Intro.

 

My name is Roman Titus. I'm building the future of environment controlled farming.

I want your help.

If you're reading this then I've asked you to partner with me, to join your resources: capital, network and business savvy with my resources: vision, drive, passion and resilience.

It would stand to reason that you would like to know about who I am. Let's talk about that. I grew up in a blue collar farm community in Ohio. I studied religion in Hungary, photography in Cincinnati then dropped out and started working in the creative industries. I value calling a spade a spade, finding angles and taking the initiative. My last venture was building and growing a brand and design studio in Chicago called Nelson Cash. The studio grew from $0-$6 million in revenue in two years. We went from no clients to Google, Chicago Bulls, Thomson Reuters, Lean In, Solemn Oath Brewery and many others. From 2 people to 25. From a coffee shop office to 5000 sq. ft. in the West Loop.

My current venture, Sojourn Fare, will change the future of urban food production by making it flexible and accessible. For over two years, I have been growing mushrooms and building a computer-controlled environment system tailored to the mushroom cultivator’s needs. I call it Noko. It is an IoT system that allows the user to control environment parameters, monitor activity and optimize grows via a mobile web app. I have proof of concept at a small scale and am now expanding to build a mushroom farm and lab in a warehouse in Chicago. The ultimate goal of Sojourn Fare is to establish a replicable model for urban mushroom farming then build and support the systems and tools that empower consumers and small to mid-sized farmers to produce their own food.

 
 

Potential.

 
 

Now that I've given you a bit of background, let’s talk about how we get money back in your pocket down the road.

The current value of the mushroom market in the US is $1.19 billion and globally it is expected to reach $50 billion by 2019. From 2015 to 2016, US production fell 7 million pounds and its value rose by $40 million. The demand and price for mushrooms are growing faster than the production. The years preceding this, have seen a similar trend towards a faster rate of value growth than production growth. I believe this is a symptom of how difficult it is to enter the mushroom farming industry.

I know the process of mushroom cultivation and how to solve the existing problems within, that said mushrooms are just the tip of the spear. Noko, at its core, is controlled environment hardware and software. In our existing unit, we are capable of using it for cold storage, growing potted plants, aging cheese or curing meat and with mild modifications the system can be used to grow fruits, vegetables, flowers and beyond. That means in time, our playground can grow to Flowers & plants, Organic and non-organic fruits & vegetables, Mushrooms and Commercial greenhouses. Meaning we're looking at a potential TAM of $335 billion domestic and $516 billion globally.

 
 

Problem.

 

Now that you know me a bit, let's look at the deeper issue we're addressing. The problem I'm tackling is the lack of available fresh, high-quality mushrooms in the United States. While the value of mushrooms continue to rise, the production is wavering. Why? Because growing mushrooms is not for the faint of heart. It’s an 8 day a week job. It combines the sterile lab work of a scientist and the physical labor of a farmer. The operational needs of a mushroom farm is incredibly daunting to would-be farmers.

There was just a Wall Street Journal article that touched on this very thing. Beyond the time commitment, is the sterile environment which mushroom spawn (i.e. early stages of mycelium) needs, as well as their finicky nature that needs tight environmental control for fruiting. It doesn't stop there, once you harvest those mushrooms, you have 3-5 days to sell them before they wilt. And these things are delicate, little flowers in shipment. Often crushed by their own weight. These barriers to entry result in a lack of farmers and a lack of fresh product.

There are currently 17,000 active members on the industry's largest online mushroom forum and only 346 registered mushroom farmers in the USA.  If you spend even a small amount of time reading threads on this forum, you'll discover multitudes of very interested and passionate folks struggling to grow mushrooms.

A small amount of farmers producing more mushrooms is great for the massive operations in Chester County, Pennsylvania who produce 63% of the US’s mushrooms, but it doesn’t bode well for small farmers, diverse selection, quality product, local optionality or affordability of product.

As we face the unsustainability of animal husbandry for protein, rising cost of synthetic medicines and the manufacturing of millions of tons of non-biodegradable materials, the time for humans to invest in this incredible organism is now.

 
 

Solution.

 

Lower the barrier to entry to growing mushrooms by taking away the pain points.

So what are the pain points?

The primary pain points are the sterile work necessary to spawn mushrooms and the consistent environmental control needed to incubate and fruit them. One mistake can ruin months of work and dishearten even the most resilient of cultivators.

To address this, we’re building a mushroom farm consisting of two large grow units on the southside of Chicago. With this setup we will be able to grow upwards of 1200 lbs. of mushrooms per week. They will run on the same logic that controls our current units and are flexible enough to be used as either incubation or growing environments. We will continue to build our relationship with our spawn lab and seek to white label their substrate blocks for use in our units. Longer term, we will build our own spawn lab in Chicago in order to control quality and cost.

We will also build two more units that grow 50 lbs. per week. These will service restaurants, corporate and institutional cafeterias and/or schools. They will be used strategically as a foot in the door towards establishing a larger onsite grow and will also serve in mushroom education and awareness capacities.

Once we’ve established a working urban mushroom farm, we will take Noko to market by offering it to farmers, restaurants, corporations and institutions in one of two ways. Purchase a Noko growing unit, order myceliated substrate blocks from us and farm on your own. Or a more premium option of purchasing the unit and blocks from us and we'll staff the farm with weekly deliveries of extremely fresh product to the client's kitchen.

And if you're interested in the longer term vision of where we're headed, take a look at our horizon.

 
 

Traction.

 

So, the next question is do people even want this? And my answer would be, "It sure seems so."

From June 2016 to January 2017, we prototyped our smallest unit, the Noko Soso, in Google Chicago's cafeteria. The unit consistently yielded 7 pounds of mushrooms weekly which were served in their cafeteria. They're big fans of what we’re doing and we're super stoked to have had them as a prototyping partner.

We have the full support and excitement of the President of The Mushroom Council, the USDA's commission to make mushrooms a staple in the American diet. I’ve also spoken with mushroom farmers in Oregon, Washington, Pennsylvania, New York, Colorado, Ohio and Illinois all of whom have expressed a strong need for a system like Noko on their farm. And every chef that has seen these mushrooms have been amazed at the quality, size and freshness of the product.

Our users, the end user and the national mushroom spokesman are all excited and supportive of what we're doing right now.

 
 

Competition.

 

There is very little happening publicly in this space. One company, Smallhold, in New York is doing subscription based onsite food growing. Their focus is on growing multiple products (i.e. mushrooms, basil, "other gourmet produce") on rack units covered in plastic in restaurants, groceries or homes.

MIT has also been working on a similar unit called the OpenAg Initiative. They focus on traditional crops, rather than mushrooms. I've met with one of their consultants and had a riveting discussion around the work itself. They are an open source non-profit with no plan to enter the commercial market.

 
 

Team.

 

At present, we're a lean, mean team. It's me and Justin.

 
 

Ask.

 

Sojourn Fare is seeking $250k in the form of a SAFE with 20% discount and a $3 million dollar cap.

 
 

Investment allocation (%)

 

Annual projections

Projections.png
 

Terms

 

THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.  THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.  

Sojourn Fare, Inc.

SAFE
(Simple Agreement for Future Equity)

THIS CERTIFIES THAT in exchange for the payment by [Investor name]  (the “Investor”) of $[__________] (the “Purchase Amount”) on or about [Date of Safe], Sojourn Fare, an Illinois corporation (the “Company”), hereby issues to the Investor the right to certain shares of the Company’s capital stock, subject to the terms set forth below.

The “Valuation Cap” is $3,000,000.

The “Discount Rate” is 80%.

See Section 2 for certain additional defined terms.

1. Events

(a) Equity Financing. If there is an Equity Financing before the expiration or termination of this instrument, the Company will automatically issue to the Investor a number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Discount Price.

In connection with the issuance of Safe Preferred Stock by the Company to the Investor pursuant to this Section 1(a): 

(i) The Investor will execute and deliver to the Company all transaction documents related to the Equity Financing; provided, that such documents are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and provided further, that such documents have customary exceptions to any drag-along applicable to the Investor, including, without limitation, limited representations and warranties and limited liability and indemnification obligations on the part of the Investor; and 

(ii) The Investor and the Company will execute a Pro Rata Rights Agreement, unless the Investor is already included in such rights in the transaction documents related to the Equity Financing.

(b) Liquidity Event. If there is a Liquidity Event before the expiration or termination of this instrument, the Investor will, at its option, either (i) receive a cash payment equal to the Purchase Amount (subject to the following paragraph) or (ii) automatically receive from the Company a number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price, if the Investor fails to select the cash option.  

In connection with Section (b)(i), the Purchase Amount will be due and payable by the Company to the Investor immediately prior to, or concurrent with, the consummation of the Liquidity Event. If there are not enough funds to pay the Investor and holders of other Safes (collectively, the “Cash-Out Investors”) in full, then all of the Company’s available funds will be distributed with equal priority and pro rata among the Cash-Out Investors in proportion to their Purchase Amounts, and the Cash-Out Investors will automatically receive the number of shares of Common Stock equal to the remaining unpaid Purchase Amount divided by the Liquidity Price.  In connection with a Change of Control intended to qualify as a tax-free reorganization, the Company may reduce, pro rata, the Purchase Amounts payable to the Cash-Out Investors by the amount determined by its board of directors in good faith to be advisable for such Change of Control to qualify as a tax-free reorganization for U.S. federal income tax purposes, and in such case, the Cash-Out Investors will automatically receive the number of shares of Common Stock equal to the remaining unpaid Purchase Amount divided by the Liquidity Price.

(c) Dissolution Event. If there is a Dissolution Event before this instrument expires or terminates, the Company will pay an amount equal to the Purchase Amount, due and payable to the Investor immediately prior to, or concurrent with, the consummation of the Dissolution Event. The Purchase Amount will be paid prior and in preference to any Distribution of any of the assets of the Company to holders of outstanding Capital Stock by reason of their ownership thereof. If immediately prior to the consummation of the Dissolution Event, the assets of the Company legally available for distribution to the Investor and all holders of all other Safes (the “Dissolving Investors”), as determined in good faith by the Company’s board of directors, are insufficient to permit the payment to the Dissolving Investors of their respective Purchase Amounts, then the entire assets of the Company legally available for distribution will be distributed with equal priority and pro rata among the Dissolving Investors in proportion to the Purchase Amounts they would otherwise be entitled to receive pursuant to this Section 1(c).

(d) Termination.  This instrument will expire and terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this instrument) upon either (i) the issuance of stock to the Investor pursuant to Section 1(a) or Section 1(b)(ii); or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to Section 1(b)(i) or Section 1(c).

 

2. Definitions

Capital Stock” means the capital stock of the Company, including, without limitation, the “Common Stock” and the “Preferred Stock.”

Change of Control” means (i) a transaction or series of related transactions in which any “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Company’s board of directors, (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.  

Discount Price” means the price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate. 

Distribution” means the transfer to holders of Capital Stock by reason of their ownership thereof of cash or other property without consideration whether by way of dividend or otherwise, other than dividends on Common Stock payable in Common Stock, or the purchase or redemption of Capital Stock by the Company or its subsidiaries for cash or property other than: (i) repurchases of Common Stock held by employees, officers, directors or consultants of the Company or its subsidiaries pursuant to an agreement providing, as applicable, a right of first refusal or a right to repurchase shares upon termination of such service provider’s employment or services; or (ii) repurchases of Capital Stock in connection with the settlement of disputes with any stockholder.

Dissolution Event” means (i) a voluntary termination of operations, (ii) a general assignment for the benefit of the Company’s creditors or (iii) any other liquidation, dissolution or winding up of the Company (excluding a Liquidity Event), whether voluntary or involuntary.

Equity Financing” means a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells Preferred Stock at a fixed pre-money valuation. 

Initial Public Offering” means the closing of the Company’s first firm commitment underwritten initial public offering of Common Stock pursuant to a registration statement filed under the Securities Act.

Liquidity Event” means a Change of Control or an Initial Public Offering. 

Liquidity Price” means the price per share equal to: the fair market value of the Common Stock at the time of the Liquidity Event, as determined by reference to the purchase price payable in connection with such Liquidity Event, multiplied by the Discount Rate. 

Pro Rata Rights Agreement” means a written agreement between the Company and the Investor (and holders of other Safes, as appropriate) giving the Investor a right to purchase its pro rata share of private placements of securities by the Company occurring after the Equity Financing, subject to customary exceptions.  Pro rata for purposes of the Pro Rata Rights Agreement will be calculated based on the ratio of (1) the number of shares of Capital Stock owned by the Investor immediately prior to the issuance of the securities to (2) the total number of shares of outstanding Capital Stock on a fully diluted basis, calculated as of immediately prior to the issuance of the securities.  

Safe” means an instrument containing a future right to shares of Capital Stock, similar in form and content to this instrument, purchased by investors for the purpose of funding the Company’s business operations.

Safe Preferred Stock” means the shares of a series of Preferred Stock issued to the Investor in an Equity Financing, having the identical rights, privileges, preferences and restrictions as the shares of Standard Preferred Stock, other than with respect to: (i) the per share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which will equal the Discount Price; and (ii) the basis for any dividend rights, which will be based on the Discount Price.

“Standard Preferred Stock” means the shares of a series of Preferred Stock issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing.

 

 3. Company Representations

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted.

(b) The execution, delivery and performance by the Company of this instrument is within the power of the Company and, other than with respect to the actions to be taken when equity is to be issued to the Investor, has been duly authorized by all necessary actions on the part of the Company. This instrument constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.  To the knowledge of the Company, it is not in violation of (i) its current certificate of incorporation or bylaws, (ii) any material statute, rule or regulation applicable to the Company or (iii) any material indenture or contract to which the Company is a party or by which it is bound, where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on the Company.

(c) The performance and consummation of the transactions contemplated by this instrument do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material indenture or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien upon any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations.

(d) No consents or approvals are required in connection with the performance of this instrument, other than: (i) the Company’s corporate approvals; (ii) any qualifications or filings under applicable securities laws; and (iii) necessary corporate approvals for the authorization of Capital Stock issuable pursuant to Section 1.

(e) To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business as now conducted and as currently proposed to be conducted, without any conflict with, or infringement of the rights of, others.

 

4. Investor Representations

(a) The Investor has full legal capacity, power and authority to execute and deliver this instrument and to perform its obligations hereunder. This instrument constitutes valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. 

(b) The Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act. The Investor has been advised that this instrument and the underlying securities have not been registered under the Securities Act, or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available. The Investor is purchasing this instrument and the securities to be acquired by the Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time. 

5. Miscellaneous

(a) Any provision of this instrument may be amended, waived or modified only upon the written consent of the Company and the Investor.  

(b) Any notice required or permitted by this instrument will be deemed sufficient when delivered personally or by overnight courier or sent by email to the relevant address listed on the signature page, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address listed on the signature page, as subsequently modified by written notice.

(c) The Investor is not entitled, as a holder of this instrument, to vote or receive dividends or be deemed the holder of Capital Stock for any purpose, nor will anything contained herein be construed to confer on the Investor, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action or to receive notice of meetings, or to receive subscription rights or otherwise until shares have been issued upon the terms described herein.

(d) Neither this instrument nor the rights contained herein may be assigned, by operation of law or otherwise, by either party without the prior written consent of the other; provided, however, that this instrument and/or the rights contained herein may be assigned without the Company’s consent by the Investor to any other entity who directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, managing member, officer or director of the Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Investor; and provided, further, that the Company may assign this instrument in whole, without the consent of the Investor, in connection with a reincorporation to change the Company’s domicile.  

(e) In the event any one or more of the provisions of this instrument is for any reason held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this instrument operate or would prospectively operate to invalidate this instrument, then and in any such event, such provision(s) only will be deemed null and void and will not affect any other provision of this instrument and the remaining provisions of this instrument will remain operative and in full force and effect and will not be affected, prejudiced, or disturbed thereby. 

(f) All rights and obligations hereunder will be governed by the laws of the State of [Governing Law Jurisdiction], without regard to the conflicts of law provisions of such jurisdiction.

IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and delivered.

SOJOURN FARE INC.

By:

Name:

Title:

Address:

Email: 

 

INVESTOR:

By:

Name:

Title:

Address:

Email:

 

 

 
 

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