Although details were sparse, Texas-based holding company Sharing Services, Inc. (OTCPK:SHRV) announced Thursday morning that it has made an investment in Direct Cellars, an international company that sells memberships to its wine club via a direct-sales model. Formed only four years ago, Direct Cellars now trumpets over 10,000 members in their club, spanning the U.S., U.K. and soon-to-be Germany and Australia.
Headquartered in Ft. Lauderdale, Florida, the Direct Cellars website shows offices also in Kansas City, Missouri, London, Australia and Germany. In addition to arranging wine selections to be delivered each month to its members, Direct Cellars also offers wine education. The multi-level-marketing model allows members to recruit new members and enjoy free wine as a reward.
The corporate news release on the investment didn't provide much in the way of details on the transaction, but a form 8-K filed with the Securities and Exchange Commission delivered some transparency. According to a filing yesterday, Sharing Services closed a series of four investments in Direct Cellars for an aggregate of $275,000. The investment was structured as convertible promissory notes accruing interest of 12% per annum. The notes, which are dated March 15, 2018 ($100,000), March 19, 2018 ($75,000), March 22, 2018 ($75,000) and April 24, 2018 ($25,000) are due at the one-year anniversary of each, respectively.
At the option of Sharing Services, the notes can be converted into Class A common units of Direct Cellars.
Wall Street isn't exactly popping a bottle to celebrate the news, as not a share has traded yet on Thursday as of 10:50 AM in New York. Shares closed Wednesday at 36 cents each.