The true scale of the mess at Emoov is only now being revealed. It was all avoidable.

A bit like - Ukip, I'll drive;  Emoov- doesnt. It's administration is revealing the real facts behind its collapse, just months after Crowdcube allowed it to take £2.6m off its investors. The filed documents now reveal that someone somewhere must have known that the pitch on Crowdcube was not all true.

We warned investors not to touch this one, when Emoov came back to Crowdcube in June 2018, to raise more cash after it it had bought out Tepilo and Urban. Emoov had already shown that their 'projections' were completely untrustworthy. In their first Crowdcube raise, another £2.6m in 2015, the company told punters they expected the revenue for CY 2017 would be £15m and in 2018, £39m. That was without any mergers. The actual revenue for YE Apr 2018 was £2.2m. That sort of says it all.

No mention of this gap was ever made in their last Crowdcube raise. And for all of you who poo poo our analysis of this gap, maybe time to think again?

In the IM for this raise, checked and verified by the Crowdcube Broom Cupboard, Emoov told investors that they had a combined customer number of almost 50,000. They also stated that the business was built on TRUST (their caps). The filed Administration report states that the company had 2,400 active customers when it failed. So that's 50,000 down to 2,400 in 4 months. That is some churn rate - more like extinction rate. It doesnt exactly thrust the T into rust.

According to the same filings, the company's own management accounts showed a loss of ~£15m in the 5 months prior to September 2018 - so that would be from May to September 2018. A response to this came back from the CEO, here, in which he claims that the company could not have known of these losses when they were live on Crowdcube - as he put it, because they were in the future.

He told EAT: “The crowdfunding campaign was in July ... Just one month after the Tepilo merger. How on earth  could we possibly have declared ANY financial information about the ‘losses up to September’ in July - three months hence?

But they were live on Crowdcube in June and July and did not complete the raise until August. All three months are within the 5 month period. And these were the companies OWN management accounts! So you have to ask did Emoov knowingly promote itself on an FCA regulated ECF platform, knowing of the losses being incurred but failing to mention them. If so did the Broom Cupboard know? Certainly investors did not.

One problem here is that the only rule the FCA have set out for ECF is that pitches must not be misleading. No case has yet come to court to explore what 'misleading' means. Is it just about a false statement of fact or is it also about not revealing relevant information? Then, of course, the climax of lawyers start over on what 'relevant' means.  Whilst Crowdcube claim to check what companies tell them, they do not check what companies dont tell them. And they deny all responsibility for the IM anyway. So being FCA regulated is really as useful as being a donkey at The Derby. You're visible and lovable but of no use, unless you want to get rid of some carrots. Too many days at the Dogs.

In the IM, Emoov make no mention of Ebitda or losses. We saw this as a huge red flag. With Crowdcube pitches, what they dont tell you is always more important than what they do. I leave you make up your own minds.

Emoov owes a lot of money to a lot of people. Its valuation, £50m to £100m in August 2018 on Crowdcube, can now be laughed at. But the driver for this value was its performance  - past and future. Were investors given the real facts? The business was so successful, it could not be sold. In total, its assets raised just  ~£300k. Unpaid Creditors are likely to be north of £14m. Crowdcube investors have lost over £6m. It has been an epic disaster - one of Crowdcube's best.

You have to wonder if people will ever learn. We would say that there is little doubt that Emoov held back on the real information about their financial position and that Crowdcube, knowingly or otherwise, failed in their duty of care to check this out. But the signs were all there for anyone who read this blog. And we will continue with and enhance this service once ECF.buzz is launched in the summer.

This is not the first time this has happened and the only two winners are Crowdcube, who retain their commission and the administrators. It really is time the FCA got its act together.