Saturday, 31 October 2015
Lawbit files more large losses.
The projections used to get to this stage have as usual proved to be total fantasy.
Accounts filed for YE May 2015 show losses for the year of £250k against a projected profit of of £1.9m in the fantasy version for YE November 2015. Accumulated losses are now £800k as opposed to the projected accumulated profit figure of £1.7m. It's technically insolvent to the tune of £380k. The company will surely be appearing again soon at an ECf platform near you.
How is it possible to be so consistent in getting these financial projections so stupendously wrong? Of course much of this is down to Crowdcube's out to lunch department - the one that will be running their new EIS fund. High valuations based on future fairy tale revenues and profits are the mainstay of the Crowdcube model. This heightens excitement amongst investors, allows grand claims to appear in the business plans and ensures that founders sell minimal amounts of their equity.
In the end however, investors will surely wake up and realise that they are being conned. Wont they?