Tuesday, 31 January 2017

Simply Nonsense



We really are in a bit of mess.

Let me tell you why.

We'll keep names out of this for now.

A company pitched on the UK's largest platform in May 2016 and took over £700k off investors. The pitch details showed there were no more plans to raise any more capital via the equity route. Dilution comes to mind.

That was 7 months ago.

Now the same company is using another platform to raise equity finance of £1.5m at a valuation that has increased in these 7 months by 33%.

Hang on. So they must be doing well right?

The projections for the 2016 raise showed revenues of 2016 of £1.9m and increasing at great speed for 2017 onwards.

7 months later the new projections on the new site show actual revenues for 2016 of just £1.1m - or considerably less than the actual/projected figure given to investors in round 1. WTF. During the first raise half of 2016 had already been completed. The loss for the year is a third greater than the one the company projected just 7 months ago.

As you might expect the projected income and EBITDA for subsequent years has also taken a massive dive in the second pitch. But the valuation has shot up.

This discrepancy isnt mentioned at all in the new pitch on the new site. It's like this company has a record of delivering on its commitments.

The people involved should really know better. Im sure they do but they thought they could get away with it. Platforms desperate for income are happy to short circuit all the usual rules. It's a total farce out there.

Monday, 30 January 2017

Sad Tales from the Riverbank. What is happening down at River Cottage?


Crevated away amongst the dingley dells of the glorious South West, Hugh Fearnley Wittingstall's business has caught a bit of a cold.


Achoo!

River Cottage will be known to most UK readers. Hugh FerWitt, the old Etonian, crusty loafed, food foraging founder, is a TV star and leading light in efforts to get us to pay more attention to what we eat and where it comes from. A highly commendable cause in our opinion.

Back in 2014, he went on Crowdcube to raise a £1m bond, which is due for repayment in 2019. 

Recent accounts to YE March 2016 report sizeable losses of over £600k. Operational losses of £557k are heading rapidly in the wrong direction . Accumulated losses are now just below the £2m mark. These losses were certainly not part of the prospectus put out by the company and Crowdcube in 2014. In fact the company was talking large numbers for its roll out of River Cottage canteens. 

Annual sales in 2014, we are told by the prospectus, had hit £4m in 2014, rising from £1.1m in just 3 years. The latest accounts have the revenues at only £4.4m - more than 2 years later. According to this document, existing canteens turned over an average of £1.3m pa. If this were the case for 15/16 then turnover would have been £5.2m. The stated plans were to open one new unit a year from the existing 2014 base of 3. Today they have just four open with an average turnover of just 1.1m. 

So something hasnt worked.

The last accounts show a negative balance sheet. No new money has been raised.

Now its very possible that they have turned this all around since April 2016. Although the lack of new openings suggest that maybe they havent?

No need for the 285 Crowdcube investors to worry though. Hugh has guaranteed to pay you back and he's old school - one of the oldest actually. Old E's are renowned for keeping their word - remember that recent has been, delicious Dave, for example.

Pip pip.


HMRC not fit for purpose


Here is conclusive proof that HMRC or their systems are not fit for purpose.


Playrcart raised £150k on Crowdcube back in 2013. They then tried and failed to raise £350k in 2015. People generally learn from their mistakes. We wrote about them here

Checking on their recent accounts was difficult as they havent filed any since YE September 2014.

No that's not possible, HMRC would have closed them down.

Here is a copy of their filings page

Date(document was filed at Companies House)Description(of the document filed at Companies House)View / Download(PDF file, link opens in new window)
19 Dec 2016Previous accounting period shortened from 27 September 2016 to 26 September 2016
View PDF Previous accounting period shortened from 27 September 2016 to 26 September 2016 - link opens in a new window )(1 page)
26 Sep 2016Previous accounting period shortened from 28 September 2015 to 27 September 2015
View PDF Previous accounting period shortened from 28 September 2015 to 27 September 2015 - link opens in a new window )(1 page)
19 Sep 2016Confirmation statement made on 14 September 2016 with updates
View PDF Confirmation statement made on 14 September 2016 with updates - link opens in a new window )(5 pages)
28 Jun 2016Previous accounting period shortened from 29 September 2015 to 28 September 2015
View PDF Previous accounting period shortened from 29 September 2015 to 28 September 2015 - link opens in a new window )(1 page)
18 Feb 2016Appointment of Mr Richard Mason as a director on 18 February 2016
View PDF Appointment of Mr Richard Mason as a director on 18 February 2016 - link opens in a new window )(2 pages)
16 Feb 2016Appointment of Mr Julian Robert James Hucker as a director on 16 January 2016
View PDF Appointment of Mr Julian Robert James Hucker as a director on 16 January 2016 - link opens in a new window )(2 pages)
05 Nov 2015Annual return made up to 14 September 2015 with full list of shareholders 
Statement of capital on 2015-11-05
  • GBP 2,695.449
View PDF Annual return made up to 14 September 2015 with full list of shareholders
Statement of capital on 2015-11-05
  • GBP 2,695.449
- link opens in a new window )
(8 pages)
29 Sep 2015Total exemption small company accounts made up to 30 September 2014
View PDF Total exemption small company accounts made up to 30 September 2014 - link opens in a new window )(4 pages)

By altering the 'Previous accounting date' by one day on no less than 3 occasions in 2016, it would appear they have managed to crash the HMRC system. There can be no reason for altering these filings dates apart from for the purpose of stalling filing accounts. Each time you alter the date by one day, the 'system' lets you push your filing date back by 3 months. So the YE Sept 2015 accounts should have been filed July 2016 (9 months later). Add 3 months for the 28 June 16 filing and you get to September  - when they filed another day's change taking the new date to December, when they filed another new date taking it to ? 

They had already altered the date in 2015. Making decisions is clearly not a management strength.

Thursday, 26 January 2017

More Horlicks in Denmark Square


For those who have followed the Horlick's Saga - more news.

Nicola Horlick's parent company, which owns her P2P lending venture Money&Co, has just finally reported its accounts to March 2016. 

Not good. Although according to her they are ahead of budgets. But who saw the budgets?

A loss for the year of £1.89m puts the company balance sheet almost half a mill into the red. New finance by way of borrowings was arranged in Autumn 16 to cover off due balances. Redcrest Enterprise, a BVI registered company, provided the finance, along with Nicola and a colleague.

4 directors left on 19 January 2017 including Crowdfinder's Luke Davis. Do you think that means that Nicola will no longer be wheeled out at their events as a doyenne of the investment world? Her comment on the departures quoted in The Times http://www.thetimes.co.uk/article/superwoman-flies-to-rescue-of-ailing-lender-r8qlrrsk3 is Trumpesque - they.... were part of the firm’s desire to strengthen its board as it seeks regulatory approval from the Financial Conduct Authority. A comment that cannot please those leaving too much!

Shame.

In a month's time, Nicola is due to stump up the missing investment in her empty Glentham vehicle see here  . That's a missing £250k that was promised via the Seedrs platform. Wasn't that also from China?

We will wait and see. 

Monday, 23 January 2017

Why would anyone invest in this?


Stacking Systems raised £94k on Crowdcube in early 2014 for their pallet stacking solution The Pallet Eater. It seems to have developed chronic indigestion.

Put to one side the fact that after almost three years, the Pallet Eater still doesnt exist as a commercial entity; even though it seemed to be close to commercial production in 2014.  The claim made in the Crowdcube vetted video is very clearly incorrect. It has what I think we now call alternative facts. Namely that the pallet eater is (that is 'is' in 2014) 6 times faster than fork lift trucks at stacking pallets.

Firstly in 2014 the Pallet Eater did not exist except on paper and secondly now that one prototype does, it's clear that it is the slowest way to stack pallets ever devised by man. A video to show this is out there where it takes the Pallet Eater 7 minutes to stack 6 pallets - not moving them more 2 yards just putting one on top of the other. Something it would take one or two people 2 minutes to achieve without a fork lift. I know we are known for our low productivity but this is ridiculous.

The video is part of a new funding drive by the company - the money from Crowdcube has now run out as has the Smart Award cash. According to the 2014 pitch, sales were due to start in 2014 with £500k in that year, over £2m in 2015 and an impressive £4.8m delivering profits of profits of 1.8m by now. Well as they dont have product to sell, it's fair to assume they missed these targets by someway. Shareholders will be relieved to know that their cash now appears as intangibles on the BS.............

The main point here is yet again that Crowdcube have been promoting facts that are not facts - they are simply made up alternative facts or total falsehoods.  

Crowdcube's graveyard is filling up


Togethera raised over £200k on Crowdcube in 2015. Just a year later it had spent this and closed.

Togethera was an app - well that might be slightly over egging it. It may have been an app if it had lasted more than a few months.

Backed by some seasoned overseas investors to the tune of £500k, the company's Crowdcube projections showed turnover of almost £3m by now. 
 
According to a rather strange piece in Techcrunch here from July 2016, which says they have closed having failed to raise the Crowdcube round. However Crowdcube and filings show they did.

We find it a little surprising that they have closed, given that the accounts/projections show they were on target and were not due to raise more capital. Something a little odd here - but then this is a Crowdcube story.

The company isn't technically closed yet. First gazette posted.

Thursday, 19 January 2017

Glass half empty as Crowdcube's Quantock Brewery closes down


Quantock Brewery raised £120k on Crowdcube in 2013 - so they have lasted well by Crowdcube standards. Now they have been forced to close by HMRC - or so they claim.


Recently they had talked about expansion.

The company hopes to be able to sell itself once HMRC have seen the lights are off. 

Most of the directors had already left the building.

We wrote about them here

Crowdcube's Savvy Foods past its sell by date but has a cunning plan


Savvy Foods raised £85k on Crowdcube in 2015. Just a year or so on, they have collapsed leaving debts of around £189k. Well done Crowdcube.

We wrote about them last year here

But - here is the really interesting bit - in a letter to shareholders the founders of Savvy have rebirthed their company and called it Carobco Ltd. Easy as peasy. Off load the boring old debts of £189k and make hay.

Whats even better is that they are crowdfunding again. - on their own account using some accountancy firm.

The founders report on the failure of Savvys is wholly ubelievable. It should also be noted that in this letter to shareholders the founders claim the company has been liquidated. Not according to CH it hasnt; so there is still a chance that claimants may take action. Of course as we know CH may be behind the times.

Whats almost unbelievable (this is equity crowdfunding after all) is that they are approaching all Savvy's shattered shareholders for more cash. And wait for it, they are using the valuation they agreed with Crowdcube in 2015 of £0.5m, to offer new shareholders a 50% discount! Its a bargain for sure - 10% of the newco for just £25k.

In a previous email just before Christmas16, the founders had offered to pay back shareholders or offer them like for like investment in the new version. They now say they cant do this as a lead investor in Caroco wont allow it. Oh well, it was a lovely thought.

Is it just us or is there something very wrong with this?

Takers should form an orderly queue and await further incarceration.

Wednesday, 18 January 2017

Ineed calls it a day and reveals its all down to Facebook!



INeed has raised money on Crowdcube FOUR times. Now, with its story wearing a little thin to raise more, it is closing its doors.

INeed was one of Crowdcube's early successes - although it never got close to its fantasy projections for any of its 4 pitches. Since 2012 it has raised over £200k on the platform. In the last and final round in 2015 it showed profits for YE 2016 of over £1m. Hmmm.

What is more alarming is the fact that during this raise the company knew that Facebook were going to be reviewing their Facebook Friends API  - which they in fact shutdown support for in April 2015. So just at the time that this company was selling more of its equity on Crowdcube, it was also aware that its main means of operation were being removed. 

In the letter sent out recently by the company, they declare that this move by Facebook was the main reason for their failure.

You have to ask if this final Crowdcube raise, given the developments behind the scenes, can be justified? It seems to show very little regard for the shareholders and be totally contrary to Crowdcube's much repeated mantra that they are open about the information that is shared. The filing for these new shares was not completed until October 2015 so they had plenty of time to cancel the finance. But then that would have lost Crowdcube their commission.

Whatever your conclusion, the result fits in very neatly with our research into over 400 companies that have funded via Crowdcube since 2011 - research that we hope will be available at the end of March once a whole load of results have been filed. Register with us if you would like a copy - info@ecfsolutions.co.uk
  

Thursday, 12 January 2017

Angelberry aims high and shoots low - like most Crowdcube successes



This is now the new norm - fantastical projections met head on by sober realities for Crowdcube investors.


This company raised £200k on Crowdcube in 2014. Its still functioning but has failed to get anywhere near to the revenues and profits its fantasy projections sold to the Crowdcube investors. 

Accounts for 2014 and just over half of 2015 (the date was changed for some reason) show heavy accumulated losses of £350k against projected profits estimated at £300k plus. Promised deals with units in Africa and the ME (in the pitch there were over 50 contractual commitments quoted) have come to nout.

We wrote to them to ask politely why they were so far off their targets. We had no response.

In one of the more ludicrous Crowdcube moments, their pitch talks about a possible exit in Q1 of 2017 at 8.5 times earnings ie according to the fantasy projections that would bring in £14.5m anytime now. 

More Trumponics. No really these guys are great - Im telling you. Really really great. Dont believe the fake figures at CH. 

Wednesday, 11 January 2017

Faction Collective yet another Crowdcube company that has off piste accounts


Faction Collective SA - designers and makers of snow skis, raised £775k on Crowdcube in 2015.

In their pitch for this money the company showed 'historic' financial data for YE June 2015 - the accounts for this period were not available during the pitch period.

In these figures - vetted closely by an intern in the Out to Lunch Crowdcube DD Dept - there were various figures given like turnover and losses for the year. The Crowdcube pitch completed in December 2015; so 6 months after the YE.

The figures given by Crowdcube are listed below on the left and put beside the real figures on the right, that were posted by the company with CH - all are in Euros. 

Revenue              2,124,574             1,455,327

Net Profit (loss) (2,821,272)          (2,396,384)

So the loss was considerably smaller than 'projected' (remember these figures were already historic when the pitch launched) due to a much reduced spend on marketing and personnel. But how do you explain a reduction in turnover of a third? It means that the leap to the 2016 revenue figures is one that not even Jon Olsson would attempt.

Dont Crowdcube investors deserve a more professional service? 

The solution is very simple and is one we have calling for for 2 years - make all companies using this funding channel produce full accounts up to the date before their pitch goes live - and make them and the platforms liable for any trickery they might choose to try out. 

My Mate your Date gone walkabout and returns as Quinn the App.



My Mate Your Date, an Australian duos idea (where else would come up with such a crass name) has gone dark but shareholders via Crowdcube now have a new App version named 'Quinn'.

In one of Crowdcube;s more amusing disasters, MMYD funded not once but twice through the FCA regulated platform - the second time just over a year ago. Total raised was £240k.

Searches for the company's website have drawn a total blank and as this is very much (or was ) an internet dating site, that doesnt look too good.

However the Aussie boys behind this company seem to have come up with a new idea - an App called Quinn which apparently uses AI (Australian Intuition?) to evaluate your love life and find you the perfect partner. The Apple Store has had so few reviews since May 2016 that they dont register a rating.

There is one review there which is revealing -


Customer Reviews

Complete rubbish, app is a waste of time. 

If I could give this no stars I would. Terrible matches, drip fed at a rate of 5 a day. Quinn chat pretends to talk to you to ask you questions that will improve your matches, then after about 5 it just crashes and goes to a blank screen. Support don't even bother to answer your emails. Do yourself a favour and skip this one.

Activity on Quinn's TW and FB sites has been nil since early Summer 2016 - so not looking too promising. Their website has no press reviews under the media icon.  We sent them a message but had no reply. Does that go down as a small overseas heist?

Justpark continues to get appalling customer service reviews



We have mentioned this several times - Justpark's customer service stinks.

Take the month of December and up to now on Trust Pilot.

18 reviews.

6 of these are 1 star and 1 is 3 star. The rest are 5 star. You cant go lower than 1 star but all of these sound like they would if they could.

That's over a third that think the service they received is rubbish. Surely that's not how to build a profitable company?

And the complaints are consistent - parking fines, lack of help when space not available etc etc.


Monday, 9 January 2017

Crowdcube themselves prove that they do not bother to check facts and figures



If you dont believe us when we say Crowdcube are slapdash about the figures they promote for their pitches - then here is the evidence.

A new pitch on the platform Ridewithlocal proves that Crowdcube's systems are well below where you would expect a FCA accredited financing platform's should be.

The pitch has now been corrected as someone spotted the oddity but it could just as easily have gone through to complete the funding using what would have been totally bogus sales projections.

The numbers in question are the 2016 YTD 'sales' figures  - which it turns out are not the revenue figures as stated but are the GMV for the period. 

The snapshot finances have now been changed to show the new figures but really how can such a simple mistake get through the process Luke and Darren decsribe as being thorough? Thorough rubbish maybe. It simply means no one is checking the interns.....again.

If I was an investor in this company I would spend a good few days double checking their figures - looks no one else has bothered.

Thursday, 5 January 2017

Fact Not Fantasy Research to Follow - register now.

Well into 2017 and we are very busy working on a review of where the companies are that have funded via equity crowdfunding since 2011 - mainly the ones on Crowdcube.

This is a long and often quite tedious job but we want to be accurate so we are double checking everything. The results to date, we can tell you, are a little mind blowing!

For a while now we have been considering establishing a premium Fantasy service and this report when it comes out will not be available on the blog (parts maybe) but can be obtained by request simply by emailing us with a 'real' name and email address. 

So if you would like this information please let us know on the following email address - 

info@ecfsolutions.co.uk

Thank you

Tuesday, 3 January 2017

Hybrid Air make it up as they go along - and Crowdcube investors pay the price.



Following our recent revelations about the Hybrid Air share value crash, we have further evidence that the company has been grossly abusing its trusting Crowdcube investors.

As if it wasnt bad enough to see the value of your holding in this company more than halved in a couple of months, the fact that the company tried to sell existing shareholders shares at the £1.40 level in late 2016, illustrates their sympathies with the Crowd.

We may never know when Hybrid discovered that £1.40 per share was considered laughable by larger investors - £1.40 being the price over 1400 Crowdcube punters forked out earlier in 2016. Earlier more Crowdcube investors forked out £1 per share in the first round.

But  correspondence we have seen from the company to existing (mainly CC) shareholders attempting to elicit more support following the crash landing of the balloon's second flight, needs to be read to be believed.

On the one had it implores further support at the £1.40 level whilst never mentioning what must have been apparent by late September 2016, that £1.40 was not going to induce larger investors to come on board.

At Companies House the Crowdcube deal is listed but shortly afterwards another deal is done at a share price of £1.19 for a small consideration of just over £30k. Why the difference?

If you need further evidence of this just look at where the final share price for this round ended up (for 'international 'investors) by December 2016 - £0.575 - well below half what they were asking just a few months earlier.

There has been much talk of the balance (or lack of it) between ordinary punters presented with Crowdcube style plans and projections and the often (but not always) more savvy Corporate, VC and Angel investors.

Whilst you cant blame Crowdcube directly for this instance of blatant abuse, as they were not involved in this final funding, it still begs the question.

The company need to raise another £30m this year according to plans. No clues yet as to the likely new share price! Answers on a postcard.

When is legal action a good idea?


This doesnt happen very often - in fact this is the first time in over 500 articles that we have removed one completely. Threats of legal whilst clearly childish, are to be weighed in the grand scheme of things and if a company is so small and insignificant that their likely demise or legal battle is not going to make any news items, then fighting them over what's true and what's not isnt worth the time.

Suffice to say this was another Crowdcube funded company promising massive profits after just 2 years and delivering nothing but losses. It raised only £200k and as at March 2016 had no cash, so we dont expect it to be around for much longer.

Shareholders should feel hard done by - the projections were very highly glossed.

If anyone wants to know the name, just get in touch


Nameless mobility scooter company misses targets on Crowdcube

New Year brings Crowdcube investors in Airlander to the ground with a heavy bump - no parachutes issued.



Airlander - the new/old Zeppelin idea  - has had to reduce its share 'value' by 60% to gain more, much needed funding. Leaving Crowdcube investors with large potential losses.


Airlander has always talked a great game - big numbers, massive enthusiasm and glittering future prospects. Who knows the latter might yet materialise. But progress has not been good from an investors' standpoint.

In their first raise in 2015, Airlander shares were valued at £1, then again shortly afterwards they raised more on CC, at a share price of £1.42; valuing the company at over £55m. Below is the confirmation of these figures in a reply to a Q on the CC forum in the second raise. 


When we started the Crowdcube raise in March last year the company was valued at £34.4 million (with a share price of £1 per share). Today we are valued at £55.0 million (with a share price of £1.42 per share). The change in valuation is explained by a reduction in risk in the business, with the build of the aircraft now complete, and due to additional resources secured by the company. Since we commenced the last raise we have secured £3.9 million in equity, £5.3 million in grants and £4.5 million in convertible loans. All these funds add value to the company.

We are currently raising a total of £4 million of equity (of which the crowdfunding forms a part - hence why we are able to overfund by a small amount) which funds the Flight Test Programme. From that point onwards, the business plan forecasts we should break-even by getting customers to pay for the results of trials and demonstrations. At some point in the near future, we need to raise £30 million for productionisation of the Airlander, which is likely to come from an IPO or potentially through deals with other companies. So this raise will be undertaken with the benefit of secured orders in place. The level of dilution created by that raise is clearly dependent on the share prices achieved and that is extremely hard to forecast as it will depend on many factors. That said, our model suggest that the dilution percentage would be in the mid to low teens, but it could be higher of lower.
We hope that gives you a full picture of the future raises currently forecast. With anything forward-looking we cannot guarantee what will happen, but this is our plan and our best estimate as to what will happen.
The Airlander Team 

You can take all of that with a mouthwash of salt  - especially the bit about the dilution being in the low teens. All apart from the bit about we haven't a clue what will happen.
Just before Christmas 16, investors were sent a Christmas card with a lovely present  - news that this round of crowdfunding had just completed the remainder of the £4m (the 4 mentioned above) but at a share value of £0.575 per share. Crowdcube investors remember, all 1462 of them, had paid £1.42. The excuse for the discrepancy appears to be that some 'international' investors will bring extra benefit to the company - thereby making the lower valuation justified. What is it Luke Lang always says about Crowdcube giving the little a guy a fair chance! This value is not just a down round it represents value almost half of the previous, previous round.

Dear Fellow Shareholders

I am very pleased to report that we have successfully secured the first £4 million of investment in the current equity fundraising round.  In doing this we have added a number of significant international investors and we think their quality, when added to that of our existing shareholder base, will be very important to the success of the company as we go forward.


In order to secure this level of funding we have had to reduce the per share price for this round to £0.575. These funds will allow us to return Airlander to flight and to progress our discussions with customers towards securing revenue. Successes in these areas are what will drive huge value appreciation back into the company and so the Board was happy to accept this price and put the company on a good footing to start 2017.

As has always been the case, we are very keen to ensure that all shareholders have an equal opportunity to invest in new share issues.  This new price means that any investment will get more of the company for the same amount that we were offering you initially this round.  This also means that there will be more dilution to existing shareholdings than would have been the case had we achieved a higher price.  So if you didn’t participate in this fundraising or if you would like to increase your investment please reply to this email and indicate how much you would like to invest.  The amount available is limited so new applications will be accepted on a first come first served basis.

Similarly if you have any questions (for example, as to how much you would need to invest to maintain your percentage ownership of the company) then please just ask and we will come back to you.

I have pleasure in attaching our HAV Christmas Card and in wishing you all the very best for the festive season.

Regards

Steve

Stephen McGlennan FRAeS
Chief Executive

The picture at the top of this post is of the Airlander's second attempted landing - no one was hurt. It hasnt flown since. 

We dont suppose that Crowdcube even know about this double down round and if they do that they will as ever brush its embarrassing fall in share value under their increasingly lumpy office carpet. 

Of course you also have to know that Crowdcube are a sponsor of Airlander; so all the information you get from the platform on this company is highly subjective. Can it be right that an FCA platform is pushing millions of pounds into a company that it is directly linked to? That sounds like Trumponics to us. 

What's important here is to maintain some perspective. Airlander might just be a the next big thing - no one knows now. If it is, this massive fall in value will be inconsequential. However the cock up or greed on behalf the management is self evident right now - producing fictional values to rob ordinary unsophisticated investors of value. The more sosphisticated 'international' investors could not be fooled. This message is not lost on those feeling slightly bruised by the rough landing.

One thing we can guarantee is that Crowdcube, in their shortly to be PRinged Reveiw of the Successes of 2016 will make no mention of this down round and the loss of around £1.4m in 'value' on the £3.4m invested by over 2000 of the platform's investors. More for the overworked carpet cleaner intern to dispose of.