Investment Opportunity
JZ Microphones
Handcrafted premium-level studio microphones;
Sold in more then 60 countries;
Made in Latvia, EU
Key investment considerations:
Opportunity
Interested investors are offered an opportunity to:
- invest EUR 1 million in JZ Microphones share capital by subscribing to a new issue of shares to be used to buy out manufacturing assets; and
- provide EUR 500,000 in the form of a subordinated loan to be used for working capital and general business development needs.
Company
Established in 2007, JZ Microphones focuses on marketing and sales of professional-use microphones designed by late Juris Zarins and manufactured at Sound Productions.
The Company has been offered a unique opportunity to acquire controlling interest in Sound Productions and to significantly expand and strengthen its business franchise.
The shareholder structure of JZ Microphones is as follows:
Established business with a proven track record
The Company has been engaged in marketing and sales of microphones for more than 15 years, although until recently facing the issue of limited supply of items to sell.
According to the management the year 2021 serves as a good illustration of its current capacity and ability. The 2022 results have been affected by the overall audiovisual market slowdown and by the stagnating sales in China. The 2023 full year results are better than the 2021.
In 2023 the Company restructured its balance sheet by capitalising the loans from shareholders.
The financial highlights are summarised below:
Experienced and skilled management team
The day to day operations of the Company are managed by the management board consisting of 3 members:
Filips Rajevskis has been the chairman of the management board and the CEO of the company since 2007. He is also one of the founding shareholders of Mediju Tilts and is widely recognized as one of the best-known consultants in the Baltics.
https://www.linkedin.com/in/filips-rajevskis-16017b11/
Elvijs Junde is the management board member responsible for logistics and for sales to China and South Korea. Elvijs has a master’s degree in business administration. He has been with the company since 2008.
https://www.linkedin.com/in/elvijs-junde-3a176714/
Andris Zemmers is the management board member responsible for marketing, sales and digital marketing in Europe and in the US. Since joining the company in 2012, his expertise has been instrumental in the growth of the JZ ecommerce channels.
https://www.linkedin.com/in/andris-zemmers-2bb59561/
Well-established and recognised brand and product line
Over the years the Company has built a remarkable position and brand recognition in a very conservative high technology products market with very high barriers to entry. Neither the product design, nor the IP and know-how used in manufacturing can be replicated easily.
According to Google Trends JZ Microphones ranks as #14 most searched large diaphragm studio microphone in the US and as #14 globally in 2023.
The Company offers the following series and individual products:
- Black Hole series - BH1, BH2 un BH3 microphones
- HH series - HH1 dynamic microphone
- Signature series - BB29 un The Amethyst microphones
- Vintage series - Vintage 11, Vintage 12, Vintage 47 (Limited) un Vintage 67 microphones
- accessories - pop filters, BH shock mount, Vintage shock mount, The Amethyst shock mount, BB29 shock mount, small and large wooden boxes for microphone storage.
"When it comes to microphones I keep my Black Hole at the top of my arsenal. Truly stunning on acoustic instruments - so clear, smooth and versatile. A real winner in all applications!"
Highly developed marketing and sales function
According to management, in 2023 more than 68% of all the sales have been made online.
The Company uses the following sales channels:
Web sites:
- for international clients - https://intshop.jzmic.com/
- for US clients - https://usashop.jzmic.com/
- for Japanese clients - https://jzmicrophones.jp/
Distributors:
The only country where the Company has made arrangements with a distributor is China - https://www.dingdongaudio.com/
Dealer network with no exclusivity granted:
- in Europe - https://www.thomann.de and https://www.bax-shop.de/
- in the UK - https://studiocare.com/
- in the US - https://www.frontendaudio.com/
- in Japan - https://www.soundhouse.co.jp/
The Company has built a most comprehensive buyers' email address data base in the industry and uses email as its primary marketing tool with remarkable success.
Strong revenue growth potential
The management expects that after the acquisition of manufacturing assets from Sound Production and raising additional capital the Company will be well-positioned to grow its sales by 25% a year without a significant increase in its cost base:
Note: other operating income includes co-financing and grants received from the Investment and Development Agency. of Latvia.
The management estimates that better control over its supply chain will allow JZ Microphones to improve its gross margin by at least 10 percentage points starting from 2024.
Proposition to acquire a Latvian high tech products manufacturer
After Juris Zarins passing away in 2017, Sanda Stafecka, the daughter of his business partner, arranged with his estate to transfer the assets and IP rights to a new entity, Sounds Productions.
These are financial highlights of Sound Productions manufacturing:
The following is a summary of Sound Productions manufacturing revenues and costs related only to the microphone manufacturing business in H1 2023:
Because of personal reasons Sanda Stafecka has offered JZ Microphones the opportunity to acquire manufacturing assets of Sound Productions. Ms Stafecka has preliminary agreed to continue serving as the COO of manufacturing for at least the next 3 years and to enter into a long term lease agreement of production premises with the company.
Next steps
Murinus Advisers have been retained to advise on capital raising and on the envisaged transaction.
The Company reserves the right to enter into direct negotiations with an interested party or parties at their sole discretion at any time.
Important Notice
This investment overview does not constitute an offer or invitation to persons to subscribe for or purchase any shares or other securities in any company or for persons to enter or offer to enter into an investment agreement or to exercise any rights conferred by an investment to acquire, dispose of, underwrite or convert an investment.
The investment overview may contain basic information, statements, estimates provided to Murinus Advisers by the management of the Company.
Any person, including any proposed acquirer of securities of the Company referred to in this document or any business or assets referred to herein, must satisfy himself as to all matters relating to the Company or such business assets including all the information and statements contained herein
The investment overview contains certain statements, estimates and projections with respect to the anticipated future performance of the business. Such statements, estimates and projections reflect various assumptions made by the management of the Company concerning anticipated results, which assumptions may or may not prove to be correct. No representation is made as to the accuracy of such statements, estimates and projections.
Contacts
Aivars Jurcans
Murinus Advisers
aivars@murinus.lv
Filips Rajevskis
CEO, JZ Microphones
filips@jzmic.com
