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Tuesday, 31 October 2017

Vita Mojo admits to 'clerical errors' with Companies House - wink wink say no more.

This one is a cracker. Vita Mojo tried to silence this blog with threats of legal action after we showed how their filings at CH were incorrect, along with the stated numbers in their Crowdcube pitch for the year before they funded in 2017.

As requested a couple of days ago by Vita Mojo, we removed the offending paragraphs whilst we gave them time to check their facts. They have now responded - 

Dear Rob,
It appears there may have been a clerical error in the recent filing which is being corrected. In relation to your previous comments:
The accounts presented at the time of the crowdfunding raise were draft accounts and communicated as such - we filed our accounts in accordance with GAAP, and they were signed off by our independent accountants. Any detail beyond this and what is posted on Companies House is not for the public domain. 
We ask that you refrain from further slander and defamatory commentary. Failing that, you’ll be hearing from our lawyers.

Firstly the accounts for YE Dec2016 are unaudited and not signed off by any accounting firm. Secondly GAAP is a acronym that has little meaning and certainly has no place here. Thirdly none of this is or ever was slander - it is as we explained to you in the first instance, all factual. You have now agreed this. Thanks

We had pointed out several problems with the filings going back over the last two years. They have not addressed these here. 

The accounts that they produced on Crowdcube as 'prior year' were not the filed accounts, as we all know. Had they been, then one hopes there would have been no discrepancy.  But they declared them to be the real numbers for the past 12 months - which by the time they were on Crowdcube, had already been finished for 5 months. They were happy, as were Crowdcube, to use these numbers tagged 'prior period' for the purpose of selling equity for cash to the general public on the FCA regulated, Crowdcube platform.  The difference between a £1m loss as described on Crowdcube and the real £1.5m loss as filed, we would claim is material. Even if it's a another clerical error, it doesnt reflect well on the management. Actually it is completely hopeless. How can you not know about another £500k in losses 5 months after the year end?

Talking of clerical errors and management, they seem to have a few problems in that area. On 10th May 2017, the company split its shares by a factor of 10 - SH02  filed at CH. However they then failed to reflect this in any of the subsequent share dealings - including the one that involved a £3.2m investment via Crowdcube. Take a look at the filings - it's all there in black and white. Why SHs have not picked up on this is a surprise. 

What this means is the clerical error has given Crowdcube shareholders their proportion of the company under the pre split conditions - a fraction of the holding they paid for . So for an easy example say company A had 100 shares and sold 20% of its business for another 25 shares - total 125 shares of which new owners hold 25 or 20%. However if ,as we have seen with Vita Mojo, they had split the original shares by a factor of 10 but failed to allow for this/failed to file it correctly or simply just failed, new owners would be sitting with 25 shares out of total holding of 1025 or around 2.5%. OOPPS! Some clerical error by Jove.

Apart from this clerical mishap, we cannot find in these filings this £3.2m - we can only find around £1.8m. But hey, it's probably just another error of the clerical variety. If I was a new SH, Id sure want my holding checked. 

They have never thanked us for helping them avoid a very embarrassing mess had these clerical errors not been pointed out to them. No manners. 

Actually the underling who was sent forth to tackle us, armed only with legal phrases such 'cease and desist', suggested as his first gambit that we didnt know how to read accounts. BIG mistake. HUGE. His genius idea was that we had somehow mixed up cash flow with the balance sheet - oh dear. 

When you learn that he was previously the intern in charge of the offerings at Crowdcube, it all makes perfect sense! A perfect circle.

It is all highly embarrassing for the management of Vita Mojo, their backers if they didnt pull out and for Crowdcube. Of course for Crowdcube this is the norm, although at £3.2m this was a substantial raise for them. It reflects very poorly on the skill sets that our SME businesses have and on our education system. It is a lose lose and we need to do something about it. 

Monday, 23 October 2017

Monetaflex has gone - Long Live EarlyAce. A common tale from the Crowdcube.

In more shenanigans on the Crowdcube platform, ex Crowdcube success Monetflex director Simbarashe Chiguma, has set up a newco doing the same thing - EarlyAce. 

Chiguma, a co founder, resigned from Monetaflex last year, just 12 months after the Crowdcube campaign. The company raised £160k on Crowdcube for the business which was an online platform for the sale of invoice credit. We wrote about them here. They recently decided to close with the loss of all investors cash.

In the video that they used to take money off Crowdcube investors, they had all sorts of successful businesses using their services and an 'investor' who was purported to be a highly successful individual. This all  looks a little odd now.

Since incorporating EarlyAce in November 2016, the month he resigned from Monetaflex, Chiguma has been busy raising funding - 4 small tranches which give him around £200k to play with. Lets  hope he does better this time. 

Thanks to our reader for the heads up. 

Thursday, 19 October 2017

Crowdcube's Shamba Technology has no news, no money and no assets.

Shamba Technologies raised £112k on Crowdcube in 2014. From the accounts most of this is now spent and the company has no fixed assets.

It is quite literally an extraordinary business. Its balance sheet suggests it is dormant and has been for some time. The website news section has had no news for over 12 months.

Yet it won a Siemens award in 2016 - small but still an award.

It was supposed to help get electricity to the poor in Africa, using a combination of small time solar powered units and their IOsolar system, which being modular, allowed it to be built in stages as and when it could be afforded. To be fair it is not a bad idea and its for a great cause.

We have no idea what has gone wrong. It was,according to Crowdcube, to be making around £1m profit in 2016 and almost £2m in 2017. In fact it made a small loss on negligible trading. A £400k loan was supposed to be in place for 2016 according to Crowdcube but this has not appeared. The turnover was projected to go from £40k to £1.7m in the twelve months post funding. Clearly that didnt happen either.

We hate to say it but we have been telling you for years that the kind of businesses Crowdcube supports will, in the round, go nowhere.

Sunday, 15 October 2017

Square Pie and the mystery of the Disappearing Restaurants

When Square Pie managed to get £650k off 324 Crowdcube punters for their 4 year mini bond in September 2015, they promised mass openings. Now in October 2017, they have fewer restaurants than two years ago.

We have given these guys some previous coverage - here

The original target for the bond was £2m but that soon looked untenable so they reduced it to £450k. That was a dumb idea. Then they had 6 restaurants in London, now they have only 3. Plus one in Birmingham.

In lieu of restaurants, they have teamed up with Vue - the cinema operators - to offer a pie selection to film goers. They have one Vue in London and one in Bristol. 

The last accounts to YE Dec 16 will not have thrilled SHs - a loss of around £300k against a projected profit of £75k. It is hardly surprising given the change in company's core strategy. 3 of the London restaurants from 2015 have now closed - which strikes us as very odd considering what the Crowdcube pitch said about them. The 2015 pitch showed the company operating 12 restaurants by YE 2016 - with 20 by the end of this year. 

So now they have joined The Eden Project and Riverside to see who can be the first Crowdcube mini bond funded company to fail to repay investors. Square Pie have little cash and now new investment this year. Their reviews remain poor. I wouldnt bet against them.  

Thursday, 5 October 2017

Easy Property does a deal with

Easy Property or Eprop raised over £1.3m on Crowdcube in 2014, valuing the company at over £60m. They then got themselves into a right mess and have now relaunched having done a deal with GPEA. The business model is now B2B2C as opposed to B2C. 

It's unclear what the exact deal entails but the company recently replaced most of its management team and from figures at CH, raised around £16m in an equity deal with GPEA, which massively dilutes CC shareholders and is technically a Big Dipper of a downround.

Still the good news is, at least they are still going. Where we go from here is anyone's guess. 

Please fasten your seat belts for take off and good luck.

Monday, 2 October 2017

Seedrs posts increased losses on tiny turnover

Seedrs - the UK's other retail equity crowdfunding site, has just filed losses of £3.8m, up from last year's loss of £1.6m. Is it any wonder they are raising another £4m?

They are building, apparently. A large CA, with £9.5m (from the £10m equity raise) in the bank and very low creditors, displays admirable restraint that another company could learn from. The cash plus the new £4m raise, has a purpose. 

But the income of just over £1m looks very vulnerable on this current market. It wouldnt take much to make this head south. If you are going to make increasing losses then you do need to be seeing some good progress on the traction side. £1m is quite frankly pathetic for the noise they make. That equates to £25m in completions at a 4% commission or even less if they are working off a higher rate.

Seedrs has expenditure of over £5m - so they need to making 5 times the revenue just to BE with a constant cost base. Given the time it has taken to get here, what are the chances of this before we all die? 

We really thought they were doing better than this after 8 years. For their revenues to grow by only 25% (2015 revenue was £800k) is hardly impressive in a growth business.  It also puts their claim to have raised over £230m since they started, into doubt? Either that or 2016 was a nightmare. But then that's what the PR Dept. is for. 

Hochanda file losses of over £8,000,000. CEO resigns.

Hochanda raised £1.9m on Crowdcube in 2016. They were due to file these accounts to Dec16 in June but changed the date. They signed them off in June 2016 - so why the delay? Now they have a deficit on their BS of over £5m.

Even by Crowdcube's standards this one is looking messy.

The CEO Jamie Morris Brian Martin resigned the day these numbers came out. This is worth a read in light of today's news. Something smells - http://startups.co.uk/the-entrepreneur-jamie-martin-hochanda/

When we read the BS (here that stands for Balance Sheet although the other meaning might be just as appropriate), we had to recheck what it said five times and then change glasses just to be sure. The Crowdcube 2016 financials showed the company making a £2m loss in 2016; not £8m. And the long term borrowings that appeared on the BS in 2016 of over £5m have no note and are not mentioned in the Crowdcube documents.

Shareholders may be disappointed to hear that the dividend they bought into for 2017 and probably 2018, totalling £2.4m, seems unlikely!

Watch this space for more Crowdcube crazy stories as we have a raft of company accounts filed for YE Dec 2106 to share with you. 

Sunday, 1 October 2017

River Cottage closes its Plymouth restaurant and now has only 3 units.

Hugh Fernley Whittingstall's River Cottage brand, raised £1m on Crowdcube by way of a mini bond in 2014. The money was to open new restaurants. 3 years later, they have fewer restaurants than they did then.

In the pitch for £1m, River Cottage made it quite clear that this £1m was to open new units over the next 5 years - taking then from 4 to 7. It already had 4 units (one was opening in conjunction with the raise).

In May of this year, this appeared in The Caterer - 

Hugh Fearnley-Whittingstall’s River Cottage Canteen and Deli in Plymouth has closed suddenly, according to the Plymouth Herald.
After six years in business, “lorries were seen hauling away furniture and parts of the kitchen” from the restaurant at the Royal William Yard and the unit was “left deserted”, reports the paper.
A spokesperson for River Cottage told The Herald the site had “struggled” and the decision has been made to close the restaurant 

So this Plymouth unit had struggled? It opened in 2011, 3 years before they raised the CC bond. According to the pitch, Plymouth was a great success. It was RC's largest unit so closure will have had a major impact on revenues - see here for the piece we wrote on RC in Jan 17. The company as at March 2016, was already making large losses, with revenues stagnant at £4.4m. Plymouth accounted for at least £1.5m of the 2014 £4m t/o.  
285 Crowdcube punters must now wait another 18 months to see if their principle sum will be repaid. One thing is for sure; it wont be taken out of revenues from new restaurants. They raised another £396k in equity in 2016. Accounts for YE March 17 due out before Christmas. 

Revolut goes dark

Revolut, the online bank funded by Crowdcube (£1m) and Seedrs (£4m), has server issues and accounts are blocked for 24 hours.

We will never know what happened in full, Revolut say that their server started having problems and the back up server crashed due to overloading. Outcome - customers lost service.

It's all fixed now apparently.

Was moving into insurance before getting this type of glitch sorted such a good idea? One things for sure when the internet goes wrong the world stops.