Raisebook

Leading Product Sampling and Digital Promotions Platform
PINCHme
PINCHme
ASX:PIN
  • PINCHme’s existing clients include some of the largest household brands in the US FMCG industry including Nestlé, Johnson & Johnson and Procter & Gamble.
  • Total marketing expenditure by FMCG companies in the US is estimated to have been US$225 billion in 2016, which represents around 30% of total industry sales of US$760 billion.
  • PINCHme now has more than 4 million profiled members, and in the first six months of 2018, it has grown its membership by more than 100,000 members per month on average.
  • Approximately 1.4 million members are actively engaging with the PINCHme platform.
  • The company has completed over 500 sampling programs for more than 100 leading FMCG brands, with more than 85% of campaigns undertaken for repeat clients.
  • Well positioned to grow its member community and create further monetisation opportunities.
  • Enterprise Value / pro forma forecast FY2018 Revenue of 3.51 x
  • Maximum bid is $5,000 per entity
Raise Amount
$8,000,000
Offer Price
$0.5000
Closes
Oct 12, 2018

PINCHme is a New York based company that operates a leading product sampling and digital promotions platform.

PINCHme’s platform intelligently matches large “fast moving consumer goods” (FMCG) brands with PINCHme’s own members, who are consumers that have provided PINCHme with comprehensive personal data about themselves and their spending habits.

In return for the data they provide, PINCHme’s members receive free samples of products already available in-store, or access to products ahead of their store release, while its FMCG clients receive detailed insights, product reviews and feedback, and social media engagement, all of which assist in driving sales uplift.

In addition to revenues derived from the FMCG brands for providing these services, PINCHme is able to further ‘monetise’ its member audience through performance-based online advertising (which involves PINCHme promoting third party advertisements on its website or to its members) and survey based revenue streams (which involve PINCHme members completing third party online surveys).

The FMCG industry manufactures and distributes products for consumers that are purchased and used on a frequent basis such as beauty, personal care, pet, food and beverage and home care products.

PINCHme was founded in 2012 to address a number of issues faced by FMCG manufacturers, including the decline in effectiveness of traditional mass media marketing channels (particularly with millennials), retail disruption through the advent of Amazon and other e-commerce platforms, as well as competition from the growth of retailer white label brands and direct-to-consumer FMCG business models.

Total marketing expenditure by FMCG companies in the US is estimated to have been US$225 billion in 2016, which represents around 30% of total industry sales of US$760 billion.

PINCHme is well placed to take advantage of this changing FMCG market.

PINCHme now has more than 4 million profiled members, and in the first six months of 2018, it has grown its membership by more than 100,000 members per month on average.

PINCHme captures more than 50 data points on each member when they register with its platform at www.pinchme.com (including, for example, who they are, where they shop, what they buy, hobbies, habits, interests, medical conditions and family demographics), and it continues to collect further data points as members participate in sampling campaigns and engage with its services.

Approximately 1.4 million members are actively engaged with the PINCHme platform, through opening the company’s emails, claiming samples, providing product feedback, participating in consumer research studies, taking up online advertising offers and participating in surveys.

PINCHme’s existing clients include some of the largest household brands in the US FMCG industry including Nestlé, Johnson & Johnson and Procter & Gamble.

PINCHme operates solely in the US and competes across the sampling/consumer promotion and market research sectors of the US FMCG marketing industry as well as the performance-based online advertising sector and online market research sector.

PINCHme is now well positioned to continue to grow its member community and create further ‘monetisation’ opportunities, through providing value-added services for FMCG clients and other companies seeking access to the highly targeted consumer groups within the PINCHme community.

The Offer

PINCHme.com Inc. (a Delaware corporation ARBN 627 641 221) is seeking to raise A$8M through the issuance of 16 million Chess Depositary Interests (CDIs) at an offer price of A$0.50 per CDI.

The offer of the securities are made in the Disclosure Document, a copy of this document can be obtained by clicking on the "ACCESS DISCLOSURE DOCUMENT" button on this page. For this Offer, the Disclosure Document comprises the Prospectus, dated 13 September 2018, and the Supplementary Prospectus, dated 5 October 2018.

Anyone who wants to acquire the securities will need to complete the application form that will be in or will accompany the Disclosure Document.

Investors should consider that an investment in the Company is highly speculative. The Company is essentially a start-up company with limited trading history. Since incorporating in 2012, PINCHme’s activities have principally involved raising money to develop its software, products and services. Like many start-up companies, the Company has incurred losses since its inception. Given the Company’s limited trading history, it is difficult to make an evaluation of Company’s business or its prospects and there is significant risk that the Company is not able to continue its growth at current rate, if at all.

Proceeds raised in the Offer will be used to drive membership growth, fund product development and operational improvements, invest in marketing strategies and pursue other growth opportunities.

In addition, the Offer and ASX listing will provide the company with access to capital markets, provide a liquid market for CDIs and assist the company to attract and retain quality employees.

What are CDIs?

The ASX uses an electronic system called CHESS for the clearance and settlement of trades on the ASX. PINCHme is incorporated in the United States, which does not recognise the CHESS system of holding securities.

Accordingly, to enable companies such as PINCHme to have their securities cleared and settled electronically through CHESS, depositary instruments called CDIs are issued. CDIs are units of beneficial ownership in Shares and are traded in a manner similar to shares of Australian companies listed on the ASX.

Each Share will be equivalent to 355 CDIs.

The Shares underlying the CDIs will rank equally with the Shares currently on issue in the Company.

A description of the CDIs and the underlying Shares, including the rights and liabilities attaching to them, is set out in Section 9.4 of the Disclosure Document.

PINCHme will apply to ASX within seven days after the Prospectus Date for its admission to the Official List, and quotation of CDIs by ASX under the code ‘PIN’.

Offer Statistics

Offer Statistic CDIs Shares
Offer Price A$0.50 per CDI Equivalent to A$177.50 per Share
Ratio of CDIs per Share 355 1
Number of securities offered to investors under the Offer 16 million 45,070
Gross cash proceeds from the Offer A$8 million A$8 million
Total number of securities on issue on Completion of the Offer 117.13 million 329,953
Indicative Market Capitalisation on Completion of the Offer A$58.6 million A$58.6 million
Indicative Market Capitalisation on a Fully Diluted Basis A$63.3 million A$63.3 million
Pro forma cash on Completion of the Offer A$7.9 million
Enterprise Value at the Offer Price A$50.7 million
Enterprise Value / pro forma forecase FY2018 Revenue 3.51 x
Enterprise Value / annualised pro forma forecast 2H FY2018 Revenue 2.92 x

Note: For further details on the Offer Statistics, please also refer to the Disclosure Document (including page 3 of the Prospectus and page 2 of the Supplementary Prospectus).

Capital Structure on Completion of the Offer

Immediately Prior to the Offer

Number of Shares
Shares held by Existing Holders 89,273
Number of Shares to be issued on conversion of existing:
- Convertible Notes and accrued interest 176,136
- Shareholder Loans 19,474
Shares to be issued under the Offer -
Total 284,883
Options -

Immediately Following the Offer

Number of Shares CDI equivalent Percentage (%) Fully diluted Percentage (%)
Shares held by Existing Holders 89,273 31,691,915 27.1% 25.1%
Number of Shares to be issued on conversion of existing:
- Convertible Notes and accrued interest 176,136 62,528,280 53.4% 49.4%
- Shareholder Loans 19,474 6,913,270 5.9% 5.5%
Shares to be issued under the Offer 45,070 15,999,850 13.7% 12.6%
Total 329,953 117,133,315 100.0% 92.6%
Options 26,387 9,370,000 n/a 7.4%

Notes: For further details, please refer to Section 1.2 of the Disclosure Document.

Key Dates

Offer Closes Friday 12 October 2018
Settlement of the Offer Wednesday 17 October 2018
Issue of CDIs under the Offer (Completion of the Offer) Thursday 18 October 2018
Expected despatch of holding statements Friday 19 October 2018
CDIs expected to begin trading on ASX on a normal settlement basis Wednesday 24 October 2018

Note: The above dates are indicative only and may change without notice. Please refer to page 3 of the Disclosure Document for further details.

Historical and Forecast Financial Information

A selected summary of PINCHme’s pro forma historical and pro forma statutory forecast financial information is set out below. This is intended as a summary only and should be read in conjunction with the more detailed discussions of the financial information disclosed in Section 4 of the Disclosure Document, as well as the risk factors set out in Section 5 of the Disclosure Document.

US$'000 December year end FY15 Pro forma FY16 Pro forma FY17 Pro forma FY18 Pro forma
Revenue 5,948 9,075 7,929 10,406
Gross Profit 2,323 4,881 4,974 5,999
Operating EBITDA (3,048) (1,382) (1,537) (3,574)
EBIT (3,248) (1,953) (1,635) (3,650)
Net loss after finance (costs) / income and income tax (3,248) (1,953) (1,635) (3,650)

Note: There can be no guarantee that PINCHme will achieve its stated objectives or that any forward looking statement or forecasts will eventuate.

US FMCG Industry

The FMCG industry (also known as the consumer-packaged goods or “CPG” industry) manufactures and distributes products for consumers that are purchased and used on a frequent basis such as beauty, personal care, pet, food and beverage and home care products.

These products are usually sold through third party retail outlets, most commonly supermarkets or similar grocery stores.

In 2017, the FMCG industry in the US is estimated to have achieved total sales of approximately US$760 billion.

The FMCG industry is dominated by large, multi-national companies, often offering multiple brands, although there are also many smaller companies often active in single product categories.

Large US-headquartered FMCG companies include Procter & Gamble, PepsiCo, Anheuser-Busch InBev and Coca-Cola.

Many non-US headquartered FMCG companies are also active in the US, including Nestlé, L’Oréal, Unilever and Reckitt Benckiser.

Many of these companies are existing clients of PINCHme.

PINCHme’s Key Strengths

Trusted and established partnerships with leading FMCG brands

45 leading FMCG brands actively worked with PINCHme between 1 January 2018 and 30 June 2018 and over 100 brands have worked with the Company since its establishment.

Since inception, more than 85% of campaigns have been undertaken for repeat clients, with more than 500 product campaigns undertaken in total to date.

Proprietary and scalable technology platform

PINCHme’s platform has been fully developed in-house and the company believes it provides advantages over competitors in its scalability, security, ease of use and focus on user experience.

Thousands of new members have been joining the community each month since its establishment, welcomed through a dynamic onboarding system where users provide information on more than 50 data points as well as being shown targeted offers.

The platform also has dynamic campaign targeting capabilities, which uses the data collected to display relevant samples for members to claim.

Large and data-rich member community

PINCHme believes it operates one of the larger profiled communities in the US FMCG space, with more than 4 million members.

The data-rich platform stores over 50 different data points on each consumer, which it uses to match consumers with targeted product sample campaigns, consumer research studies and associated sales-related marketing, as well as performance-based online advertising offers.

PINCHme continues to collect further data points based on usage and participation, with approximately 1.4 million members actively engaged with the PINCHme platform.

The volume and quality of data stored enables the company to harness insights from its member base and build out machine learning capability to further enhance the business model.

The “network effect”

The size of PINCHme’s member community and the quality and diversity of its social influencer and blogger network makes PINCHme an attractive partner for FMCG brands.

As the company increases the number of members within its community, it expects to attract further high-quality FMCG brand clients.

A larger member audience also unlocks the potential for higher volume sampling campaigns from both existing and new FMCG brand clients, which in turn will provide product samples and content with which to attract and engage new members. This phenomenon is known as the "network effect".

Sizeable and growing social media following

PINCHme benefits from a highly engaged social media following of more than two million followers which continues to grow.

The combined social media followers across Facebook, Instagram, YouTube and Twitter facilitate a number of key benefits, including driving member acquisition, building product awareness for campaigns and facilitating member participation in campaigns.

High quality experienced management team

PINCHme has an entrepreneurial and experienced management team with a material vested interest in the Company. It was established and grown by Jeremy Reid, who is passionate about the business, its strategic direction and long-term future growth. Jeremy has assembled, and is supported by, an experienced and dedicated management team.

At the same time, an investment in PINCHme is subject to a number of risks. The key risks associated with an investment in PINCHme are set out in Section 5 of the Disclosure Document and include, among others, risks associated with its limited trading history, its ability to attract new FMCG clients and to source sufficient samples, its ability to acquire new members and the level of member engagement, disruption or failure of our technology systems and breaches of privacy and data protection requirements.

How does PINCHme generate revenue?

PINCHme generates revenues from its two key businesses, being the sampling business, and the “audience monetisation” business.

The sampling business involves FMCG clients paying PINCHme to:

  • provide product samples to a targeted subset of PINCHme members, based on a set of consumer characteristics defined by the FMCG client (such as age, gender, geography, number of children etc); and
  • conduct consumer research studies, which involve the distribution of products or samples to a much smaller, selective group of members who perform extensive in-home testing.

PINCHme’s audience monetisation business involves third parties paying PINCHme to:

  • promote online advertising offers (including digital samples) to members on its website and via email offers; and
  • provide third party hosted surveys to its members, branded as “QWIZme” on PINCHme’s website.

What is PINCHme’s Growth Strategy?

PINCHme has a range of strategic initiatives to support its future growth that include:

  • New member acquisition. PINCHme intends to use a significant portion of the Offer proceeds to acquire new members. Strategies that will be adopted include paid acquisition using PINCHme’s performance based advertiser networks and third party website partnerships, as well as increased use of paid blogger relationships.
  • Further refining the technology platform. PINCHme is investing in actively developing and enhancing machine learning models to predict member behaviour; leveraging PINCHme’s member specific rating called a “PINCHme score” to improve member targeting, optimising the website and utilising data-driven testing; and engaging with experts to design new programs that will promote member engagement through “gamification” techniques.
  • Further monetisation strategies. PINCHme intends to target a number of industries outside of the existing category of FMCG brands, whose advertising and data needs could be serviced by PINCHme and its members, such as the healthcare sector.
  • Acquisitions. PINCHme may in the future consider acquisitions that have the potential to further the growth of its business. PINCHme intends to only pursue acquisitions that are complementary to its existing business and strategies.
This deal closed on October 12, 2018