— Where we are and hope to go —
Watertown, NY, April 26, 2022 — McapMediaWire — 1812 BREWING COMPANY, INC. (OTC Pink: KEGS) (the “Company” or “KEGS”) Chairman and Chief Executive Officer, Thomas W. Scozzafava, issued the following update to its shareholders today:
Dear Shareholders:
I am pleased to address shareholders at this critical time to take inventory of our progress and accomplishments to date, as well as look forward towards what we hope to accomplish. In less than two years and during the greatest pandemic in 100 years, the Company was successful in its efforts to organize its books and records to maintain its quoted trading status with OTC Markets while many others failed to do so. Additionally, we enacted our name change to “1812 Brewing Company” with FINRA and received the ticker symbol “KEGS,” which we felt could not have been a better representation of what the Company was and what the company hoped to be.
As stated previously, KEGS is an operator of and investor in companies in the craft beer industry. The Company seeks to build a nation-wide network of craft breweries to develop and foster respective brand growth at the local, regional, and national level. KEGS looks to build a network wherein certain economies of scale can be shared across it such as production, distribution expansion, inter-member contract brewing, new product development, sharing of best brewery practices and scale logistics and transportation. The network is to be built through investment by 1812 Brewing Company while maintaining the members’ respective local and regional uniqueness, brand autonomy and direct involvement with its consumers. The Company seeks to be an “incubator” of growth for its holdings in the industry.
With regards to the Company’s initial holding, Sackets Harbor Brewing Company, which recently changed its trade name to 1812 Brewing Company, (“1812 Brewing”), I am very pleased to outline the following accomplishments over the last 24 months:
- 1812 Brewing has successfully moved its legacy brewing operations from its Sackets Harbor, NY restaurant to a company-owned 13,000 square foot facility in the City of Watertown’s Industrial Center. The site, on over 2 acres of property, give the Company ample room for production and growth for years to come.
- KEGS significantly expanded 1812 Brewing’s production capacity. (1) When KEGS moved 1812 Brewing’s original brewing equipment, with equipment additions we increased its production capacity by 83% immediately. (2) Shortly thereafter and by participating in a series of auctions in Milwaukee, WI and Detroit, MI, along with some new asset acquisitions, we opportunistically acquired a second brewing system over 4.2 times larger than 1812 Brewing’s original system along with additional fermentation tanks, and KEGS increased 1812 Brewing’s production capacity by almost 1,000%.
- And finally, KEGS acquired out of the ashes of a competitor’s bankruptcy, a high-speed bottle labeling and filling station, which was originally purchased new and only in use a few years.
KEGS has invested through the first quarter of 2022 almost $2.5 million of its capital to acquire the real estate and machinery and to build out the facility that will be the growth engine for 1812 Brewing. We are proud to say that our subsidiary, 1812 Brewing, is for the first time in its 26-year history brewing, kegging and bottling completely independently and without the need for any “contract” brewing partners. The very first bottling run the company ever completed resulted in a Bronze medal at the New York International Brewing Competition held in February 2022, which was a satisfying validation of KEGS’ strategy and efforts.
What we have done for the former Sackets Harbor Brewing Company is a perfect model of what we intend to do through investment and collaboration with others that become a part of our KEGS “family” of breweries.
As we look to the future, our efforts will be focused on accomplishing a number of both operational and financial milestones:
- KEGS is committed to reducing the authorized shares once again. As previously announced, we have filed with the state of Florida to reduce the Company’s Authorized Shares from 20 billion to 10 billion. Assuming we can maintain or increase KEGS per share price, management would look to, once again, reduce the Authorized Shares by another 50%. It is important to recognize that these larger authorized share figures are legacies from 2009, when the previous incarnation of the Company was in a very different financial condition during the “great recession” that followed the housing market collapse.
- KEGS currently has no plans to effectuate a reverse split. Numerous shareholders have recently inquired about any plans to do so.
- I, Tom Scozzafava, have previously announced that I shall retire 500 million shares that I own. I am re-affirming this commitment. Further, I am open to additional reductions in personally held shares if necessary.
- KEGS will aggressively pursue restructuring the Notes of KEGS’ two largest convertible note holders. Although neither Noteholder has converted shares in over ten (10) years, the size of the debt and scope of hypothetical dilution is optically an unnecessary weight on KEGS balance sheet and capital table. Management is committed to reducing the size of the Notes and minimizing (ideally eliminating) potential dilution from these Notes.
- Excluding expansion-related expenses, KEGS is seeking to become cash flow positive from operations by the end of 2022. This includes continued profitability at the restaurants and in brewing operations of 1812 Brewing. Such cash flow could be used for debt reduction and/or share repurchases.
- KEGS is seeking a major acquisition or series of acquisitions. To help accomplish this, KEGS is on the verge of consummating the engagement of a highly regarded Mergers and Acquisitions investment bank specializing in advising consumer products companies such as breweries.
- To grow and to pursue material acquisitions, KEGS must raise additional capital. But having said that, management is absolutely sensitive to minimizing the size and scale of equity issuances. The algebra, frankly, is quite simple. The higher KEGS can maintain its per share price, any further issuances will cause less dilution. It was management’s desire to sustain a share price at $0.02 into the fall of 2021, which would have minimized the current 200 million share issuance by 90% to 20 million. Despite the engagement of consultants in this arena, the small issuer selloff in the late fall and winter in 2021 seemed to have pulled our shares down with the overall market.
- Our desire is to up-list KEGS to NASDAQ. The most likely scenario under which this would happen is through the acquisition of a significantly larger microbrewery and a simultaneous NASDAQ up-listing. We will aggressively pursue this strategy.
I hope that you have found this helpful and enlightening. I am committed to regularly communicating to our shareholders updates on the above matters and on any further developments at KEGS.
Cheers!
About 1812 Brewing Company (“KEGS or the “Company”):
KEGS is an operator of and investor in companies in the craft beer industry. The Company seeks to build a nation-wide network of craft breweries to develop and foster respective brand growth at the local, regional, and national level. KEGS looks to build a network wherein certain economies of scale can be shared across it such as production, distribution footprint expansion, inter-member contract brewing, new product development, sharing of best brewery practices and scale logistics and transportation. The network is to be built through investment by 1812 Brewing Company while maintaining the members’ respective local and regional uniqueness, brand autonomy and direct involvement with its consumers. The Company seeks to be an “incubator” of growth for its holdings in the industry.
The Company’s current holding, 1812 Brewing, produces award-winning beers such as War of 1812 Amber Ale (“1812 Amber Ale”), 1812 Light, Hazy Oasis Pale Ale, Thousand Islands IPA, Malicious Intent XX IPA, Route 11 Lager, Railroad Red Ale, Helles Bells Pilsner, St. Stephens Stout, Third Rail Porter, Featherhammer Maibock.
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Safe Harbor: This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 27E of the Securities Act of 1934. Statements contained in this release that are not historical facts may be deemed to be forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain. Actual performance and results may differ materially from that projected or suggested herein due to certain risks and uncertainties including, without limitation, ability to obtain financing and regulatory and shareholder approval for anticipated actions.
Contact: contact@1812ale.com
