Minimum Investment: $100
Currently sells sparkling waters in retail stores with the assistance of 14 distributors in seven different states
Retail outlets include small grocery chains, bars, convenience stores, health food and specialty stores
As of October 2019, the company has generated approximately $822,084 in revenue since 2017
Raised $565,000 in total funds since its inception in 2017
Mountjoy Sparkling is the brainchild of Alex Mountjoy and was inspired by the thirsty demands of his own family. He created Mountjoy Sparkling to combine the potential health benefits of cannabidiol (CBD) with pure, revitalizing sparkling water. The company also provides tetrahydrocannabinol (THC)—the psychoactive compound found in marijuana—infused beverages in California where THC is legalized.
Mountjoy currently sells its sparkling waters in retail stores with the assistance of 14 distributors in seven different states. Retail outlets include. small grocery chains, bars, convenience stores, health food and specialty stores. The company plans to begin increasing its distribution of CBD-infused beverages in the coming months to 22 additional states. So far, the company has raised $585,000 in total funds since its inception in 2017.
Security Type: Crowd Note
Round Size: Min: $25,000 Max: $107,000
Valuation Cap: $4.5 million or $5.5 million
Conversion Provisions: In connection with equity financing of at least $1 million, the Company has the option to convert the Crowd Note into non-voting preferred stock (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share for Preferred Stock by investors in the Qualified Equity Financing or (B) the price per share paid on a $4.5 million or $5.5 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.
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, subject to Regulation CF investment limits, are not inclusive of lower dollar amount perks, except where otherwise noted.
Early bird investors that purchase the first 25,000 Crowd Notes, and thereby fund the first $25,000, will receive Crowd Notes with a conversion provision based on a $4.5 million valuation cap instead of a $5.5 million valuation cap. That means, in connection with equity financing of at least $1,000,000, the company has the option to convert the Crowd Note into non-voting preferred shares (Conversion Shares) at a price based on the lower of (A) a 20% discount to the price per share paid for Preferred Shares by investors in the Qualified Equity Financing or (B) the price per share based on a $4.5 million valuation cap (instead of $5.5 million).
$250: Mountjoy Sparkling CBD Assorted Flavors 12 Pack
$500: Mountjoy Sparkling CBD Assorted Flavors 24 Pack
$1,000: Investor Bronze Discount - Mountjoy Sparkling CBD Assorted Flavors 12 Pack + 10% off all future online purchases for one year
$2,500: Investor Silver Discount - Mountjoy Sparkling CBD Assorted Flavors 12 Pack + 20% off all future online purchases for three years
$5,000: Investor Gold Discount - Mountjoy Sparkling CBD Assorted Flavors 12 Pack + 30% off all online purchases for five years
$10,000: Two round-trip tickets to visit the Mountjoy Sparking facility + a gift bag of assorted flavors
In 2018, the U.S. Farm Bill designated hemp—from which cannabidiol (CBD) is derived—as an agricultural crop and made it legal to farm nationwide.i While additional research is needed, studies suggest that CBD may help patients fall, and stay, asleep and may also be a viable treatment option for certain types of chronic pain. The strongest scientific evidence for CBD’s treatment of health issues is its effectiveness in fighting childhood epilepsy syndromes.ii Due to an increase in consumer interest, companies have begun bringing CBD-based products, such as CBD-infused beverages, to market to meet the growing demand.iii According to Zenith Global, a market research firm, U.S. sales of CBD-based drinks reached $86 million in 2018 and are projected to reach $1.4 billion by 2023.iv
Large alcohol brands like Molson Coors, Anheuser-Busch InBev, and Heineken have noticed the potential of CBD and have invested in cannabis-infused (e.g. CBD and THC) drinks as a result.v In fact, Constellation Brands—one of the top three beer producers in the U.S.—made a $4 billion investment in Canopy Growth—a cannabis and hemp consumer products company—in August 2018.vi Additionally, beverage companies such as Coca-Cola, Pepsi, and Starbucks have indicated interest in cannabis-based and cannabis-infused beverages.vii
Mountjoy Sparkling offers cannabis-infused sparkling water created from fresh filtered carbonated water and full-spectrum cannabis oils. The company utilizes a proprietary, full-spectrum process uniquely suited to edibles and beverages to offer naturally flavored beverages with a hint of fruit, such as orange, peach, and lemon lime. Mountjoy was initially founded in a backyard barn on Alex’s sheep rescue farm—aptly named Crybaby Ranch—and has since moved into a warehouse space in Petaluma, California. The new location provides the company with truck loading and staging bays and has better access to established beverage distribution routes.
Mountjoy’s sparkling waters offer a refreshing, calorie-free drink for health conscious individuals. The company’s flagship product, Mountjoy Sparkling CBD, is a full-spectrum CBD beverage with 10mg of industrial hemp-derived CBD. Mountjoy is made using a proprietary full-spectrum process uniquely designed to suit edibles and beverages in particular. The company’s process—trade-named NanoTonic—receives ongoing development attention. Flavors include Blackberry, Orange, Lemon Lime, Peach and Natural.
Mountjoy’s products are intended for health-conscious individuals who care about their bodies and the environment. As such, Mountjoy Sparkling CBD waters are packaged in convenient, portable, resealable 16 oz. polyethylene terephthalate (PET) bottles. PET is inexpensive, lightweight, resealable, shatter-resistant, and highly recyclable.viii Recycled PET—known as RPET—is the most widely recycled plastic in the world.ix RPET is used in products such as:
The company also plans to offer alternative packaging formats such as glass and cans, to satisfy various preferences and social situations.
Mountjoy has built a distribution business model to help expansion efforts. The funds raised will be used to increase distribution throughout the U.S., drive sales and marketing, build brand identity, and introduce new packaging solutions—such as glass bottles or aluminum cans—for varying situations. The company intends to allocate funds in the following manner:
If Mountjoy raises the minimum amount of $25,000, it plans to use the proceeds primarily for the following:
If Mountjoy raises the maximum amount of $107,000, it plans to use the proceeds primarily for the following:
Mountjoy Enterprises aims to provide new aluminum can packaging for its sparkling water and is currently in talks with a co-packer. It also aims to develop new distribution deals with large beverage distributors in 15 additional states by 2020. Should regulations allow, the company also aims to create partnerships with more large grocery chains to supply CBD beverages in bulk.
The bulk of Mountjoy’s revenue comes from sales to distributors. On average, a full truckload nets $64,800 (24 pallets at $2,700 per pallet; 60 cases of 24 per pallet), which includes a 25% distributor discount off regular wholesale. ($3,600 *(1-25%) = $2,700). The company’s CBD beverages are distributed through standard beverage channels, alongside beer, energy drinks and bottled waters and are sold in groceries, convenience stores, gas stations, bars, and other beverage retailers. Currently, Mountjoy Sparkling Water is sold through 14 different distributors and distributed in seven states. It is also available for purchase through the company’s website. Drinks range in price from $30 for a six-pack, $55 for a 12-pack, and $100 for a case of 24 bottles.
Mountjoy’s target consumers are individuals looking to actively optimize their daily lives through supplements, superfoods, natural ingredients, exercise, spiritual means, and other holistic approaches. These individuals are open to discovery and may be willing to pay a premium for products that can enhance their daily routine.
Mountjoy currently sells its sparkling waters through 14 different beverage distributors and is distributed in seven states. Its CBD products can also be purchased online through the company’s website.
Distribution states include:
As of October 2019, Mountjoy has generated approximately $822,084 in revenue since inception. Q4 2018 was the company’s best sales period to date with a 257% quarter-over-quarter increase in revenue. This was attributed to existing distributors ordering more product along with the addition of new distributors ordering for the first time. So far, total revenue for 2019 has outpaced 2018’s performance year-to-date. Through October 2019, Mountjoy has generated $396,507 in revenue year-to-date, up by 45% over total revenue of $272,581 for that same period in 2018. Gross margins for 2017 and 2018 were 51% and 49% respectively.
As of October 2019, overall expenditures—cost of goods sold (COGS) + operating expenses (OpEx)—have totaled $1,445,468 since inception, with COGS accounting for $426,067 and OpEx accounting for $1,019,402. Year-to-date, expenses have totaled $645,589 which represents a 33% increase over the same period in 2018. Total expenses were $139,902 and 659,977 for years 2017 and 2018 respectively. Expenses for 2018 increased ~372% over totals in 2017.
As of October 2019, Mountjoy has generated a net loss of $623,385 since inception. Year-to-date, the company has incurred a net loss of $249,082 as of October 2019, up 9% from a net loss of $224,053 over the same period in 2018. On average, the company has had a monthly net loss of $24,908 year-to-date for 2019. As of the close of November 1, 2019, the company had $18,419 in cash on hand and an average monthly cash burn of $22,854 in 2018. The company intends to rely on selling inventory, filling upcoming orders, and raising additional capital from supportive investors to fund operations over the near future. Net Income losses for 2019, 2018, and 2017 were $243,904, $238,081, and $136,222 respectively.
In 2018, the U.S. CBD industry grew by nearly 30% to reach a total market size of $10.3 billion and is expected to grow by 32% to reach nearly $13.6 billion through end-of-year 2019. Total combined legal sales are projected to grow at a compound annual growth rate (CAGR) of 14% to reach $30 billion by 2025.x
The CBD industry can be split into two categories, hemp-derived CBD and marijuana-derived CBD. The U.S. hemp-derived CBD market is expected to reach $646 million by 2022, while the U.S. marijuana-derived CBD market is expected to reach $647 million by 2022. In 2017, hemp was grown in 19 different states across 25,500 acres of farmland with 70% of land allocated for CBD production, 20% for seed, and 10% for hemp fiber production.xi
Within the CBD industry are CBD-infused beverages. According to Zenith Global, a market research firm, U.S. sales of cannabis-based or infused drinks reached $86 million in 2018. Zenith believes the market will undergo substantial growth in the coming years, reaching $1.4 billion by 2023. Key growth drivers for CBD drinks could include a loosening regulatory environment, investment from major beer brewers, and innovation by startups. Additionally, there has been a cultural shift toward drinks with natural ingredients and potential health benefits as consumers look to reduce their alcohol consumption.xii In addition to being part of the fast-growing cannabis industry, CBD beverages also stand to benefit from the recent trend in wellness beverages.xiii
While infused beverages currently make up only 2-3% of total sales in the adult marijuana industry, Mark Hunter from Molson Coors believes it could soon account for 20-30% of cannabis sales. As a result, large alcohol brands like Molson Coors, Anheuser-Busch InBev, and Heineken have invested in cannabis-infused drinks in recent years.xiv Additionally, large beverage companies Coca Cola, Pepsi, and Starbucks have all indicated they’re monitoring developments in the cannabis-based or infused beverages market.xv
In 2018, the U.S. Farm Bill designated hemp as an agricultural crop and made it legal to farm nationwide.xvi The increasing consumer interest in hemp and CBD is currently driving new market entrants to fill shelves with hemp-derived products to meet the growing demand in an evolving regulatory environment.xvii 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.xviii While additional research is needed, studies suggest that CBD may help patients fall, and stay, asleep and may also be a viable treatment option for certain types of chronic pain. The strongest scientific evidence for CBD’s treatment of health issues is its effectiveness in fighting childhood epilepsy syndromes such as Dravet Syndrome and Lennox-Gastaut syndrome (LGS).xix
Although the Farm Bill changed the federal government’s position on hemp farming and the production of CBD oils, individual states have not responded in-kind. The debate on the substance’s legality is still murky.
Source: PitchBook Data, Inc.
Source: PitchBook Data, Inc.
Founded in 2017, Recess is a consumer wellness brand offering sparkling water infused with hemp extract. The company offers flavors for sparkling water like blackberry chai, peach ginger, and pomegranate hibiscus. Each flavor of sparkling water is made with hemp extract (typically 10mg of broad-spectrum oil), American ginseng, L-theanine, schisandra, filtered water, flavor concentrate, and cane sugar. An eight-pack of 12oz cans sells for $39.99 on the Recess website.xxi Since the company launched in October 2018, it has sold around 400,000 cans.xxii It has raised $3 million in total as of February 2019.xxiii
Founded in 2015, Queen City Hemp is a provider of a range of CBD products including seltzers, oils, and topical creams. The company’s seltzers come in four different flavors: blood orange, passion fruit, guava, and lemon lavender. Ingredients in Queen City Hemp seltzers include carbonated water, natural flavors, sorbate, and 5mg of CBD from hemp extract. A twenty-four pack of 12oz cans can be purchased on the company’s website for $89.99.xxiv Queen City Hemps’ oils and topical creams come with higher doses of CBD and range in price from $39.99 to $59.99. In January 2019, the company expanded its product availability to all 50 states.xxv
Founded in 2015, Sprig produces CBD-infused sparkling water. The company currently offers flavors including citrus, citrus zero sugar, lemon tea zero sugar, and melon zero sugar. Each can of Sprig sparkling water is made with 20mg of CBD isolate, derived from hemp. Other ingredients found in Sprig sparking water includes carbonated water, cane sugar, flavor extract, gum arabic, fruit and vegetable juice, and beta carotene. A twelve-pack of 12oz cans sells for $50.00.xxvi Sprig became the most-widely distributed CBD drink in the United States in 2019.xxvii The company has raised $2.8 million so far in funding.xxviii
Founded in 2018, Sweet Reason is a CBD-infused beverage brand. The company currently offers three flavors of CBD-infused sparkling water, grapefruit, cucumber mint, and strawberry lavender. Drinks are made with carbonated water, natural flavors, and 7mg of CBD isolate from organic hemp. A six-pack of 12oz cans sells for $39.99 on the Sweet Reason website.xxix Sweet Reason drinks are currently offered in around 200 retailers in New York. The company raised $2.5 million in a seed round led by Lerer Hippeau with participation from RiverPark Ventures, Max Ventures, Subversive Capital, and angel investors in July 2019.xxx
Founded in 2017, Weller provides an assortment of CBD-infused products including a water-soluble CBD powder, CBD-infused sparkling water, and CBD-infused coconut bites. These products contain 0% THC, are lab-tested and verified for potency, and contain 25 mg of broad-spectrum hemp extract per serving.xxxi Weller Snacks products can be purchased through the company’s website, with prices ranging from $14.99 for three packages of coconut bitesxxxii to $80 for the Barista Blend water-soluble CBD powder.xxxiii In July 2019, the company raised a $3 million Series Seed round, of which MicroVentures participated, bringing its total funding amount to date to $4.25 million.xxxiv
Alex is a serial entrepreneur with 25 years of leadership experience in product design and innovation, domestic and overseas manufacturing, sales management, and factory engineering. He has a Bachelor of Arts in Physics from Tufts University. Mountjoy Sparkling was conceived on the eight-acre ranch in Sonoma County, California that Alex calls home.
So far, Mountjoy has raised $565,000 from investors via SAFE Notes. It also issued a $20,000 SAFE to Willington Research Corporation for previous work performed. The company has also issued two warrants to Ackrell Capital and CannaAngels LLC redeemable for 1% and 0.5% of the company’s fully diluted capitalization respectively.
The information provided herein is not intended to be, nor should it be construed or used as, investment, tax or legal advice, a recommendation to purchase, or an offer to sell securities of the company. You should rely on the offering statement and documents attached as exhibits to the offering statement when making any investment decision. An investment in the company is not suitable for all investors.
An investment in the company is speculative, and as such is not suitable for anyone without a high tolerance for risk and a low need for liquidity. You should invest only if you are able to bear the risk of losing your entire investment. There can be no assurance that that investors will receive any return of capital or profit. Investors should have the financial ability and willingness to accept the risks (including, among other things, the risk of loss of their entire investment and the risks of lack of liquidity) that are characteristic of private placement investments. There will be no public market for the securities being offered, applicable securities laws will restrict any transfer of the securities, and the securities will not be transferable without the company’s consent.
The company’s industry is highly competitive, and the company may not be able to compete effectively against the other businesses in its industry. The company is subject to a number of significant risks that could result in a reduction in its value and the value of the company securities, potentially including, but not limited to: