay FundAmerica (i) $225.00 escrow account set up fee, (ii) $25.00 per month escrow account fee, (iii) applicable fees for fund transfers and accounting as follows: (x) Inbound funds fees - $0.50 per ACH transfer, $15.00 per domestic wire transfer, $10.00 per check, $2.50 per investor (one-time accounting fee upon receipt of funds); and (y) Outbound funds fees - for each transmittal of funds to the Company upon closing of a successful offering $15.00 per domestic wire transfer, (iv) AML checks ($2.00 for each domestic investor, $5.00 for each investor from the United Kingdom, $5.00 - $60.00 for all other international investors depending on domicile), (v) $45.00 for each bad actor check (per entity and each associated person), (vi) $20.00 processing fee for each AML and fund transfer exception, if any, and (vii) up to $5,000 of interest accrued from funds deposited in the escrow account (collectively, the "Administration Fees"). In the event more than $5,000 in interest accrues on funds deposited in the escrow account, the excess will be distributed to each subscriber in the same proportion as such subscriber's investment bears to the gross proceeds of the offering. The
Administration Fees shall not exceed a maximum of $175,000.00.
All subscribers will be instructed by the Company or its agents to transfer funds by wire or ACH transfer directly to the escrow account established for this Offering or deliver checks made payable to "FundAmerica Securities, LLC, as Agent to BrewDog USA Inc. Escrow Account" which FundAmerica shall deposit into such escrow account no later than noon the next business day after receipt. The Company may terminate the Offering at any time for any reason at its sole discretion.
FundAmerica is not participating as an underwriter of the Offering and under no circumstance will it solicit any investment in the company, recommend the Company's securities or provide investment advice to any prospective investor. Rather, FundAmerica involvement in the Offering is limited to acting as an accommodating broker-dealer. Based upon FundAmerica limited role in this offering, it has not and will not conduct extensive due diligence of this securities Offering and no investor should rely on FundAmerica involvement in this Offering as any basis for a belief that it has done extensive due diligence. FundAmerica does not expressly or impliedly affirm the completeness or accuracy of the Offering Circular presented to investors by the issuer in this Offering. All inquiries regarding this Offering or services provided by FundAmerica Securities and its affiliates should be made directly to the Company.
There are no plans to return funds to subscribers if all of the securities to be offered are not sold. There is no minimum subscription amount required (other than a per investor minimum purchase) to break escrow and distribute funds to the Company. There will be no material delay in the payment of the proceeds of the Offering by FundAmerica to the Company.
The sale of other securities of the same class as those to be offered for the period of distribution will be limited and restricted to those sold through this Offering. Because the Shares being sold are not publicly or otherwise traded, the market for the securities offered is presently stabilized.
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FundAmerica Securities Transfer LLC, an affiliate of FundAmerica, may serve as transfer agent to maintain stockholder information on a book-entry basis. The fee for this service is $25.00 per month plus additional fees for services performed as a result of secondary market activity, if any.
USE OF PROCEEDS TO ISSUER
The foregoing Use of Proceeds is an estimate based on the Company's current business plan. We may find it necessary or advisable to reallocate portions of the net proceeds reserved for one category to another, and we will have broad discretion in doing so.
The maximum gross proceeds from the sale of the Shares in this Offering are $50,000,000.00 The net proceeds from the offering, assuming it is fully subscribed, are expected to be approximately $46,600,000.00 after the payment of offering costs including broker-dealer and selling commissions, printing, mailing, legal and accounting costs, and other compliance and professional fees that may be incurred. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ from those expected by management.
Management of the Company has wide latitude and discretion in the use of proceeds from this Offering. Ultimately, management of the Company intends to use the majority of the proceeds for general working capital and, once certain funding milestones are met, to build and open additional BrewDog bars. At present, management's best estimate of the use of proceeds, at various funding milestones, is set out in the chart below. However, potential investors should note that this chart contains only the best estimates of the Company's management based upon information available to them at the present time, and that the actual use of proceeds is likely to vary from this chart based
upon circumstances as they exist in the future, various needs of the Company at different times in the future, and the discretion of the Company's management at all times.
A portion of the proceeds from this Offering may be used to compensate or otherwise make payments to officers or directors of the issuer. The officers and directors of the Company may be paid salaries and receive benefits that are commensurate with similar companies, and a portion of the proceeds may be used to pay these ongoing business expenses.
The Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company and the discretion of the Company's management. The Company may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate.
| Total Raised in Offering | $2,500,000 | $5,000,000 | $10,000,000 | $25,000,000 | $50,000,000 |
|---|---|---|---|---|---|
| Salaries and Wages | $100,000 | $500,000 | $750,000 | $1,250,000 | $1,750,000 |
| Construction | $1,000,000 | $1,000,000 | $1,000,000 | $6,000,000 | $6,750,000 |
| Purchase of Equipment | $1,000,000 | $1,500,000 | $2,500,000 | $5,000,000 | $10,000,000 |
| Open BrewDog Pubs | $3,000,000 | $7,500,000 | $22,500,000 | ||
| Working Capital | $500,000 | $500,000 | $750,000 | $1,000,000 | |
| Materials and Inventory | $100,000 | $225,000 | $250,000 | $500,000 | $750,000 |
| Marketing | $100,000 | $150,000 | $250,000 | $400,000 | |
| Office Expenses | $25,000 | $100,000 | $150,000 | ||
| Furniture & Fixtures | $50,000 | $150,000 | $200,000 | $300,000 | $400,000 |
| Product Development | $250,000 | $400,000 | $750,000 | $1,000,000 | |
| Travel & Entertainment | $100,000 | $150,000 | $250,000 | $400,000 |
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| Utilities | $250,000 | $350,000 | $500,000 | $650,000 | |
| Computers and Software | $50,000 | $100,000 | $100,000 | $150,000 | $200,000 |
| Licenses | $50,000 | $175,000 | $550,000 | ||
| Legal | $25,000 | $50,000 | |||
| Accounting | $25,000 | $50,000 | |||
| Offering Expenses1 | $75,000 | $75,000 | $75,000 | $75,000 | $75,000 |
| Broker-Dealer Fees2 | $125,000 | $250,000 | $500,000 | $1,400,000 | $3,325,000 |
| TOTAL | $2,500,000 | $5,000,000 | $10,000,000 | $25,000,000 | $50,000,000 |
1 The Offering Expenses include, among other things, legal fees, reproduction expenses, costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares, but do not include fees to be paid to the escrow agent and administrative fees paid to FundAmerica.
2 The Broker-Dealer Fees do not include up to $175,000.00 in additional fees payable to FundAmerica for escrow services and Administrative Fees, as set out in PLAN OF DISTRIBUTION above.
DESCRIPTION OF THE BUSINESS
Narrative
BrewDog USA Inc. was formed on April 22, 2015, as a Delaware Corporation, for the general purpose of brewing and distributing craft beer in the United States. BrewDog USA is, prior to the Shares being sold in this Offering, wholly owned by BrewDog plc, a United Kingdom company.
BrewDog USA wholly owns two subsidiaries: BrewDog Brewing Company LLC, an Ohio limited liability company, that will act as an operating company and will own the brewing equipment and BrewDog Columbus LLC, an Ohio limited liability company, that will own the land and the building where our Columbus brewery sits. Both BrewDog Brewing Company LLC and BrewDog Columbus LLC will, in the Company's belief, be treated as disregarded entities by the Internal Revenue Service, with all revenues and expenses being passed through to BrewDog USA. For purposes of this Offering Circular, "BrewDog USA" or the "Company" or "we" or "our" will refer to BrewDog USA Inc., BrewDog Brewing Company LLC and BrewDog Columbus LLC in the collective. The BrewDog brand, in general and without specific reference to either BrewDog USA or BrewDog plc, is referred to as "BrewDog" with no additional wording throughout this Offering Circular.
Introduction to BrewDog USA Inc.
BrewDog exists to make other people as passionate about great craft beer as we are. We are on a mission to put the taste, flavor and artisan craftsmanship back into people's beer glasses.
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BrewDog's Headliner Range of Craft Beers
With BrewDog USA, we are combining Europe's most explosive craft brewery with the world's most explosive craft beer market. Expect fireworks.
We want to build on BrewDog plc's successes as Europe's leading craft brewer and take BrewDog's hardcore hoppy ales to the people of America. We are building a distribution network in the U.S. and have brand recognition in the U.S. on the back of our TV show BrewDogs that airs on Esquire Network. Our management team, our beers and our business model are tried and tested, all dialed in and soon to be unleashed on the United States of America.
BrewDog plc is the largest and fastest-growing craft brewer in Europe and has been the fastest- growing food and drink company in the UK for the last 4 years consecutively. In addition to brewing beer, there are 44 successful BrewDog bars all over the planet. BrewDog USA intends to import this part of the BrewDog business model to the USA.
We plan to take all we have learned from BrewDog plc's Scottish business and build a business in the United States - the largest, fastest growing and most vibrant craft beer market in the world.
BrewDog USA's American brewery in Columbus, Ohio is already being built. We have a team in place and our route to market is close to being locked down with two distribution deals finalized and others being negotiated in several states. With your investment, BrewDog USA's team hopes to scale our American business even faster than was done in the UK, as we plan to roll out distribution of our range of beers and also look to build a brewpub operation with a nationwide footprint.
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Introduction to BrewDog plc: BrewDog's UK Company
BrewDog USA is currently 100% owned by BrewDog plc, Europe's leading craft brewer and owner of Europe's largest chain of craft beer bars with 44 outlets. BrewDog USA will share the same senior management team as BrewDog plc and will brew the same beers for the U.S. market that are currently leading the way in Europe. BrewDog's flagship beer, Punk IPA, is the UK & Europe's best selling craft beer, and it is BrewDog USA's intention to make it one of America's best selling craft beers.
We will take advantage of BrewDog plc's infrastructure, expertise, intellectual property and experienced people as we look to turbo- charge our American business. Despite only starting in 2007, BrewDog plc has grown exponentially, and we believe BrewDog USA can enjoy a much steeper growth trajectory given the starting point our pending distribution footprint and brand awareness give our U.S. business.
Two Punks, One Mission
The story of BrewDog began in 2007. In a derelict shed in an industrial park in Northeast Scotland, BrewDog was founded by best friends and home-brewers James Watt and Martin Dickie. Before starting BrewDog, James was the captain of a North Atlantic fishing boat while Martin was working as a brewer and distiller. James and Martin both quit their jobs, got a £20,000 bank loan and some second hand stainless steel tanks, and set out to turn the UK beer scene on its head. They bootstrapped a tiny ramshackle brewery together on a shoestring budget. They did most of the set-up and building work themselves because they could not afford to get anyone to help them.
James and Martin have grown BrewDog from its humble start to Europe's largest craft brewery
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James and Martin had a very simple mission when they founded BrewDog: to make other people as passionate about great craft beer as they are. As a company, BrewDog plc focuses on two key things: its beer and its people. BrewDog plc not only wants to brew the best beers in the world, it also strives to be the best company to work for in the world. BrewDog USA has inherited those same traits and qualities, and plans to extend those qualities that make the BrewDog brand so special to our brewery and Company in the United States.
For the first 12 months of its existence, BrewDog plc was just two humans and one dog. James and Martin did everything: brewing, bottling by hand, sales and even delivered their beer from their car trunks as they spent most of their weekends selling their beers at local street markets. The fledgling enterprise quickly started to grow quickly as more customers wanted to stock their beers. By 2009, BrewDog was the largest independent brewery in Scotland and was already exporting its beers to 15 countries in Europe and selling to major retail chains in the UK such as Tesco, Sainsbury's, Waitrose and ASDA.
In 2010, BrewDog plc opened its first ever craft beer bar in their hometown as BrewDog Aberdeen. BrewDog plc wanted to give people somewhere to drink world-class craft beer in an environment where James and Martin would want to hang out. BrewDog plc now has 44 BrewDog bars all over the planet.
As you can see from the graph below, the BrewDog brand has continued to grow quickly ever since and BrewDog plc has been the fastest-growing food and drink company in the UK for the last four years consecutively. During this time, BrewDog plc's management team has learned a lot about rapidly growing brewing production, scaling infrastructure and building teams to meet the demands of its ever-expanding business. That same management team now brings their knowledge and experience to BrewDog USA.
BrewDog: Bringing its UK experience in rapid growth to the U.S.
Today, BrewDog plc employs more than 600 passionate people, ships its beer to more than 50 countries around the world, owns and operates in conjunction with local partners 44 craft beer bars
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and also owns one of the world's most advanced craft breweries from its base in Aberdeenshire in Northeast Scotland. Its flagship beer, Punk IPA is the leading craft beer in the UK and in Europe and BrewDog plc has been solidly profitable every year since 2008. BrewDog plc is also a public company in the UK and has a community of more than 35,000 shareholders.
James Watt, BrewDog plc Managing Director and the Chief Executive of BrewDog USA Inc., has been named Scottish Entrepreneur of the Year three times and won the Great Britain Entrepreneur of the Year award in 2015. James has recently published the best selling business book Business for Punks with Penguin Publishing. James is also one of only nine Master Cicerones in the world. Martin Dickie, BrewDog plc's Brewing Director and Chief Operations Officer of BrewDog USA, has won two gold medals for BrewDog beers at the World Beer Cups as well as four gold medals at the World
Beer Awards, making BrewDog's beers amongst the highest rated and most decorated on the planet. James and Martin also host BrewDogs - the longest running beer TV show in history - which is shown the U.S. by the Esquire Network.
The BrewDog team constantly seeks to challenge people's perceptions of what beer can be. In addition to brewing our everyday beers, we make limited edition high-octane brews that look to take innovation in brewing to new levels. We make a series of ice-distilled beers that are up to 32% ABV, we have brewed the strongest beer in the world three times, we have served a beer as a fog, we have served beer from taxidermy and we have even brewed a beer at the bottom of the north Atlantic.
Equity for Punks in Europe
BrewDog plc is an alternative business owned by thousands of people who love craft beer. They are BrewDog plc's shareholders, friends, community and the heart and soul of its business. The growth of BrewDog plc was fueled and funded by its radical crowdfunding model which first launched in 2010 as BrewDog plc tore up convention, turned the traditional business model on its head and launched "Equity for Punks" giving thousands of people a front row seat to the craft beer revolution.
Equity for Punks was an online equity-based crowdfunding campaign in the UK. At the end of 2015, BrewDog plc held the world record for the biggest online equity based crowd funding campaign and, to date, has used Equity for Punks to raise more than £20,000,000 of investment into BrewDog plc, while building a community of more than 35,000 investors. Sitting amid the harsh and rugged landscape of Aberdeenshire, BrewDog plc's HQ brewery was built with the proceeds of the Equity for Punks investment rounds making it the one of the world's most successful substantially- crowdfunded breweries.
BrewDog USA is now looking to replicate this equity crowdfunding model in the U.S. The launch of the JOBS Act and Regulation A+ makes it possible for us to raise capital from thousands of people who love craft beer, regardless of how wealthy they might be. BrewDog plc led the way in crowdfunding in Europe, and BrewDog USA plans to do the same in the U.S.
BrewDog plc's Aberdeenshire Brewery
BrewDog plc's initial brewery was cobbled together in Fraserburgh, Scotland then expanded multiple times. The company eventually ran out of space and in 2012 moved into its present home - a state of
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the art eco-brewery in Ellon, a town in Aberdeenshire, Scotland. Located on a green field site, BrewDog plc's Ellon brewery is technologically advanced and environmentally friendly.
BrewDog plc's Aberdeenshire Brewery
Environmentalism and technology are very important to BrewDog. BrewDog plc's existing brewhouse features a progressive heat recovery system, which drastically cuts its energy consumption. All of the Ellon brewery's brewing by-products (spent malt, hops and yeast) are utilized by local farmers. The Ellon brewery also has a laboratory with state of the art equipment that allows BrewDog to completely focus on the quality of its beers. BrewDog plc's Ellon brewery also boasts a tap room called DogTap, and a high-tech pilot brewhouse where new beers are developed.
BrewDog Bars
BrewDog plc's first BrewDog Bar opened in Aberdeen in 2010. Since then, the bar division has grown rapidly and there are now 30 BrewDog Bars in the UK, and a total of 44 sites worldwide including flagship sites internationally such as BrewDog Tokyo, BrewDog Barcelona and BrewDog Sao Paulo.
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BrewDog Bars are libraries of beery masterpieces from the likes of Stone, Mikkeller, To Ol, Beavertown, AleSmith and many more.
BrewDog Bars allow customers to indulge in everything that is great about craft beer. With knowledgeable staff who are passionately evangelical when it comes to craft beers, the BrewDog Bars pride themselves on showcasing the best, most exciting and flavorsome craft beers that BrewDog plc can get its paws on from all corners of the planet. In addition to serving a full range of BrewDog beers, they also offer an varied selection of food and coffee from artisan coffee roasters - BrewDog Bars are libraries of beery masterpieces from the likes of Stone, Mikkeller, To Øl, Beavertown, AleSmith and many more.
BrewDog Bar division serves three main purposes: (1) sell BrewDog beer contributing to the overall volume of beer BrewDog produces, (2) provide a showcase for the BrewDog brand where we control the customer experience and (3) raise the awareness and profile of BrewDog beers and craft beers overall. This degree of vertical integration has helped BrewDog plc scale quickly in the UK. BrewDog USA plans to do the same in the U.S.
BrewDog plc Future Plans
BrewDog plc's rapid growth over the last few years has enabled the continued investment in two of BrewDog's passions: its beer and its people. To help keep up with the demand for BrewDog beers in Europe, BrewDog plc is currently expanding its Scotland brewery and plans to open 16 new
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BrewDog bars in the UK and Europe giving consumers more places to enjoy craft beer and continuing to grow the BrewDog brand.
BrewDog USA Inc. is the largest and most exciting of BrewDog plc's future plans. BrewDog USA has been planned for years, and already has some distribution and the key personnel in place to ensure we hit the ground running.
Rapid growth is in the BrewDog DNA. And now we plan to transplant that DNA stateside.
BrewDog Beers
BrewDog is on a mission to make other people as passionate about world-class craft beer as we are. Our main priority is brewing high-quality beers. All the beers BrewDog USA will brew in the U.S. have been successfully developed and launched in Europe and many are now established global brands. Our range is split between our Headliner and our Amplified line-ups, and we will use what we have learned to date to optimize our U.S. portfolio.
Our Headliner Range Beers
BrewDog's Headliners, including our flagship beer: Punk IPA
Punk IPA
Punk IPA is BrewDog's flagship beer and the cornerstone of our Headliner Range. Punk IPA accounts for 60% of BrewDog plc's production and sales in Europe and we anticipate this beer also being our flagship in the U.S. It is the first beer we ever made and has been BrewDog plc's best selling beer ever since. Layered with new world hops to create an explosion of tropical fruit and an all-out riot of grapefruit, pineapple and lychee before a spiky bitter finish, this beer is a transatlantic fusion. Punk IPA is the number one selling craft beer in the UK and is also the number one selling craft beer in Europe.
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Punk IPA continues to lead the way for craft brew sales in the UK
Dead Pony Club is BrewDog's highly hopped session pale ale and the second biggest selling beer overall. Sales of Dead Pony Club have increased more than 130% in the UK over the last 12 months. This beer has been a key part of the BrewDog lineup since 2011, and we anticipate it being our second biggest selling beer in America.
Kingpin is BrewDog's hoppy spin on the classic German pilsner style. This is a beer that really excels on draft.
5am Saint is BrewDog's hopped up red ale delivering roasty malty goodness with our favorite American and New Zealand hops.
Jet Black Heart is BrewDog's milk and oatmeal stout which is also available on nitro dispense in kegs, this been is all about mountains of chocolate with an opulent velvety mouthfeel.
Our Amplified Range Beers
Elvis Juice is a 6.5% grapefruit infused IPA building on all our favorite hops and adding a huge grapefruit hit.
Jack Hammer is a beer with a huge cult following and a savagely bitter IPA that literally hammers hops into your palate.
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Hardcore IPA is our explicit imperial ale, at 9.2% and over 100 IBU, and is not one for the feint of heart.
Cocoa Psycho is a 10% Imperial Russian stout combining decadence and attitude in this deep dark beast of a beer.
Our Amplified range: boxful flavor, high octane craft brews
These beers will make up around 95% of our production from BrewDog USA's Columbus, Ohio brewery. The remaining 5% will be small batch, seasonal and experimental brews.
BrewDog USA: The Why
At BrewDog USA, we are not reinventing the wheel. We plan to combine the experience and success of our explosive European craft brewery with the world's most explosive craft beer market - the U.S. We plan to roll out the same beers, the same retail concept, the same game plan and the same management team as we did with BrewDog plc. In the U.S., we have the potential to go much bigger, much harder and ultimately, much better because, unlike BrewDog plc's European operation, we are not starting from scratch.
We have finalized two distribution deals and are negotiating others in several states with craft beer distributors in the U.S. ready and waiting for our beers. We already have a strong reputation in the U.S. with customers who are familiar with our beers and our story, so we will be servicing a demand that already exists. We have a team and an infrastructure already in place with plenty of experience having rapidly grown a craft beer business in the UK under their belts. Because of all of these factors combined, we plan to turbo-charge our growth trajectory in the U.S.
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The U.S. Craft Beer Market
The U.S. is both the largest and fastest-growing craft beer market in the world. According to the Brewers Association, craft breweries account for 11% of the beer market in the United States, with over 25 million barrels of craft beer being produced in 2015 alone. Small brewing companies employed 115,469 people across America in 2014. In 2014, total beer production in the U.S. grew 0.5%, but craft beer grew 17.6%. It is forecasted that by 2020, craft beer will be 20% of the total American beer market.
BrewDog is coming to the rapidly growing craft beer market in the U.S.
Recent Acquisitions
There have been several recent acquisitions of craft breweries by larger companies in the U.S. Ballast Point Brewing Company, based in San Diego, had a production of 123,000 barrels in 2014 and was acquired by Constellation Group for $1 billion in November 2015. By comparison, BrewDog U.S.'s initial brewhouse and building will have a capacity of up to 426,000 barrels and we project sales of 85,000 barrels in our first full year of production. Furthermore, we will also have the retail element to our business through the roll out of BrewDog bars. Other recent craft beer acquisitions have included Lagunitas, Firestone Walker and Golden Road.
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BrewDog in the U.S.
BrewDog beers have been available in limited quantities in the U.S. since 2008 via a California based importer. BrewDog plc has been unable to keep up with the demand from America from its Scottish based brewery. By brewing in our new brewery in Ohio, we will be able to meet the American demand as well as get much fresher beer to customers at a very competitive price point because we will not have the huge freight charges that BrewDog plc has shipping beer to the U.S.
BrewDog in the Media
BrewDog already has a strong media reputation in worldwide. BrewDog is one of the top four most followed craft breweries globally on social media and in 2015 received an average of more than 32,000 American visitors to its website on a monthly basis.
BrewDog has been featured in Huffington Post, CNN, CNBC, Time magazine and Forbes, and is regularly approached for comments and statements on key opinion pieces. BrewDog is regarded as a leading voice in craft beer, and our position on a wide range of topics from brewing to small business is held in high regard among a broad set of media outlets. BrewDog regularly appears in all UK national media, both online and in print, and regularly sees reach in excess of 1 million media impressions each month.
Captain James explaining the craft beer revolution on CNBC
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Forbes Interview with James Watt discussing "The BrewDog Way"
BrewDog beers are also are highly prominent on beer rating websites. On the American website www.ratebeer.com, BrewDog beers were the 4th most rated beers globally in 2015 translating to a strong amount of brand equity in the craft beer community.
More press for James Watt and BrewDog's Punk Craft Beer Revolution
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BrewDogs: The TV Show
Now airing its third season, our TV show BrewDogs is the longest-running beer TV show in history. Each episode of the show, broadcast on Esquire Network in the U.S., follows James and Martin as they travel across America (and the world) visiting amazing breweries and creating their own locally inspired craft brews. From brewing on a NASCAR speedway in Delaware to making beer under a frozen lake in Michigan, the TV show celebrates craft beer and has elevated James and Martin to two of the most-recognizable beer industry personalities in the U.S. and beyond. BrewDogs has helped to build BrewDog's reputation in the U.S. and further enhance the demand for our beers.
Esquire TV's BrewDogs series: The longest running beer show on television
The New BrewDog USA Brewery in Columbus, Ohio
We are already well on our way to completing our new brewery in Ohio on a 42 acre site just over 10 miles from downtown Columbus. The site benefits from great utilities such as water, gas and electric which will make it easy for us to scale our operations there and expand our American business. The site features strong transport links, being located directly on the Route 33 South Eastern Expressway as well as being serviced by rail, which should unlock great freight efficiencies as the company grows. At 42 acres, BrewDog USA will enjoy an abundance of space to scale its brewery and production. By comparison, BrewDog plc's Scottish brewery is on a site that is only 5.5 acres. Being only 10 miles from Columbus and sitting immediately next to the Canal Street Retail Mall, our visitor centre, tap room and restaurant also have what we feel are a great location.
Construction of our initial 100,000 square foot brewery building is well underway and the building is due to be completed in 2016. The building will feature a tap room and restaurant of 8,000 square feet as well as an outdoor patio with additional customer space. We will also have a bottle shop and a
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BrewDog is bringing our experience from across the pond to the shores of America
visitor center offering tours on site. We intend to have 17,000 square feet of office space. In terms of beer production, the brewhouse area is 16,000 square feet. The packaging hall is initially 11,000 square feet and our warehouse features 7,000 square feet of refrigerated space. The tap room will feature a stunning glass wall 28 feet high with views directly into our brewhouse so visitors can enjoy one of our beers while they watch our team in action.
Architect's rendering of BrewDog's Columbus Brewery
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Progress on the building in Columbus as of February 2016
Our initial brewing equipment for the Ohio brewery is currently being manufactured. We are working with renowned Esau & Hueber from Germany to build the brewing equipment. BrewDog plc has worked with E&H since 2010 and much of the equipment in the Scottish brewery was built, supplied and commissioned by them. We have initially ordered a 170,000 barrel fully automated brewhouse. The brewhouse will have the potential to brew up to 426,000 barrels of beer annually. We have also ordered 22 fermentation tanks that will give us a starting capacity of 102,000 barrels. The production can be expanded up to 426,000 barrels simply by adding additional fermentation tanks because our system and building are designed with this expansion in mind. Furthermore, we are currently finalizing an order for a state of the art canning line from KHS that can fill up to 40,000 cans per hour. The equipment is due to start arriving in May, with the first test brews planned for mid-August 2016.
The Columbus building and its equipment are designed with rapid expansion in mind. The building was designed to be easily extended when required. We already have plans for a potential 200,000 square foot extension with plenty of space on the site for further building work thereafter, too. Additionally, the equipment is also all designed with expansion as the main focus. The initial brewhouse can support an annual capacity of 426,000 barrels by adding more fermentation tanks to the system and the building has been designed to be able to take a second brewhouse of 255,000 barrels when we fully utilize the capacity of the initial brewhouse. We will use all that we have learned at BrewDog plc's European site about quickly growing production in a craft brewery to maximize efficiencies and minimize equipment costs when growing our American operation. Long
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term, the Columbus brewery will eventually be able to support a total production in excess of 1.5 million barrels annually.
Why We Selected Columbus, Ohio.
We are excited to be building our American brewery in Columbus, Ohio. We selected Ohio, and specifically Columbus, for several reasons:
First, we saw a huge opportunity in the Midwest. We felt both the east coast and west coast had a number of craft breweries which created an opportunity for the type of beers we brew to build out from a strong foothold in this region. Second, there is no other mid-sized or large craft brewery in the Columbus area. This presented us with an opportunity to fill that void.
Third, we had a tremendous response and support from the people of Columbus and Ohio. Before we selected the location, we scouted many potential cities and sites and met the local community at each potential location. The response in Columbus was always overwhelmingly positive and many people went out of their way to convince us to build our new brewery there. The local community even launched the viral #BDOGTOCBUS campaign that had thousands of supporters online.
Fourth, Columbus is an outstanding location for us from a logistics and freight perspective. Our site is serviced by rail and directly on a main expressway. Columbus is within 500 miles (or a 9 hour drive) from just over half of the American population, making it the perfect location for us to further establish BrewDog in the U.S. market. Furthermore, we plan to export to Canada from BrewDog USA and Columbus is perfectly placed for sending our beers north of the border.
Fifth, we received a comprehensive incentive package from the local and state authorities to help us make the project happen. Overall, the support package in terms of incentives and other reductions amounted to more than $5 million. This package helped reduce the initial investment from our side and enabled the project to proceed faster and at a larger scale than we had originally envisioned.
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Beer Sales
Because BrewDog beer has previously been sold in the U.S., albeit in limited quantities, we already have an established route to market that assists BrewDog USA. We are setting up a distribution network all over America and we already have relationships from our parent company with retailers such as Whole Foods and Bevmo. Everything is already in place for our aggressive and staged rollout from our Columbus base as we will look to continually add additional states and expand our distribution footprint all over America. We believe we are starting from a very strong position in terms of distribution, brand recognition and personnel and this strong position will enable us to hit the ground running and give us the best chance of hitting our growth targets.
BrewDog Bars
As in Europe, BrewDog Bars will be a key part of BrewDog USA's operation. Our first BrewDog Bar in America will be the onsite bar at our Columbus brewery and is scheduled to open in late 2016. In addition, we are currently negotiating to open a second location in the Franklinton area near downtown Columbus. Given the U.S. laws we must comply with, American bars all have to be brew- pubs so each bar we have in the U.S. will have small batch brewing equipment on site and will brew its own special beers to sit on tap alongside the beers we will brew at the Columbus brewery.
Just as they do in Europe, our bars will enable us to sell more beer, gain additional visibility, build our community, and get the BrewDog brand into as many people's hands as possible. Although we only anticipate around 5% of our overall Columbus production will be sold in our own bars, we believe they will contribute in excess 25% to our overall turnover during the first five years given the additional mark-up on selling direct to the customer and also the revenue generated from other items such as food and drinks we will sell.
The BrewDog Bar is a new spin on the craft beer bar that BrewDog plc has honed across 44 sites internationally. Originally inspired by American bars, each BrewDog bar infuses European beer cafe culture, highly trained expert staff, contemporary Scottish food, and craft cocktails with board games into the mix. Our spaces are stripped back, raw, industrial and utilitarian using reclaimed materials and furniture and where, in our opinion, the most beautiful thing is the beer in the glass.
We favor small, alternative locations and our DIY design ethos both contributes to the vibe and keeps our initial cost down. Our American bar expansion plans will take advantage of all of the experience the BrewDog plc team has in quickly building and establishing the 44 BrewDog Bars located all over the world.
Our combined brewing and retailing approach with a national ambition is a new business model in the U.S. craft beer industry. We intend to use this vertical integration to accelerate our growth, bolster our profitability and build deep and lasting connections with our customers. At BrewDog, we love to shorten the distance as much as possible between ourselves and the people who enjoy our beers. Our BrewDog Bars enable us to do just that.
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BrewDog Bars: Helping to build the BrewDog brand worldwide.
BrewDog's U.S. Growth Plan
Everything about BrewDog USA is set up for growth. From our 42-acre Columbus brewery site primed for future expansion in terms of space, transport links, utilities, infrastructure and brewing equipment to our team's UK experience, we have the contacts and people to make expansion happen quickly and efficiently.
We are already looking for additional locations for our American BrewDog Bars. We have a concept which is finely tuned after BrewDog plc rolled out 44 new BrewDog bars over the last five years in the UK and internationally. Not only has this model already proven successful for us, it brings something new to the U.S. craft beer market.
We have a team of people who are determined to ensure BrewDog fulfils its American potential. Our BrewDog USA team is made up of U.S. and UK craft beer industry veterans who will provide a wealth of local knowledge combined with the key people who have driven the success and growth of BrewDog plc's European business.
We already have confirmed volumes and have two distribution agreements already in place. For a brand new operation, we believe BrewDog USA is in a strong position in terms of anticipated initial sales, orders and volumes. This is a position of strength we will look to build from quickly. With the
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U.S. craft beer market booming and projected to continue doing so for some time, we see enormous potential for BrewDog in the U.S.
We plan to duplicate BrewDog plc's European successes in the far larger craft beer market of the U.S. We plan to take advantage of the brand recognition BrewDog already has stateside from our beer sales, our online footprint and our television show. We plan to build on the amazing sales and distribution contracts we already have in place. We plan to take our team's experience of rapidly expanding a craft beer brewing and retailing business, and apply it to the U.S. market.
We want you to be along for the ride. And your investment will enable us to grow even faster.
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DESCRIPTION OF PROPERTY
The brewery will be located at 96 Gender Road, Canal Winchester, Ohio 43110. The site consists of approximately 42 acres of land zoned for manufacturing. Originally, the site consisted of 52 acres, including 10 acres of public park land. On August 28, 2015, BrewDog Columbus LLC purchased the entire 52 acres from TS Trim Industries Inc. for $1,500,000. Also on August 28, 2015, the 10 acres of park land was sold to the City of Canal Winchester for $400,000. Therefore, the final 42-acre site was purchased by BrewDog Columbus LLC for $1,100,000. The brewery will be approximately 100,000 square feet, sitting 700 feet East of Gender Road. The building will house an approximately 16,000 square foot state-of-the art brewhouse, 11,000 square feet of packaging space 7,000 square feet of refrigerated, and over 17,000 square feet of office. The site is bordered by Gender Road to the West, a cycle path running along Groveport Road to the South, a baseball and skate park owned by the City of Canal Winchester to the East and railroad tracks to the North.
Construction of our initial 100,000 square foot brewery building is well underway and the building is due to be completed in 2016. The building will feature a tap room and restaurant of 8,000 square feet as well as an outdoor patio with additional customer space. We will also have a bottle shop and a visitor center offering tours on site. We will have 17,000 square feet of office space. In terms of beer production, the brewhouse area is 16,000 square feet. The packaging hall is initially 11,000 square feet and our warehouse features 7,000 square feet of refrigerated space. The tap room will feature a stunning glass wall 28 feet high with views directly into our brewhouse so visitors can enjoy one of our beers while they watch our team in action.
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Ariel rendition of the Columbus brewery site
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled "Risk Factors" and elsewhere in this Offering Circular.
BUSINESS
BrewDog USA Inc. ("BrewDog" or the "Company") was formed on April 22, 2015, as a Delaware Corporation, for the general purpose of brewing and distributing craft beer in the United States. BrewDog is, prior to the Shares being sold in this Offering, wholly owned by BrewDog plc, a United Kingdom company. BrewDog is building a brewery in Columbus, Ohio to manufacture its craft beer for national distribution across the U.S., as well as wholesale and retail sales and also to operate local retail bar/restaurant establishments, which may have small brewing facilities on site that will operate under the name "BrewDog" and will sell BrewDog beer, along with food items.
BrewDog USA Inc. is presently wholly owned by BrewDog plc, but as Shares in the Company are issued pursuant to this Offering, BrewDog plc's ownership in the Company will be diluted. If the maximum amount is raised in this Offering, BrewDog plc will own 85.71% of the Company. All shares in the Company are Common Stock with the same rights and privileges as set out herein.
Results of Operations
The period of April 22, 2015 (date of inception) to December 31, 2015
Revenue. Total revenue for the period of April 22, 2015 (date of inception) to December 31, 2015 was $0.00 as the Company is in the start-up phase.
Operating Expenses. Operating expenses for the period of April 22, 2015 (date of inception) to December 31, 2015 were $252,494. Operating expenses for the period were comprised of organization costs as well as attorney fees, accounting fees, other administrative expenses associated with setting up our operations, payroll, web site development and real estate taxes.
Net Loss. Net loss for the period of April 22, 2015 (date of inception) to December 31, 2015 was ($252,760). This net loss was the result of attorney fees, accounting fees, other administrative expenses associated with setting up our operations, payroll, web site development and real estate taxes. Currently operating costs exceed revenue because we do not have sales. We cannot assure when or if revenue will exceed operating costs.
Liquidity and Capital Resources
We had net cash of $0.00 at December 31, 2015.
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During the period of April 22, 2015 (date of inception) to December 31, 2015, we used $220,521 of cash for operating activities. A portion of the funds was used to pay general and administrative costs, accounting fees, professional fees, payroll, web site development and real estate taxes.
Cash used by financing activities relating to capital expenditures during the period of April 22, 2015 (inception) to December 31, 2015 was $1,575,574. Cash provided by investing activities during the period of April 22, 2015 (inception) to December 31, 2015 was $1,796,095 related to advances from BrewDog plc. Since inception, our capital needs have primarily been met by BrewDog plc.
Plan of Operations
Our plan of operation for the 12 months following the commencement of this Offering is as follows: We plan to complete the brewery in Columbus, Ohio in 2016. We plan to begin brewing our craft beers and have a team in place to distribute our products in more than 20 states. We plan to open our first BrewDog Bar in the United States in late 2016, and depending on the amount raised in this Offering, we plan to open other BrewDog Bars in the United States in the 12 months following the commencement of this Offering. We plan to hire staff to run our business and to help us follow through on our business plans.
In our opinion, the proceeds from this Offering will not satisfy our cash requirements and we anticipate it will be necessary to raise additional funds in the next six months to implement the plan of operations. We also anticipate that we will have additional capital requirements after the next six months in 2016 and throughout 2017. During that time frame, we do not expect to be able to satisfy our cash requirements through sales and the proceeds from this Offering alone, and therefore we anticipate we will attempt to raise additional capital through the sale of additional securities in additional offerings, or through other methods of obtaining financing such as through loans or other debt. We cannot assure that we will have sufficient capital to finance our growth and business operations or that such capital will be available on terms that are favorable to us or at all. We are currently incurring operating deficits that are expected to continue for the foreseeable future.
Trend Information
Because we are still building our brewery in Columbus and have not started to produce our products for sale yet, we are unable to identify any recent trends in production, sales and inventory, the state of the order book, costs or selling prices since the latest financial year. For the same reason, for the current financial year, we are unable to identify any known trends, uncertainties, demands, commitments or events based on our business that are reasonably likely to have a material effect on our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause the reported financial information in this Offering not necessarily to be indicative of future operating results or financial condition.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a
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current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout management's Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.
Income taxes are one such critical accounting policy. Income taxes are recorded on an accrual basis of accounting based on tax positions taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. Since our inception, no such interest or penalties have been incurred.
Revenue Recognition
The Company had no revenue during 2015. The Company had no returns during 2015.
Additional Company Matters
The Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings. The Company is not presently involved in any legal proceedings material to the business or financial condition of the Company. The Company does not anticipate any material reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business, in the next 12 months.
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DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
As of December 31, 2015, the BrewDog USA Inc. had one full-time employee, who was not an executive officer of the Company, and no part-time employees. The Company plans to actively hire additional employees at such time as the Company has sufficient capital or financing to fund the expanded launch of its business plans.
The directors, executive officers and significant employees of the Company as of December 31, 2015 are as follows:
Name |
Position |
Age |
Term of Office |
Approx.hours |
Executive Officers: |
||||
James Watt |
Chief Executive Officer |
34 |
4-22-15 to present |
10 |
Neil Simpson |
Chief Financial Officer |
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4-22-15 to present |
10 |
Alan Martin Dickie |
Chief Operations Officer |
34 |
4-22-15 to present |
10 |
Directors |
||||
James Watt |
Chairman of Board of Directors |
34 |
4-22-15 to present |
N/A |
Alan Martin Dickie |
Director |
34 |
4-22-15 to present |
N/A |
Neil Simpson |
Director |
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4-22-15 to present |
N/A |
JAMES WATT
As the Managing Director and co-founder of BrewDog plc, James Watt has led the business to excellent growth in just eight short years. James was awarded Scottish Entrepreneur of the Year three times and Great Britain Entrepreneur of the Year in 2014, and is one of only eleven Master Cicerones in the world. Prior to BrewDog James turned his back on a legal career after studying Law & Economics and became the Captain of a North Atlantic fishing boat and spent seven years on the high seas. James also co-hosts the international hit TV show BrewDogs on Esquire
MARTIN DICKIE
As the "Beer Pirate" & Co-founder of BrewDog plc, Martin Dickie has a first class honors degree in Brewing & Distilling from Herriot Watt University. He is a renegade artist on a mission to change people's perceptions about beer and challenge their taste buds. Along with James, Martin hosts the hit international TV show BrewDogs.
NEIL SIMPSON
Neil Simpson joined BrewDog plc in August 2012, bringing with him more than 20 years of experience, (10 of which were at partner level), advising and acting for a wide variety of businesses through the Ritson Smith accountancy practice. Neil is a qualified chartered accountant with the Institute of Chartered Accountants in Scotland.
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TIM HAWN
BrewDog's Columbus brewery will be run by Brewmaster Tim Hawn. For the past nineteen years, Tim has worked in breweries with capacities that ranged from over 10 million hL to running a 2 hL pilot system. He has brewed beers for Boston Beer Company, Pete's Wicked Ales, Dogfish Head Craft Brewery as well as a large multinational brewer. During his time in brewery leadership, he has worked with the brewing team to ensure beer quality across the board, regardless of which brewery it was produced at. He has led departments in all phases of brewery production from raw material selection to packaging and as Brewmaster at Dogfish Head Craft Brewery. Tim now joins Brew Dog USA, bringing his experience to his new role as Brew Dog USA's Brewmaster.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The directors of BrewDog USA Inc. are, at present, not compensated by the Company for their roles as directors. For the three present directors, only expenses are reimbursed for their participation on the board of directors. The Company may choose to compensate the present directors in the future, as well as compensate future directors, in the Company's discretion.
Executive Compensation
From its inception in April 2015 to the end of the past fiscal year, BrewDog USA Inc. paid no annualized salaries to its executive officers:
| Name | Capacities in which compensation was received |
Cash compensation ($) |
Other compensation ($) |
Total compensation ($) |
|---|---|---|---|---|
| James Watt | Chief Executive Officer | $ 0 | $ 0 | $ 0 |
| Alan Martin Dickie | Chief Operations Officer | $ 0 | $ 0 | $ 0 |
| Neil Simpson | Chief Financial Officer | $ 0 | $ 0 | $ 0 |
Employment Agreements
We have not entered into any employment agreements with our executive officers or other employees to date. We may enter into employment agreements with them in the future. A stock incentive program for our directors, executive officers, employees and key consultants may be established in the future
Stock Incentive Plan
In the future, we may establish a management stock incentive plan pursuant to which stock options and awards may be authorized and granted to our directors, executive officers, employees and key employees or consultants. Details of such a plan, should one be established, have not been decided yet. Stock options or a significant equity ownership position in us may be utilized by us in the future to attract one or more new key senior executives to manage and facilitate our growth.
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Board of Directors
Our board of directors currently consists of three directors. None of our directors are "independent" as defined in Rule 4200 of FINRA's listing standards. We may appoint additional independent directors to our board of directors in the future, particularly to serve on committees should they be established.
Committees of the Board of Directors
We may establish an audit committee, compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future, but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the Board of Directors.
Director Compensation
We currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act as independent board members, on either a per meeting or fixed compensation basis.
Limitation of Liability and Indemnification of Officers and Directors
Our Bylaws limit the liability of directors and officers of the Company to the maximum extent permitted by Delaware law. The Bylaws state that the Company shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or an officer of the Company or such director or officer is or was serving at the request of the Company as a director, officer, partner, member, manager, trustee, employee or agent of another company or of a partnership, limited liability company, joint venture, trust or other enterprise.
The Company believes that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified parties. The Company also may secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our Bylaws permit such indemnification.
The Company may also enter into separate indemnification agreements with its directors and officers, in addition to the indemnification provided for in our Bylaws. These agreements, among other things, may provide that we will indemnify our directors and officers for certain expenses (including attorneys' fees), judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person's services as one of our directors or officers, or rendering services at our request, to any of its subsidiaries or any other company or enterprise. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.
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There is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.
For additional information on indemnification and limitations on liability of our directors and officers, please review the Company's Bylaws, which are attached to this Offering Circular.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS
The following table sets forth information regarding beneficial ownership of our Common Stock as of December 31, 2015. There is no beneficial ownership of our Common Stock at the time of this Offering by any of our directors or executive officers or by all of our directors and executive officers as a group.
Beneficial ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to Shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose.
Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following table possesses sole voting and investment power over their Shares of Common Stock. Percentage of beneficial ownership before the offering is based on 6,315,789 Shares of Common Stock outstanding as of December 31, 2015.
| BrewDog USA, Inc. | ||||
| Common Stock | ||||
| Name and Position of Beneficial Owner | Shares Beneficially Owned Prior To Offering |
Shares Beneficially Owned After Offering |
||
| Number | Percent | Number | Percent | |
| BrewDog plc2 | 6,315,789 | 100.00% | 6,315,789 | 85.71% |
| New Shares in Offering | N/A | N/A | 1,052,632 | 14.29% |
| Total Shares in Class | 6,315,789 | 100.00% | 7,368,421 | 100.00% |
| Total Overall Shares | 6,315,789 | 100.00% | 7,368,421 | 100.00% |
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
BrewDog plc, the Company's parent, has built a highly successful operation in the United Kingdom, with the same lines of business as BrewDog USA wishes to establish in the United States. As part of BrewDog plc's business, it previously established relationships with local beer and spirits distributors of BrewDog craft beers in the United States. BrewDog USA will therefore be able to draw upon such distribution relationships and BrewDog plc's expertise in launching the U.S. business.
2 James Watt and Martin Dickie will exercise voting control over the shares of BrewDog plc. Collectively, Watt and Dickie own a majority of the voting stock of BrewDog plc and are authorized by BrewDog plc to vote on behalf of its shares of BrewDog USA, Inc.
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In addition, BrewDog plc plans to enter into a license with BrewDog USA permitting the Company to use the intellectual property of BrewDog plc (including any trademarks) and any new marks created by BrewDog plc. It is anticipated that any new intellectual property will be owned by BrewDog plc, who will pay for the cost of clearing, registering and protecting any new intellectual property, and will be licensed to BrewDog USA.
During the last fiscal year, the Company was a participant in transactions with BrewDog plc, its parent company, in which the amounts involved exceed the lesser of $120,000 and one percent of the average of the Company's total assets at year end for the last completed fiscal year. In these transactions, from April 22, 2015 to December 31, 2015. BrewDog plc made advances of $1,796,095 to the Company.
James Watt and Martin Dickie own a majority of the stock of, and are executive officers and directors of BrewDog plc. As a result, they both have an indirect interest in the above-referenced transactions, as well as any other transactions involving the Company and BrewDog. James Watt and Martin Dickie will also have an indirect interest in any future transactions between BrewDog plc and the Company due to their status as majority shareholders, executive officers and directors. There have been no transactions between BrewDog plc and the Company in which either James Watt or Martin Dickie received any extra or special benefit not shared on a pro-rata basis by all of the holders of securities of the class of stock owned by them as shareholders of BrewDog plc.
SECURITIES BEING OFFERED
The Company is offering Shares of its Common Stock. Except as otherwise required by law, the Company's Certificate of Incorporation or Bylaws, each Shareholder shall be entitled to one vote for each Share held by such Shareholder on the record date of any vote of Shareholders of the Company. The Shares of Common Stock, when issued, will be fully paid and non-assessable. Since it is anticipated that at least for the next 12 months the majority of the Company's Common Stock will be owned by BrewDog plc, the holders of Common Stock issued pursuant to this Offering Circular should not expect to be able to influence any decisions by management of the Company through the voting power of such Common Stock.
There are no other classes of stock in the Company as of the date of this Offering Circular. The Company does not expect to create any additional classes of Common Stock during the next 12 months, but the Company is not limited from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available to holders of its common stock.
The Company does not expect to declare dividends for holders of Common Stock in the foreseeable future. Dividends will be declared, if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of the Company's Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company, subject to the provisions of law, the Company's Bylaws and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of
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the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company.
There is no minimum number of Shares that needs to be sold in order for funds to be released to the Company and for this Offering to close.
The minimum subscription that will be accepted from an investor is Ninety-Five Dollars ($95.00) (the "Minimum Subscription").
A subscription for Ninety-Five Dollars ($95.00) or more in the Shares may be made only by tendering to the Company the executed Subscription Agreement (electronically or in writing) delivered with the subscription price in a form acceptable to the Company, via check or ACH. For subscriptions exceeding Ten Thousand Dollars ($10,000.00) or more, the subscription price may be delivered via wire transfer in a form acceptable to the Company. The execution and tender of the documents required, as detailed in the materials, constitutes a binding offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until the Expiration Date or until the offer is accepted or rejected by the Company, whichever occurs first.
The Company reserves the unqualified discretionary right to reject any subscription for Shares, in whole or in part. If the Company rejects any offer to subscribe for the Shares, it will return the subscription payment, without interest or reduction. The Company's acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic notification that the subscription was accepted.
There are no liquidation rights, preemptive rights, conversion rights, redemption provisions, sinking fund provisions, impacts on classification of the Board of Directors where cumulative voting is permitted or required related to the Common Stock, provisions discriminating against any existing or prospective holder of the Common Stock as a result of such Shareholder owning a substantial amount of securities, or rights of Shareholders that may be modified otherwise than by a vote of a majority or more of the shares outstanding, voting as a class defined in any corporate document as of the date of filing. The Common Stock will not be subject to further calls or assessment by the Company. There are no restrictions on alienability of the Common Stock in the corporate documents other than those disclosed in this Offering Circular. The Company intends to engage FundAmerica Stock Transfer, LLC, 2300 West Sahara Avenue, Suite 803, Las Vegas, Nevada 89102 to serve as the transfer agent and registrant for the Shares. For additional information regarding the Shares, please review the Company's Bylaws, which are attached to this Offering Circular.
DISQUALIFYING EVENTS DISCLOSURE
Recent changes to Regulation A promulgated under the Securities Act prohibit an issuer from claiming an exemption from registration of its securities under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20% or more of the voting power of the issuer's outstanding voting equity securities, any promoter connected with the issuer in any capacity as of the date hereof, any investment manager of the issuer,
54
any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer's interests, any general partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor has been subject to certain "Disqualifying Events" described in Rule 506(d)(1) of Regulation D subsequent to September 23, 2013, subject to certain limited exceptions. The Company is required to exercise reasonable care in conducting an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. The Company believes that it has exercised reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons and is aware of the no such Disqualifying Events.
It is possible that (a) Disqualifying Events may exist of which the Company is not aware and (b) the SEC, a court or other finder of fact may determine that the steps that the Company has taken to conduct its inquiry were inadequate and did not constitute reasonable care. If such a finding were made, the Company may lose its ability rely upon exemptions under Regulation A, and, depending on the circumstances, may be required to register the Offering of the Company's Common Stock with the SEC and under applicable state securities laws or to conduct a rescission offer with respect to the securities sold in the Offering.
ERISA CONSIDERATIONS
General Fiduciary Obligations. Trustees and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer, as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants (together, "ERISA Plans"), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement Income Security Act of 1974 ("ERISA"). An investment in the Shares by an ERISA Plan must be made in accordance with the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment in the Shares should accordingly consult their own legal advisors if they have any concern as to whether the investment would be inconsistent with any of these criteria.
Fiduciaries of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code, Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account, will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations establishing criteria for determining whether the extent of a beneficiary's independent control over the assets in his account is adequate to relieve the ERISA Plan's fiduciaries of their obligations with respect to an investment directed by the beneficiary. Under the regulations, the beneficiary must not only exercise actual, independent control
55
in directing the particular investment transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control, and must permit him to choose among a broad range of investment alternatives.
Trustees and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA or Keogh Plan and certain persons related to it (e.g., a plan sponsor, fiduciary, or service provider) are prohibited transactions. The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary, participant or beneficiary considering an investment in Shares by a qualified retirement plan IRA or Keogh Plan should examine the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries, participants or beneficiaries considering an investment in the Shares should consult their own legal advisors if they have any concern as to whether the investment would be a prohibited transaction.
Regulations issued on November 13, 1986, by the Department of Labor (the "Final Plan Assets Regulations") provide that when an ERISA Plan or any other plan covered by Code Section 4975 (e.g., an IRA or a Keogh Plan which covers only self-employed persons) makes an investment in an equity interest of an entity that is neither a "publicly offered security" nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as "plan assets"). Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans are exempt from being designated as holding "plan assets." Management anticipates that we would clearly be characterized as an "operating company" for the purposes of the regulations, and that it would therefore not be deemed to be holding "plan assets."
Classification of our assets of as "plan assets" could adversely affect both the plan fiduciary and management. The term "fiduciary" is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets. Thus, classification of our assets as plan assets could make the management a "fiduciary" of an investing plan. If our assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if our assets are classified as "plan assets," certain transactions that we might enter into in the ordinary course of our business might constitute "prohibited transactions" under ERISA and the Code.
Under Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to IRA holders by January 31 of each year. The Service has not yet promulgated regulations defining appropriate methods for the determination of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their "current value" as of the close of the plan's fiscal year in order to comply with certain reporting obligations under ERISA and the Code. For purposes of such requirements, "current value" means fair market
56
value where available. Otherwise, current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary, assuming an orderly liquidation at the time of the determination. We do not have an obligation under ERISA or the Code with respect to such reports or valuation although management will use good faith efforts to assist fiduciaries with their valuation reports. There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan or Keogh Plan upon sale of the Shares or upon liquidation of us, or (ii) will comply with the ERISA or Code requirements.
The income earned by a qualified pension, profit sharing or stock bonus plan (collectively, "Qualified Plan") and by an individual retirement account ("IRA") is generally exempt from taxation. However, if a Qualified Plan or IRA earns "unrelated business taxable income" ("UBTI"), this income will be subject to tax to the extent it exceeds $1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject to the alternative minimum tax. It is anticipated that income and gain from an investment in the Shares will not be taxed as UBTI to tax exempt shareholders, because they are participating only as passive financing sources.
INVESTOR ELIGIBILITY STANDARDS
The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person's annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of Shares. Investor suitability standards in certain states may be higher than those described in this Offering Circular. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons.
Each investor must represent in writing that he/she meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she is purchasing the Shares for his/her own account and (ii) he/she has such knowledge and experience in financial and business matters that he/she is capable of evaluating without outside assistance the merits and risks of investing in the Shares, or he/she and his/her purchaser representative together have such knowledge
and experience that they are capable of evaluating the merits and risks of investing in the Shares. Transferees of Shares will be required to meet the above suitability standards.
57
Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Ohio, on July 18, 2016.
BrewDog USA, Inc.
By: /s/ James Watt
Chief Executive Officer
This offering statement has been signed by the following persons in the capacities and on the dates
indicated.
By: /s/ James Watt
James Watt
Chief Executive Officer and Director
July 18, 2016
By: /s/ Neil Simpson
Neil Simpson
Chief Financial Officer and Director
July 18, 2016
By: /s/ Alan Martin Dickie
Alan Martin Dickie
Chief Operations Officer and Director
July 18, 2016
58
ACKNOWLEDGEMENT ADOPTING TYPED SIGNATURES
The undersigned hereby authenticate, acknowledge and otherwise adopt the typed signatures above
and as otherwise appear in this filing and Offering.
By: ___/S/ _______________________________________
James Watt
James Watt
Chief Executive Officer and Director
July 18, 2016
By: ___/S/_______________________________________
Neil Simpson
Neil Simpson
Chief Financial Officer and Director
July 18, 2016
By: ___/S/_______________________________________
Alan Martin Dickie
Alan Martin Dickie
Chief Operations Officer and Director
July 18, 2016
59
60
C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
BREWDOG USA INC.
AS OF DECEMBER 31, 2015 AND FOR THE PERIOD FROM
APRIL 22, 2015 (INCEPTION) TO DECEMBER 31, 2015
1
Contents
REPORT OF INDEPENDENT AUDITORS .................................................................................... 3
CONSOLIDATED STATEMENT OF COMPREHENSHIVE LOSS ............................................... 4
CONSOLIDATED BALANCE SHEET ........................................................................................... 5
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY .............................................. 6
CONSOLIDATED STATEMENT OF CASH FLOWS .................................................................... 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ........................................................ 8
2
REPORT OF INDEPENDENT AUDITORS
The Stockholders of Brewdog USA Inc.
We have audited the accompanying consolidated financial statements of Brewdog USA Inc., which comprise the consolidated balance sheet as of December 31, 2015, and the related consolidated statements of comprehensive loss, changes in stockholder's equity and cash flows for the period from April 22, 2015 (inception) to December 31, 2015, and the related notes to the consolidated financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Brewdog USA Inc. at December 31, 2015, and the consolidated results of their operations and their cash flows for the period from April 22, 2015 (inception) to December 31, 2015 in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Columbus, Ohio
March 1, 2016
3
BREWDOG USA INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
For the period from April 22, 2015 (inception) to December 31, 2015
Costs and other expenses Administrative expenses |
$ 252,494 |
Depreciation | 266 |
Loss before income tax expense | (252,760) |
Net comprehensive loss | $(252,760) |
Basic loss per share | $ (0.04) |
Basic common shares outstanding | 6,315,789 |
See accompanying notes.
4
BREWDOG USA INC.
CONSOLIDATED BALANCE SHEET
| December 31, 2015 | |
| Assets | |
| Prepaid expenses and other current assets | $64,622 |
| Total current assets | 64,622 |
Property and equipment, net |
3,447,632 |
| Total non-current assets | 3,447,632 |
Total assets |
$ 3,512,254 |
| Liabilities and stockholder's equity | |
| Accruals and other current liabilities | $1,968,919 |
| Accounts payable - BrewDog Plc | 46,094 |
| Total current liabilities | 2,015,013 |
Common stock, par value of $0.01; 10,000,000 shares authorized and 6,315,789 | 63,158 |
| Additional paid-in capital | 1,686,843 |
| Accumulated deficit | (252,760) |
| Total stockholder's equity | 1,497,241 |
| Total liabilities and stockholder's equity | $ 3,512,254 |
See accompanying notes.
5
BREWDOG USA INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
| Common Shares Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | |
|---|---|---|---|---|---|
Balance, April 22, 2015 (inception) | - | $ - | $ - | $ - | $ - |
Stock issuance | 6,315,789 | 1 | - | - | 1 |
Capitalization of BrewDog Plc payables to equity |
- |
63,157 |
1,686,843 |
- |
1,750,000 |
Net loss | - | - | - | (252,760) | (252,760) |
| Balance, December 31, 2015 | 6,315,789 | $ 63,158 | $ 1,686,843 | $ (252,760) | $ 1,497,241 |
See accompanying notes.
6
BREWDOG USA INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from April 22, 2015 (inception) to December 31, 2015
Cash flows from operating activities | |
Net loss | $ (252,760) |
Adjustment to reconcile net loss to net cash used by operating activities: | |
Depreciation expense | 266 |
Changes in operating assets and liabilities: | |
Prepaid expenses and other current assets | (64,622) |
Accruals and other current liabilities | 96,595 |
Net cash used in operating activities | (220,521) |
Cash flows from investing activities | |
Capital expenditures | (1,975,574) |
Sale of land | 400,000 |
Net cash used in investing activities | (1,575,574) |
Cash flows from financing activities | |
Advances from BrewDog Plc | 1,796,095 |
Net cash provided by financing activities | 1,796,095 |
Net increase in cash and cash equivalents |
- |
Cash and cash equivalents at April 22, 2015 (inception) | - |
Cash and cash equivalents at December 31, 2015 | $ - |
Supplemental schedule of non-cash financing activities | |
BrewDog Plc accounts payable converted to equity | $ 1,750,000 |
Construction in progress not yet paid, but accrued | $ 1,872,324 |
See accompanying notes.
7
BREWDOG USA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Description of Business
BrewDog USA Inc. ("BrewDog" or in the first person notations of "we," "us," and "our") was formed on April 22, 2015, as a wholly owned subsidiary of BrewDog Plc, a company incorporated in the United Kingdom. BrewDog and its wholly owned subsidiaries, BrewDog Columbus LLC and BrewDog Brewing Company LLC, are in the startup phase of building and operating a brewery in Columbus, Ohio.
BrewDog's mission is to make other people as passionate about great craft beer as we are. BrewDog has three main prospective focuses:
BrewDog is currently constructing its North American headquarters, brewery and pub. Since inception, BrewDog has purchased land and started construction. BrewDog also is in the process of raising additional capital to support the completion of the building with the intent to start operations in the fall of 2016. BrewDog's activities are subject to significant risks and uncertainties, including failing to secure additional funding.
Note 2 - Significant Accounting Policies
Presentation - The accompanying consolidated financial statements include the accounts of BrewDog and its wholly owned subsidiaries. BrewDog prepares its consolidated financial statements on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All intercompany balances and transactions have been eliminated. As of December 31, 2015, BrewDog Plc uses a centralized approach to treasury services to perform cash management for the operations of its affiliates including BrewDog. As a result, BrewDog Plc funds BrewDog's operating and investing activities, as needed, and any cash generated by BrewDog is transferred to BrewDog Plc. BrewDog Plc will provide financial support as required to BrewDog for a period of not less than 12 months from March 1, 2016.
Accounting estimates - The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from those estimates.
Fair value measurement - We are required to determine the fair value of financial assets and liabilities based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. Fair value is a market-based measurement, not an entity specific measurement. The fair value of certain assets and liabilities approximates carrying value because of the short-term nature of the accounts, including other current assets and accounts payable.
Stock split - On February 29, 2016, our Board of Directors approved a stock split of 63,157.89 to one outstanding common share. At the same time, the authorized number of common shares was increased to 10,000,000. All per share and share amounts in the accompanying consolidated financial statements and notes to the consolidated financial statements have been adjusted to reflect the stock split.
Operating expenses - Administrative expenses are expensed as incurred, and include all directly attributable costs from BrewDog Plc.
8
BREWDOG USA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Deferred issue costs - Costs attributable to a proposed offering of securities pursuant to Regulation A of the Securities Act of 1933 are deferred pending offset against the gross proceeds of the offering. As of December 31, 2015, these amounted to $56,626.
Foreign currency - The majority of our expenditures were denominated in U.S. dollars. Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollar at the rates of exchange prevailing at the balance sheet date. Transactions in foreign currencies are recorded at the prevailing rate at the date of the transaction with foreign currency transaction gains and losses recorded in the consolidated statement of comprehensive loss
Income taxes - Income taxes are recorded on an accrual basis of accounting based on tax positions taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. Since our inception, no such interest or penalties have been incurred.
Incentives and other reductions - In the course of selecting Columbus, Ohio, as the North American headquarters, BrewDog has received proposals it intends to exercise on certain economic incentives from various governmental entities. The incentives include employee income tax withholding reductions, training grants and development grants for fixed asset investments totaling approximately $1,000,000 that require BrewDog to meet certain investment, job and payroll amounts to receive the incentives. These incentives will be available to BrewDog beginning in 2016 with many of them available through 2026. Additionally, BrewDog received a15-year property tax abatement for the North American headquarters. These various incentives will be recognized when there is reasonable assurance that the incentives will be received and that BrewDog will be able to comply with the conditions attached to the incentives. At the time the incentive will be recognized either in the consolidated statement of comprehensive loss for incentives related to income or the consolidated balance sheet for incentives related to assets in a systematic and rational basis over the periods in which the incentive applies and/or as expenses/costs for which the incentives are intended to compensate are incurred.
As part of the construction of the headquarters, BrewDog received a proposal for various infrastructure improvements, totaling approximately $400,000, to be collected over a five-year period interest free. The obligation and amount in property and equipment is expected be recorded in the consolidated balance sheet in accordance with Accounting Standards Codification Topic 970-470-25, Liability for Tax Increment Financing Entity Debt, once construction of the infrastructure assets is complete and ownership is received. Interest will be imputed on this obligation at that time of the recording of the obligation.
Cash and cash equivalents - BrewDog considers all highly liquid investments with original maturities of less than three months or less at the time of purchase to be cash and cash equivalents.
Prepaid expenses and other current assets - Prepaid expenses relate primarily to deferred equity issue costs in the amount of $56,626. An allowance for doubtful accounts is established on a case-by-case basis, considering changes in the financial position of the customer. Account balances are charged off against the allowance after recovery efforts have ceased. At December 31, 2015, there was no allowance for doubtful accounts recorded in the consolidated balance sheet.
9
BREWDOG USA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Property and equipment - Property and equipment are stated at cost. Depreciation is recorded using the straight- line method over the estimated useful lives of the assets (generally three years for computer equipment).
Depreciation expense was $ 266 in 2015.
Subsequent events - BrewDog has evaluated all subsequent events through March 1, 2016, the date the accompanying consolidated financial statements were available to be issued. No matters noted except the stock split noted in Note 2 to the consolidated financial statements and the accounts payable - BrewDog Plc amount at March 1, 2016, is approximately $ 400,000.
Note 3 - New Accounting Pronouncements
Revenue from Contract with Customers - In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers," a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under GAAP. This update requires companies to recognize revenue at amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services at the time of transfer. In doing so, companies will need to use more judgment and make more estimates than under today's guidance. Such estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Companies can either apply a full retrospective adoption or a modified retrospective adoption.
BrewDog is required to adopt the new requirements in the first quarter of 2018. BrewDog is currently evaluating the method of adoption and its impact of the new requirements on the consolidated financial statements. BrewDog currently does not believe the impact will be significant.
In November 2015, the FASB issued ASU 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes". ASU 2015-17 requires the BrewDog to classify deferred tax assets and liabilities as noncurrent amounts in the consolidated balance sheets. Such amounts were previously required to be classified as current and noncurrent assets and liabilities. BrewDog is required to adopt the provisions of ASU 2015-17 for the year ended December 31, 2017; however, BrewDog elected to adopt the provisions for the year ended December 31, 2015.
Note 4 - Property and Equipment
Property and equipment consist of the following at December 31, 2015:
Land | $ 1,118,148 |
Buildings and brewing equipment under construction | 2,328,155 |
Computer equipment | 1,595 |
Property and equipment | 3,447,898 |
Accumulated depreciation | (266) |
Property and equipment, net | $ 3,447,632 |
10
BREWDOG USA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Note 5 - Accruals and Other Current Liabilities
Accruals and other current liabilities consist of the following at December 31, 2015:
Payables associated with assets under construction | $ 1,872,324 |
Real estate taxes payable | 77,565 |
Other | 19,030 |
Total accruals and other current liabilities | $ 1,968,919 |
Note 6 - Income Taxes
The tax effects of temporary differences and tax loss carry forwards that give rise to significant portions of deferred tax assets and liabilities at December 31, 2015, are comprised of the following:
Deferred tax asset: | |
Capitalized start-up costs | $ 78,118 |
Total deferred tax assets | 78,118 |
Valuation allowance | (78,118) |
Deferred tax assets, net of allowance | $ - |
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets at December 31, 2015.
The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) for the period from April 22, 2015 (inception) to December 31, 2015) as follows:
Federal statutory income tax rate | 34.0% |
Change in valuation allowance | (34.0)% |
Income tax expense (benefit) | - % |
There is no income tax expense (benefit) for the period from April 22, 2015 (inception) to December 31, 2015.
Note 7 - Commitments and Contingencies
In connection with the construction of property and equipment, BrewDog has approximately $14.8 million of remaining capital commitment to be incurred primarily in 2016 associated with the construction of the building and brewery equipment as of December 31, 2015.
Note 8 - Operating Segments
BrewDog operates in a single operating segment.
11
BREWDOG USA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Note 9 - Related Party Transactions
Our operations are funded by BrewDog plc as an interest free intercompany balance repayable on demand. Total funding provided during 2015 amounted to $1,796,095 and of which $1,750,000 was converted to additional-paid in capital.
The payable to the parent included in the consolidated balance sheet is the result of various transactions between BrewDog and BrewDog Plc. There are no terms of settlement or interest charges associated with the account balance. The balance is primarily the result of the establishment of BrewDog operations in the United States and BrewDog being part of BrewDog's participation in BrewDog Plc's cash management program, wherein all of BrewDog's cash receipts are remitted to BrewDog Plc and all cash disbursements are funded by BrewDog Plc. Other transactions include miscellaneous administrative expenses incurred by BrewDog Plc on behalf of BrewDog.
BrewDog Plc provided certain services to BrewDog including, but not limited to, Executive services, accounting and legal services, and other selling, general and administrative expenses. The allocation method utilized by management of BrewDog Plc during the period from April 22, 2015 (inception) to December 31, 2015, was an allocation of approximately 10% of expenses incurred. Management of BrewDog believes this method is a reasonable allocation. The amount included in the consolidated statement of comprehensive loss by BrewDog for the period from April 22, 2015 (inception) to December 31, 2015, is $23,000.
12
ESCROW SERVICES AGREEMENT
This Escrow Services Agreement (this "Agreement") is made and entered into as of _______________ by and between FundAmerica Securities, LLC ("FundAmerica Securities" or "Escrow Agent"), a Delaware limited liability company, and BrewDog USA Inc., a Delaware Corporation ("Issuer").
RECITALS
WHEREAS, Issuer proposes to offer for sale to investors as disclosed in its offering circular on Form 1-A (the "Offering") pursuant to Section 401 of the JOBS Act (Regulation A) promulgated by the U.S. Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the "Securities Act"), or another federal or state exemption from registration, either directly (issuer-direct) and/or through one or more registered broker-dealers (selling group), Common Stock (the "Securities") of the Issuer in the amount of up to $50,000,000 (the "Maximum Amount of the Offering").
WHEREAS, Issuer desires to establish an Escrow Account (as defined below) in which funds received from prospective investors ("Subscribers") will be held during the Offering, subject to the terms and conditions of this Agreement. FundAmerica Securities agrees to serve as Escrow Agent for the Subscribers with respect to such Escrow Account, pursuant to SEC Rule 15c2-4, and in accordance with the terms and conditions set forth herein to be held at a FDIC insured bank (the "Bank") in a segregated account as described herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, it is hereby agreed as follows:
1. Establishment of Escrow Account. Prior to Issuer initiating the Offering and prior to the receipt of the first investor funds, the Escrow Agent shall establish an account at the Bank entitled "FundAmerica Securities LLC as Agent for BrewDog USA Inc. Escrow Account" (the "Escrow Account"). The Escrow Account shall be a segregated, deposit account at the Bank. All parties agree to maintain the Escrow Account and escrowed funds in a manner that is compliant with SEC Rules 10b-9 and 15c2-4, promulgated under the Securities Exchange Act of 1934, as amended.
2. Escrow Period. The period in which funds shall be held in escrow (the "Escrow Period") shall begin with the commencement of the Offering and shall terminate in whole or in part upon the first to occur of the following:
| a. | The date upon which subscription amounts for the Maximum Amount of the Offering required to be sold have been deposited and cleared in the Escrow Account and the Issuer has instructed the closing on those funds; or |
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| b. | January 1, 2017, or whatever date the Regulation A offering closes based upon the Form 1-A qualified by the Securities and Exchange Commission, unless extended by the Issuer by up to one hundred eighty (180) days by written instruction to the Escrow Agent by the Chief Executive Officer of the Issuer; or |
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| c. | The date upon which a determination is made by Issuer and/or its authorized representatives to terminate the Offering. |
During the Escrow Period, the parties agree that (i) Escrow Account and escrowed funds will be held for the benefit of the Subscribers, and that (ii) the Issuer is not entitled to any funds received into escrow, and that
© Copyright, 2015 FundAmerica Securities, LLC All Rights Reserved
no amounts deposited into the Escrow Account shall become the property of Issuer or any other entity, or be subject to any debts, liens or encumbrances of any kind of Issuer or any other entity. In addition, Issuer and Escrow Agent acknowledge that the total funds raised cannot exceed the Maximum Amount of the Offering permitted by the offering circular. Issuer represents that no funds have yet been raised for Issuer in the Offering and that all funds to be raised for the Offering will be deposited in the Escrow Account established by FundAmerica Securities at the Bank.
3. Deposits into the Escrow Account. All Subscribers will be instructed by Issuer or its agents to transfer funds by wire or ACH directly into the Escrow Account or deliver checks made payable to "FundAmerica Securities as Agent for BrewDog USA Inc. Escrow Account" for prompt deposit into the Escrow Account. All monies so deposited in the Escrow Account and which have cleared the banking system are hereinafter referred to as the "Escrow Amount." The Escrow Agent shall transmit all such checks to the Bank for deposit no later than the following day after receipt. Escrow Agent shall cause the Bank to process all Escrow Amounts for collection through the banking system and shall maintain an accounting of each deposit posted to its ledger, which also sets forth, among other things, each Subscriber's name and address, the quantity of Securities purchased, and the amount paid.
Any check payable other than to the Escrow Account as required hereby shall be returned promptly to the prospective purchaser, or if the Escrow Agent has insufficient information to do so, then to the Issuer, and such check shall be deemed not to have been delivered to the Escrow Account pursuant to the terms of this Agreement. Issuer or its agents shall promptly, concurrent with any new or modified subscription, provide Escrow Agent with a copy of the Subscriber's signed subscription agreement and other information as may be reasonably requested by Escrow Agent in the performance of its duties under this Agreement. As required by government regulations pertaining to the US Treasury, Homeland Security, the Internal Revenue Service and the U.S. Securities and Exchange Commission, federal law requires financial institutions to obtain, reasonably verify and record information that identifies each person (natural person or legal entity, including its authorized persons) who funds and executes securities transactions. Information requested of the Issuer and Subscribers will be typical information requested in the gathering and verification guidelines and best practices promulgated by anti-money laundering ("AML") rules and regulations and those regulatory agencies that enforce them.
Escrow Agent is under no duty or responsibility to enforce collection of any wire, check, or ACH delivered to it hereunder. Escrow Agent reserves the right to deny, suspend or terminate participation in the Escrow Account of any Subscriber to the extent Escrow Agent deems it advisable or necessary to comply with applicable laws or to eliminate practices that are not consistent with securities industry laws, rules, regulations or best practices. Escrow Agent may at any time reject or return funds to any Subscriber (i) that do not clear background checks (anti-money laundering, USA PATRIOT Act, social security number issues, etc.) to the satisfaction of Escrow Agent, in its sole and absolute discretion, or, (ii) for which Escrow Agent determines, in its sole discretion, that it would be improper or unlawful for Escrow Agent to accept or hold the applicable Subscriber's funds, as Escrow Agent, due to, among other possible issues, issues with the Subscriber or the source of the Subscriber's funds. Escrow Agent shall promptly inform Issuer of any such return or rejection.
4. Disbursements from the Escrow Account. In the event Escrow Agent does not receive written instructions from the Issuer to release funds from Escrow on or prior to the termination of the Escrow Period, Escrow Agent shall terminate Escrow and make a full and prompt return of funds so that refunds are made to each Subscriber in the exact amount received from said Subscriber, without deduction, penalty, or expense to Subscriber. In the event Escrow Agent receives a written instruction from Issuer (generally via notification in the application programming interface ("API")), Escrow Agent shall, pursuant to those instructions, distribute funds from such Escrow Amount pursuant to the instructions of Issuer. Issuer acknowledges that there is a 24-hour (one business day) processing time once a request has been received to break Escrow. Issuer's written instructions to Escrow Agent shall certify that all conditions set forth in the Offering
© Copyright, 2015 FundAmerica Securities, LLC All Rights Reserved
Statement for release of funds have been met for a closing of the Offering and include a schedule of deductions from the Escrow Account for any broker fees and other funds for management and offering and selling expenses from the gross proceeds of the Escrow Account prior to remitting such funds, if and when due, to Issuer. Issuer hereby authorizes Escrow Agent to deduct broker fees and other funds for management and offering and selling expenses from the gross proceeds of the Escrow Account prior to remitting such funds, if and when due, to Issuer. Escrow Agent is hereby directed to remit such funds directly to the broker(s) and other parties, if any, to which they are due. Net proceeds (meaning gross proceeds less amounts remitted to brokers and other parties, and interest earned or accumulated in the Escrow Account) will then be remitted to Issuer as described above. Furthermore, Issuer directs Escrow Agent to accept instructions regarding fees from any registered securities broker in the syndicate, if any. Interest earned or accumulated in the Escrow Account shall be retained by the Escrow Agent or distributed to Subscribers as set forth in item 6 below.
5. Collection Procedure. Escrow Agent is hereby authorized, upon receipt of Subscriber funds not transmitted directly into the Escrow Account, to promptly deposit them in the Escrow Account. Any Subscriber funds which fail to clear or are subsequently reversed, including but not limited to ACH chargebacks and wire recalls, shall be debited to the Escrow Account, with such debits reflected on the escrow ledger. Any and all fees paid by Issuer for funds receipt and processing are non-refundable, regardless of whether ultimately cleared, failed, rescinded, returned or recalled. In the event of any Subscriber refunds, returns or recalls after funds have already been remitted to Issuer, then Issuer hereby irrevocably agrees to immediately and without delay or dispute send equivalent funds to Escrow Agent to cover the refund, return or recall. Issuer will address directly with said Subscriber any disputes, including taking whatever actions Issuer determines appropriate, but Issuer shall not involve Escrow Agent in any such disputes.
6. Investment of Escrow Amount. Escrow Agent may, at its discretion, invest any or all of the Escrow account balance as permitted under SEC Rule 15c2-4. This generally means short term investments in: (1) bank accounts, (2) bank money-market accounts, (3) short term certificates of deposit issued by a bank, and/or (4) short-term securities issued or guaranteed by the U S Government. Up to $5,000 in interest accumulated on the balance (the "Maximum Retained Interest") is the property of Escrow Agent as part of its compensation. Any interest over and above the Maximum Retained Interest will be distributed to each Subscriber in the same proportion as such Subscriber's investment bears to the gross proceeds of the Offering.
7. Escrow Administration Fees, Compensation of Escrow Agent. Issuer shall pay the Escrow Agent certain escrow administration fees ("Administration Fees") as following: (i) $225.00 escrow account set up fee, (ii) $25.00 per month escrow account fee, (iii) applicable fees for fund transfers and accounting as follows: Inbound and outbound funds fees - $0.50 per ACH transfer, $15.00 per domestic wire transfer, $10.00 per check and $2.50 per investor (one time accounting fee upon receipt of funds); (iv) AML review fee of $2.00 for each domestic investor or $5.00 - $60.00 for all other international investors depending on domicile, (v) $20.00 processing fee for each AML and fund transfer exception, if any, (vi) $45.00 for each bad actor check (per entity, issuer and each associated person), and (iv) the Maximum Retained Interest from funds held in the escrow account. The Administration Fees shall not exceed a maximum of $175,000.00. Issuer is liable to Escrow Agent to pay and agrees to pay Escrow Agent, even under circumstances where Issuer has entered an agreement that said fees are to be paid by a funding platform, lead syndicate broker or another representative of Issuer. All fees are charged immediately, and are not contingent in any way on the success or failure of the Offering. Furthermore, Escrow Agent is exclusively entitled to retain as part of its compensation, any and all investment interest, gains and other income earned pursuant to item 6 above. No fees, charges or expense reimbursements of Escrow Agent are reimbursable, and are not subject to pro-rata analysis. All fees and charges, if not paid by a representative of Issuer (e.g. funding platform, lead syndicate broker, etc.), may be made via either the Issuer's credit card or ACH information on file with FundAmerica Securities. It is acknowledged and agreed that no fees, reimbursement for costs and expenses, indemnification for any damages incurred by the Issuer or the Escrow Agent shall be paid out of or chargeable to the investor funds on deposit in the Escrow Account.
8. Term and Termination. This Agreement will remain in full force during the Escrow Period. Even Term and Termination. This Agreement will remain in full force during the Escrow Period. Even after this Agreement is terminated, certain provisions will remain in effect, including, but not limited to, items 3, 4, 5, 9, 10 and 12 of this Agreement.
© Copyright, 2015 FundAmerica Securities, LLC All Rights Reserved
9. Binding Arbitration, Applicable Law and Venue, Attorneys Fees. The parties agree that this Agreement is governed by, and will be interpreted and enforced in accordance with, the laws of the State of New York, without regard to principles of conflict of laws. Any claim or dispute arising under this Agreement may only be brought in arbitration, pursuant to the rules of the Financial Industry Regulatory Authority ("FINRA"), with venue in the city of New York, New York State. Each of the parties hereby consents to this method of dispute resolution, as well as jurisdiction, and consent to this being a convenient forum for any such claim or dispute and waives any right it may have to object to either the method, venue or jurisdiction for such claim or dispute. Any award an arbitrator makes will be final and binding on all parties and judgment on it may be entered in any court having jurisdiction. Furthermore, the prevailing party shall be entitled to recover damages plus reasonable attorney's fees.
10. Liability and Indemnity. The Escrow Agent shall not be liable for any action taken or omitted hereunder, or for the misconduct of any employee, agent or attorney appointed by it, except in the case of willful misconduct or gross negligence. The Escrow Agent shall have no responsibility at any time to ascertain whether or not any security interest exists in the Escrow Amounts or any part thereof or to file any financing statement under the Uniform Commercial Code with respect to any part thereof. You agree to defend, indemnify and hold FundAmerica Securities and its affiliates (including FundAmerica Technologies, LLC), directors, employees, service providers, advertisers, officers, agents, and partners and third-party service providers, including Bank or other FDIC member bank, harmless from any loss, liability, claim, or demand, including reasonable attorney's fees, made by any third party due to or arising out of this Agreement and/or arising from a breach of any provision in this Agreement, except in the case of willful misconduct or gross negligence. This defense and indemnification obligation will survive termination of this Agreement. FundAmerica Securities reserves the right to assume, at its sole expense, the exclusive defense and control of any such claim or action and all negotiations for settlement or compromise, and you agree to reasonably cooperate with FundAmerica Securities in the defense of any such claim, action, settlement or compromise negotiations, as requested by FundAmerica Securities.
11. Entire Agreement, Severability and Force Majeure. This Agreement contains the entire agreement between Issuer and FundAmerica Securities regarding the Escrow Account. If any provision of this Agreement is held invalid, the remainder of this Agreement shall continue in full force and effect. Furthermore, no party shall be responsible for any failure to perform due to acts beyond its reasonable control, including acts of God, terrorism, shortage of supply, labor difficulties (including strikes), war, civil unrest, fire, floods, electrical outages, equipment or transmission failures, internet interruptions, vendor failures (including information technology providers), or other similar causes.
12. Changes. Escrow Agent may, at its sole discretion, comply with any new, changed, or reinterpreted regulatory or legal rules, laws or regulations, and any interpretations thereof, and without necessity of notice, to modify either this Agreement and/or the Escrow Account to comply or conform to such changes or interpretations. Escrow Agent will notify Issuer of material changes as soon as practicable. Furthermore, all parties agree that this Agreement shall continue in full force and be valid, unchanged and binding upon any successors of FundAmerica Securities. Changes to this Agreement will be sent to you via email.
13. Notices. Any notice to Escrow Agent is to be sent to escrow@fundamericasecurities.com. Any notices to Issuer will be to nas@brewdog.com with a copy to kalmerico@dimuro.com.
14. Language. It is expressly agreed that it is the will of all parties, including Escrow Agent and Issuer that this Agreement and all related pages, forms, emails, alerts and other communications have been drawn up and/or presented in English.
© Copyright, 2015 FundAmerica Securities, LLC All Rights Reserved
15. Electronic Signature and Communications Notice and Consent. Digital (electronic) signatures, often referred to as an e-signature, enable paperless contracts and help speed up business transactions. The 2001 E-Sign Act was meant to ease the adoption of electronic signatures. The mechanics of this Agreements electronic signature include your signing this Agreement below by typing in your name, with the underlying software recording your IP address, your browser identification, the timestamp, and a securities hash within an SSL encrypted environment. This electronically signed Agreement will be available to both Issuer and Escrow Agent, as well as any associated bankers, brokers and platforms so they can access and copy it at any time, and it will be stored and accessible on the FundAmerica Securities Service. Issuer and Escrow Agent hereby consent and agree that electronically signing this Agreement constitutes Issuers signature, acceptance and agreement as if actually signed by Issuer in writing. Further, all parties agree that no certification authority or other third party verification is necessary to validate any electronic signature; and that the lack of such certification or third party verification will not in any way affect the enforceability of your signature or resulting contract between Issuer and Escrow Agent. You understand and agree that your e-signature executed in conjunction with the electronic submission of this Agreement shall be legally binding and such transaction shall be considered authorized by you. Issuer agrees that its electronic signature is the legal equivalent of its manual signature on this Agreement consenting to be legally bound by this Agreements terms and conditions. Furthermore, Issuer and Escrow Agent hereby agree that all current and future notices, confirmations and other communications regarding this Escrow Services Agreement specifically, and future communications in general between the parties, may be made by email, sent to the email address of record as set forth in Section 13 above, or as otherwise from time to time is changed or updated and disclosed to the other party, without necessity of confirmation of receipt, delivery or reading, and such form of electronic communication is sufficient for all matters regarding the relationship between the parties. If any such electronically sent communication fails to be received for any reason, including but not limited to such communications being diverted to the recipient's spam filters by the recipients email service provider, or due to a recipients change of address, or due to technology issues by the recipients service provider, the parties agree that the burden of such failure to receive is on the recipient and not the sender, and that the sender is under no obligation to resend communications via any other means, including but not limited to postal service or overnight courier, and that such communications shall for all purposes, including legal and regulatory, be deemed to have been delivered and received. No physical, paper documents will be sent to Issuer, and if you desire physical documents then you agree to be satisfied by directly and personally printing, at your own expense, the electronically sent communication(s) and maintaining such physical records in any manner or form that you desire.
16. Counterparts. This Agreement may be executed in several counterparts or by separate instruments and by email transmission and all of such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto.
17. Substitute Form W9: Taxpayer Identification Number certification and backup withholding statement.
PRIVACY ACT STATEMENT: Section 6109 of the Internal Revenue Code requires the Issuer to provide FundAmerica Securities with your correct Taxpayer Identification Number (TIN).
Name of Business: BrewDog USA Inc. Tax Identification Number: 47-4320975
Under penalty of perjury, by signing this Agreement below I certify that: 1) the number shown above is our correct business taxpayer identification number; 2) our business is not subject to backup withholding unless we have informed FundAmerica in writing to the contrary; and 3) our Company is a U.S. domiciled business.
Your Consent is Hereby Given: By signing this Agreement, Issuer explicitly agrees to receive documents electronically including its copy of this signed Agreement as well as ongoing disclosures, communications and notices.
© Copyright, 2015 FundAmerica Securities, LLC All Rights Reserved
Agreed as of the date set forth above by and between:
BrewDog USA Inc.
By:______________________________
Name: Neil Simpson
Title: CFO
FundAmerica Securities, LLC
By:______________________________
Name: Jonathan Self
Title: President
| Description | Item | Exhibit |
|---|---|---|
| Broker-Dealer Services Agreement with FundAmerica Securities LLC | Item 17.1 | 1A-1 |
| Charters (including amendments) | Item 17.2 | 1A-2A |
| Bylaws | Item 17.2 | 1A-2B |
| Subscription Agreement | Item 17.4 | 1A-4 |
| Material Contracts | Item 17.6 | 1A-6 |
| Escrow Agreement with FundAmerica Securities LLC | Item 17.8 | 1A-8 |
| Consent of Independent Auditors | Item 17.11 | 1A-11 |
| Legal Opinion of Kendall Almerico, DiMuroGinsberg | Item 17.12 | 1A-12 |
| Testing The Waters | Item 17.13 | 1A-13 |
1A-1
BROKER-DEALER SERVICES AGREEMENT
This Broker-Dealer Service Agreement ("Agreement") is made and entered into as of May 30, 2016 by and between FundAmerica Securities, LLC, a Delaware limited liability company ("FundAmerica", "us", "our", or "we"), and BrewDog USA Inc. ("Issuer", "you" or "your").
Whereas, FundAmerica is a broker-dealer registered with the Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority ("FINRA") providing capital markets compliance and other services for market participants, including issuers conducting offerings of securities pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). In servicing this market, FundAmerica has created and maintains proprietary tools and technology, negotiated third-party integrations, and has developed operational services, including limited customer service and compliance, to provide certain back-end tools and specific compliance services to issuers raising capital; and,
Whereas, Issuer is undertaking a capital raising effort pursuant to the exemption from registration under Section 401 of the JOBS Act (Regulation A) of up to $50,000,000 (the "Offering"); and,
Whereas, Issuer recognizes the benefit of having FundAmerica, as a regulated market participant, provide certain support services as described herein for proposed investors in its Offering, Issuer desires to retain FundAmerica and FundAmerica desires to be retained by Issuer pursuant to the terms and conditions set forth herein; and,
Now, therefore, in consideration of the mutual promises and covenants contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Retention:
a. | Issuer hereby retains FundAmerica to provide the services set forth in Section 2 (the "Services") below during the Offering period, commencing on the date hereof and until the earlier of the completion or cancellation of the Offering or the termination of this Agreement as provided in Section 8 hereof. | |
| b. | FundAmerica shall serve as the back office service provider for all potential investors in the Offering as requested by the Issuer. However, FundAmerica will not provide services for any investors who are introduced to the Offering by a registered broker-dealer that entered into a selling agreement with Issuer. | |
| c. | Issuer agrees to provide FundAmerica with due diligence information and materials as it reasonably requests and undertakes to update such information and materials throughout the Offering as may be necessary for accuracy. | |
| d. | FundAmerica will not advise Issuer or any prospective investor with respect to the Offering, or the terms and structure thereof, which will be determined solely and exclusively by Issuer and its advisers in meeting its capital needs. Issuer will provide FundAmerica with copies of the Offering materials and disclosures, including the investor subscription agreement and the offering circular. Under no circumstances shall any communication, whether oral or written, be construed or relied on by Issuer as advice from FundAmerica. Issuer acknowledges that FundAmerica is not acting as a placement agent or underwriter for the Offering and has not and will not at any time provide any securities, financing, legal or accounting advice to Issuer. Issuer represents that it will only rely on the advice of its securities counsel, accountants and/or auditors, and any placement agent or underwriter. Further, Issuer acknowledges and understands that FundAmerica will not have any direct communication with investors other than unsolicited contact that will be redirected to Issuer or Issuer’s designees. |
2. Services:
a. | FundAmerica Responsibilities - FundAmerica agrees to: | ||
i. | Accept investor data from Issuer, generally via the FundAmerica Technologies software system, but also via other means as may be established by mutual agreement of the Parties; | ||
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ii. | Review and process information from potential investors, including but not limited to running reasonable background checks for anti-money laundering ("AML"), IRS tax fraud identification and USA PATRIOT Act purposes, and gather and review responses to customer identification information; | ||
iii. | Review subscription agreements received from prospective investors to confirm they are complete; | ||
iv. | Contact Issuer and/or Issuer's designees, if needed, to gather additional information or clarification from prospective investors; | ||
v. | Provide Issuer with prompt notice about inconsistent, incorrect or otherwise flagged (e.g. for underage or AML reasons) subscriptions; | ||
vi. | Serve as registered agent where required for state blue sky requirements, but in no circumstance will FundAmerica solicit a securities transaction, recommend the Issuer's securities or provide investment advice to any prospective investor; | ||
vii. | Transmit data to transfer agent as book-entry data for maintaining Issuer's responsibilities for managing investors (investor relationship management, aka "IRM") and for maintaining future good-delivery and recordkeeping; | ||
viii. | Keep investor details and data confidential and not disclose to any third-party except Issuer or as is required by law, or in our performance under this Agreement (e.g. as needed for AML); and | ||
ix. | Transmit any checks received from subscribers to the designated escrow account for the offering by Noon of the next business day after receipt. | ||
b. | Issuer Responsibilities - Issuer agrees to; | ||
i. | Refer investor data, at its sole and arbitrary discretion, to FundAmerica; | ||
ii. | Ensure investors understand they are making a "self-directed" decision, and provide FundAmerica with all information and data required to ascertain whether the investor is eligible to invest in the Offering and the investment threshold, if applicable; | ||
iii. | Immediately, but not later than within 24 hours, notify FundAmerica with details of any notices, requests, complaints or actions of or by any regulators, law enforcement, investors, trade associations or legal counsel regarding the Offering; | ||
iv. | Establish an escrow account in compliance with SEC Rule 15c2-4 using the services of an escrow agent and for investor subscription funds to be held in a segregated bank account at and FDIC insured bank pending closing or termination of the Offering; | ||
v. | Comply with state securities laws and rules; and | ||
vi. | Not compensate any unregistered person directly or indirectly with any fees, commissions or other consideration based upon the amount, sale of securities or success of an Offering. | ||
c. | Marketing of Offering - Issuer represents that it will ensure the marketing and promotional activities it engages in, as related to the Offering, are not materially misleading and in compliance with all SEC rules and regulatory guidance, as well as industry best practices. In no event will Issuer or its agents provide "advice" or make securities recommendations to any investor. Issuer will not compensate any person for directly selling securities unless such person is associated with a FINRA member broker-dealer and is appropriately registered with both the SEC and the state(s) in which the investors reside. Issuer may use FundAmerica's name but only to extent set forth in Section 6 of this Agreement. | ||
| 3. Compensation: For services provided under this Agreement, the terms and payments shall be: | |||
a. | Broker-Dealer Facilitation Fees: Broker-Dealer facilitation fee for FundAmerica serving as an accommodating broker-dealer in state notice Filings required for the Offering and the provision of the Services of a commission equal to 5% cash on the tranche of capital raised in the Regulation A offering up to the first $10 million raised. After $10 million is raised, the following fees shall be paid: | ||
(a) For all capital raised between $10,000,001 and $15,000,000, a fee of 5.5% cash on this tranche raised in the Regulation A offering, | |||
(b) For all capital raised between $15,000,001 and $20,000,000, a fee of 6% cash on this tranche raised in the Regulation A offering, | |||
(c) For all capital raised between $20,000,001 and $25,000,000, a fee of 6.5% cash on this tranche raised in the | |||
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Regulation A offering, | |||
(d) For all capital raised between $25,000,001 and $30,000,000, a fee of 7% cash on this tranche raised in the Regulation A offering, | |||
| (e) For all capital raised between $30,000,001 and $35,000,000, a fee of 7.5% cash on this tranche raised in the Regulation A offering, | |||
(f) For all capital raised between $35,000,001 and $40,000,000, a fee of 8% cash on this tranche raised in the Regulation A offering, and | |||
| (g) for all capital raised between $40,000,001 and $50,000,000 a fee of 8% cash on this tranche raised in the Regulation A offering. | |||
Fees may be reduced on a case-by-case basis, or as required in compliance with FINRA rules. For these purposes, an email from FundAmerica to Issuer will constitute sufficient evidence of an alteration of the fees contained in this Agreement. Any alteration to the fees shall not be interpreted to be, or constitute an amendment or general waiver of other terms of this Agreement unless specifically set forth by FundAmerica in writing. | |||
Payment Terms: FundAmerica will charge Administrative service fees directly to Issuer via ACH-debit and Issuer hereby authorizes such payment. Brokerage service fees are due upon the sale of securities to investors and Issuer agrees and directs that they will be paid from the flow of funds upon Closing. The parties shall have the reasonable right to obtain documentation concerning the details of the payments due. | |||
4. Warranties and Representations: | |||
The Issuer and FundAmerica represent and warrant that each has all requisite power and authority to enter into and carry out the terms and provisions of this Agreement and the execution, delivery and performance of this Agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound, and further: | |||
a. | FundAmerica warrants and represents to the Issuer that: | ||
i. | It is an SEC registered, FINRA member, SIPC insured firm in good standing and licensed to conduct securities business; | ||
ii. | It is duly registered in states where investors reside; | ||
iii. | Its personnel who provide services to the Issuer are licensed securities representatives and/or principals, as required by regulations for the business being conducted; | ||
iv. | It will not compensate any unregistered person with any fees based upon the amount or success of any investment in the Offering; | ||
v. | It will comply with FINRA Rule 5110 and make any regulatory filings required for the Offering; | ||
vi. | It will not solicit or sell investors any other services or investment products; and | ||
vii. | It will not provide any investment advice nor any investment solicitation or recommendations to any investor. | ||
b. | Issuer warrants and represents to FundAmerica that; | ||
i. | The offering materials will be complete and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. | ||
ii. | It will duly comply with all state securities ("blue sky") laws and regulations and make all Filings as required. | ||
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| 6. | Limited License of Trademarks. During the term of this Agreement, Issuer may request to use FundAmerica's name, logo and trademarks on its website and other marketing materials, but FundAmerica must approve in advance the specific uses intended by Issuer. Generally, the use of FundAmerica's name, logo or trademarks is not used in a manner that implies the Offering is endorsed, recommended, or vetted by FundAmerica, or that Issuer or its agents are authorized to act as a securities agent or a representative of FundAmerica. Furthermore, it is agreed that FundAmerica and Issuer each, in perpetuity, have the option to use the name and logo of one another in disclosing the existence of this business relationship. | ||
| 7. | Independent Contractor. It is agreed that FundAmerica and Issuer are independent contractors for the business and services provided hereunder. Under no circumstances shall this Agreement be deemed to imply or infer that Issuer and FundAmerica have anything other than an arm’s length and independent relationship. Both FundAmerica and Issuer shall be individually responsible and liable for their own respective federal, state, local and other taxes or fees, as well as all costs associated with their businesses. FundAmerica is not a fiduciary of the Issuer or its management or board of directors in regard to any of the Services provided under this Agreement. | ||
| 8. | Term and Termination: This Agreement is effective beginning on the date set forth above through the completion or cancellation of the Offering unless terminated by either Party pursuant to this Section 8. | ||
a. | Either Party may terminate their participation in this Agreement without cause by giving 10 days’ notice via email to the other at any time. Such termination shall only affect future business and not apply to transactions or other business conducted prior to the date of termination. | ||
b. | Either Party may terminate their participation in this Agreement for a material breach of this Agreement immediately by giving notice via email to the other at any time. Such termination shall only affect future business and not apply to transactions or other business conducted prior to the date of termination. The nonbreaching Party has the sole discretion to grant a period to cure by giving notice via email of the time period for such cure. However, the grant of a cure period does not waive any indemnification or rights of the nonbreaching Party to pursue all remedies. | ||
c. | In the event of any termination, the responsibilities of each party detailed in Section 2 shall cease. | ||
| 9. | Mutual Indemnification: The Parties hereby agree as follows: | ||
a. | To the fullest extent permitted by applicable law, the Issuer will indemnify FundAmerica and its affiliates, stockholders, directors, officers, employees and controlling persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1940, as amended) against all losses, claims, damages, expenses and liabilities, as the same are incurred (including the reasonable fees and expenses of counsel), relating to or arising out of its activities hereunder or pursuant to this engagement letter, except to the extent that any losses, claims, damages, expenses or liabilities (or actions in respect thereof) are found in a final judgment (not subject to appeal) by a court of law to have resulted primarily and directly from FundAmerica's willful misconduct or gross negligence in performing the services described herein. Issuer and FundAmerica agree that this clause shall not require Issuer to indemnify FundAmerica if the basis of the claim for indemnification comes from FundAmerica’s sole actions that result in a claim against FundAmerica by FINRA. | ||
b. | Promptly after receipt by FundAmerica of notice of any claim or the commencement of any action or proceeding with respect to which FundAmerica is entitled to indemnity hereunder, FundAmerica will notify the Issuer in writing of such claim or of the commencement of such action or proceeding, and the Issuer will assume the defense of such action or proceeding and will employ counsel reasonably satisfactoiy to FundAmerica and will pay the fees and expenses of such counsel. Notwithstanding the preceding sentence, FundAmerica will be entitled to employ counsel separate from counsel for the Issuer and from any other party in such action if counsel for FundAmerica reasonably determines that it would be inappropriate under the applicable rules of professional responsibility for the same counsel to represent both the Issuer and FundAmerica. In such event, the reasonable fees and disbursements of no more than one such separate counsel will be paid by the Issuer, in addition to local counsel. The Issuer will have the exclusive right to settle the claim or proceeding provided that the Issuer will not settle any such claim, action or proceeding without the prior written consent of FundAmerica, which will not be unreasonably withheld. | ||
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| c. | The Issuer agrees to notify FundAmerica promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to a transaction contemplated by this engagement letter. | |
| d. | If for any reason the foregoing indemnity is unavailable to FundAmerica or insufficient to hold FundAmerica harmless, then the Issuer shall contribute to the amount paid or payable by FundAmerica as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect not only the relative benefits received by the Issuer on the one hand and FundAmerica on the other, but also the relative fault of the Issuer on the one hand and FundAmerica on the other that resulted in such losses, claims, damages or liabilities, as well as any relevant equitable considerations. The amounts paid or payable by a party in respect of losses, claims, damages and liabilities referred to above shall be deemed to include any legal or other fees and expenses incurred in defending any litigation, proceeding or other action or claim. Notwithstanding the provisions hereof, FundAmerica's share of the liability hereunder shall not be in excess of the amount of fees actually received, or to be received, by FundAmerica under this engagement letter (excluding any amounts received as reimbursement of expenses incurred by FundAmerica). | |
| 10. | Certain Placement Procedures. On or prior to the date the securities are made available for purchase by subscribers and on each closing date for the purchase and sale of the securities to subscribers in the Offering (the "Closing Date"), FundAmerica shall have obtained from the Company the following: | |
| a. | Comfort Letter from the Company’s auditor named in the offering circular addressed to FundAmerica in form and substance satisfactory in all respects to FundAmerica Securities. | |
| b. | Officers’ Certificate signed by the Chairman of the Board or the Chief Executive Officer and the Secretary of the Company (in their capacities as such] to the effect that the Company has performed all covenants and complied with all conditions required by this Agreement to be performed or complied with by the Company, that the representations and warranties of the Company set forth herein and the disclosure provided in the offering materials are true and correct. | |
| c. | Secretary's Certificate signed by the Secretary or Assistant Secretary of the Company, respectively, certifying (i] that the Certificate of Incorporation and Bylaws, as amended of the Company are true and complete, have not been modified and are in full force and effect, (ii] that the resolutions of the Company's Board of Directors relating to the public offering contemplated by this Agreement are in full force and effect and have not been modified, (iii] as to the accuracy and completeness of all correspondence between the Company or its counsel and the Commission, and (iv] as to the incumbency of the officers of the Company. The documents referred to in such certificate shall be attached to such certificate. | |
| d. | Negative assurance statement from legal counsel with respect to offering customarily provided in public offerings addressed to FundAmerica Securities in form and substance satisfactory to FundAmerica. | |
| 11. | Confidentiality and Mutual Non-Disclosure: It is acknowledged that in the performance of this Agreement each party may become aware of and/or in possession of confidential, non-public information of the other party. Except as necessary in this Agreement’s performance, or as authorized in writing by a Party or by law, the Parties (and their affiliated persons] shall not disclose or make use of such non-public information. Nothing contained herein shall be construed to prohibit the SEC, FINRA, or other government official or entities from obtaining, reviewing, and auditing any information, records, or data. Issuer acknowledges that regulatory record-keeping requirements, as well as securities industry best practices, require FundAmerica to maintain copies of practically all data, including communications and Offering materials, regardless of any termination of this Agreement. Notwithstanding the foregoing, information which is, or was, in the public domain (including having been published on the internet] is not subject to this section. | |
| 12. | Notices: All notices given pursuant to this Agreement shall be in writing and sent via email to: | |
FundAmerica Securities: jonathan@fundamericasecurities.com Issuer: nas@brewdog.com with a copy to kalmerico@dimuro.com | ||
| 13. | Binding Arbitration, Applicable Law and Venue, Attorneys Fees: This Agreement is governed by, and will be interpreted and enforced in accordance with the regulations of the SEC and FINRA, and laws of the State of New York, without regard to principles of conflict of laws. Any claim or dispute arising under this Agreement may only be brought in arbitration, pursuant to the rules of the Financial Industry Regulatory Authority ("FINRA"), with venue in New York City, New York. Each of the parties hereby consents to this method of dispute resolution, as well as jurisdiction, and waives any right it may have to object to either the method, venue or jurisdiction for such claim or dispute. Any award an arbitrator makes will be final and binding on all parties and judgment on it may be entered in any court having jurisdiction. Furthermore, the prevailing party shall be entitled to recover damages plus reasonable attorney's fees. |
| 14. | Entire Agreement, Amendment, Severability and Force Majeure: This Agreement contains the entire agreement between Issuer and FundAmerica regarding this Agreement. If any provision of this Agreement is held invalid, the remainder of this Agreement shall continue in full force and effect. Furthermore, no party shall be responsible for any failure to perform due to acts beyond its reasonable control, including acts of regulators, acts of God, terrorism, shortage of supply, labor difficulties (including strikes), war, civil unrest, fire, floods, electrical outages, equipment or transmission failures, internet interruptions, vendor failures (including information technology providers), or other similar causes. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. This Agreement must be amended in writing. |
| 15. | Counterparts; Facsimile. This Agreement may be executed in counterparts, each of which will be deemed an original and all of which, taken together, will constitute one and the same instrument, binding on each signatory thereto. This Agreement may be executed by signatures, electronically or otherwise, delivered by facsimile or email, and a copy hereof that is properly executed and delivered by a party will be binding upon that party to the same extent as an original executed version hereof. |
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date set forth above.
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