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Mighty Self

Daily nutraceuticals that contain full spectrum CBD & cannabis extracts

$46,493

Raised from 148 investors

Min: $25,000

Max: $107,000

Security Offered

Convertible Note

Minimum Investment: $100

  • Farm Bill passed in December 2018 legalizing Hemp and CBD nationwidei

  • Launched two products in 2018, one CBD product to boost mood and energy and one cannabis-infused (i.e. THC-infused) product for enhanced attention and focus

  • Plans to launch two more products in 2019, focused on improving sleep and aiding the body’s recovery from stress

  • Began generating revenue in January 2019

Terms

Investment Terms

Security Type: Crowd Note

Round Size: Min: $25,000 Max: $107,000

Valuation Cap: $5 million

Discount: 20%

Conversion Provisions: In connection with equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into shares of non-voting preferred stock (Conversion Shares) at a price based on the lower of (A) the price paid per share for Preferred Stock by investors in the Qualified Equity Financing or (B) the price paid per share paid on a $5 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.

Perks

*You are investing in a Crowd Note in this Offering. Perks are meant to be a thank you from the company for investing. The perks below are not inclusive of lower dollar amount perks. Product perks do not include a shipping fee that will be based on their state or country assuming it’s legal to ship to that destination. All perks above $250 will also include an exclusive, specially-designed owner’s t-shirt for investors.

$250+: Mighty Self stickers and an exclusive, specially-designed owner’s t-shirt for investors

$500+: One-month supply of BALANCE (one bottle)

$1,000+: 3-month supply of BALANCE (three bottles), pocket-sized capsule case, and three coupon codes per month for family or friends (50% discount for 3 months)

$5,000+: Early access to all CBD products and a six-month supply of BALANCE (six bottles)

$10,000+: Guided tour of San Francisco dispensaries, breweries, or a local cannabis farm (investors may choose between the three), and a one-year supply of BALANCE (12 bottles)

$15,000+: One bottle of a custom CBD formulation based on Mighty Self’s interview process

Overview

Opportunity

Over the past few years, many states have legalized marijuana usage in some form. As of the beginning of 2019, cannabis is legal for medical use in thirty-three states. Washington D.C. and ten states have also legalized cannabis for recreational use by adults over the age of 21.ii

In December 2018, President Trump signed the 2018 Farm Bill, legalizing the commercial production of hemp in the United States. Hemp and marijuana are derived from different varieties of the Cannabis sativa species. Marijuana is grown by selectively breeding for high concentrations of the psychoactive tetrahydrocannabinol (THC), whereas hemp is cultivated for high concentrations of cannabidiol (CBD). According to the Farm Bill, hemp is legal provided that it contains no more than 0.3% THC.iii While researchers are still studying the potential benefits of CBD, it’s already used for pain relief, anti-seizure properties, combatting anxiety, fighting cancer, reducing the risk of diabetes, and treating sleep issues.iv

In 2017, the U.S. CBD industry grew by nearly 40% to reach a total market size of $367 million. The $367 million market was split between hemp-derived CBD ($190 million) and marijuana-derived CBD ($177 million). The market is expected to reach over $1.9 billion by 2022 with hemp-derived CBD expected to reach $646 million, marijuana-derived CBD expected to reach $647 million, and pharmaceutical-related CBD products expected to reach $625 million.v

Founded in 2017, Mighty Self makes nutraceuticals that combine full spectrum CBD extracts with modern and traditional bioactive ingredients to create a new category of health and wellness products. Full spectrum CBD contains the natural substances found in cannabis including terpenes, cannabinoids, flavonoids, and fatty acids that are believed to have therapeutic value.vi Mighty Self currently produces CBD and cannabis-infused (i.e. THC-infused) products that can help address daily health and wellness needs.

Press

Product

Mighty Self creates CBD and cannabis-infused products that seek to help users with anxiety, stress, relaxation, and focus. The CBD and/or THC are blended with bio-active ingredients like Ashwagandha, Curcumin, L-Theanine, Theorbromine, and others. The company believes that adding specific amounts of other bio-active ingredients with a low dosage of THC and CBD can increase relaxation, attention, reduce stress, and help with sleep, depending on which ingredients are included. Mighty Self currently has two products in the market, BALANCE and FOCUS. The company plans on releasing two more products, SLEEP and RECOVER, in 2019.

BALANCE

BALANCE is made with non-psychoactive hemp-based CBD extract that is blended with other ingredients and taken orally in capsule form. It seeks to provide daily alignment, with ingredients to boost your mood, help you relax, and give you a healthy dose of natural anti-inflammatory compounds. BALANCE is made from specially selected domestic hemp and contains less than 0.03% THC.

FOCUS

FOCUS is a cannabis-infused nutraceutical that is intended to help enhance clarity and productivity. The product is taken orally in capsule form and made with full-spectrum, whole plant extract that contains THC and CBD. The product is also blended with several other bio-active ingredients like piracetam, theobromine, L-theanine, B6, B12, folic acid, and more, that the company believes to increase mental energy and attention.

Use of Proceeds & Product Roadmap

The company plans to use the proceeds from this raise to increase brand awareness and manufacturing. In order to increase brand awareness, the company plans to spend roughly 30% of the proceeds from this raise on marketing. The company intends to gain brand awareness through targeted retail presence at health and beauty, natural foods, and specialty stores. The company also intends to spend on education tools online, delivery partners, in-store samples and demos, lunch and learns, and influencer and partner promotions. The company will also spend over 30% of this raise on manufacturing to increase inventory and reduce its cost of goods sold. The company plans on hiring two contract manufacturers, one for the CBD product line and one for the THC product line.

The company also plans to allocate proceeds from this raise towards research and development, purchasing necessary equipment to simplify the production process, future wages, and accrued expenses. The company intends on purchasing equipment to automate the capsule making process. The funds spent on research and development will go towards finalizing formulas for the SLEEP and RECOVER products.

Upcoming Products

SLEEP: In response to customer demand, the company has begun formulating its SLEEP product and anticipates release by the end of 2019. A portion of the proceeds from this raise will be used to begin formal market testing of candidate formulas for SLEEP.

RECOVER: Customer surveys provided anecdotal evidence that the BALANCE product was also helpful in remediating headaches and discomfort associated with strenuous exercise or a late night of recreational activities. Based on these responses and the company’s intention to develop a more effective “recovery” product, it has conducted R&D for a formula specifically designed to aid the body’s recovery from the physical symptoms of stress. The company intends for the RECOVER product to be a small format beverage to support the body’s nutritional and medicinal needs when recovering from physical symptoms associated with common stressors in daily life. The RECOVER product is expected to launch in the second half of 2019.

Business Model

The company currently generates revenue from the sale of its two products, BALANCE and FOCUS, which cost $39.95 each for approximately 25 servings. Currently, the BALANCE product is produced in-house and costs $7.50 per bottle. FOCUS is produced by a third-party manufacturer in California and costs $5.10 to produce. The products can be purchased online through the company’s website and at select retailers in Northern California. Wholesale orders can be placed with the company’s distributors: ESI Logistics (for FOCUS) and CWI (for BALANCE). The company sells its products for roughly $180 per case of 12 to wholesale partners.

The company intends to use a portion of the proceeds from this raise to hire two new third-party contractors to manufacture the products. The company believes the cost of goods sold associated with the BALANCE and FOCUS products will decrease with the new manufacturers.

Potential Litigation

In March 2019, the company received a cease and desist letter related to its use of the name "Mighty Health." The company is currently working on a resolution and name change. As part of this process, on May 23, 2019, the company filed to trademark “Mighty Self” with the USPTO. The company does not plan to switch the name of its Mighty BALANCE and Mighty FOCUS products. The matter remains open.

Historical Financials

Mighty Self began generating revenue in January 2019, though it gave away some of its product for free last year to promote brand awareness. As of the end of April 2019, the company generated revenue of $2,788. The company picked up traction in April generating revenue of $1,753, a 101% increase from $860 in March.

In 2018, expenses totaled $82,792. The majority of expenses went towards developing and testing the products. The increase in expenses in March 2018 was due to a $10,000 expense for consulting fees. In 2018, the company had the following major expenses:

  • $27,494 (33%) on packaging, materials and ingredients, and product testing.
  • $23,310 (28%) on consulting fees
  •  $5,857 (7%) on advertising and promotion
  • $5,376 (6%) on rent

 In 2017, the company’s expenses totaled $32,293. The increase in Q4 2018 was due to a large increase in cost of goods sold in order to increase inventory. The company manufactured a large number of products in Q4 2018 in preparation of sales in Q1 2019.

In the first four months of 2019, the company has incurred expenses of $28,900. Third-party consulting and professional fees have been the largest expense in 2019 accounting for 65% ($18,620) of total expenses. These fees have been incurred due to professional fees for this raise including legal and CPA fees, and legal fees for a trademark dispute that has been disclosed above. In 2018, the company had an average monthly burn rate of roughly $4,000. The company anticipates a lower burn rate in 2019 due to having a large amount of inventory. Once this raise is complete, the company anticipates increasing its spending on manufacturing and marketing.

Industry

According to a report by Arcview Market Research and BDS Analytics, the U.S. legal cannabis industry experienced 31% growth in 2017 and reached $8.5 billion. The report forecasts that nationwide spending on cannabis will increase to $23.4 billion by 2022, growing at a 22% compound annual growth rate. This growth is expected to be driven by continued state-by-state roll-out of medical-use programs and adult-use recreational legalization. The research report also predicted that the industry could generate more than 467,000 full-time jobs by 2022.vii The worldwide market reached $9.5 billion in 2017, 90% ($8.5 billion) generated in the U.S. The roll-out of legal markets internationally is projected to grow the worldwide market to $32 billion by 2022, lowering the U.S. share to 73%.viii

U.S. states have varying levels of cannabis legalization, with some states electing to legalize marijuana for both medical and recreational use. Other states that have legalized both medical and recreational cannabis, like Washington and Colorado, sold $1.3 billionix and $1.5 billionx of cannabis, respectively, in 2017.

Countries like Canada are beginning to legalize marijuana for recreational use. In June 2018, Canada became the second country in the world—and the first G7 nation—to implement legislation to legalize recreational marijuana use nationwide.xi Canada and California are poised to capture 41% of the world cannabis market by 2022, reaching combined revenue of $13.2 billion.xii

According to BCC Research, the global nutraceutical market was valued at $230.9 billion in 2018 and is projected to grow at a compound annual growth rate of 7.8% to reach $336.1 billion by 2023. This growth is expected to be driven by an aging population and rising health concerns among the population. Additionally, emerging markets such as China, India, and Brazil, are expected to influence market growth as those countries’ populations experience growth in per capita income. BCC Research projects that China could become the world’s largest nutraceutical market by 2030.xiii

2018 was the largest year ever for venture capital financing in the global cannabis industry with over $881 million invested across 139 deals. That is more than double the ~$400 million that was invested in 2017 and more than eight times what was invested in 2014. As of January 25, 2019, VC investment in cannabis was nearing $100 million in year-to-date investments.xiv

Competitors

Plant People

Founded in 2017, Plant People provides organic, high-performance CBD and adaptogen products to help consumers naturally reduce stress, anxiety, pain, and inflammation. The company offers several products that vary in consumption methods including balm, drops, capsules, and olive oil. Balm costs $49xv, drops cost $69 for regular strength or $129 for extra strengthxvi, capsules cost $59xvii, and the oil costs $34.xviii The company offers two different types of capsules, Be Calm and Stay Sharp, that blend CBD with adaptogenic herbs and nootropics to offer customers support for anxiety, sleep, memory, focus, cognitive function, and overall health.xix Plant People ships its products to all 50 states, Canada, and Europe.xx

Multiply Labs

Multiply Labs uses 3D printers to manufacture personalized pharmaceutical supplements that are made to the unique needs of each patient. The company combines pharmaceutical science with robotics technology and 3D printers to automate the process. Customers are able to design their own capsule by taking a three-minute lifestyle quiz, the capsules are then delivered to them and users can update their capsules using the Multiple Labs app if their health, energy, or schedule changes in the future. Multiply Labs is a Y Combinator portfolio company and in May 2017, it raised $2.7 million in funding from lead investor P101 with participation from CRCM, Graph Ventures, and Fenox Venture Capital.xxi

HVMN

Formerly known as Nootrobox, HVMN produces health and wellness nootropic supplements to support brain and body function.xxii HVMN’s core product, the HVMN Ketone, claims to enhance physical and cognitive performance and endurance. The product costs $99 for a one-time shipment of three bottles or a subscription of $89.10 per month.xxiii The company also sells various nutritional products including Keto powder, MCT Oil, electrolyte support, and a Nootrobox which contains four supplements to enhance cognitive and physical performance. In November 2018, the company raised $2 million in funding led by Andreessen Horowitz.xxiv

Eva CBD

Founded in 2015, EVA produces hemp and superfood juice blends that are freeze-dried and dosed into vegan capsules. The company currently offers several products including Better Brain, Better Energy, Better Mood, Better Pet Relief, Better Relief, and Better Sleep for human and pet consumption.xxv Products range in price based on quantity and monthly subscription but range from $34.99 to $64.99 for a 30 count or $119.99 for a 60 count.xxvi

Irwin Naturals:

Founded in 1994, Irwin Naturals produces soft-gel based herbal supplements that seeks to address a wide spectrum of health needs. Its products are sold in over 90,000 outlets.xxvii The company offers various products CBD soft-gel pills for both men and women, including soft-gels customized with ingredients to help with sleep, libido, and relaxation. It also produces Nitric Oxide Booster for focus, weight management products, multivitamins, sports performance products, and more. Irwin Naturals sells a bottle of 60 CBD soft-gels for prices ranging from $15.99 to $27.99 depending on the product.xxviii In 2011, the company had to pay $2.65 million in a settlement due to unfair business practices including false and misleading advertising of dietary supplements.xxix

Team

Matthew Runeare

Co-Founder & CEO

Prior to Mighty Self, Matt served as a Brand Director and Brand President at several companies including Off the Grid, Munchery, and Belcampo Group. He was also the Marketing and Sponsorship Director at Eat Real Festival and the Creative Director at Tivo. Matt graduated with a BA from the University of California, Santa Cruz and also received a master’s degree in Food Culture and Communications from the Università di Scienze Gastronomiche in Italy.

David Rothenberg

Co-Founder & COO

David has experience as a product and marketing leader in the U.S., Europe, and Asia. Prior to Mighty Self, he served as the CEO of NXST, a global computer software company. Previously David worked as the Senior Product Manager at PlaceIQ, Head of Product for Disney Interactive at The Walt Disney Company, Director of Marketing and Partnerships at Movea (acquired by InvenSense)xxx, and Director of Business Development at RTX America Inc. David graduated with a BS in Physics, Aerospace, and Philosophy from the University of Colorado at Boulder

Past Financing

In 2017 and 2018, the company raised a total of $140,500 through Convertible Notes from friends and family. The Convertible Notes were raised with the following terms:

Discussion

Endnotes

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