Tuesday, 17 July 2018

Faction Collective have not filed accounts since 2015 - Whats UP!



Faction Collective, a French registered ski maker with a UK registered off shoot, raised £775k on Crowdcube in 2015. Prior to this, the company had filed annual accounts. Nothing since.


I know the French have a different accounts system but for accounts to be left for over 2 years seems a little odd. No new filings have been made at CH since June 2016.

Does anyone know how they are doing? Website seems live and active, brand certainly still out there. 

Saturday, 14 July 2018

Let's play What If.



So what if an FCA regulated ECF platform promoted a company and as a result the company achieved its funding target. Then sometime later, the company got itself into serious trouble and ceased trading. It turned out the founder had issues and couldnt cope. Or so it was claimed.

What if this founder was in fact not having issues of his own making? He was having issues induced by the things, illegal things, he was doing. What, if any, liability comes back onto the platform for not seeing this in the original pitch?

What if, when the company got into trouble, the platform and the founder told investors that the reason for the company's collapse was in fact nobody's fault - it was just a case of circumstances. And then what if there was irrefutable evidence that this was not the case. Would the platform be liable then for misleading investors?

As things stand today the platforms are not liable for any form of behaviour by the founders who use their sites to raise cash - even though the pitches are supposedly vetted.

Should this founder be banned from being a Company Director? Or do we allow this sort of thing just to happen and put it down to bad luck.

Im not sure but unless we start talking about these things and stop trying to hide them for the bad PR they will bring, then we will never come to a satisfactory answer.

Friday, 13 July 2018

What happened to Crowdcube success Grubklub? Another woeful tale?



Grubklub, who owned the online Grub Club app, raised £288k on Crowdcube in 2015. Their projections showed profits for YE 2017 of £2m. Accounts show losses £240k. But that is not the main story.


Update 14 July 18. A SH has been kind enough to share correspondence - which in turn shows this company up for what we believed it was - a sham. A sham that has ripped off shareholders and that Crowdcube have taken so little interest in since claiming their commission, that their own website tells people, is fine. Well it is not and will according to the remaining founder close shortly with all investors cash lost. For Vizeat it wasnt so much a takeover as a shovel and sweep job. Well done everyone. Here is the email to SH - 

Dear Shareholders,

As you know well by now, following my several newsletters on the subject, we have been endeavouring since early 2017 to find a sustainable way to continue the Grub Club business, whether by investment, strategic partnership, merger, or sale to an acquiring purchaser.

Following positive discussions with our biggest global competitor during the last few weeks of the year, I am now able to advise of Grub Club's asset sale to VizEat late on Saturday 23 December 2017.

The structure of the deal is such that the Grub Club business will effectively be absorbed into VizEat meaning, unfortunately, that there will be no return on Grub Club shares, whether for Founders or Investors alike.

On behalf of the leadership team, I would like to thank you for your contribution to making Grub Club the 'stand out' dining experience in London, resulting in:
·  100's of thousands of pounds being raised for charities, such as the Hands Up Foundation for Syria, Food Cycle and The Food Chain, to name but three out of many more;
·  Over 60,000 dining guests experiencing a completely new way to enjoy good food whilst meeting like-mindedly sociable fellow guests;
·  Dozens of underused cafe's being able to supplement their normal income through hosting evening dining events;
·  10 new permanent restaurants being established following the chef's experience with Grub Club; 
·  1 such restaurant achieving their ambition of being awarded a Michelin star of excellence.   
The sale to VizEat will allow the Grub Club team to continue shaping the London Dining Out scene and further expand into other UK cities, whilst also protecting current Grub Club suppliers and employees.

We will revert to all relevant shareholders latest by 31 March 2018 to advise on the possibility of claiming any EIS / SEIS loss relief. 

In the light of the above sale, I will be stepping down from my role as Grub Club Executive Chairman & CEO on 30 December - thank you for your support over the last 12 months of what has been a highly eventful 2017 for the business.

As the remaining Founder still active in the business, Sid will now be your main point of contact for all future business communication.

Best,

Paul

Paul Heritage
Executive Chairman & CEO

Grub Club 
"Creating Extraordinary Dining Experiences in Curious Corners" or 'Creating a bloody a mess'


And here is article by Beauhurst on Crowdcube exits - https://about.beauhurst.com/blog/grub-club-acquisition-crowdfunding-exit/ - which has now been corrected due to our data. But you would have to say that it is incredible and worrying that a company like Beauhurst can accpt a Crowdcube PR and just stick it out there as if it were true. We accept that Crowdcube are happy putting out misinformation but we wouldnt expect Beauhurst to do the same on their behalf.

The Crowdcube site shows nothing interesting has happened at Grub Club for 2 years - typically out of date. Yet the website they have puts you through to a similar business owned by a totally seperate company, Vizeat. Grub Club was 'aquired' by Vizeat - well it is now run by them. It is unlikly any money changed hands.

Having dug around a little we failed to find any legal connection between Grubklub and Vizeat. Crowdcube shareholders still appear to own shares in Grubklub, which was at YE technically insolvent, with accumulated losses of over £800k and £27k in the bank. 

We have asked Vizeat what happened but have had no reply yet. Vizeat has rebranded to Eatwith and guess what, the old founder of Grub Club, Siddarth VijayaKumar has been made the UK CEO. The other two founders have resigned. Is this good news for Crowdcube investors? Hard to say. Probably not as they do not own shares in Vizeat which now owns the Grub Club app.

In an interesting piece here Vizeat calls it an acquisition whilst Siddarth calls it a joining of forces. It cannot be both.

If any SHs in Grubklub have any interesting insights then please get in touch. It looks like another Crowdcube company that couldnt deliver and that has been picked off by a larger rival for pennies or nout - ring any bells? Success in Vizeat does not currently appear to mean success for SHs in Grubklub. 


Thursday, 12 July 2018

Brewdog - 2017 numbers are out and profits are down by 73%. Mind you, the Hatman is not worried.



Brewdog's 2017 results show a drop in profits, after tax, for the world beating brewer, of £2.2m on last year's £3.2 result. Does it matter for a company that became a paper Unicorn recently?

As always this post comes with caveats. We know that Brewdog is a phenomenally successful UK company. We only asks these questions about its recent progress so as to analyse the use of ECF on this scale.

Expansion is the probable cause and if they can keep the money flowing in as fast as it is flowing out, then no, it probably doesnt matter at this stage. Administrative expenses rose by £15m, from £20m to £35m. Meantime GP only rose by £12m with a fall of 1% on the GPM. Their favourite headline figure, EBITDA, has been given some treatment so that it appears to be increasing from £6m to £8m. However this would seem to be some accounting ruse as the non 'adjusted' figure is down by almost 40%. Of course that message is somehow lost in the mayhem of a Brewdog accounts presentation. The bottom line net profit number has not been adjusted. Other income from non controlling interests is set at just over £4m. 

The finance costs more than doubled to £1.2m  

Brewdog have been struggling a little to raise their punk equity both in the UK (still below the first target of £20m and so nowhere close to the real target of £60m) and the USA. In the US they appear to have taken down the running meter  - well we couldnt find it anymore. Their map of US investors is still bleak.

During the year, the company bought back shares to value of £705k at a price of £13.18 per share. In December 2017 the company sold B shares for £23.75 each. Not quite sure how that works? 

The company claims to have seen sales growth in the UK of 78% over the year. But the accounts show UK sales going from £58m to 89m. Not sure how that works either. 

Sales in the US were tiny at under £4m out of a total £111m. As the brewery has been in action there since July 17, this seems like a slow start.

As ever the plans are gargantuan. New breweries in Australia and the Asia are the headlines.  All in keeping with Hatman's love of Locke's advice -

IF WE DISBELIEVE EVERYTHING, BECAUSE WE CANNOT CERTAINLY KNOW ALL THINGS, WE SHALL DO MUCH WHAT AS WISELY AS HE, WHO WOULD NOT USE HIS LEGS, BUT SIT STILL AND PERISH, BECAUSE HE HAD NO WINGS TO FLY. 

With rising costs that will be difficult to cut, the ECF cash is looking more and more crucial, if his wings are not to be scorched. 

Tuesday, 10 July 2018

And here we go again Zzish are back on Crowdcube having lost £1.4m last year. Yet they have passed their target.


So  it appears you can tell Crowdcube investors whatever you like - they hand over cash anyway. Zzish raised £1.3m last year. Now they have burned this as their model didnt work. With a doubled valuation they are back and have already cracked their obviously fake target of £300k.

It is not until you read the forum on ZZish that you get the real picture. The launch in the US didnt work - the service/product wasnt right for its target market. You have to ask if they bothered to ask  schools in the US what it was they wanted, before offering them a product that wasnt a fit. £1.5m of loss later, they have an idea of what the required product is. That is someway to run a business. Is it possible to charge the enemy firing blanks - realise your mistake halfway through, regroup, reload with live ammunition and charge again with success?? We shall see.

In the pitch you would be forgiven for believing that all had gone to plan. So why do they do that? Why lie to investors? Just be honest and say ok we got it wrong but now we have got it right and we can go places. Which they can if what they say is correct. Mind you, the trust has just been shattered so maybe people will not believe them now. For sure they need far more than £300k.

One good point is that they have at least had the nous and honesty to file their accounts to YE May18. This is indeed very rare on Crowdcube - maybe a first.

As the Q shows, if they were going to do that, then there wasnt much point in trying to cover up the failure of 2017.


Daisy Green back on Crowdcube with the same old misinformation as always


Despite their best efforts to make you believe the contrary, Daisy Green are not anywhere close to their 2015 Crowdcube Bond projections. Of course they dont tell you that now.


It is the same old same old and it always gets the same reaction. Daisy Green have already burst through their fake funding target of £500k and had exceeded £1m before it went public. That looks like a huge success at a valuation of £18m.

But if you look a little closer, cracks appear. The company projected years 2015, 2016, 2017 and 2018 would all be profitable  - they were not (2018 is still unknown). So the 2015 figures given in the Crowdcube pitch were historic and showed a profit of around £40k. The company actually made a loss when these accounts were filed. This fudge is now so common on Crowdcube I suppose it is the norm - but it shouldnt be. 

Losses for year ending April 2017 were ~£500k. The company sold its bond to Crowdcube investors with a 2017 profit of £300k. Hey so what! Well the point here isnt the gap but its the complete lack of recognition that it exists.

One other trick they try and lay out in this new pitch is the mirage that they paid off this Crowdcube Bond early, out of profits. They didnt. Of course they dont claim they did but the way it's worded, as some sort of huge success - paying it off 2 years early - makes it appear like it is. In fact they had to borrow (at a better rate) to pay it off - thereby stitching up Crowdcube investors who expected another 2 years of interest. 


As always on Crowdcube, things are not what they seem. The company may go on to some success but I just hate the way this information has yet again been manipulated in order to obtain more money. Where is the integrity?

Looking over their figures they have been manipulated to make a best case and they totally ignore key numbers that would give investors a true picture of the situation. But then investors really should be looking for these numbers anyway. 

For me this has a similar ring to it as Sugru did. Asked why they are now selling equity when they repaid the bond early, the answer from Daisy is less than convincing. What if, as in the Sugru case, the bank loan Daisy has is under pressure (£500k loss last year is not what was planned). You have seen it once, well this might be a repeat. Worth asking before you throw your cash at it. 

How to get fake 5 star reviews for your product via Equity Crowdfunding


When Oppo Brothers are not asking their investors to post fake reviews on Asda, they make ice cream. I always thought this sort of nonsense went on but have never caught anyone red handed. Oppo Brothers raised £400k on Seedrs in 2016.

Here is the text of the Oppo Brothers latest shareholder communique. Since this was issued, many 5 star reviews have appeared on their product reviews at Asda. Dont think we need to say more -

Tell Asda shoppers that Oppo is awesome.

We're low on reviews in Asda and could do with a few more - every review will help accelerate sales! We need to have an average of over 4.5* to unlock more support.
It takes 30 seconds to add a quick star rating, you don't need to shop there, and one or two brief words and will help grow your investment. 
(Just don't say you're an Oppo investor 😉 )
Just click any of the flavours here, then click the reviews tab and you will get hero status:


Following comments below its obvious not everyone agrees on this. My point is that if you allow this by just saying its ok, then where do you draw the line. Oppo are asking indirectly for 5 star reviews (they say they need 4.5 plus ie 5). So for example you might not like their apple and gosseberry as much as their melon but because you are a SH you give it 5 anyway. That is a fake review. If the product was worth 5 stars then customers would give it 5 stars - that is the whole purpose of reviews. It may well be a 5 star product but you shouldnt be making it one.

Oppo Brothers are one ECF company heading in the right direction - they really do not need to be attempting to manipulate things like this.