Where Are They Now: Ellison Eyeware
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Mar 2, 2017
Ellison Eyeware launched their first Kickfurther deal in October 2016. A sunglasses company built around the idea that losing things is a...
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Highlights:
A lifetime client-service model for customers
A recognized brand of hand-made, top quality sunglasses
A company that gives back with every sale
- Operational for 2 years with 125% average yearly growth
The eyewear industry is broken
We all love sunglasses. They make us look good, protect our eyes, guard our privacy, and allow us to see better.
However, unfortunately for us, consumers, the $112 billion eyewear industry is headed by a handful of giant corporations, who currently own the rights and licenses to today’s biggest fashion brands and distribution channels. This means consumers pay higher prices for lower quality products than they deserve.
The status quo is not easy to change. But we’re set to do that.
Ellison is building a brand that:
1. Strives for the highest quality. Period.
2. Does good and has an integrated social mission.
3. Focuses on customers with a lifetime client service model.
1. The Highest Quality. Period.
We set ourselves apart from established brands by exceeding expectations and creating top-notch products at fair and honest prices.
Here's how we build amazing glasses:
Handmade
Every pair of Ellison’s is handcrafted in a family-owned workshop in Greece.
Finest Italian materials
We’re using only the finest Italian materials and metals. Every pair is made using the highest quality Italian Mazzucchelli 1849 acetate.
56-step QA
Ellison’s quality assurance process is 2x more rigorous than the industry standard, ensuring that every pair is the highest quality before it leaves our hands, and arrives in yours.
It’s in the details:
German engineered 5 barrel hinges
Ellison’s come equipped with 5 barrel stainless steel hinges. This sturdy hinge provides integrity, durability, and comfort while keeping your temples straight unlike an average pair of sunglasses that may only have 3 barrels.
Real rivets
Pins in the frame and temples of our sunglasses provide structural integrity, while adding a touch of flare to our designs.
Soft gel nose pads
We only use soft gel nose pads to ensure comfort, even after long hours of use.
Hinge lining detail
A galvanized metal cap detailed with our trademarked “E” is also used to line the temple-front junction. Only visible when the frame isn’t being worn, it’s a hidden pleasure for Ellison owners to enjoy!
Carl Zeiss Vision lenses
Tested more thoroughly than any industry standard or law in the world requires, Carl Zeiss Vision Lenses deliver our customers the same superior optics found in the lenses used to film the moon landing.
Temple tip detail
We engrave our trademarked “E” on the left temple tip of every pair, showing our attention for detail and certifying your pair is authentic!
Thermic
A special temperature sensitive varnish treatment makes Ellison “Thermic” line one of a kind: when exposed to temps above 78°F, thermic pairs react by changing color.
Look Good, Do Good.
Companies must have a bigger purpose. We have been on a quest for the last 3 years, providing eyesight to those in need and building homes that create safe spaces for those who need it.
Our mission is to make the best glasses and do good in this world. Through our close relationship with our customers, we are able to empower them to engage in social outreach and community development programs.
Giving back is core to our culture
We provide a tangible way for our community to be the change they want to see in the world.
Every year, our team sponsors multiple impact-travel excursions, with local partners, dedicated to closing the gap on social issues, and those who want to help solve them. We allow our community to truly involve themselves, first hand, in an immersive philanthropic experience alongside like-minded journeyers, while exploring some of the most beautiful corners on earth.
To date, our community built 40 new homes in Nicaragua for families living in slum conditions.
Giving a gift of sight
With every pair of sunglasses and Club Ellison membership sold, Ellison will provide sight to somebody in need in one of three ways:
1) Spectacles for children
the results of giving glasses to the child are miraculous – children go from failing and resenting their classes to excitedly getting straight As..
2) Building Vision Centers for the poor
Many rural areas don’t have access to basic eye care. Our donations help build eye care centers to provide help to people in need.
3) Training eye health personnel.
Along with the shortage of eye care access, the rural clinics that do exist lack trained staff. Our donations help train the personnel to provide basic eye care.
3. Club Ellison. Our customers are our friends.
Other brands take advantage of the nature of the game: that sunglasses get lost, broken or stolen all the time. In fact, other brands bet on it to make profits. Ellison turns the tides, and converts customers into a loyal community with Club Ellison.
A Club Ellison membership is insurance for your Ellison frames. It targets 3 unaddressed pain points experienced by tens of millions of customers of high end frames:
Should something happen to a Club Ellison member's glasses, they have access to our entire collection at exclusive membership pricing. *50% off retail*
Members also become part of a community that acknowledges and rewards living experiences, instead of punishing you for it.
Since the launch of Club Ellison in June, in just several months we have organically acquired over 1,200 new members, with ~18% of those members already taking advantage of their membership perks and rebuying.
A growing movement
Our story was picked up by news outlets, fashion blogs, business blogs and TV and has garnered notable features and PR across top publications and national media outlets for our noval approach to addressing global problems.
Ellison glasses have become integrated into pop culture. We’ve had notable features on some of the most recognized faces in the entertainment industry, Mario Lopez, The Fray, Kelly Clarkson, Jennie Garth, Terri Seymour, Pia Toscano, Marc Malkin, Carolina Liar, Novak Djokovic, Kendall Jenner, with music artists like Post Malone, FKi 1st, Lil Wayne and Waka Flocka Flame, just to name a few and are the premier sunglass brand for Fox’s breakout drama Empire., and many more.
Branding & Marketing
The crowded eyewear space is currently focused on an outdated traditional retail model versus cost suppression and customer experience CRM-based model.
Data-Driven
Our deeply embedded CRM has allowed us one-to-one customer feedback from thousands of clients. This gives us real-time design and deployment insights that is typically not available at scale or without the use of a third party.
This way, we are able to stay informed and current with quickly changing customer needs and trends.
Emotional connection
Ellison’s marketing takes an aggressive approach in how we communicate with our consumer and how we differentiate from our competitors. This approach will communicate the tangible value of the brand and the deeper emotional connection that current competitor brands are not leaning into.
Purchasing behavior comparison
Sales channels
Through 2016, we’ve expanded into 60 brick-and-mortar stores, globally.
Ellison makes profit with a four point sales strategy.
Wholesale and Pop-Up/Direct are our current main revenue generating channels given their higher up-front conversion rates and the branding opportunities available through additional exposure.
On the brick and mortar front, teams will be hired on to push efforts with monthly goals outlined. This channel’s main purpose is brand development and testing to continue building the Ellison brand and image.
Profit Margins
Action plan
Our 5 to 10 year business plan is centered on new efficiencies within the Ellison consumer purchase funnel. With the Wholesale and Pop-Up processes streamlined, this sales channel is ready for growth and only requires a capital investment in order to advance our scaling efforts.
Ever improving experience
We’re focused on investing in consumer experience across digital and offline sales touch points. This investment will help us become faster and cut overall costs related to product development without lowering the quality.
Data analysis
We are constantly integrating more data and insights into our product development and online conversion strategy. Your investment will be used to make this area of our business more sophisticated, focusing heavily on Club Ellison, which is projected to be a significant growth and profit channel for our brand.
New market
We will use your investment to start developing our prescription eyewear line. We will make this strategic leap because of the rocket-like growth of this market opportunity: the eyewear market size is projected to reach $184.03 billion by 2024 (source: grandviewresearch)
Geographic expansion
By working with investors who have signature real estate, we can take advantage of these on-the-ground locations and foot traffic to drive instant sales while leveraging reduced retail and rent expenses.
Our Team
Ellison was started by Aristotle Loumis, who set out to his home country of Greece to build a sunglasses company that creates the highest quality sunglasses in the market, with the best craftsmanship and unmatched materials.
We’ve brought together the people to get us where we need to be. Our team is made up of proven investors who have invested into the vision and market opportunity.
We partnered with a strategic group of proven investors like John Roa – an award winning entrepreneur and innovator in the technology and lifestyle space with his latest venture, AKTA being fully acquired Salesforce Inc. in September 2015.
Ravi Patel, another key investor, is the principle of BuiltByIowa Ventures and president of Hawkeye Hotel Group – one of the fastest growing, privately-owned hotel companies in the country.
From the beginning, Ellison has had a passion for superior product and a fixation with service and making the world better place to live. These values endure today.
Why crowdfunding
Since Ellison has been built by our loyal customers, we want to further strengthen that relationship. Equity crowdfunding is more personal than selling shares in the open market, allowing investors a stronger level of buy-in with the company.
When you invest in Ellison, you are investing in a company that actively seeks to improve the quality of life for communities around the globe.
We share this opportunity with our investors to get them involved in a social good whether it’s providing eyesight to somebody in need or building homes across Latin America. We are here to do good, while having fun in the process.
Investment in Ellison is an investment in a growing brand, in dedication to product and service and in the strong ideals that guide our business.
We invite you to join the movement.
While we are laser focused on growing our business, we are bigger than just outfitting sunglasses.
We have lost things ourselves and we never forget how it burns. We are turning this insight into a movement and bringing people peace of mind, allowing them to live their life of adventure without worrying about the little things.
We want you to be part of it – and invite you to join us for the ride.
Deal terms
Valuation cap
$4,000,000
The maximum valuation at which your investment converts
into equity shares or cash.
Learn more.
Discount
20%
If a trigger event for Ellison Eyewear occurs, the discount provision
gives investors equity shares (or equal value in cash) at a reduced price.
Learn more.
Maximum investment
$100,000
The largest investment amount that Ellison Eyewear is accepting.
Learn more
Type of security
Crowd SAFE
·
Learn more
A SAFE is a Simple Agreement for Future Equity. An investor makes a cash investment in a company, but gets company stock at a later date, in connection with a specific event. The Crowd SAFE is a modified SAFE that is better suited for crowdfunding.
Funding goal
$50,000 – $750,000
Ellison Eyewear needs to raise
$50K
before the deadline. The maximum amount Ellison Eyewear is willing
to raise is $750K.
Learn more
Deadline
Ellison Eyewear needs to reach their minimum funding goal before the deadline
().
If they don’t, all investments will be refunded.
Learn more
Documents
This securities offering is filed with the SEC. View the official filing and all updates:
Form C
SEC.gov
Company documents
Ellison Crowd Safe
Perks
In addition to your Crowd SAFE, you'll receive perks for investing in Ellison Eyewear.
Invest
$30
Receive
- $30 Crowd SAFE
- Digital thank you and one LIFETIME membership to Club Ellison.
Invest
$65
Receive
- $65 Crowd SAFE
- One pair of 1st generation sunglasses + one LIFETIME membership to Club Ellison.
- We’ll contact you at the end of the campaign to pick your style.
Invest
$125
Receive
- $125 Crowd SAFE
- One pair of 2nd generation sunglasses + one LIFETIME membership to Club Ellison. We’ll contact you at the end of the campaign to pick your style.
Invest
$275
Receive
- $275 Crowd SAFE
- One pair of 3rd generation (new arrival) sunglasses + one LIFETIME membership to Club Ellison. We’ll contact you at the end of the campaign to pick your styles.
Invest
$550
Receive
- $550 Crowd SAFE
- Four pair of sunglasses (one 3rd generation + three of any combination of 1st and 2nd generations) + one LIFETIME membership to Club Ellison. We’ll contact you at the end of the campaign to pick your styles.
Invest
$1,200
Receive
- $1,200 Crowd SAFE
- Two pairs (one of each 1st and 2nd generations) of sunglasses + personal fitting from Aristotle, and mention of gratitude on website. One LIFETIME membership to Club Ellison.
Invest
$5,500
Receive
- $5,500 Crowd SAFE
- One pair of 3rd generation (new arrival) sunglasses + trip to Greece with Ellison team. One LIFETIME membership to Club Ellison. We'll contact you at the end of the campaign to pick your styles.
Invest
$25,000
Receive
- $25,000 Crowd SAFE
- 4-pack 3rd generation sunglasses, 4 LIFETIME memberships to Club Ellison, and trip to Greece with Founder + receive additional investor benefits.
About Ellison Eyewear
Legal Name
Ellison Eyewear, Inc.
Founded
Mar 2014
Form
Delaware
Corporation
Headquarters
314 W. Institute Place
#2E
, Chicago, IL
Headquarters
314 W. Institute Place , Chicago, IL, US
Ellison Eyewear Team
Everyone helping build Ellison Eyewear, not limited to employees
Faraz Mirza
Advisor
CEO/Founder @1FaceWatch @ChuckOffs @MirzaMinds
Aristotle Loumis
CEO/Founder
John Roa
Partner / Technologist
Ravi Patel
Co-Founder / Growth Strategist
Scott Kitun
Advisor
Tim Huizenga
Advisor
Chad Bronstien
Advisor
Adam Codilis
Advisor
Angelo Loumis
Advisor
Alex Afshari
CFO / Advisor
Stacey Walker
Advisor
Atul Nakhasi
Advisor
Iggy Rodriguez
Advisor
Alec Whitters
Advisor
Ben O'Connor
Advisor
Adam Keune
Advisor
Faraz Mirza
Advisor
Gregory Pappas
Advisor
Aashay Shah
Advisor
Press
FAQ
How do you become a Club Ellison Member?
How do you become a Club Ellison Member?
Very simple. After purchasing any one of our products at full retail price (online) you will be eligible to become a ClubEllison Member for $10 -- a one time payment for lifetime coverage against loss, theft, or damage.
Can you redeem your ClubEllison membership perks in-store?
Can you redeem your ClubEllison membership perks in-store?
Currently, members can only redeem their membership perks online via WearEllison.com - we plan to develop processes/procedures and work closely with our retail brick-and-mortar stores to extend membership perks offline.
What is Club Ellison?
What is Club Ellison?
Club Ellison is a loyalty, exclusive membership program. Our promise is simple. Buy a pair at full price and you are
automatically eligible to receive full access to current and future
frames at exclusive membership pricing for the rest of your life.
(*Member pricing is half off full retail*)
What makes Ellison products different?
What makes Ellison products different?
Imagine replacing your Chanel sunglasses with plastic frames from the convenience store down the street. Not quite the same. You could just as easily drop another couple hundred dollars to replace those Chanel sunglasses, but what happens the next time you lose or break them? People don't want to be hindered by the loss of their glasses, but they also don't want to settle for something cheap or of lesser quality. Ellison Sunglasses resolves the buyer's dilemma by providing affordable, high-end sunglasses that are beautifully crafted in Greece. It started when our founder, Aristotle Loumis, lost his own sunglasses while traveling abroad and realized this was a common annoyance that wasn't being addressed by major eyewear companies. Ellison is dedicated to quality, and value, every pair of Ellison’s is handmade by our manufacturing team in the beautiful country of Greece. Our process includes several steps above industry standards to ensure that every pair is the highest quality before it leaves our hands, and arrives in yours.
How does Ellison make money?
How does Ellison make money?
Ellison makes profit with a four point sales strategy that is built around a direct to consumer approach.
1) Wholesale
2) Pop-Up-Shop
3) Corporate
4) Online & Direct (ClubEllison)
Since inception, we’ve expanded into 60 brick-and-mortar stores, globally.
Wholesale and Pop-Up/Direct are our current main revenue generating channels given their higher up-front conversion rates and the branding opportunities available through additional exposure.
On the brick and mortar fronts, teams will be hired on to push efforts with monthly goals outlined. This channel’s main purpose is brand development and testing to continue building the Ellison brand and image.
Corporate events have become a high cash generating area -- essentially, a corporate client will purchase a set number of our Ellison products to gift their partners and/or employees. We will either ship directly to them, or host an in-person event. During a 2-3 hour corporate event we can generate ~$5k - 8k.
Establishing new retailer connections as well as re-engaging the ones previously had has been very successful, as well. Reorder rates are very strong at %95 and our retail partners are loving our branding and marketing efforts.
Q2 16' also saw the launch of ClubEllison Membership Program - Just weeks after launch, we are thrilled to announce that we have over 1200 members sign up for the program, with ~18% of those members already taking advantage of the membership perks and reordered. We are seeking investment to continue building more sophisticated technology and back end tracking system in order for us to monitor and grow ClubEllison, as it is the most profitable and scalable avenue of growth.
How much do we donate?
How much do we donate?
We donate $1 from every product sold and 50%, or $5, from every Club Ellison membership sold.
Still have questions? Check the
discussion section.
Risks
In order for the Company to compete and grow, it must attract, recruit, retain and develop the necessary personnel who have the needed experience.
Recruiting and retaining highly qualified personnel is critical to our success. These demands may require us to hire additional personnel and will require our existing management personnel to develop additional expertise. We face intense competition for personnel. The failure to attract and retain personnel or to develop such expertise could delay or halt the development and commercialization of our product candidates. If we experience difficulties in hiring and retaining personnel in key positions, we could suffer from delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect operating results. Our consultants and advisors may be employed by third parties and may have commitments under consulting or advisory contracts with third parties that may limit their availability to us.
The development and commercialization of our products is highly competitive.
We face competition in the eyewear industry with respect to any products that we may seek to develop or commercialize in the future. Our competitors include major companies worldwide. One company in particular, Luxottica Group S.p.A. (_Luxottica_), holds a virtual monopoly in the industry, holding a controlling stake in major eyewear brands, such as Lenscrafters, Sunglass Hut and Target Optical, and producing sunglasses and prescription frames for major designer brands, such as Chanel and Prada. Luxottica and other of our competitors, such as JAND Inc., dba Warby Parker (_Warby Parker_), have significantly greater financial, technical and human resources than we have and superior expertise in research and development and marketing approved products and thus may be better equipped than us to develop and commercialize products. These competitors also compete with us in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, our competitors may commercialize products more rapidly or effectively than we are able to, which would adversely affect our competitive position, the likelihood that our products will achieve initial market acceptance and our ability to generate meaningful additional revenues from our products.
We rely on other companies to provide the raw materials and major components of our products.
We outsource production of our eyewear frames to manufacturers in Greece and Italy, and we depend on these suppliers and subcontractors to meet our contractual obligations to our customers and conduct our operations. Our ability to meet our obligations to our customers may be adversely affected if suppliers or subcontractors do not provide the agreed-upon supplies or perform the agreed-upon services in compliance with customer requirements and in a timely and cost-effective manner. Likewise, the quality of our products may be adversely impacted if companies to whom we delegate manufacture of raw materials or major components for our products, or from whom we acquire such items, do not provide the raw materials or major components which meet required specifications and perform to our and our customers_ expectations. Our suppliers may be less likely than us to be able to quickly recover from natural disasters and other events beyond their control and may be subject to additional risks such as financial problems that limit their ability to conduct their operations. The risk of these adverse effects may be greater in circumstances where we rely on only one or two subcontractors or suppliers for a particular component.
We depend on third-party service providers and outsource providers for a variety of services and we outsource a number of our non-core functions and operations.
In certain instances, we rely on single or limited service providers and outsourcing vendors around the world because the relationship is advantageous due to quality, price, and lack of alternative sources. If production or service were interrupted and we were not able to find alternate third-party providers, we could experience disruptions in manufacturing and operations including product shortages, higher freight costs and re-engineering costs. If outsourcing services are interrupted or not performed or the performance is poor, this could impact our ability to process, record and report transactions with our customers and other constituents. Such interruptions in the provision of supplies and/or services could result in our inability to meet customer demand, damage our reputation and customer relationships and adversely affect our business.
We depend on third party providers, suppliers and licensors to supply some of the hardware, software and operational support necessary to provide some of our services.
We obtain these materials from a limited number of vendors, some of which do not have a long operating history or which may not be able to continue to supply the equipment and services we desire. Some of our hardware, software and operational support vendors represent our sole source of supply or have, either through contract or as a result of intellectual property rights, a position of some exclusivity. If demand exceeds these vendors_ capacity or if these vendors experience operating or financial difficulties, or are otherwise unable to provide the equipment or services we need in a timely manner, at our specifications and at reasonable prices, our ability to provide some services might be materially adversely affected, or the need to procure or develop alternative sources of the affected materials or services might delay our ability to serve our customers. These events could materially and adversely affect our ability to retain and attract customers, and have a material negative impact on our operations, business, financial results and financial condition.
We are required to comply with various import laws and export control and economic sanctions laws, which may affect our transactions with certain customers, business partners and other persons and dealings between our employees and contractors.
In certain circumstances, export control and economic sanctions regulations may prohibit the export of our products. In other circumstances, we may be required to obtain additional export licenses before exporting our products. Compliance with the various import laws that apply to our businesses can restrict our access to, and increase the cost of obtaining, certain products and at times can interrupt our supply of imported inventory.
The Company_s success depends on the experience and skill of the board of directors, its executive officers and key employees.
In particular, the Company is dependent on John Roa, Ravi Patel, and Aristotle Loumis who are, respectively, an advisor, co-founder, and co-founder and chief executive officer of the Company. The Company has or intends to enter into employment agreements with Aristotle Loumis and other key personnel, although there can be no assurance that it will do so or that such persons will continue to be employed or engaged by the Company for a particular period of time. The loss of any of John Roa, Ravi Patel, or Aristotle Loumis could harm the Company_s business, financial condition, cash flow and results of operations.
We rely on third-party suppliers for the materials used in the manufacturing of our products.
In 2014, the following suppliers provided the following percentage of the listed services, inputs or raw materials: Nea Optiki S.A.: 30% of our gross manufacturing; Carl Zeiss AG:30% of our eyewear lenses; and Mazzucchelli 1849 S.p.A.: 0.30% of acetate needed for our eyewear frames. If any of these suppliers changed its sales strategy to reduce its reliance on distribution channels, or decided to terminate its business relationship with us, sales and earnings could be adversely affected until we are able to establish relationships with suppliers of comparable products. Any delay or interruption in manufacturing operations (or failure to locate a suitable replacement for such suppliers) could materially adversely affect our business, prospects, or results of operations. Most of our agreements with suppliers are terminable by either party on short notice for any reason. Although we believe our relationships with these key suppliers are good, they could change their strategies as a result of a change in control, expansion of their direct sales force, changes in the marketplace or other factors beyond our control, including a key supplier becoming financially distressed.
We rely on various intellectual property rights, including trademarks, in order to operate our business.
Such intellectual property rights, however, may not be sufficiently broad or otherwise may not provide us a significant competitive advantage. In addition, the steps that we have taken to maintain and protect our intellectual property may not prevent it from being challenged, invalidated, circumvented or designed-around, particularly in countries where intellectual property rights are not highly developed or protected. In some circumstances, enforcement may not be available to us because an infringer has a dominant intellectual property position or for other business reasons, or countries may require compulsory licensing of our intellectual property. Our failure to obtain or maintain intellectual property rights that convey competitive advantage, adequately protect our intellectual property or detect or prevent circumvention or unauthorized use of such property, could adversely impact our competitive position and results of operations. We also rely on nondisclosure and noncompetition agreements with employees, consultants and other parties to protect, in part, trade secrets and other proprietary rights. There can be no assurance that these agreements will adequately protect our trade secrets and other proprietary rights and will not be breached, that we will have adequate remedies for any breach, that others will not independently develop substantially equivalent proprietary information or that third parties will not otherwise gain access to our trade secrets or other proprietary rights. As we expand our business, protecting our intellectual property will become increasingly important. The protective steps we have taken may be inadequate to deter our competitors from using our proprietary information. In order to protect or enforce our patent rights, we may be required to initiate litigation against third parties, such as infringement lawsuits. Also, these third parties may assert claims against us with or without provocation. These lawsuits could be expensive, take significant time and could divert management_s attention from other business concerns. The law relating to the scope and validity of claims in the technology field in which we operate is still evolving and, consequently, intellectual property positions in our industry are generally uncertain. We cannot assure you that we will prevail in any of these potential suits or that the damages or other remedies awarded, if any, would be commercially valuable.
Although dependent on certain key personnel, the Company does not have any key man life insurance policies on any such people.
The Company is dependent on John Roa, Ravi Patel, and Aristotle Loumis in order to conduct its operations and execute its business plan. However, the Company has not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, in any of John Roa, Ravi Patel, and Aristotle Loumis die or become disabled, the Company will not receive any compensation to assist with such person_s absence. The loss of such person could negatively affect the Company and its operations.
We have not prepared any audited financial statements.
While the Company has prepared reviewed financial statements in connection with this Offering, we have not prepared any audited financial statements to date. Therefore, you have no audited financial information regarding the Company_s capitalization or assets or liabilities on which to make your investment decision. If you feel the information provided is insufficient, you should not invest in the Company.
We are subject to income taxes as well as non-income based taxes, such as payroll, sales, use, value-added, net worth, property and goods and services taxes, in both the United States, and various foreign jurisdictions.
Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe that our tax estimates are reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals and (ii) any material differences could have an adverse effect on our financial position and results of operations in the period or periods for which determination is made.
We are not subject to Sarbanes-Oxley regulations and lack the financial controls and safeguards required of public companies.
We do not have the internal infrastructure necessary, and are not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurance that there are no significant deficiencies or material weaknesses in the quality of our financial controls. We expect to incur additional expenses and diversion of management_s time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.
The Company has indicated that it has engaged in certain transactions with related persons.
Please see the section of this Memorandum entitled _Transactions with Related Persons and Conflicts of Interest_ for further details.
Changes in employment laws or regulation could harm our performance.
Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime pay, healthcare reform and the implementation of the Patient Protection and Affordable Care Act, unemployment tax rates, workers_ compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, increased tax reporting and tax payments, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.
Maintaining, extending and expanding our reputation and brand image are essential to our business success.
We seek to maintain, extend, and expand our brand image through marketing investments, including advertising and consumer promotions, and product innovation. Increasing attention on marketing could adversely affect our brand image. It could also lead to stricter regulations and greater scrutiny of marketing practices. Existing or increased legal or regulatory restrictions on our advertising, consumer promotions and marketing, or our response to those restrictions, could limit our efforts to maintain, extend and expand our brands. Moreover, adverse publicity about regulatory or legal action against us could damage our reputation and brand image, undermine our customers_ confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations. In addition, our success in maintaining, extending, and expanding our brand image depends on our ability to adapt to a rapidly changing media environment. We increasingly rely on social media and online dissemination of advertising campaigns. The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands or our products on social or digital media, whether or not valid, could seriously damage our brands and reputation. If we do not establish, maintain, extend and expand our brand image, then our product sales, financial condition and results of operations could be adversely affected.
We must correctly predict, identify, and interpret changes in consumer preferences and demand, offer new products to meet those changes, and respond to competitive innovation.
Consumer preferences our products change continually. Our success depends on our ability to predict, identify, and interpret the tastes and habits of consumers and to offer products that appeal to consumer preferences. If we do not offer products that appeal to consumers, our sales and market share will decrease. We must distinguish between short-term fads, mid-term trends, and long-term changes in consumer preferences. If we do not accurately predict which shifts in consumer preferences will be long-term, or if we fail to introduce new and improved products to satisfy those preferences, our sales could decline. In addition, because of our varied customer base, we must offer an array of products that satisfy the broad spectrum of consumer preferences. If we fail to expand our product offerings successfully across product categories, or if we do not rapidly develop products in faster growing and more profitable categories, demand for our products could decrease, which could materially and adversely affect our product sales, financial condition, and results of operations. In addition, achieving growth depends on our successful development, introduction, and marketing of innovative new products and line extensions. Successful innovation depends on our ability to correctly anticipate customer and consumer acceptance, to obtain, protect and maintain necessary intellectual property rights, and to avoid infringing the intellectual property rights of others and failure to do so could compromise our competitive position and adversely impact our business.
We are vulnerable to fluctuations in the price and supply of ingredients, packaging materials, and freight.
The prices of the components of our products, packaging materials and freight are subject to fluctuations in price attributable to, among other things, changes in supply and demand of raw materials and fuel prices. The sales prices to our customers are a delivered price. Therefore, changes in our input costs could impact our gross margins. Our ability to pass along higher costs through price increases to our customers is dependent upon competitive conditions and pricing methodologies employed in the various markets in which we compete. To the extent competitors do not also increase their prices, customers and consumers may choose to purchase competing products or may shift purchases to lower-priced private label or other value offerings which may adversely affect our results of operations. We use significant quantities of raw materials, as well as packaging materials provided by third-party suppliers. We buy from a variety of producers and manufacturers, and alternate sources of supply are generally available. However, the supply and price are subject to market conditions and are influenced by other factors beyond our control. We do not have long-term contracts with many of our suppliers, and, as a result, they could increase prices or fail to deliver. The occurrence of any of the foregoing could increase our costs and disrupt our operations.
Substantial disruption to production at our manufacturing and distribution facilities could occur.
A disruption in production at our third-party manufacturing facilities could have an adverse effect on our business. In addition, a disruption could occur at the facilities of our suppliers or distributors. The disruption could occur for many reasons, including fire, natural disasters, weather, water scarcity, manufacturing problems, disease, strikes, transportation or supply interruption, government regulation, cybersecurity attacks or terrorism. Alternative facilities with sufficient capacity or capabilities may not be available, may cost substantially more or may take a significant time to start production, each of which could negatively affect our business and results of operations.
Future product recalls could adversely impact our results of operations.
We may be required to recall certain of our products should they be mislabeled, tampered with or damaged. A product recall could have an adverse effect on our business, depending on the costs of the recall, the destruction of product inventory, competitive reaction and consumer attitudes. Even if a consumer fraud claim is unsuccessful or without merit, the negative publicity surrounding such assertions regarding our products could adversely affect our reputation and brand image. We also could be adversely affected if consumers in our principal markets lose confidence in the quality of our products.
Changes in raw material and manufacturing input prices could adversely affect our business and results of operations.
Because pricing for the majority of our cellulose specialty fibers customers is set annually, we typically have very limited ability to pass along fluctuations in costs to customers after pricing has been established. Raw material costs and energy are a significant operating expense. The cost of raw materials and energy can be volatile and are susceptible to rapid and substantial increases due to factors beyond our control, such as changing economic conditions, political unrest, instability in energy-producing nations, and supply and demand considerations. Price increases and general volatility could adversely affect our business and results of operations.
Any disruption in our information systems could disrupt our operations and would be adverse to our business and results of operations.
We depend on various information systems to support our customers_ requirements and to successfully manage our business, including managing orders, supplies, accounting controls and payroll. Any inability to successfully manage the procurement, development, implementation or execution of our information systems and back-up systems, including matters related to system security, reliability, performance and access, as well as any inability of these systems to fulfill their intended purpose within our business, could have an adverse effect on our business and results of operations. Such disruptions may not be covered by our business interruption insurance.
The potential impact of failing to deliver products on time could increase the cost of our products.
In most instances, we guarantee that we will deliver a product by a scheduled date. If we subsequently fail to deliver the product as scheduled, we may be held responsible for cost impacts and/or other damages resulting from any delay. To the extent that these failures to deliver occur, the total damages for which we could be liable could significantly increase the cost of the products; as such, we could experience reduced profits or, in some cases, a loss for that contract. Additionally, failure to deliver products on time could result in damage to customer relationships, the potential loss of customers, and reputational damage which could impair our ability to attract new customers.
Many of our customers do not commit to long-term production schedules, which makes it difficult for us to schedule production accurately and achieve maximum efficiency of our manufacturing capacity.
Many of our customers do not commit to firm production schedules and we continue to experience reduced lead-times in customer orders. Additionally, customers may change production quantities or delay production with little lead-time or advance notice. Therefore, we rely on and plan our production and inventory levels based on our customers_ advance orders, commitments or forecasts, as well as our internal assessments and forecasts of customer demand. The variations in volume and timing of sales make it difficult to schedule production and optimize utilization of manufacturing capacity. This uncertainty may require us to increase staffing and incur other expenses in order to meet an unexpected increase in customer demand, potentially placing a significant burden on our resources. Additionally, an inability to respond to such increases may cause customer dissatisfaction, which may negatively affect our customers_ relationships. Further, in order to secure sufficient production scale, we may make capital investments in advance of anticipated customer demand. Such investments may lead to low utilization levels if customer demand forecasts change and we are unable to utilize the additional capacity. Additionally, we order materials and components based on customer forecasts and orders and suppliers may require us to purchase materials and components in minimum quantities that exceed customer requirements, which may have an adverse impact on our results of operations. Such order fluctuations and deferrals may have an adverse effect on our business and results of operations.
Failure to execute our opportunistic buying could adversely affect our business.
We purchase the majority of our inventory opportunistically, with our buyers purchasing close to need. While opportunistic buying provides our buyers the ability to buy at desirable times and prices, in the quantities we need and into market trends, it places considerable discretion in our buyers, subjecting us to risks related to the pricing, quantity, nature and timing of inventory flowing to our stores. If we are unable to provide frequent replenishment of fresh, high quality, attractively priced merchandise in our stores, it could adversely affect traffic to our stores as well as our sales and margins. We base our purchases of inventory, in part, on our sales forecasts. If our sales forecasts do not match customer demand, we may experience higher inventory levels and need to markdown excess or slow-moving inventory, leading to decreased profit margins, or we may have insufficient inventory to meet customer demand, leading to lost sales, either of which could adversely affect our financial performance. We need to purchase inventory sufficiently below conventional retail to maintain our pricing differential to regular department and specialty store prices and to attract customers and sustain our margins, which we may not achieve at various times and which could adversely affect our results.
Our business may be adversely affected by catastrophic events and extreme or unseasonable weather conditions.
Unforeseen events, including war, terrorism and other international conflicts, public health issues and natural disasters such as earthquakes, hurricanes or tornadoes, whether occurring in the United States or abroad, could disrupt our supply chain operations, international trade or result in political or economic instability. Any of the foregoing events could result in property losses, reduce demand for our products or make it difficult or impossible to obtain merchandise from our suppliers.
Decreases in discretionary consumer spending may have an adverse effect on us.
Our eyewear products are products that consumers may view as discretionary items rather than necessities. As a result, our results of operations are sensitive to changes in macroeconomic conditions that impact consumer spending, including discretionary spending. Difficult macroeconomic conditions, particularly high levels of unemployment, also impact our customers_ ability to obtain consumer credit. Other factors, including consumer confidence, employment levels, interest rates, tax rates, consumer debt levels, and fuel and energy costs could reduce consumer spending or change consumer purchasing habits. Slowdowns in the U.S. or global economy, or an uncertain economic outlook, could adversely affect consumer spending habits and our results of operations.
If we do not continue to source new products, our ability to compete will be undermined, and we may be unable to implement our business plan.
Our ability to compete in the direct marketing industry and to expand into the traditional retail environment depends to a great extent on our ability to develop or acquire new innovative products under particular brands and to complement these products with related families of products under those brands.If we do not source new products as our existing products mature through their product life cycles, or if we do not develop related families of products under our brands, we will not be able to implement our business plan, and the value of your investment may decrease.
Our business and results of operations may be adversely affected if we are unable to maintain our customer experience or provide high quality customer service.
The success of our business largely depends on our ability to provide superior customer experience and high quality customer service, which in turn depends on a variety of factors, such as our ability to continue to provide a reliable and user-friendly website interface for our customers to browse and purchase our products, reliable and timely delivery of our products, and superior after sales services. Our sales may decrease if our website services are severely interrupted or otherwise fail to meet our customer requests. Should we or our third-party delivery companies fail to provide our product delivery and return services in a convenient or reliable manner, or if our customers are not satisfied with our product quality, our reputation and customer loyalty could be negatively affected. In addition, we also depend on our call center and online customer service representatives to provide live assistance to our customers. If our call center or online customer service representatives fail to satisfy the individual needs of customers, our reputation and customer loyalty could be negatively affected and we may lose potential or existing customers and experience a decrease in sales. As a result, if we are unable to continue to maintain our customer experience and provide high quality customer service, we may not be able to retain existing customers or attract new customers, which could have an adverse effect on our business and results of operations.
We depend upon designers, vendors and other sources of merchandise, goods and services.
Our business could be affected by disruptions in, or other legal, regulatory, political or economic issues associated with, our supply network. Our relationships with established and emerging designers have been a significant contributor to our past success. Our ability to find qualified vendors and access products in a timely and efficient manner is often challenging, particularly with respect to goods sourced outside the United States. Our procurement of goods and services from outside the United States is subject to risks associated with political or financial instability, trade restrictions, tariffs, currency exchange rates, transport capacity and costs and other factors relating to foreign trade. In addition, our procurement of all our goods and services is subject to the effects of price increases, which we may or may not be able to pass through to our customers. All of these factors may affect our ability to access suitable merchandise on acceptable terms, are beyond our control and could negatively affect our business and results of operations.
Our advertising and marketing efforts may be costly and may not achieve desired results.
We incur substantial expense in connection with our advertising and marketing efforts. Although we target our advertising and marketing efforts on current and potential customers who we believe are likely to be in the market for the products we sell, we cannot assure you that our advertising and marketing efforts will achieve our desired results. In addition, we periodically adjust our advertising expenditures in an effort to optimize the return on such expenditures. Any decrease in the level of our advertising expenditures, which may be made to optimize such return could adversely affect our sales.
We may be required to collect sales tax on our direct marketing operations.
With respect to the direct sales, sales or other similar taxes are collected primarily in states where we have retail stores, another physical presence or personal property. However, various states or foreign countries may seek to impose sales tax collection obligations on out-of-state direct mail companies. A successful assertion by one or more states that we should have collected or should be collecting sales taxes on the direct sale of our merchandise could have an adverse effect on our business.
Government regulation is evolving and unfavorable changes could harm our business.
We are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet, e-commerce, electronic devices, and other services. Existing and future laws and regulations may impede our growth. These regulations and laws may cover taxation, privacy, data protection, pricing, content, copyrights, distribution, mobile communications, electronic device certification, electronic waste, energy consumption, environmental regulation, electronic contracts and other communications, competition, consumer protection, web services, the provision of online payment services, information reporting requirements, unencumbered Internet access to our services, the design and operation of websites, the characteristics and quality of products and services, and the commercial operation of unmanned aircraft systems. It is not clear how existing laws governing issues such as property ownership, libel, and personal privacy apply to the Internet, e-commerce, digital content, and web services. Jurisdictions may regulate consumer-to-consumer online businesses, including certain aspects of our seller programs. Unfavorable regulations and laws could diminish the demand for our products and services and increase our cost of doing business.
The SAFE (Simple Agreement for Future Equity) will not be freely tradable until one year from the initial purchase date. Although the SAFE may be tradable under federal securities law, state securities regulations may apply and each Purchaser shou...
You should be aware of the long-term nature of this investment. There is not now and likely will not be a public market for the SAFE (Simple Agreement for Future Equity). Because the SAFE has not been registered under the Securities Act or under the securities laws of any state or non-U.S. jurisdiction, the SAFE has transfer restrictions and cannot be resold in the United States except pursuant to Rule 501 of Regulation CF. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the SAFE may also adversely affect the price that you might be able to obtain for the SAFE in a private sale. Purchasers should be aware of the long-term nature of their investment in the Company. Each Purchaser in this Offering will be required to represent that it is purchasing the Securities for its own account, for investment purposes and not with a view to resale or distribution thereof.
Neither the Offering nor the Securities have been registered under federal or state securities laws, leading to an absence of certain regulation applicable to the Company.
No governmental agency has reviewed or passed upon this Offering, the Company or any Securities of the Company. The Company also has relied on exemptions from securities registration requirements under applicable state securities laws. Investors in the Company, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this offering on their own or in conjunction with their personal advisors.
No Guarantee of Return on Investment
There is no assurance that a Purchaser will realize a return on its investment or that it will not lose its entire investment. For this reason, each Purchaser should read the Form C and all exhibits carefully and should consult with its own attorney and business advisor prior to making any investment decision.
A majority of the Company is owned by a small number of owners.
Prior to the Offering, the Company's current owners of 20% or more beneficially own 67.35% of the Company. Subject to any fiduciary duties owed to our other owners or Purchasers under Delaware law, these owners may be able to exercise significant influence over matters requiring owner approval, including the election of directors and approval of significant Company transactions, and will have significant control over the Company's management and policies. Some of these persons may have interests that are different from those of the Purchasers. For example, these owners may support proposals and actions that the Purchasers may disagree with. The concentration of ownership could delay or prevent a change in control of the Company or otherwise discourage a potential acquirer from attempting to obtain control of the Company, which in turn could reduce the price potential Purchasers are willing to pay for the Company. In addition, these owners could use their voting influence to maintain the Company's existing management, delay or prevent changes in control of the Company, or support or reject other management and board proposals that are subject to owner approval.
The Company has the right to extend the Offering deadline.
The Company may extend the Offering deadline beyond what is currently stated herein. This means that your investment may continue to be held in escrow while the Company attempts to raise the Minimum Amount even after the Offering deadline stated herein is reached. Your investment will not be accruing interest during this time and will simply be held until such time as the new Offering deadline is reached without the Company receiving the Minimum Amount, at which time it will be returned to you without interest or deduction, or the the Company receives the Minimum Amount, at which time it will be released to the Company to be used as set forth herein. Upon or shortly after release of such funds to the Company, the Securities will be issued and distributed to you.
Purchasers will not become equity holders until the company decides to convert the Securities into CF Shadow Securities or until an IPO or sale of the Company.
Purchasers will not have an ownership claim to the Company or to any of its assets or revenues for an indefinite amount of time, and depending on when and how the Securities are converted, the Purchasers may never become equity holders of the Company. Purchasers will not become equity holders of the Company unless the Company receives a future round of financing great enough to trigger a conversion and the Company elects to convert the Securities. Except for certain _Major Investors,_ Purchasers will have no say in whether their securities are converted in any Equity Financing. The Company is under no obligation to convert the Securities into CF Shadow Securities (the type of equity securities Purchasers are entitled to receive upon such conversion). In certain instances, such as a sale of the Company, an IPO or a dissolution or bankruptcy, the Purchasers may only have a right to receive cash, to the extent available, rather than equity in the Company.
Purchasers will not have voting rights, even upon conversion of the Securities into CF Shadow Securities.
Purchasers will not have the right to vote upon matters of the Company even if and when their Securities are converted into CF Shadow Securities. Upon such conversion, CF Shadow Securities will have no voting rights and even in circumstances where a statutory right to vote is provided by state law, the CF Shadow Security holders are required to vote with the majority of the security holders in the new round of equity financing upon which the Securities were converted. For example, if the Securities are converted upon a round offering Series B Preferred Shares, the Series B-CF Shadow Security holders will be required to vote the same way as a majority of the Series B Preferred Share holders vote. Thus, Purchasers will never be able to freely vote upon any director or other matters of the Company.
Purchasers will not be entitled to any inspection or information rights other than those required by Regulation CF.
Purchasers will not have the right to inspect the books and records of the Company or to receive financial or other information from the Company, other than as required by Regulation CF. Other security holders may have such rights. Regulation CF requires only the provision of an annual report on Form C-AR and no additional information. This lack of information could put Purchasers at a disadvantage in general and with respect to other security holders.
In a dissolution or bankruptcy of the Company, Purchasers will be treated the same as common equity holders.
In a dissolution or bankruptcy of the Company, Purchasers of Securities which have not been converted will be entitled to distributions as if they were common stock holders. This means that such Purchasers will be at the lowest level of priority and will only receive distributions once all creditors as well as holders of more senior securities, including any preferred stock holders, have been paid in full. If the Securities have been converted into CF Shadow Securities, the Purchasers will have the same rights and preferences (other than the ability to vote) as the holders of the securities issued in the equity financing upon which the Securities were converted.
Purchasers will be unable to declare the Security in _default_ and demand repayment.
Unlike convertible notes and some other securities, the Securities do not have any _default_ provisions upon which the Purchasers will be able to demand repayment of their investment. The Company has ultimate discretion as to whether or not to convert the Securities upon a future equity financing and Purchasers have no right to demand such conversion. Only in limited circumstances, such as a liquidity event, may the Purchasers demand payment and even then, such payments will be limited to the amount of cash available to the Company.
The Company may never elect to convert the Securities or undergo a liquidity event.
The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company_s assets or profits and have no voting rights or ability to direct the Company or its actions. In addition to the risks listed above, businesses are often subject to risks not foreseen or fully appreciated by the management. It is not possible to foresee all risks that may affect us. Moreover, the Company cannot predict whether the Company will successfully effectuate the Company_s current business plan. Each prospective Purchaser is encouraged to carefully analyze the risks and merits of an investment in the Securities and should take into consideration when making such analysis, among other, the Risk Factors discussed above.
Discussion
Ellison Eyewear successfully raised
$124,784
from 257 investors
on March 6, 2017
