12x3's Ltd

Single company EIS report

07 Sep 2017 / Tax enhanced research

Summary: 12x3’s is raising new money to fund the growth of its first boxing gym and the establishment of its second.

Why Invest

Positives

Strategy: The company has just opened its first boxing gym in Aldgate and is planning the opening of its second in Paddington in 2018.

Issues

Competition: There are already many fitness gym operators. 12×3’s is a specialist boxing gym making it a niche player with both the positive and negatives which go with that tag.

 

The Management

Positives

Team: A high-energy combination of highly experienced boxers and successful entrepreneurs.

Issues

Track record: The management team has no previous experience in running a gym business but they have worked in boxing gyms and have substantial business management experience.

 

Nuts & Bolts

  • Share Issue: Open offer issue for 646 shares (25% of enlarged equity) at £1,548 per share i.e. raising £1m gross.
  • Offer: Offer launched on 1st September 2017 and will close on 1st November 2017.
  • Exit Strategy: There is no planned exit but the most likely first liquidity event will be the introduction of an institutional investor to fund further expansion.

 

Specific Issues

  • Start up: 12×3’s has only just started trading. Its trading record is just a few weeks long. So the concept is yet to be proven and, without a monthly membership scheme, it is as yet unclear how loyal the patrons will be.

 

Risks

  • Generic: 12×3’s is a relatively small unquoted company. There will be no formal market in the shares. It is not intended that there will be any capital returns or dividends paid in the first three years. There can be no guarantee that the investment will be successful, that an exit will be achieved or there will be any value to be distributed.
  • Specific: The business has very low fixed costs as the key personnel – the boxing trainers – are paid on the number of members they train. Nevertheless there are still fixed costs to cover such as rent, rates and some small fixed salaries. The biggest risk we see is getting the business off the ground in both, very different, locations.