Dear backers and tea drinkers,

That one is a bit longer as we have decided to do something that we should have done before.. A few years before…The goal is to be as transparent as possible and give you an honest take on our situation. We are happy to see that many of you appreciated the transparency and in this month's update we will continue to share insights about how we arrived here and what the current situation is. Since we have seen some questioning how we have used the money from the crowdfunding campaign we will share an overview on how the funds were used.

But first, a quick update about option 1

EU
There are still a small number of perks that have not been delivered due to various reasons such as the shipment getting stuck in customs or it was never received and sent back to us. We had some problems keeping all perks and backers in one place by working with several excel sheets and having the human factor in there as well, we ended up by sending wrong colors to some people or shipping machines to an old address. If you are an option 1 backer in the EU and have not received your perk yet, you know what to do >>>> please contact our support team.

USA
As previously mentioned, we initially planned to assemble and ship option 1 perks of the US version of the machine by end of June so that they should have arrived by the end of July. However, due to the inventory and financial shortages that we have now, we have decided to postpone the production of US machines for another 1-2 Months. We plan to produce US versions of the machine in the next bigger production batch and will keep you informed. We try and aim to fulfill all US Option 1 perks by the end of this year as we also plan to launch official sales in the US later this year.

Canada
Unfortunately, we cannot share any positive updates with you. We are continuing to find a way to get the certification while these perks are also affected by the inventory and financial shortages. We will let you know once we have the certification and are in a position to fulfill your perks.

Do you have questions?\xa0
Please use support@bru-tea.com for your questions as it allows us to look into your case more effectively. We try to answer comments here but email works better.

And now the interesting part. At least for those who still think we got all the money in our pockets and haven’t done anything to fulfill your perks...

How was the money from the crowdfunding campaign spent?

To continue on our path of full transparency we have decided to share a breakdown of how the money from the crowdfunding campaign was spent. Hopefully, this will provide you with a better understanding of the situation, how we ended up here, and that you realize why we decided to offer option 1/option 2.

First let's take a look at what we actually received from the campaigns on Kickstarter and Indiegogo, you will find more details about each cost below the table:
\xa0

Belive it or not but this the the amount that we ending up getting in out bank account.

Some details about why we didn't receive the full amount that you see on the platform

Platform fees and transaction fees
Kickstarter and Indiegogo were the platforms we used for our campaign. Kickstarter charges a 5% platform fee while Indiegogo InDemand has a 8% charge on everything collected during the campaign. In addition there are transactional fees that vary depending on where the purchase is made from. For this exercise we calculated with 3% transaction fees so the real cost was even higher.

Kickstarter fees
Platform fee: 5%\xa0
Transactional fee: 3-5% + \\$0.3 per transaction
https://updates.kickstarter.com/kickstarter-fees-a-comprehensive-guide-for-creators

Indiegogo InDemand fees
Platform fee: 8%\xa0
Transactional fee: 3-5% + \\$0.2 per transaction
https://support.indiegogo.com/hc/en-us/articles/204456408-Fees-Pricing-for-Campaigners-How-much-does-Indiegogo-cost

Marketing
In order to run a successful crowdfunding campaign it is common that startups use a marketing agency. Many startups, including us, do not have the resources to run it themselves when starting the crowdfunding campaign. Remember that the start of the crowdfunding campaign was also the start of a company. These agencies are crucial in order to attract enough backers to the project and without them it would not be possible to reach enough success to bring the project to life. They charged 15% on all crowdfunding perks.
https://retailbound.com/how-much-do-crowdfunding-agencies-charge/

So in the end…
We only received around\xa0€770,387\xa0from the crowdfunding campaigns in our bank account.

Now let's take a look at how that was used. First we will go through the major costs associated with the project and then summarize it in a table.

Development, injection molds, and testing
In order to develop a product that should last a long time, that deals with water and electricity and to prepare it for mass production we could not do it entirely on our own. We worked with an industrial engineering agency in order to go from our initial prototype to a final product. We looked all over the world for cost efficient options that would also meet all quality/certification requirements. We are happy with the results, and all the positive reviews we receive from backers who have received their machine and other customers speaks for itself that the product is working great. Regarding injection molds, these are molds that are used to shape the plastic and create the components of the machine. Costs here are associated with the number of cavities and complexity and for a whole machine like ours, the complexity of the molds is very high which results in a big cost to produce them. We have 29 plastic components in our machine and the cost for those molds range from €5k to €37k. There is also a need to take into consideration how many components each mold can produce before it needs to be replaced by a new mold.

For some general information about injection molding, here is an article on that topic:\xa0https://rexplastics.com/plastic-injection-molds/how-much-do-plastic-injection-molds-cost#:~:text=A%20small%20and%20simple%20single,your%20hand%20costs%20around%20%2412%2C000

Redesign of the machine
If you remember there was a pandemic in the middle of our crowdfunding campaign. During this time we faced many challenges. Feel free to go back and read our updates from that time. Instead of sitting still and not doing anything we decided to implement many of the changes suggested by you in order to improve the machine further. This resulted in us basically developing a new product from scratch.

Certification
In order to sell a hardware product like the BRU Maker One, there were several certifications that we had to get. Also take into consideration that the campaigns were global meaning that we need to acquire certification for several different countries and the process varies for each country/region. The BRU Maker One is a product that uses electricity, is heating water, and is used to prepare a “food” items (yes, tea in this case is classified as food). For some of these tests we had to submit a final product for them to test. Then after feedback, submit more products for further testing until it is approved.

There is a lot of information available if you want to learn more about how certification works. Here is one example about CE certification:https://cemarking.net/what-are-the-costs-of-ce-...

And about FCC:\xa0https://www.linkedin.com/pulse/how-much-fcc-certification-fee-2023-detailed-schedule-ai-dash-cam-nftgc/

Running cost
In order to manage everything needed for this project, developing the product from scratch, managing production and marketing, customer support, certification and everything else we had to recruit a few team members and hire external consultants. We have a small office to work from, computers and software in order to actually do the tasks and so much more. That we managed to do all this by only spending 8k per month (in Switzerland!) should show you that we spent the money extremely conservatively. And, as you can imagine, after paying all these expenses there is not that much left so our founders actually had to earn money elsewhere with part-time jobs in order to survive. Let's be clear on that, doing this crowdfunding campaign has not been financially beneficial for us.

Let's summarize all the costs for you here
Here is a simple overview of the described costs associated with developing the machine.

What was the result?

What we received from the crowdfunding campaigns:\xa0€770,387
What was spent on developing the whole project:\xa0€817,000

So in the end we actually had a negative balance in our accounts. So, there was no money left for producing and shipping the machines to you. In order to fulfill any backer perks we had to find additional funding. As we have explained in several updates before, we decided to offer our backers an option to pay an additional amount in order to produce and ship the machine to them. The rest we simply have to fulfill as soon as we are in a financial position to do so. This is the situation we are currently in and we hope that this overview provides you with a better understanding and also trust that we are working hard in order to fulfill every perk, and keep in mind that all these costs and expenses are rough calculations\xa0and not all costs have been included here.\xa0

And again - the crowdfunding campaign was not portable for us in any sense. After paying all the expenses resulted in the much more expensive and advanced product, there was nothing left for us as profit. So please let's be clear on that, doing this crowdfunding campaign has not been financially beneficial for us at all.

And \xa0here is something very important for our Option 2 backers:

Moving forward we plan to use a portion of our future profits to fulfill your perks. How much it will be and how long it will take we can’t tell you.- After paying for everything needed to keep the company running, we will be at a point where we have the money that will be used to fulfill your perks.\xa0But the formula is actually pretty simple: The faster our new sales grow, the faster we can fulfill your perks. Meaning that the faster we can scale our direct, official, new sales, the faster we will be in a position where we can start to fulfill our perks. It’s as simple as that.

Thanks again for all your support. We hope you see the effort we put in every month to keep you updated.

And as always, if there is something unclear or you have any questions please reach out to us at support@bru-tea.com where we monitor the questions in detail.

Happy tea drinking!\xa0

Team BRU