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Friday, 30 December 2016

More sticky business for equity crowdfunding

Sugru's recently published accounts show why we need to change the way company accounts are filed.

Sugru raised almost £3.4m on Crowdcube last year. 

More recently they tried to raised more equity funding via the Envestors platform. 

The problem here is that their accounts were due out about the time that the Envestors round was live; September 2016. But they were not filed until afterwards - or to be exact 2 weeks ago.

Now in the brief summary for the Envestors pitch the company showed a series of actual numbers for the financials which included YE December 2015 (the one they had failed to file on time). The 2014 'actual' accounts tally with the ones filed at CH - which they would have to as these were readily available for all to see.

The 2015 certainly 'actuals' do not.

One crucial figure, which is the main driver for all businesses, especially those in a rapid growth phase, has been incorrectly given to potential investors by the company and the platform. Assuming the platform have to work on the information given to them, then the responsibility lies with the company. The miscalculation is so large it is hard to believe it is a simple error.

The GPM for 2015 turned out to be only 42% against a given 'actual' figure on Envetsors of almost 51%. Now a difference of 8-9% on turnovers heading north of £3m is highly significant. Not just in cash terms. The projected GPM for future years is crucial to Sugru's progress and if the 50%+ figure is not attainable then investors should be asking why? They cannot ask if they are told it is 50% 'actual'. On the 2015 revenue figure, this 8% shortfall would lose around £280,000 of gross profit. In reality they were £306k down on GP for 2015. 

Losses were in fact lower than the 'actuals' shown by Envestors - by cutting the overheads by around £300k. This in itself should be of interest to investors, who were given the wrong figures. But the main point here is that the future 50% GMP for 2016 and beyond must now be in doubt. With projected turnover for 2020 of more than £28m, a change in the GPM of this magnitude will not be welcome.

At the end of November 2016, the company arranged three new facilities with the Clydesdale Bank - we'd love to know which figures it was working off.

If, as we have been demanding for sometime now, all companies raising ECF had to produce up to date filed accounts, then this wouldn't and couldn't happen. It would be a very simple fix for what is a very major problem - as anyone who reads this blog will know.

Cornerstone's razor sharp Crowdcube pitch blunted by results

Cornerstone raised over £860k on Crowdcube in 2015. Results for YE December 2015 show losses more than double those projected.

We had expected this. A company using free give aways to build its client base on line is bound to hit the wall when they try to charge - unless the product is good. Reviews seem very nixed. Mind you that didnt stop over 200 people investing very nearly a million.

Its too early to tell for now. 3 of the original directors have left - never a good sign. Will Hobhouse is their Chairman - the man who built up Whittards Of Chelsea; colloquially known as 'House of Cards'.

Whittards was one of those companies that kept expanding and expanding in the late 80's and 90's but never seemed to make any money for any length of time - making what seemed to be some disastrous decisions along the way. And then it was sold for £21m in 2005 (how they managed this is the stuff of business legend) and went into liquidation on large losses at the start of 2009 - Whittard owed over £5m to trade creditors and was employing around 950 staff, when it ran for cover. In a pre packed deal (here we go) the remnants were bought out and it still occupies our High Street. Its eventual losses were many millions.

Maybe a lesson there?

Ouch - bloody cheap razors!

Thursday, 29 December 2016

Hop Stuff completes its Crowdcube raise of £500k - glass half empty or half full?

Hop Stuff will be the one to watch in 2017. Prudence has left the room.

Despite being only loss making since it raised funds on Crowdcube in 2013 and having an estimated turnover of just £1m for YE April 2017, Hop Stuff have smashed their £500k target with more than 3 weeks to go. Well actually this pitch was extended but lets not quibble about facts - this is CC after all.

Congratulations to Hop Stuff for what is either a great business or possibly one of Crowdcube's best examples of just why their system stinks. Only time will tell.

The pitch was full of interesting figures - ones stretched to their limit - see here  . After we wrote about them, many were removed or altered. Some are still elastic.

We think that this will either be a remarkable success or a catastrophic failure. Their plans leave little room for anything else. On their projections, they borrow another £500k by April 2017 - or that is the plan. They then pay over £100k pa in interest which wipes out the next year's profits. Burn rate for 2017/18 is almost £2m - much of this in the fixed cost column. 2017-2018 revenues triple, partly on the back of a Swedish deal which the founder has himself admitted has not been concluded - but only when asked. 

All of this on top of the fact that as far as we can see there is no experience in the team at the £3m t/o level. Sure the beer is popular but that's just one relatively simple step. 

There is no room for error here - the 2018 profit will evaporate if the GPM increase of 2% doesnt materialise and we all know how difficult GPMs are to project accurately at an early stage. If they over trade and require more cash  - this round's valuation is likely to prevent any new equity funding. They are already highly geared, so missing revenue projections is not an option.

400 trusting souls have jumped in. Here is a toast to you all. Brave or foolhardy - we will know by the time 2018 is over. We hope that the new year brings Hop Stuff much success - god knows Crowdcube could do with some really good news.

Affresol cements another bad year for Crowdcube

Affresol Ltd have just posted their results for YE May 2016.

This company, which created a synthetic concrete for buildings, raised a small amount on Crowdcube in 2013 and has since raised over £1.5m in equity finance  - giving it a current equity funding of £2.4m.

In the Crowdcube pitch - it was shown as being in profit from 2014 and made a handsome £3.8m profit for YE November 2015 - so we assume that 2016 would be even more productive.

This was not a brand new venture on 2013; the Crowdcube pitch showed the company had completed its 5th iteration of its product in 2011. It had sales and was paying its directors £36k pa each. It also had backing from Finance Wales by way of long term loan.

So what has gone wrong?

Well we cant tell you that - its not something that basic one page balance sheets reveal. However we can tell you that to date they have racked up losses of £2.23m with 2015/16 accounts showing a large drop in debtors and losses of over £400k. The long term debt on the books has been reduced to almost zero from £260k in the previous year. The cash raised in 2015 has been invested in what the balance sheet shows as fixed assets but this seems to have generated falling sales and increased losses. There was no cash in the bank in May 2016 and no new cash has been filed at CH since.

All in all not looking too good for 2017.

Wednesday, 14 December 2016

Crowdcube's Stakis Daycare Nurseries delivers more empty promises for yet another year

Diapers, you might scream if you had shares in this company.

Stakis - founded by the famous Hotelier's son, has now spent all the money it raised on Crowdcube and to this date has delivered not a single place for babies and toddlers to be kept safe.

In fact all it has done to date is spend the cash. On what.....who knows.

The last filed accounts for YE March 2016 are looking like dormant accounts.

We have written about them previously here 

Would Crowdcube care to comment? It was after all on their platform that the company raised over £100k in 2013. They no doubt go down in the Crowdcube portfolio as a success as they have not yet closed. The company was unreachable and Crowdcube dont speak with us so your guess is as good as mine. Fraud comes to mind. If that is the case, then what will Crowdcube actually do about it.

Here is what we expect Luke Lang, the CC Pring man, to say - 

'Investing on these start ups is high risk. We carry out thorough due diligence using our team of well trained interns - no sorry lawyers - to scrutinise every company. We have more lawyers than most law firms! (that is a real quote from Luke!!) Only 1 in 10,000 applications get to list on our platform - we are that meticulous. If people are stupid enough to invest via our site then that's their issue - we make money anyway we can. Are we off air??!!''

Thanks Luke.

Cookoo cancels its Crowdcube campaign

Cookoo have cancelled their £1m Crowdcube campaign - leaving empty handed.

This company went into liquidation on 25th February 2017, with all hands lost. Maybe if they had asked us first??

Cookoo, a platform that links cooks with consumers, launched a Crowdcube campaign about two weeks ago. It was a quite a decent effort although you had to wonder at the valuation and the projections.

The one thing that killed it for us was the use of a geezer on their video, This guy claimed to be some big noise in the world of start ups and his slot on the video, where he backed the company, was the gravitas that made it work . However a fairly rudimentary check showed he had achieved nothing and his Linkedin page was what could best be described as wholly optimistic. One thing we do know for sure is that he is not and never has been the MD of Virgin Care as he claims.

Why Crowdcube didnt pick up on this we will leave to your imagination. 

The business isn't a bad idea per se, although scaling it in the time given, is in our opinion not something the two girls who run it, are capable of. It may go on to great things at a slower more considered pace which in the long run will be to everyone's benefit.

We imagine they gave up because they found, as we did recently, that Crowdcube do not deliver. We helped a recent pitch, which also cancelled early, and they reported back to us that the investor event that Crowdcube put on for them and others, was largely attended not by investors, but by other businesses (potential CC clients) and a whole host of would be consultants trying to sell their wares to the unlucky pitching companies. No doubt these geezers had been charged by CC to attend. It was, according to this well established, profitable company, not only a waste of time but also extremely irritating.

All in all yet more proof that Crowdcube need to close down or change the way they operate.

Tuesday, 13 December 2016

Hop Stuff inflate their figures on latest Crowdcube pitch

Hop Stuff is a Crowdcube success story - no it really is a Crowdcube success story

It is one of the only companies that has raised money on the platform that has achieved or exceeded its revenue projections. So why in its latest Crowdcube pitch for £500k, has it felt the need to play around with the truth?

This is what they say on the pitch - 

We have a demonstrable track record of beating our own forecasts. In 2013 we forecast Hop Stuff would be turning over around £480,000 by this year, we’re currently on track to double that.

This is highly misleading.

In fact the 2013 projections showed a turnover to August 2016 of £417k against an actual turnover to April 2016 (their filing date) of £524k. The claim to be on track to double the £480k is made up based on firstly an estimated figure of £480k for 2016 (Jan to Dec) - which is not a figure they ever published and the use of a large chunk of 2017 - which has not happened yet. What they dont highlight is the crucial fact that in the 2013 projections they had a 2016 forecast EBITDA profit of £166k whereas in reality they made a loss on EBITDA of £84k. 

Would you think that this loss is the more significant figure - or rather how it came about bearing in the extra revenues? Maybe a look at that 2013 projected GPM of 83% might help. This 2016 figure was actually rising over the 3 year projection.

Then just when you think you have clearer picture of what has actually happened, you find this footnote on the pitch - 

The actual figures (12 months to Apr-16 and 5 months to Sep-16) have been prepared by the Company and represent consolidated figures of Hop Stuff Brewery Limited (08471474) and Yeomans Pubs & Bars Limited (09539108) which at the time was not a Hop Stuff wholly-owned subsidiary.

So we are really comparing Apples with Elephants. Totally transparent. 

It is still a success, certainly in terms of  Crowdcube, but they really dont need to make things up. They have most certainly exceeded their 2015/16 projected revenue figure. Part of the confusion has been caused by Crowdcube allowing companies to use different projection dates to their filing dates. Something easy for the FCA to stop? 

As usual, the valuation is stupendous at £5.5m - for a company yet to make a penny of profit but then that's why they have to make these claims. Oh and you might want to ask about that debt. 

A word of caution

We notice that the forum for this pitch is crammed full of hyperbole - from the founder. He claims that the company has done very well for its first round funders, that growth will be such and such etc etc. This is all fantasy - at the moment. Shareholders in round one are no better off than they were the day after they invested. The value of the company is entirely make believe - there is no market for the shares and the company makes losses not profits. Sure the future looks interesting but please take a good look at the hype here before jumping in. 

And on top of this, the founder has now admitted that a deal with an overseas importer which is given a big push in the pitch is NOT confirmed. He goes on to say that due to this, they have only put 50% of this deal's revenues into the projections - apparently that is prudent!!!! Come on please.

And a final update - 

It seems someone reads this blog as the Hop Stuff pitch text has been changed  - in line with our comments above. That's much better guys now we might believe you :))

Sunday, 11 December 2016

FCA Interim review is still looking through the wrong end of the lense

So now we have the FCA's interim report on alternative finance. Will it make any difference?

In the 21st century, you would have thought we might have learnt how to engage regulation with a new vibrant form of business finance. From the outcome of this turgid, starchy interim report from the FCA, its clear we have not.

For starters, if you look at the who the FCA are asking for input, it is mainly those parties with the most interest in minimal interference. So much so in fact, that this is one of the more inane comments that The FCA saw fit to include in the report -

Other matters 4.21
Five industry respondents said the FCA should not refer to blogs ((: and market commentators in the media, which may be sensationalised or subject to their own conflicts of interest. Instead, they recommended we focus on industry data.

Our response (FCA not us!)

We will continue to analyse due diligence standards in the ongoing post implementation review. As set out in Chapter 5, we are considering consulting on further rules on disclosure and may consider options for specific disclosures about the due diligence process, even if we do not go on to prescribe minimum due diligence standards.
To gain a rounded picture of the market, we will continue to consider all sources of data, including social media, consumer feedback and media commentary but will not give undue weight to any one source of information.

The key problem for the FCA is that they are looking to control the investors rather than the platforms. They try to limit the access to the platforms but under voluntary guides rather than rules - this will never work. People are too arrogant and or ignorant to admit they are not capable of knowing what to invest in. 

Control of the platforms in the form of making them more accountable, stopping them from using glossy advertising and restricting the use of third party FCA licences would be more appropriate here. This is business finance not some Saturday evening entertainment show.

Leave investors to fend for themselves - voluntary restrictions are doing that anyway. Get to grips with what the platforms offer investors and you will have a far better outcome. Crowdcube, the worst offender by far, is still producing the most ridiculous projections and valuations. Its advertising spend is massive and this is managing to hold the company up - despite the growing list of failures and lack of any real success. Their model needs to be banned - no due diligence, no post raise accountability, massive glossy misleading advertising, poor or non existent shareholder communications, poor or non existent S/EIS communications. But now we have Seedrs joining in with their Annual Portfolio Report, supposedly showing the majority of shareholders are doing well. It's a total fabrication.

The FCA needs to get together with HMRC and come up a new way of SME's filing accounts, listing their directorships etc etc. The current system is way behind the new business environment. Due diligence is made so much harder. As an example a recent pitch on Seedrs had a company looking for £1.5m as a loan. But the company was late filing accounts - so late it had had its first notice to be struck off. How does that happen? In fact this company had already moved its filing date, so it hadnt filed any accounts for 30 months. To add to the irony, the company declared it had applied for and was waiting for its FCA licence to allow it to carry out its main activity - raise money for businesses. Is someone taking the Michael?

The FCA seem powerless to do anything. They have kowtowed to big guns like Balderton, who have sunk large sums in to Crowdcube, and are now pussyfooting around the real issues.

Just by of example here is a little piece of the FCA report -

Due diligence standards on platforms 4.18 

Three respondents said that current due diligence standards are below those that would be expected for professional investors but most respondents said that standards are appropriate.

'Most' said DD was appropriate. In the time we have been running this blog and for the 4 years prior to that, we have not come across an investor who thinks the DD is appropriate - it stinks. It isnt just below a professional standard, it is criminally negligent. That's why we have companies going bust having never done a thing, why we have directors who are banned, why we have phoenixing like it was going out of fashion, why we have lies (promises) all over some pitches and why we have videos with fake entrepreneurs promoting the pitch. Platforms do not carry out anything but the briefest DD. It's all catalogued in this blog - the blog that respondents didnt want the FCA to read.

Our guess is that the final FCA report will just like the 2015 effort - a hands off whitewash which leaves 99% of all this just as before. 

Saturday, 10 December 2016

GoCarShare thinks about calling it day

GoCarShare has raised equity finance on Seedrs twice - in 2013 and 2014. 

Now the company has written to shareholders to say that things are not quite going to plan - or to read between the lines they are not making money. Or rather they have lost it all.

Its quite an upbeat communication talking about two potential offers to take the business forward. You feel quite sympathetic reading it - here are some guys trying to do the right thing for the planet and mankind whilst also running a business.

However the sympathy bakes tinder dry, when you realise that they are well overdue with their 2015 accounts. So running a company is clearly not what they are doing. And they shouldnt have had access to equity crowdfunding finance. Their 'plan' has evidently been a flop.

In the great Seedrs Portfolio Report, we wonder where these guys appear in the graphic - doing well most probably. Well it just reiterates the pointlessness of the whole charade  - they are not doing well or even hanging on - they are waiting to close. The CEO has been forced to take on another job - thats how well they are doing.

Get the basics right first guys - do your accounts and file them on time. Then you might have an ear. 

Wednesday, 7 December 2016

Crowdcube customer service goes missing

Crowdcube sent an email to the unlucky investors in Flavourly, saying how sorry they were for their loss. Oh and giving them no advice on the state of their EIS relief.

Flavourly funded on Crowdcube in 2015. £500k was invested by over 300 people. A few days ago the main shareholders and the key Directors sent a one line note to investors to say they would now be forced to sell their shares - at a ~85% discount to the price they paid for them just over a year ago. We wrote about it here.

Today the same investors received an email from Crowdcube - see below - 

Hi [...],

We understand that the major shareholders of Flavourly Limited have issued a drag along notice to all other shareholders. As the value offered for each Called Share under this notice is less than the price paid by you during its Crowdcube round, you may be able to claim loss relief (if eligible).

If applicable, you should have received your EIS3 form to enable you to claim any tax relief you may be entitled to and if you haven’t yet done this, we recommend you do so. Income tax relief can be claimed within five years of the year you made the investment.

If appropriate, loss relief is also available under EIS. You should seek professional advice if necessary. For more information about EIS, please visit the HMRC website:

 HMRC - 'How to claim EIS tax relief'

Once again, we understand your disappointment and if you have any further queries please do let us know.

Kind regards,

The Crowdcube Team

We put a comment on this post that referred to the loss of the EIS relief as the shares had been sold within the 3 year period. 

To be more precise and to help Crowdcube investors who do not have access to expert advice, we have looked into this further and have found the following - 

1. EIS relief at 30% that has been claimed on this investment will be lost on the proceeds of the sale not the initial investment as the sale has resulted in loss. So for example if you invested £10k and have claimed 30% under EIS, you will have your EIS income tax relief withdrawn based on 30% of the sales proceeds ie ~ 30% of £1500 or a withdrawal of ~£500 of the initial £3k. The loss you can claim is then reduced by the balance of the relief you claimed ie ~£2500 will be taken off your loss claim.

2. So for example someone who invested £10k and had claimed £3k. They would now have £500 of that withdrawn so they could claim only £2500 against income tax. The loss they made when they received their sale proceeds of £1500 is £8500. But they have to reduce this by the relief not withdrawn ie £2500. So they can claim loss relief on £6000 only.  

3. If you have deferred capital gains into this EIS investment then this will also have to be corrected.

You should of course check this with a tax expert. We did. But we are not experts.

So the net result seems to be it would have been better for the company to close. You would then have kept all the relief and be able to claim on the full loss. 

Oh and what about the service from Crowdcube on this? There is none. The interns at Crowdcube simply dont have a clue. Sad but there you are. They really dont give a fig about their investors - but we do :))!!

Monday, 5 December 2016

More Horlicks anyone? SUPERWOMAN crashes.

The Glentham Fund saga roles on. It might one day become a film produced by Derby St.

We helped with the piece in the Times tomorrow - today now as we promised to hold this post back.

Someone here is taking the P and it aint us.

We cant think of another situation where you could take £400k off investors on an FCA regulated site, spend it, promise to provide another £250k and not deliver and end up a with a promised $250m fund that has precisely nothing in it.

Well we cant think of a legal situation anyway.

Hats off to all involved for legally ripping off 569 investors. Nice. We can hardly wait to see what Horlick does next.

The only piece of good news is that thanks in large part to the work we do here, Horlick was unable to get away with this sham. Seedrs are, belatedly and only because of pressure from us (see here), being forced to chase her for the money.

According to Jeff Lynne, Seedrs CEO, Horlick will be selling an asset to cover the missing money. But in a strange quirk, he states the asset is not very liquid, so she has been given until March 2017 to cash up. Well she has already had 12 months and has done nothing  - apart from spend all her shareholders' investment.

In a move that wouldnt go amiss in Crowdcube's office, Lynne, who was put on the spot this week by the Times, has issued his version of events to Crowdfund Insider, which is essentially the mouthpiece of the pro Equity Crowdfunding 'No matter what they get up to' faction - here. Its hard to make this farce look good, but they give it a go. Just by way of illustration this is how they describe Horlick in the opening paragraph - ''a renowned investment manager, film producer and CEO of Money &Co''. Really? Have you seen 'In The Blood', the accounts for Money&Co or the Glentham Fund? Infamous maybe.

Read this if you want to see Nicola's PRing machine in action - http://citywire.co.uk/wealth-manager/news/nicola-horlick-wins-inaugural-champion-of-change-award/a821092 or this if you like one star film reviews http://www.rogerebert.com/reviews/in-the-blood-2014

The CFI piece goes on to conclude -

While it is not clear yet as to how the 569 investors will make out some progress is better than none at all.
Investing in early stage companies comes with few guarantees regardless of who is at the helm. While we hope this one works out for all investors it is a cautioning reminder of the intrinsic risk involved.
Is that really the conclusion we take from this? Surely the conclusion is dont believe a bloody word they tell you, whoever they are and however many times they promise and do chase up all promises using Fantasy Equity Crowdfunding to get the best results. We would love to know what progress CFI are referring to here. Read my lips......There - is - NO - Fund. Or Refund for that matter.
The same CFI journalist druelled all over Horlick in a piece he wrote about her in July 2014. Here is a Q&A that was part of the piece, which makes for interesting reading given Glentham Funds current zero position - 
Crowdfund Insider:  The share price for the 2nd round has increased from £10 to £12.  Please share the progress made at Glentham that justifies the higher valuation.
Nicola Horlick: We are a long way down the road in terms of launching the first fund, Glentham Film.  We have an anchor investor who wishes to invest $20 million when the documentation is ready.  There is no absolute guarantee that they will invest as nothing is signed, but they remain very enthusiastic.  We feel this is sufficient progress to justify increasing the share price  
$20m now that would be great. Hey how about $2m or even $2k. No? 20 cents? .................. In this post truth world, this makes for a wonderful piece of evidence for just how easy some people find it to manipulate half truths and innuendo into fact. Full article here

To top it all, Nicola was involved this year in the Crowdcube fundraising attempts of Twelve London Ltd, a newco of which she is a director. We assume it would have been difficult to use Seedrs. This was without doubt one of the worst failures ever on a crowdfunding site - we wrote it up here. In the CFI piece on her, the last Q reveals much about her relationship with the truth -

Crowdfund Insider:  You have been very busy with Money&Co., Glentham Capital, etc.  Do you have any other projects in the pipeline?
Nicola Horlick:  No! I have more than enough to be getting on with.

 Maybe the birds are finally coming home to roost.

What, we wonder, will Jeff do with his 'agreement' if/when she doesnt pay up? Seedrs will then clearly claim they have done all they could. We hear a future 'denial of responsibility' resonating from the Seedrs Pring Dept; one they will no doubt copy straight from Crowdcube's broken record.

More importantly, why after 3 years is there still no Fund?

Lots of eggy faces here.

Our advice - if you see Horlick coming over the hill ....RUN LIKE HELL.

Saturday, 3 December 2016

Last orders for London Distillery and Dodds Gin?

The London Distillery Co raised money on Crowdcube back in 2012.

We have written about them before here 

Its now unclear how much they raised on Crowdcube. The original Crowdcube site stated that they had raised £250k  - which in 2012 was a great success for the platform and was overtly used by it to promote Crowdcube. This now appears to have been a lie. The current CC platform states that they only raised £95k.

Who is surprised?

Anyway, whatever they raised, they have not managed to deliver much. Despite having new equity backing of almost £1.4m, they continue to make large losses. YE March 2016 showed a loss of £350k.

Recently the company set up Dodds Gin. This is 98% owned by LDC.

Dodds are very late with their accounts and have had a compulsory strike off placed on them. They did try to raise £1.5m via help yourself equity crowdfunding portal Envestry, which is part of Envetsors. Seems to have failed from filings at CH.

Drink Up.

Flavourly snacks leave a very bitter taste.

This is really hard to believe.

Flavourly, a very poorly run snack subscription service, initially raised money on Angels Den and then in 2015, over £500k on Crowdcube. The Crowdcube investors bought in at £1.2m - which for CC is low.

We have written a lot about Flavourly here. It has been disaster since day one so this should really come as no surprise. It's the way it's been done that takes one's breath away.

Now shareholders have received an early and very unwelcome Christmas Present from the directors/majority shareholders of Flavourly Ltd - Andrew Veitch, Ryan O'Rorke and Kevin Dorren - remember those names.

These directors/shareholders have gone behind the backs of the Crowdcube shareholders and triggered the Crowdcube Drag Along clause, which states that all shareholders must sell their shares if the majority holding agrees to the sale. The text is below

We, Andrew Robert Veitch, Ryan Lrwin O'Rorke and Kevin Matthew Dorren (the "Selling Shareholders"), together holding a majority percentage of the A Ordinary Shares of the Company, have agreed to transfer all of our interest in our shares in the Company (the "Sellers' Shares") to the Proposed Buyer (the "Sale"). We, therefore, constitute the Selling Shareholders for the purposes of article 10 ("Article 10") of the articles of association of the Company (the "Articles"). Pursuant to Article I O, we, the Selling Shareholders hereby give you, the remaining shareholders of the Company (the "Called Shareholders"), notice that you are required to transfer all of your shares held in the Company (the "Called Shares") to the Proposed Buyer. This notice, therefore, constitutes a "Drag Along Notice" (as such term is defined in Article I O) and is given pursuant to and in accordance with Article I O (the "Drag Along Notice").

No one was asked but they are now having to agree that they will sell their holding - at a massive loss. In fact the email we have seen says absolutely nothing by way of explanation or apology. These 3 geezers are exactly what Crowdcube promotes.

The 3 directors/shareholders of  Flavourly have sold all the company's shares to Drinkshare Holdings Ltd. The total sum made from this sale is to be £118k - against the 2015 valuation put on the company at the time by the same directors of £1.2m.

Wait there is more.

Drinkshare Holdings was incorporated in November 2016. It has no trading record. The sole director is one Alistair Duncan Stewart, whose record speaks for itself. The company as yet has no shares issued. Stewart is listed as an investment  specialist who seems to get involved in liquidating companies.

So what is going on here?

Why didnt Flavourly follow the normal process and just close down like so many Crowdcube funded companies? This way investors do at least get some money back, but it seems unlikely to us that Drinkshare is going to turn this company around and if it was, why couldnt CC shareholders have a piece of the action?? They did after all hand over in excess of £500,000 to Rorke and his mates. That has all now gone where?

Utter shambles. Or Scam? The 2015 valuation was low to entice £500k into their bank. We have to assume that most of that has now gone. It's all perfectly legal of course....for the moment.

Finally, as a reader kindly pointed out, anyone who claimed S/EIS with Flavourly will have to repay HMRC. Nice.

Friday, 2 December 2016

Brewdog issue 7.5% 4yr Bond via Crowdcube to fill funding gaps in USA

Brewdog have launched what looks like an attempt to raise much needed funding for their US development - on the back of the US fundraising failure.

No one could argue about BD's success and the style they used to get it. 2015 EBITDA of £5m speaks for itself. 

But the US adventure may have been a mistake. They have a half built $30m facility in Ohio but do not have the money to finish it or pay to run it. Running costs in the UK have increased and higher turnover is producing flat profits. 

The US fundraising, which has been running for many months, has only raised $3m of the intended $50m. They announced this week that they are offering some ludicrous double or quits deal to try to PRing the raise into action. It has just really made them look a little silly.

Does the Brewdog message really translate into American? They wouldnt be the first UK success to fail over the water. And the US has had its own craft brewery explosion, so its not like BD are offering anything new.

Now in another attempt to breech the cash gap, they have announced a Bond with Crowdcube. Whilst this is safer than equity investment in principle - it gets paid back in 4 years with annual interest of 7.5%, if Brewdog dont manage to get the US facility funded and up and running then all bets are off. 

If the company gets into trouble then the bond is just as at risk as the equity in terms of repayments. It will be interesting to see how it goes.

One question worth asking is was this Bond in the plans a year ago? 

The other one is why is the Bond's minimum investment only £500k and max £10m. What difference will £500k or even £3m make?

According to James Watt, this is 'Funding for the 21st Century'. Well that maybe so but the basic business model of cash in and cash out hasnt really changed much since the 12th Century. If you run out of cash you go bust. 

BeerBods rapdily losing its friends

Beerbods, a subscription beer delivery club, raised £150k on Crowdcube a couple of years ago. Since that time is has reported two years of losses against two years of projected profits.

Who knows why? Only thing that is certain is that this a yet another example of Crowdcube inflating expectations in order to gain investment and their commission. We wrote about then before here 

You have to ask how many times are they going to be allowed to repeat this before something is done about it.

Projections for Beerbods showed profits of well over £100k for 2016 and the real loss reported to YE May 2016 is £41k. Profits were also forecast for 2015 but the reality was a loss of £53k. Beerbods do have a holding company but results here do not seem to reflect trading.

Thursday, 1 December 2016

Brewdog US fundraising enters realms of pure fantasy

Brewdog - The UK's fastest growing food and drink company, is now offering investors a chance to double their money by playing roulette. Is this a Dead Dog bounce we ask?

Brewdog have been trying to raise money for months in the USA to support their new brewery in Ohio. We have written about this several times here - the campaign has been nothing short of a disaster.

According to Business Insider, Brewdog have only raised $3m of the $50m target. http://www.crowdfundinsider.com/2016/11/93153-red-black-brewdog-equityforpunks-usa-offers-investors-chance-double-stake-lose-roulette-table/ 

So now they have introduced this ridiculous gimmick. If you have invested in Brewdog you get one chance to gamble using roulette's red or black to double your money and if that fails you lose your shares. What? The way this will work is that its supposed to entice possible investors to take the plunge - its only for US Brewdog enthusiasts. This isnt the stated aim of course! But then they are desperate.

That James guy needs to see a shrink. Where are the SEC? How is this not rigged?

Look, the people of the USA voted for The Donald, so theoretically anything is possible. Sensible it aint.

After the slightly farcical Brewdog share sale held recently on Asset Match, where the price of the shares was well below the last Crowdcube raise until the last few minutes when one large purchase was made, this is surely confirmation that the founders have lost touch with reality.

Crowdfund Insider have Watt, the co founder, saying that they are fucking Wall St and putting the small investor in charge. Has he ever played roulette?

It's a gimmick of the worst kind. Desperate and ever so slightly embarrassing. We dont expect the Dog to get up this time.