OWN PART OF THE BRAND YOU HELP BUILD

Equity OFFERING ENDS JUNE 15, 2018

 $500 minimum investment | $1.25 per share

Key metrics and financial performance

  • 2,807 investors
  • $1,302,546 Reg A+ raised
  • $7,800,686 total equity crowfunding raised
  • $9.6 million in revenues for trailing twelve months (TTM)
  • $31.3 million aggregate revenues since inception (March 2012)
  • 120,000+ total customers
  • 260,000+ followers on social media platforms (e.g., Facebook, Instagram, Twitter, YouTube, and Pinterest)

*Metrics as of May 9th, 2018

Exclusive Perks for Reg A+ equity Offering Investors

ALL Investor Account Perks*

* HYLETE reserves the right to adjust pricing for investors in the future which may result in more or less percentage discounts to retail value being applicable.

** Free ground shipping is available in the contiguous U.S. only

Market Opportunity

The Total Available Market (TAM) for athletic wear (which includes apparel and footwear) is a $97 billion a year industry in the United States. [1]

Delving into the number of people who engage in fitness in the US, we look to the gym industry, which places this number at 66.5 million. [2] Taking the TAM, as defined above, and dividing by the 66.5 million, places the average yearly spend per individual at $1,459.

The Serviceable Available Market (SAM) is calculated by looking at the fitness core of HYLETE, which totals 22.5 million and is comprised of individuals who participate frequently in cross-training and high intensity interval training. [3]Taking this core market and then multiplying by the average yearly spend per person yields a SAM of $32.8 billion per year.

Definition:

TAM  or Total Available Market is the total market demand for a product or service. SAM  or Serviceable Available Market is the segment of the TAM  targeted by your products and services which is within your geographical reach.

Why Now? Why Us?

Projected Growth for Digitally Native Vertical Athletic Brands

As termed by Bonobos founder, Andy Dunn, “Digitally native vertical brands are maniacally focused on the customer experience and they interact, transact, and story-tell to consumers primarily on the web. Unlike typical e-commerce companies, digitally native vertical brands control their own distribution.” [4]

The US apparel, footwear, and accessories eCommerce market is projected to represent a $118 billion opportunity by 2020. Digitally native brands are expected to coexist with companies like Amazon while taking the market share from legacy players to create a $25 billion sub-segment of this market. [5]

Clothing and clothing accessories (including footwear) is the largest category for online sales, accounting for 17% of all eCommerce sales, double the size of electronics, and growing at a faster rate than overall online sales. Better than 50% of US retail spending growth in 2017 is being driven by eCommerce, and it is estimated that eCommerce represent more than all of growth in US consumer spending beginning in 2019. Market share shift from brick and mortar to online removes the limitations of shelf space and allows brands a direct connection to consumers. [5]

There are several success factors for digitally native brands. the first is brand and product distinction. The key to success is high quality product and differentiation, with the differentiation not based exclusively price. Second is customer acquisition by getting the word out, and recruiting high value customers while establishing durable consumer connections through efficiency and community building. Next, is digital connection and customer retention. Most strong online brands value connection to their customers as a core competency. This is accomplished by leveraging social media, subscriptions, digital platforms, and a range of consumer data. Finally, the frequency of engagements and breadth of exclusive products is a key success factor. Scalability is essential to making brands investable by the public markets or attractive to publicly traded suitors. [5]

Simply put, those companies that are able to connect the right product with the right price, at the right time, and place; win customer and investor dollars. [5]

Millennials Projected to Fuel Growth of Athletic Gear

Millennials are poised to reshape the economy; their unique experiences will change the way we buy and sell. Millennials have grown up in a time of rapid change, giving them a set of priorities and expectations sharply different from previous generations. They now account for almost 80 million of the 319 million people living in the United States. Along with buying habits, wellness is a daily and active pursuit for Millennials. They are exercising more, eating smarter, and purchasing brands they find compelling via the internet. As their consumption in other areas drop, they are willing to pay more for athletic gear, with an annual purchasing power of over $200 billion; year-over-year sales growth of athletic apparel continues to grow. [6]

REVENUES BY YEAR

We started HYLETE in March of 2012, and launched our first product (men’s cross-training shorts) in July of that year. We finished the year with $250k in revenues.

During 2013, our revenues continued to climb, and we raised $328k of angel investment at a pre-money valuation of $1.5 million.

In early 2014, we conducted a crowdfunding round on the CircleUp platform that yielded an additional $1.8 million in equity, priced at a pre-money valuation of $3.0 million, while closing the year at revenues of $4.0 million.

During 2015, we completed our second successful CircleUp round raise for another $1.5 million in new equity, on a pre-money valuation of $9.0 million, and finished the year at $6.0 million in revenues.

We finished 2016 with revenues of $7.0 million and secured a three-year debt security in the amount of $3.15 million during the latter part of the year, while also converting $900k in debt to equity priced at a pre-money of $10.5 million.

Early in 2017 (February through April), we raised $1 million via a small online public offering (Reg CF) at a pre-money valuation of $25.0 million.

THE FUTURE | INITIAL PUBLIC OFFERING (IPO)

2017 was a solid year to date, as we completed the year at approximately $9 million in revenues. A big part of our growth this year has been favorable adoption of our new lifestyle products for men, as well as the success of our latest performance products for women.

The early success of pre-orders in our footwear category (over 2,700 pairs), and selling over 5,600 pairs to date, has given us the confidence that this category will not only have a significant impact to 2018, but will be a category that can become a substantial portion of our revenue base into the future.

To achieve our revenue target in 2018, we are anticipating a successful raise of up to $6.25 million of new equity through the Regulation A+ offering (Title IV of the JOBS Act) that we launched in late 2017. We are now able to make sales under Regulation A+ after we filed an offering statement with the SEC, and the SEC has “qualified” the offering statement. The pre-money valuation on this round has been initially set at $33.0 million ($1.25 per share).

We intend to move ahead aggressively to seek a liquidity option for our shareholders. This may involve an OTC quotation or an exchange listing. We are evaluating potential syndicates for an eventual listing. If that proves to be an option, we would aim to make the appropriate filings in late 2018 or early 2019.

Note: There are many factors that may prevent us from listing our stock on a public exchange, including failure to receive the required company or regulatory approvals, or an inability to establish sufficient investor interest to develop a liquid trading market for the stock.

Want to own part of the brand you help build? By clicking the button below, you will be directed to WealthForge’s platform, where you can fill out your information and make your investment. WealthForge Securities, LLC member of FINRA/SIPC, is one of the leading private capital market platforms.

References

  1. Morgan Stanley  https://morganstanley.com/ideas/global-athletic-wear-geared-for-growth
  2. IHRSA http://www.ihrsa.org/about-the-industry/
  3. 2017 SFIA – Sports, Fitness, and Leisure Activities Total Participation Report
  4. The Book of DNVB https://medium.com/@dunn/digitally-native-vertical-brands-b26a26f2cf83
  5. Stifel Equity Research: Opportunity through Disruption for Specialized Digitally Competent Brands and Branded Platforms. October 2, 2017.
  6. Forbes https://www.forbes.com/sites/greatspeculations/2016/01/14/for-athletic-wear-vendors-how-athleisure-can-continue-to-grow-by-remaining-trendy/#72d149b8541

Legal Disclaimer

An investment in early stage companies such as HYLETE involves significant risks, including the loss of the entire investment. This investment is illiquid. There is no currently established market for reselling these securities. If you decide that you want to resell these securities in the future, you may not be able to find a buyer. You should assume that you may not be able to liquidate your investment for some time, or be able to pledge these shares as collateral. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

We operate in a highly competitive market and the size and resources of some of our competitors may allow them to compete more effectively than we can. In addition to competing with other direct-to-consumer apparel companies, we face competition from a range of retailers, many of which have greater financial resources than we do. Competition may result in pricing pressure, reduced profit margins or a reduction in market share, any of which could substantially harm our business and results of operations.

Before deciding to invest in the offering, prospective investors should read the offering circular and pay particular attention to the risk factors contained in the offering circular. In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. Each prospective investor should consult their own attorney, business adviser and tax adviser as to legal, business, tax and related matters concerning the information contained herein. Certain information contained in this email constitutes “forward—looking statements,” which can be identified by the use of forward–looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “project,” “estimate,” “intend,” “continue” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward—looking statements. Certain information contained in this email is based on or derived from information provided by independent third—party sources. HYLETE believes that such information is accurate and that the sources from which it has been obtained are reliable. HYLETE cannot guarantee the accuracy of such information, however, and has not independently verified the assumptions on which such information is based. Past performance is not indicative of future results.Securities offered through WealthForge Securities LLC, Member FINRA/SIPC.

AN OFFERING STATEMENT REGARDING THIS OFFERING HAS BEEN FILED WITH THE SEC. THE SEC HAS QUALIFIED THAT OFFERING STATEMENT, WHICH ONLY MEANS THAT THE COMPANY MAY MAKE SALES OF THE SECURITIES DESCRIBED BY THE OFFERING STATEMENT. IT DOES NOT MEAN THAT THE SEC HAS APPROVED, PASSED UPON THE MERITS OR PASSED UPON THE ACCURACY OR COMPLETENESS OF THE INFORMATION IN THE OFFERING STATEMENT. THE OFFERING CIRCULAR THAT IS PART OF THAT OFFERING STATEMENT IS AT:

HYLETE.com/offering.

YOU SHOULD READ THE OFFERING CIRCULAR BEFORE MAKING ANY INVESTMENT.