- Seven flagship locations across New York City, Washington DC, and Boston; launched its At-Home platform during Covid with thousands of subscribers
- Notable investors include Tiësto, Kevin Durant, Carrie Dorr (founder of Pure Barre), and Doug Levine (founder of Crunch)
- Trained and certified an estimated 1,000+ instructors to teach 305 in their local gyms and communities
- Press features include Good Morning America, TODAY, Vogue, Harper's Bazaar, Forbes, NY Mag, Washington Post, Refinery29, and more
- Total Amount Raised: US $48,800
- Total Round Size: US $3,000,000
- Series B :
- Minimum Investment: US $1,000 per investor
- : Convertible Note
- US $25,000,000 :
- Side by Side Offering
Fitness can be intimidating and difficult. Current fitness studios and activities can be expensive and not accessible to the broader community. They may require additional equipment, a special exercise or skill, take place in a judgemental or competitive environment, or not allow individuals to fully express themselves.
305 Fitness is increasing access, by offering a uniquely engaging and fun product that beats the treadmill any day of the week. 305 gets more people working out with our sticky classes, widely accessible independent certified instructors across the country, and easy-to-access digital platform.
Prior to the COVID pandemic, 305 Fitness found success and traction in its brick-and-mortar studios. Through the pandemic, we launched two new revenue streams, finding product-market fit with our online instructor program and digital platform.
Now more than ever, the world needs joy! 305 offers consumers a place to celebrate and feel good in their bodies. Exercise doesn't have to suck! 305 makes working out fun, and in the process, includes and uplifts people who aren't being represented in the traditional fitness industry.
With 305 Fitness studios reopened, thousands of subscribers on our At-Home network, and over 1,000 certified instructors able to teach 305 across the world, we believe 305 Fitness is well positioned to become a lasting player in the fitness space.
A Side by Side offering refers to a deal that is raising capital under two offering types. Investments made through the SeedInvest platform are offered via Regulation CF and subject to investment limitations further described in the Form C and/or subscription documents. Investments made outside of the SeedInvest platform are offered via Regulation D and requires one to be a verified accredited investor in order to be eligible to invest.
US $48,800 (under Reg CF only)
Investors who invest less than $50,000 will have their securities held in trust with a Custodian that will serve as a single shareholder of record. These investors will be subject to the Custodian’s Account Agreement, including the electronic delivery of all required information.
The most important perk - the opportunity to own a piece of 305 with favorable deal terms! This investment opportunity is normally only available to institutional investors and 305 is opening access to first-time investors and investments as low as $1,000.
Bonus perk: All investments made by October 1st at 11:59pm ET will receive 10 class credits.
All investments made : 305 At Home digital subscription for one year.
Investments $5,000 and above: Receive 20 class credits and access to 305 At Home for one year.
Investments $10,000 and above: Receive 1 year of class credits to 305, 25 guest passes, and access to 305 At Home for one year.
Investments $25,000 and above: Receive unlimited class credits to 305, 100 guest passes, and access to 305 At Home for one year.
It is advised that you consult a tax professional to fully understand any potential tax implications of receiving investor perks before making an investment.
Please note that due to share price calculations, some final investment amounts may be rounded down to the nearest whole share - these will still qualify for the designated perk tier. Additionally, investors must complete the online process and receive an initial email confirmation by the deadline stated above in order to be eligible for perks.
The graph below illustrates theor the of 305 Fitness's prior rounds by year.
The target market of 305 Fitness is young adults with disposable income, generally between 20 and 35, who may or may not be traditional boutique fitness consumers. We believe our concept can attract these non-traditional users. Although 305 Fitness appeals to a wider audience than just young adults, our core addressable market is about 60,000,000 people in the US, and more globally.
Any fitness concept, from free-running to big box gyms, to other boutique studios, is in competition with 305 Fitness. However, 305's focus is on expanding fitness access to new customers and markets, and many of 305 Fitness clients do not do other boutique workouts. We can serve, but are not scrapping over the small, wealthy group that frequent boutiques like Soul Cycle and Barry's.
The brick-and-mortar fitness market has been decimated by the pandemic. A majority of gyms and boutique studios in the urban markets 305 operates in (NYC) have closed. Customers have fewer choices for in-person workouts, and 305 Fitness is well positioned and can benefit from the reduction in supply.
In comparison to other boutique competitors, 305 classes are less expensive, more accessible, and more welcoming. 305's product fits a wider audience, many of whom would not work out if not for 305 Fitness.
Our instructor certification program can be successful in a post-COVID world. Many young people are looking for work due to COVID, that they find meaningful, empowering, and that pays the bills. During the last major economic downturn, Zumba grew 2,000%, people needed auxiliary income, and like now, there was a huge number of ex-dancers, fitness instructors, and personal trainers eager to dive in and learn. We believe there is a big opportunity to grow 305 Fitness certifications, especially at a time when people are likely to be searching for a career change and for a new community.
If an event that triggers conversion of the Convertible Notes has not occurred upon Maturity, the Notes will remain outstanding unless a principal majority of the Noteholders elect to demand repayment of the Notes. In the event that the Convertible Notes remain outstanding upon maturity, the Required Holders, defined as holders of Notes representing at least a majority of the principal of the Notes outstanding, may demand that the Company (i) repay the outstanding principal under the Convertible Promissory Note and (ii) pay any accrued interest thereon. In the event that Requisite Holders do not elect to demand repayment upon Maturity, the Notes will remain outstanding until the Requisite Holders elect repayment or there is an occurrence of event that triggers conversion (as defined in the Convertible Promissory Note). Please see the Convertible Promissory Note Subscription Agreement in the Data Room for additional detail.
The development and commercialization of the Company’s products and services are highly competitive. It faces competition with respect to any products and services that it may seek to develop or commercialize in the future. Its competitors include major companies worldwide. The market is an emerging industry where new competitors are entering the market frequently. Many of the Company’s competitors have significantly greater financial, technical and human resources and may have superior expertise in research and development and marketing approved services and thus may be better equipped than the Company to develop and commercialize services. These competitors also compete with the Company in recruiting and retaining qualified personnel and acquiring technologies. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. Accordingly, the Company’s competitors may commercialize products more rapidly or effectively than the Company is able to, which would adversely affect its competitive position, the likelihood that its services will achieve initial market acceptance and its ability to generate meaningful additional revenues from its products and services.
The Company may be unable to maintain, promote, and grow its brand through marketing and communications strategies. It may prove difficult for the Company to dramatically increase the number of customers that it serves or to establish itself as a well-known brand in the competitive fitness space. Additionally, the product may be in a market where customers will not have brand loyalty.
Failure to obtain new customers or renew customers on favorable terms could adversely affect results of operations. The Company may face pricing pressure in obtaining and retaining their customers. Their customers may be able to seek price reductions from them when they renew a contract, when a contract is extended, or when a competitor offers more favorable terms. On some occasions, pricing pressure results in lower revenue from customers than what the Company had anticipated based on their previous agreement with customers. This reduction in revenue could result in an adverse effect on their business and results of operations.
Maintaining, extending, and expanding the Company's reputation and brand image are essential to the Company's business success. The Company seeks to maintain, extend, and expand their brand image through marketing investments, including advertising and consumer promotions, and product innovation. Increasing attention on marketing could adversely affect the Company's brand image. It could also lead to stricter regulations and greater scrutiny of marketing practices. Existing or increased legal or regulatory restrictions on the Company's advertising, consumer promotions and marketing, or their response to those restrictions, could limit their efforts to maintain, extend and expand their brands. Moreover, adverse publicity about regulatory or legal action against the Company could damage the Company's reputation and brand image, undermine their customers’ confidence and reduce long-term demand for their products, even if the regulatory or legal action is unfounded or not material to their operations.
In addition, the Company's success in maintaining, extending, and expanding the Company's brand image depends on their ability to adapt to a rapidly changing media environment. The Company increasingly relies on social media and online dissemination of advertising campaigns. The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about the Company, their brands or their products on social or digital media, whether or not valid, could seriously damage their brand and reputation. If the Company does not establish, maintain, extend and expand their brand image, then their product sales, financial condition and results of operations could be adversely affected.
The Company must correctly predict, identify, and interpret changes in consumer preferences and demand, offer new products to meet those changes, and respond to competitive innovation. Consumer preferences for the Company's products change continually. Its success depends on its ability to predict, identify, and interpret the tastes and habits of consumers and to offer products that appeal to consumer preferences. If the Company does not offer products that appeal to consumers, its sales and market share will decrease. It must distinguish between short-term fads, mid-term trends, and long-term changes in consumer preferences. If the Company does not accurately predict which shifts in consumer preferences will be long-term, or if it fails to introduce new and improved products to satisfy those preferences, its sales could decline. In addition, because of its varied customer base, it must offer an array of products that satisfy the broad spectrum of consumer preferences. If the Company fails to expand its product offerings successfully across product categories, or if it does not rapidly develop products in faster growing and more profitable categories, demand for its products could decrease, which could materially and adversely affect its product sales, financial condition, and results of operations.
In addition, achieving growth depends on its successful development, introduction, and marketing of innovative new products and line extensions. Successful innovation depends on its ability to correctly anticipate customer and consumer acceptance, to obtain, protect and maintain necessary intellectual property rights, and to avoid infringing the intellectual property rights of others and failure to do so could compromise its competitive position and adversely impact its business.
The Company operates in a business that is highly regulated and subject to liability concerns. Compliance with regulatory requirements and changes in regulations could result in expenses and in diversion of management attention to the operations of the business.
Through its operations, the Company collects and stores certain personal information that customers provide to purchase products or services, enroll in promotional programs, register on the web site, or otherwise communicate and interact with the Company. The Company may share information about such persons with vendors that assist with certain aspects of their business. Security could be compromised and confidential customer or business information misappropriated. Loss of customer or business information could disrupt the Company's operations, damage their reputation, and expose them to claims from customers, financial institutions, payment card associations and other persons, any of which could have an adverse effect on their business, financial condition and results of operations. In addition, compliance with tougher privacy and information security laws and standards may result in significant expense due to increased investment in technology and the development of new operational processes.
The Company’s business model is capital intensive. The amount of capital the Company is attempting to raise in this Offering is not enough to sustain the Company’s current business plan. In order to achieve near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If the Company is not able to raise sufficient capital in the future, then it will not be able to execute its business plan, its continued operations will be in jeopardy and it may be forced to cease operations and sell or otherwise transfer all or substantially all of its remaining assets, which could cause a Purchaser to lose all or a portion of his or her investment.
The Company’s cash position is relatively weak. The Company has approximately $969,000 in cash balances as of July 31, 2021. This equates to 3-4 months of runway. The Company believes that it is able to continue extracting cash from sales to extend its runway of operation. The Company could be harmed if it is unable to meet its cash demands, and the Company may not be able to continue operations if they are not able to raise additional funds.
The Company has outstanding Paycheck Protection Program loans. The Company has approximately $686,942 of Small Business Association Paycheck Protection Program (PPP) loans outstanding as of July 31, 2021. The Company was granted a SBA PPP loan in May of 2020 in the amount of $625,300. The loan bears interest at a rate of 1% per annum and matures in August of 2022, and currently has an outstanding balance of $125,300. In February of 2021, the company entered into an SBA loan agreement with Alpine Capital Bank in the amount of $561,642. The Note bears interest at a rate of 1% per annum and matures in March of 2026.
The Company has outstanding SBA Small Business Relief liability. The Company was issued a SBA Small Business Relief Note in August of 2019 in the amount of $149,900. This loan accrues interest at 3.75% per annum and matures in August of 2050. Under SBA rules, there is a 1-year no payment period after the Loan was issued.
The Company has outstanding SBA promissory notes that are secured debt. As of April 2021, the Company has approximately total liability of $832,000 from three Small Business Association promissory notes that are secured with personal and company assets. This may require the Company to dedicate a substantial portion of its cash flow from operations or the capital raise to pay principal of, and interest on, indebtedness, thereby reducing the availability of cash flow to fund working capital, capital expenditures, or other general corporate purposes, or to carry out other business strategies. The Company was issued a SBA Note from First Bank in November of 2018 to open a new location in the amount of $575,000. This loan accrues interest at 2.75% per annum and matures in November of 2028. The Company has paid off a portion of this liability and currently owes approximately $512,000 on this note. The Company was issued a second SBA Note from First Bank in January of 2019 to open a new location in the amount of $770,000. This loan accrues interest at 8% per annum and matures in May of 2029. The Company has paid off a portion of this liability and currently owes approximately $315,000 on this note. In addition, the terms of the Loans clarify that upon any event of default, the Lender may declare all or any portion of the Loans to be immediately due and payable. One of the Events of Default, as defined in that agreement is a general inability to pay its debts.
The Company has participated in related party transactions. The Company had payments to and from its fitness studios, which are its subsidiaries and all separate legal entities, owned by the same founders. As of December 31, 2020 and December 31, 2019, the outstanding balance of the amount due from those related parties was in the amount of $682,763 and $458,619, respectively.
The Company has not prepared any audited financial statements. Therefore, investors have no audited financial information regarding the Company’s capitalization or assets or liabilities on which to make investment decisions. If investors feel the information provided is insufficient, then they should not invest in the Company.
The reviewing CPA has included a “going concern” note in the reviewed financials. The Reviewed Financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has a certain accumulated deficit, operating cash flow loss, and liquid assets in cash, that total less than a year worth of cash reserves as of December 31, 2020, that along with the Company’s situation, raises a substantial doubt on whether the entity can continue as a going concern in the next twelve months. The Company’s ability to continue as a going concern in the next twelve months following the date the financial statements were available to be issued is dependent upon the ability to produce revenues and/or obtain financing sufficient to meet current and future obligations and deploy such to produce profitable operating results. Management has evaluated these conditions and plans to generate revenues and raise capital as needed to satisfy its capital needs. During the next twelve months, the Company intends to fund its operations through financing. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If it is unable to obtain sufficient amounts of additional capital, it may be required to reduce the scope of its planned development, which could harm its business, financial condition, and operating results.
In general, demand for the Company's products and services is highly correlated with general economic conditions. A substantial portion of their revenue is derived from discretionary spending by individuals, which typically falls during times of economic instability. Declines in economic conditions in the U.S. or in other countries in which they operate may adversely impact their consolidated financial results. Because such declines in demand are difficult to predict, the Company or the industry may have increased excess capacity as a result. An increase in excess capacity may result in declines in prices for their products and services.
The outbreak of the novel coronavirus, COVID-19, has adversely impacted global commercial activity and contributed to significant declines and volatility in financial markets. The coronavirus pandemic and government responses are creating disruption in global supply chains and adversely impacting many industries. The outbreak could have a continued material adverse impact on economic and market conditions and trigger a period of global economic slowdown. The rapid development and fluidity of this situation precludes any prediction as to the ultimate material adverse impact of the novel coronavirus. Nevertheless, the novel coronavirus presents material uncertainty and risk with respect to the Funds, their performance, and their financial results.
Start-up investing is risky. Investing in startups is very risky, highly speculative, and should not be made by anyone who cannot afford to lose their entire investment. Unlike an investment in a mature business where there is a track record of revenue and income, the success of a startup or early-stage venture often relies on the development of a new product or service that may or may not find a market. Before investing, you should carefully consider the specific risks and disclosures related to both this offering type and the company which can be found in this company profile and the documents in the data room below.
Your shares are not easily transferable. You should not plan on being able to readily transfer and/or resell your security. Currently there is no market or liquidity for theseshares and the company does not have any plans to list these shares on an exchange or other secondary market. At some point the company may choose to do so, but until then you should plan to hold your investment for a significant period of time before a "liquidation event" occurs. A "liquidation event" is when the company either lists their shares on an exchange, is acquired, or goes bankrupt.
The Company may not pay dividends for the foreseeable future. Unless otherwise specified in the offering documents and subject to state law, you are not entitled to receive any dividends on your interest in the Company. Accordingly, any potential investor who anticipates the need for current dividends or income from an investment should not purchase any of the securities offered on the Site.
Valuation and capitalization. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment. In addition, there may be additional classes of equity with rights that are superior to the class of equity being sold.
You may only receive limited disclosure. While the company must disclose certain information, since the company is at an early-stage they may only be able to provide limited information about its business plan and operations because it does not have fully developed operations or a long history. The company may also only obligated to file information periodically regarding its business, including financial statements. A publicly listed company, in contrast, is required to file annual and quarterly reports and promptly disclose certain events \u2014 through continuing disclosure that you can use to evaluate the status of your investment.
Investment in personnel. An early-stage investment is also an investment in the entrepreneur or management of the company. Being able to execute on the business plan is often an important factor in whether the business is viable and successful. You should be aware that a portion of your investment may fund the compensation of the company's employees, including its management. You should carefully review any disclosure regarding the company's use of proceeds.
Possibility of fraud. In light of the relative ease with which early-stage companies can raise funds, it may be the case that certain opportunities turn out to be money-losing fraudulent schemes. As with other investments, there is no guarantee that investments will be immune from fraud.
Lack of professional guidance. Many successful companies partially attribute their early success to the guidance of professional early-stage investors (e.g., angel investors and venture capital firms). These investors often negotiate for seats on the company's board of directors and play an important role through their resources, contacts and experience in assisting early-stage companies in executing on their business plans. An early-stage company may not have the benefit of such professional investors.
Frequently Asked Questions
A Side by Side offering refers to a deal that is raising capital under two offering types. This Side by Side offering is raising under Regulation CF and Rule 506(c) of Regulation D.
The Form C is a document the company must file with the Securities and Exchange Commission (“SEC”) which includes basic information about the company and its offering and is a condition to making a Reg CF offering available to investors. It is important to note that the SEC does not review the Form C, and therefore is not recommending and/or approving any of the securities being offered.
Before making any investment decision, it is highly recommended that prospective investors review the Form C filed with the SEC (included in the company's profile) before making any investment decision.
Rule 506(c) under Regulation D is a type of offering with no limits on how much a company may raise. The company may generally solicit their offering, but the company must verify each investor’s status as an accredited investor prior to closing and accepting funds. To learn more about Rule 506(c) under Regulation D and other offering types check out our blog and academy.
Title III of the JOBS Act outlines Reg CF, a type of offering allowing private companies to raise up to $5 million from all Americans. Prior capital raising options limited private companies to raising money only from accredited investors, historically the wealthiest ~2% of Americans. Like a Kickstarter campaign, Reg CF allows companies to raise funds online from their early adopters and the crowd. However, instead of providing investors a reward such as a t-shirt or a card, investors receive securities, typically equity, in the startups they back. To learn more about Reg CF and other offering types check out our blog and academy.
When you complete your investment on SeedInvest, your money will be transferred to an escrow account where an independent escrow agent will watch over your investment until it is accepted by 305 Fitness. Once 305 Fitness accepts your investment, and certain regulatory procedures are completed, your money will be transferred from the escrow account to 305 Fitness in exchange for your securities. At that point, you will be a proud owner in 305 Fitness.
To make an investment, you will need the following information readily available:
- Personal information such as your current address and phone number
- Employment and employer information
- Net worth and income information
- Your accredited investor status
- Social Security Number or passport
- ABA bank routing number and checking account number (typically found on a personal check or bank statement) or debit card information, unless paying via a Wire transfer.
Non-accredited investors are limited in the amount that he or she may invest in a Reg CF offering during any rolling 12-month period:
- If either the annual income or the net worth of the investor is less than $107,000, the investor is limited to the greater of $2,200 or 5% of the greater of his or her annual income or net worth.
- If the annual income and net worth of the investor are both greater than $107,000, the investor is limited to 10% of the greater of his or her annual income or net worth, to a maximum of $107,000.
Separately, 305 Fitness has set a minimum investment amount of US $1,000.
Accredited investors do not have any investment limits.
You are a partial owner of the company, you do own securities after all! But more importantly, companies which have raised money via Regulation CF must file information with the SEC and post it on their websites on an annual basis. Receiving regular company updates is important to keep shareholders educated and informed about the progress of the company and their investment. This annual report includes information similar to a company’s initial Reg CF filing and key information that a company will want to share with its investors to foster a dynamic and healthy relationship.
In certain circumstances a company may terminate its ongoing reporting requirement if:
- The company becomes a fully-reporting registrant with the SEC
- The company has filed at least one annual report, but has no more than 300 shareholders of record
- The company has filed at least three annual reports, and has no more than $10 million in assets
- The company or another party purchases or repurchases all the securities sold in reliance on Section 4(a)(6)
- The company ceases to do business
However, regardless of whether a company has terminated its ongoing reporting requirement per SEC rules, SeedInvest works with all companies on its platform to ensure that investors are provided quarterly updates. These quarterly reports will include information such as: (i) quarterly net sales, (ii) quarterly change in cash and cash on hand, (iii) material updates on the business, (iv) fundraising updates (any plans for next round, current round status, etc.), and (v) any notable press and news.
Currently there is no market or liquidity for these securities. Right now 305 Fitness does not plan to list these securities on a national exchange or another secondary market. At some point 305 Fitness may choose to do so, but until then you should plan to hold your investment for a significant period of time before a “liquidation event” occurs. A “liquidation event” is when 305 Fitness either lists their securities on an exchange, is acquired, or goes bankrupt.
You can return to SeedInvest at any time to view your portfolio of investments and obtain a summary statement. If invested under Regulation CF you may also receive periodic updates from the company about their business, in addition to monthly account statements.
This is 305 Fitness's fundraising profile page, where you can find information that may be helpful for you to make an investment decision in their company. The information on this page includes the company overview, team bios, and the risks and disclosures related to this investment opportunity. If the company runs a side by side offering that includes an offering under Regulation CF, you may also find a copy of the 305 Fitness's Form C. The Form C includes important details about 305 Fitness's fundraise that you should review before investing.
For offerings made under Regulation CF, you may cancel your investment at any time up to 48 hours prior to the offering end date or an earlier date set by the company. You will be sent a notification at least five business days prior to a closing that is set to occur earlier than the original stated end date giving you an opportunity to cancel your investment if you have not already done so. Once a closing occurs, and if you have not canceled your investment, you will receive an email notifying you that your securities have been issued. If you have already funded your investment, your funds will be promptly refunded to you upon cancellation. To cancel your investment, you may go to your account's portfolio page by clicking your profile icon in the top right corner.
If you invest under any other offering type, you may cancel your investment at any time, for any reason until a closing occurs. You will receive an email when the closing occurs and your securities have been issued. If you have already funded your investment and your funds are in escrow, your funds will be promptly refunded to you upon cancellation. To cancel your investment, please go to your account's portfolio page by clicking your profile icon in the top right corner.