|1||Online YoY growth of over 170% in 2020, even during the pandemic.|
|2||Founders personally invested over $1.6M in contributed capital for R&D, design, production and launch.|
|3||First strategic co-brand with Suzanne Somers Inc., finalized April 2020.|
|4||Unique, innovative women's activewear in a $398B market that's growing at 6.8% CAGR.|
|5||High customer satisfaction: 82% of reviews are 5-star.|
|6||Featured in Vogue, Shape, Goop, Thrive Global, and the cover of Oxygen magazine.|
|7||First Series Seed Round of $203K closed in November 2019, with a post valuation of $750,000.|
Yoga was the only approach I found to heal the back pain that comes with 25 years of slouching over an operating table. When I learned about Ghost Flowers unique approach to facilitating the access of channels and accupressure points into a practice I jumped at the chance to invest. The concept is brilliant and their management team is top notch.
Women want to take back control of their own health & wellness
Women want ways to heal, recover and re-energize their bodies without reaching for the medicine cabinet. We created activewear that offers a wearable guide to self-care, and have built an online community for customers to learn together. Our year over year growth has been over 170%.
Our Founder & CEO wanted to find a natural alternative for healing.
Our CEO, Susie Peebler, suffered from a serious back injury. Rather than surgery, she used yoga to self-heal. She later discovered that by stretching along energy channels and pressing related acupressure points, she could release pain and improve her flexibility. She used a magic marker to draw the energy channels and points on her yoga pants for visual guidance. This was her inspiration to create Ghost Flower.
Marrying fashion with science and a deeper purpose, combined with a learning community creates a disruption to the activewear business.
Created by experts in eastern medicine, stretch, and movement, we incorporated the body's energy network into the designs. The styles are flattering on all body shapes, as the body's vertical energy channels naturally follow your muscles and curves. We call this "designed by nature". Our team also created a Ghost Flower practice to show how to use the clothes to unblock pain and re-energize the body.
How it works: A wearable guide to self-healing
The seams represent the energy channels and the logos highlight key acupressure points. Roll, massage and stretch along the seams or use them for reference in yoga poses. Press, massage or place a ball on a logo to stimulate key acupressure points.
Our team has a unique blend of eastern medicine, stretch and movement expertise
Our Chief Scientist, Dr. Daniel Keown, is a doctor in both western and eastern medicine and is a practicing acupuncturist. He has written two best sellers, The Spark in the Machine, and The Uncharted Body. He has helped with the accuracy of the designs along with Bonnie Crotzer, an expert in fascia, stretch and yoga. Kaita Mrazek, an expert in Pilates and movement, and Nell LeBlanc, an acupressure expert rounded out the original core team.
Our first collection was a time intensive effort to ensure the patterns were technically accurate. Now, those can be used for all subsequent collections, saving time and money.
Series seed round: Over 98% of the company's funding was provided by founders Bob & Susie Peebler in the form of convertible and promissory notes until the $203,500 series seed round, which was mainly from outside investors. The company's post valuation was $750,000 and allowed us to develop the second collection.
Introduction of the Onesies: Our designers stepped up with unique designs as part of our new collection. We sold out of the Earth Onyx Onesies after just 15 days. Our Wood Pines Onesie has been our top seller and we are nearly sold out. These have been our hottest products to date and have become some of our signature pieces.
Completion of our first major co-brand with Suzanne Somers: Wellness advocate and mega-superstar, Suzanne Somers first introduced Ghost Flower on her shows back in July 2019. In April 2020, we completed our first co-brand, and in June 2020, Suzanne featured the co-brand on her show, which nearly sold out in 24 hours.
Key Metrics to Date
1. Entering the new year with a new collection and a recently hired digital marketing firm (Marketing 360), we have seen online yr/yr sales increase by 170%. Including wholesale, our revenues are up 425%.
2. Average discounts are down from 30% to less than 10%
3. Returns are only 11% (compared to the industry average of 20%)
4. Our average price per unit is $172, up 25%
5. Total orders are up by 133%.
Ghost Flower is at the intersection of three of the fastest growing industries in the world: yoga/activewear, health & wellness, and alternative medicine.
Our primary target market is the Gen X age group (35-44) who are the highest wage earners. Our secondary target are the Millennials (23-38). The Gen X group typically spends 50% more than Millennials.
Go Forward Plans
Revenue for 2020 will be from activewear, although we plan to expand beyond activewear to include complementary products such as vibrating rollers, balls and various health and wellness products that support our mission. By 2025, we will be introducing our first flagship Ghost Flower spa and retreat, which will include Ghost Flower retail, practice studios, hyper-oxygenated water therapy, acupressure massage, juice bars, and a plant-based restaurant.
These forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially.
Ghost Flower has financial statements ending December 31 2019. Our cash in hand is $18,588, as of April 2020. Over the three months prior, revenues averaged $19,510/month, cost of goods sold has averaged $10,052/month, and operational expenses have averaged $25,753/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We design, manufacture, and sell high-end women's activewear that flatters all body shapes while offering a deeper purpose of self-healing and revitalization. We are the world's only activewear with the body's energy network and acupressure points woven into the designs. This serves as a self-care guide for women's health and wellness.
Our plan is to be a multi-million dollar, profitable company that sells fashionable activewear and related products and services that serve our mission. Phase II, planned for years 4-5, will be the launch of our first experiential Ghost Flower Wellness Center and Spa, which will include movement classes, oxygenated water therapy , acupressure and energy channel massage, a retail space for our activewear products, as well as a juice and food bar.
Ghost Flower INC was incorporated in the State of Texas in June 2016.
Since then, we have:
Historical Results of Operations
Our company was organized in June 2016 and has limited operations upon which prospective investors may base an evaluation of its performance.
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $275,800 in debt, $203,500 in equity, and $319,000 in convertibles.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 4 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
Ghost Flower INC cash in hand is $18,588, as of April 2020. Over the last three months, revenues have averaged $19,510/month, cost of goods sold has averaged $10,052/month, and operational expenses have averaged $25,753/month, for an average burn rate of $16,295 per month. Our intent is to be profitable in 24 months.
Since the date of our financials, we have closed Suzanne Somers Company Co-Branding deal in April. Due to the coronavirus, we have delayed our wholesale efforts targeting boutique retail stores. We also canceled the planned spring/summer collection and will focus on Fall/Winter. Our online revenues are up 170% over same period last year due to new Digital Marketing effort. Our total orders are up 91%
We expect online revenues to continue to grow with planned increase in digital marketing. Expenses will grow after Wefunder raise to design and produce the fall/winter collection, increase digital marketing, and salaries for staff. The Founders can still provide some working capital in the form of debt if needed.
We hope (but not guarantee) to be generating $20,000/month in revenues and $18,000/month in expenses six months from now.
Yes, the Founders can provide some working capital funding via promissory notes, plus the potential of working capital loans that are prequalified from Shopify.
The Company’s limited operating history makes the Company’s business difficult to evaluate.
The Company was formed on June 13, 2016. Therefore, its prospects must be considered in light of the risks and uncertainties encountered by companies in an early stage of development in a competitive market. The Company has a history of operating losses, expects to continue to incur net losses in the immediate future, and may not achieve or maintain profitability for some time or at all. To generate significant revenue and achieve profitability, the Company must, among other things: continue to obtain market acceptance of its product; develop new products; attract, integrate, motivate and retain qualified personnel; successfully implement its marketing strategy; continue to build its financial and operational infrastructure and otherwise manage growth; develop and maintain brand awareness; and establish and maintain relationships with strategic partners. There can be no assurance that the Company will successfully implement these strategies, which could have a material adverse effect on its business. The Company cannot guarantee that it will achieve its stated business objectives or achieve positive or competitive results from its operations.
General economic conditions and volatility due to the Coronavirus in the worldwide economy has adversely affected consumer spending in certain sectors, which may negatively affect the Company.
The Company’s performance will depend significantly on economic conditions, particularly those in the United States, and their impact on levels of consumer spending. Consumer spending on non-essential items is affected by a number of factors, including consumer confidence in the strength of economies, fears of recession, the tightening of credit markets, higher levels of unemployment, higher tax rates, the cost of consumer credit and other factors. The current volatility in the United States economy in particular has resulted in an overall slowing in growth in the retail sector because of decreased consumer spending, which may remain depressed for the foreseeable future. These unfavorable economic conditions may delay or reduce consumer purchases of the Company’s products.
The Company relies on third-party suppliers to provide fabrics and raw materials for and to produce the Company’s products, and the Company has limited control over them and may not be able to obtain quality products on a timely basis or in sufficient quantity.
The Company does not manufacture its products or the raw materials for them and relies instead on third-party suppliers. If the Company experiences increased demand, or needs to replace an existing manufacturer, there can be no assurance that additional supplies of fabrics or raw materials or additional manufacturing capacity will be available when required on terms that are acceptable to us, or at all, or that any supplier or manufacturer would allocate sufficient capacity to us in order to meet the Company’s requirements or fill the Company’s orders in a timely manner. Even if the Company is able to expand existing or find new manufacturing or fabric/raw material sources, the Company may encounter delays in production. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from the Company’s markets. Any delays, interruption or increased costs in the supply of fabric, raw materials or the manufacture of the Company’s products could have an adverse effect on the Company’s business. In addition, there can be no assurance that the Company’s suppliers and manufacturers will continue to provide fabrics and raw materials or manufacture products that comply with the Company’s specifications and are consistent with the Company’s standards. Additionally, if defects in the manufacture of the Company’s products are not discovered until after such products are purchased by the Company’s customers, the Company’s customers could lose confidence in the Company’s products.
The Company operates in a highly competitive market and the size and resources of some of the Company’s competitors may allow them to compete more effectively than the Company can.
The market for athletic apparel is highly competitive. Competition may result in pricing pressures, or the lack of ability to gain market share. The Company competes directly against wholesalers and direct retailers of athletic apparel, including large, diversified apparel companies with substantial market share and established companies expanding their production and marketing of athletic apparel, as well as against retailers specifically focused on women’s athletic apparel. Many of the Company’s competitors have significant competitive advantages, including longer operating histories, larger and broader customer bases, more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and development, marketing, distribution and other resources than the Company does.
The Company’s competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than the Company can. The Company’s competitors may also create and maintain brand awareness using traditional forms of advertising more quickly in new markets than the Company can. The Company’s competitors may also be able to increase sales in their new and existing markets faster than the Company does by emphasizing different distribution channels than the Company.
If the Company’s independent manufacturers fail to use ethical business practices and comply with applicable laws and regulations, the Company’s brand image could be harmed due to negative publicity.
Violation of labor or other laws by the Company’s independent manufacturers or the divergence of an independent manufacturer’s labor or other practices from those generally accepted as ethical in the United States or other markets in which the Company does business could also attract negative publicity for the Company and its brand. Other apparel manufacturers have encountered significant problems in this regard, and these problems have resulted in organized boycotts of their products and significant adverse publicity. If the Company, or other manufacturers in the Company’s industry, encounter similar problems in the future, it could harm the Company’s brand image and results of operations.
Business disruptions such as natural disasters could seriously harm our future revenues and financial condition and increase our costs and expenses.
Our suppliers and design teams are concentrated in the greater Los Angeles, California area, a region known for seismic activity. A significant natural disaster, such as an earthquake, flood or fire could have a material and adverse effect on our business, financial condition and results of operations and increase our costs and expenses..
The Company may not be successful in implementing its business plan, which may have an adverse impact on its business and financial results.
The Company’s financial success depends upon its ability to grow and implement its business plan. There can be no assurance that the Company will be able to implement such business plan or that the business plan will deliver on its intended results.
The Company may not be able to obtain sufficient funds to expand the Company’s business.
The Company intends to continue to expand the Company’s business. There can be no assurance that any revenue the Company generates or capital it raises will be sufficient to meet the Company’s expected expenses in the foreseeable future. If additional financing is not available when required or is not available on favorable terms, the Company may be unable to successfully promote the Company’s brand name, develop or enhance the Company’s products, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on the Company’s business.
The Company’s future success is substantially dependent on the continued service of the Company’s senior management.
The Company’s future success is substantially dependent on the continued service of the Company’s senior management. The loss of the services of the Company’s senior management could make it more difficult to successfully operate the Company’s business and achieve the Company’s business goals.
The Company’s officers and directors beneficially own a majority of the Company’s equity securities.
Susan M. Peebler, the President, chief executive officer, and a director of the Company, and Robert P. Peebler, the Executive Chairman and a director of the Company, are collectively the beneficial owners of a majority of the Company’s outstanding equity securities. As such, they are able to control most matters requiring approval by shareholders including the election of directors and the approval of significant corporate transactions. In addition Susan M. Peebler and Robert M. Peebler are the only directors of the Company. enabling them to also control matters requiring approval by the board.
Actual results may vary materially from the projections provided to prospective purchasers.
The financial projections which were provided to prospective purchasers were prepared to illustrate the expected results based upon the assumptions made by the Company without the assistance of accounting and financial professionals. The assumptions upon which the projections are based are subject to variations, many of which are beyond the control of the Company. There can be no assurance that actual events will correspond with these assumptions. Actual results may be materially adversely different from the projections. While the projections represent the Company’s estimates based upon circumstances expected to exist and the Company’s own expected course of action, neither the Company nor any other person or entity makes any representations or warranty as to the projections or the future profitability of the Company. The projections have been prepared by the Company and have not been independently reviewed or verified.
Robert Peebler is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.
Bonnie Crotzer is a part-time officer. As such, it is likely that the company will not make the same progress as it would if that were not the case.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
Covid 19 has introduced risks to both the potential purchase patterns of our customers and the companies supply chain including materials and manufacturing. There is also the possibility of key contractors or employees could become sick with Covid 19 and impact their ability to work with or for the company.
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