What the hell are Seaborne Freight up to?

HM Government have awarded start up Seaborne Freight Ltd a £14m contract to launch a new RoRo service from Ramsgate to Ostend on the 1st of April 2019. No, it is not an April Fools. Chris Grayling has told Channel 4 that the Government carried out extensive due diligence on the company, its plans and its directors. Hmmm - really Chris. Well did you know that..........

For the record, we were the first to understand that Ben Sharp was John Sharp, using our DD experience. And that he had been involved in a liquidation owing HMRC £1m plus. We were also the first the tie other liquidations to other Seaborne directors. Both The Times and The FT rang us to get this information, which we gave them on the strict understanding that we would get credit for our work in the articles. Both papers reneged on this agreement. At a time when we are launching a new equity CF information service to promote the truth and honesty in this sector, this kind of shoddy backhanded behaviour is shocking.  

1. Ben Sharp, quoted as the CEO, has never run a  successful company let alone one in shipping. His LI page claims he is currently CEO of Mercator International. This company was forced to close by HMRC back in 2016, having filed a balance sheet £1.4m in the red for YE March 2013. 3 other Mercator companies were also closed. His name at CH is not Ben Sharp but John Edmund Paul Sharp. The total disregard for any attempt to present real accounts with notes doesnt bode well for Graylings KPIs when ot comes to issuing the £1.4m - another claim he made to Cathy Newman. Anyone capable of presenting accounts like this in 2013 is simply not interested in doing things properly. Something most people will recognise as a fact when they know that the new Seaborne copied its Articles from a takeaway company.

2. Sharp is also a director of Albany Shipping which does very little and is technically insolvent. Two other Seaborne directors are also directors of Albany.

3. Other Seaborne directors, are currently involved with the liquidation of Litigation Protection where debts exceeding £500k are also owed to HMRC and the liquidation of Access to Justice 2000, completed in 2014.

4. We couldnt find any other shipping experience save for the so far dormant shipping company Myferry.

This is not exactly the sort of picture painted by Grayling, who claims he has every confidence in Seabourne being able to launch a new service from a port that currently runs no ferry service and will need substantial dredging and infrastructure works before the service starts in less than 3 months . What DD did he really carry out?

Due Diligence is an art and its seems clear Grayling and his team do not have this skill set. We do. That's why we are able to get investors in one of highest risk sectors, the real information so you can make an informed decision.

Finally who in their right mind would award a new piece of vital infrastructure in a national crisis to a start up with so little shipping experience, when they have to launch a new service in 3 months -  a service which has no time to iron out any wrinkles. Well clearly only a total idiot.

Halal Dinning Club makes a mockery of Equity Crowdfunding and Crowdcube

Halal took £200k off Crowdcube investors in 2016 - 30% over its target. The pitch financials were complete nonsense with no balance in the balance sheet and figures randomly picked because they looked nice. How does that pass the Crowdcube Due Diligence test?

Now SHs have received a final plea for cash, which if it wasnt so sad for all involved, would be hilarious. Not once in 5 pages of incoherent ramblings, do they mention the delivery of the numbers they projected. Instead SHs are told that the CEO was invited to No.10 recently - maybe to be our new FS. 

Year to December 17 was projected to be one in profit. They made a large loss. So to claim that they have been on target and cannot quite understand why they cant raise another £250k is puzzling. It is just pathetic that this sort of total drivel gets funded. 

The outcome is that yet another very poor business idea, run by even poorer management, that has taken advantage of people's belief that Crowdcube do some basic due diligence, will go bust. A large part of this letter is about how to claim back your loss relief. Some SHs update.

What is it Crowdcube do not understand about checking the facts?

Moove, an Irish version of Purple Bricks according to their PR, have almost completed their Crowdcube £200k raise - then someone discovers that they are not licensed to deal with property.

So you have to ask if Crowdcube really do any very basic DD? The answer is bleeding obvious.

Luckily for CC investors, someone on the forum has done some checking and they are not currently licensed. His initial Q on the forum was removed by Crowdcube. Open and honest as ever.

http://www.psr.ie/Website/npsra/npsraweb.nsf/page/publications-licensees-en 

Even if this is a clerical error, as the company is claiming, you have to wonder if a company that cant even get its own core licence arranged, has any hope in the real world.

You couldnt make this up. FCA are you out there?

Thanks for the tip on this.  

We team up with Syndicate Room The Due Diligence Guide for Investors - out now for free

Well here it is - the new and only guide for investors in the SME market, explaining how best to carry out Due Diligence before you part with your cash. Download it for free here

The guide, written by this blogger and updated on line as new information comes to light, is a very quick but comprehensive help to carrying out DD. If you dont bother with the DD, then you are a fool. And you are not helping anyone. In doing a good job on DD you can help the company you are interested in and that in turn that will be a help to UK plc. The last thing we need is a whole raft of useless companies soaking up the investment offered by ECF. Anyone familiar with this blog will be aware of that!

We have called many of the failures that we now see - when they were pitching for your cash. Read this guide and it will help you do the same. Filled with examples (anon but real cases) it's a quick overview reflecting 35 years of business experience alongside one the UK's best ECF platforms.

Crowdfest takes the biscuit by inviting AIG to discuss due diligence!

Yes thats right  - Crowdfest - yet another made up equity crowdfunding backslapping event, trying to paper over the now obvious flaws in the model, has gone one step further.

Mr Ling from AIG will be joining the usual suspects for a discussion on due diligence - something readers here will know we keep an eye on.

Maybe it is fitting that an industry that has such an appalling record of ignoring due diligence and disclaiming all responsibility for it afterwards, should include AIG in the UKCFA event's panel. 

After all, in 2008 we saw just how great AIG are at their own DD. CDS ago-go and many billions lost with the US government being forced to step in and buy 90% of what was left of the double gold plated blue chip, largest insurance company in the world. The lawsuits are still rumbling on.

Almost makes me sad to be missing it. Now if they could also get Fred the Shred..................... 

Yet another Crowdcube pitch with misleading information - is a mess this large really possible?

They just keep coming. We are told that Crowdcube have revamped their DD but that must be just another Crowdmyth.

Dock of the Bay are about to fail spectacularly to raise money on Crowdcube. 

Firstly this begs the question, if as CC continually claim, they refuse to take 75% of the companies that apply, how did they let this one get through?

Secondly and this will now come as no surprise, the information vetted by Crowdcube and then presented to the public as verified, is wholly misleading.

It states in the first few paragraphs of the pitch that DOOB has been 'established' for more than 5 years. Yet we learn from the forum that DOOB has been a non trading company until 2016 - so it has not been established as anything apart from a name on a page for more than 8 months. The main trading company Gtem International Ltd was incorporated in 2007 and has made steady losses; not that you would get that impression from the pitch. We also learn that the founder has a 'wealth' of 'experience' in this sector and we are told, he was the founder owner of Moorcroft Lifestyle Ltd which produced one set of accounts and was then dissolved via administration.

A wholly owned subsidiary of Moorcroft Lifestyle, MC Lifestyle Ltd, of which the same founder was a director, was closed via a Court Order. If its fine to quote the good news in the pitch, why not include the bad for balance. Well the answer has to be that bad news doesn't sell equity and then Crowdcube dont get their commission. Meanwhile, the FCA carry on snoozing. 

Is it possible that the whole of the CC OTL Dept has been on holiday for the past 3 months - clearly no one checked any of this utter drivel. Whilst none of the information is critically wrong and no one has broken any laws,  it is a very slapdash approach and is misleading Why should Crowdcube members be forced to find these things out or as in many cases not find them out until it is too late?

Do investors in the Crowdcube platform, looking at this pitch and its half hearted DD, really believe that the platform can deliver a sustainable level of profit to make them worth anything like £65m? 

The Mess the FCA are Sharein, Share-In or Share In

Carrying out due diligence we are told by the likes of Crowdcube and the FCA, is an essential part of being able to invest via equity crowdfunding. We would certainly agree. To do this we all rely on official records.

We came across this company ShareIn Ltd recently. They claim to be one of the UK's leading ECf companies. We could find little evidence to back this up but that was not a surprise. They now offer a dual service  - a white label ECf platform creation service and a direct from your own website ECf campaign service. Both are fully compliant with FCA regulations, as the company is FCA authorised. It's a neat idea, although unless they are providing a free service it would seem that the ECF platforms' offer of pay only on success, must be a better option.

This is were we became confused.

Taking a look at the FCA register, there are two companies under similar names to the one here - one is called Share In Ltd and the other is called Share-In Limited. Stay with us. Both have the same address and lead person. The list of trading names is no help(there isnt one) and ShareIn Ltd has not had a name change.

So the company registered at CH no SC408803 is called ShareIn Ltd and this is the one that runs the website. However according to the FCA register this company is NOT FCA authorised. This is from the register regarding SHARE IN LTD -

Current status

No longer registered as an Appointed Representative  This is an appointed representative (AR) that is no longer an agent of an authorised firm. Do not start to do business with an AR that is listed as 'former'.

Note the final sentence.

The other company Share-In Limited which has the same registration number at CH as ShareIn Ltd, is authorised. Who's who and what's what?

So how are we to be sure that the company running the website, which is called ShareIn Ltd is in fact the same company as the FCA registered Share-In Limited and why do we appear to have one company with several different name styles  - one authorised and one not?

Clearly being allowed to create new ECF platforms and facilitating ECf campaigns on companies' own sites, should require the highest standard in due diligence. Surely then, it might be a good idea for Share-In Limited/Share In Ltd or Sharein to get its records with the FCA sorted out. If you wanted to set up a bogus FCA authorisation, it does look like it would be pretty simple.

It certainly makes you wonder when the ShareIn website states that they can raise money in the USA when anyone with even a moderate knowledge of the ECF scene would know that this is not possible currently. This from a FCA approved company is worrying. From the website - 

Reach an International Investor Audience

We can facilitate investments from the USA, UK and the EU.

Crowdcube's Cashmere Crumpet tries the Double Phoenix!!

This is a truly incredible story.

Back in 2014 Crumpet Cashmere pitched on Crowdcube. The pitch made little mention of the real circumstances behind the business. In fact it totally ignored most of the it.

The management team had started a company called Crumpet England which had got into trouble, so they used the prepacked deal route to off load the debts and start afresh. Crumpet England went down in flames owing over £750,000. The prepacked charged Crumpet Cashmere to pay £60k for the old assets, brand etc. The management of both companies were the same.

At the time that Crowdcube published the pitch for Crumpet Cashmere, the administrator's report shows that the management were in default of this payment for the old assets - or put simply they hadnt paid up. The administration had had to be extended to accommodate this default and had been forced to issue a Statutory Demand. 

These facts were never mentioned in the Crowdcube pitch. At the time this information was hard to get hold of for ordinary punters as the CH beta site wasnt running then. Chances are none of the investors knew of this default.

This is how the Crowdcube pitch described the collapse of Crumpet England in the Crumpet Cashmere pitch -

''During latter part 2012 and 2013, the business with the support of professional  advisers, undertook an in depth review of its activities and structure, which resulted in significant cuts to costs and overheads''.

The 'business plan' published in conjunction with the experts at Crowdcube states that Crumpet Cashmere had bought the brand in January 2013 - a fact we now know is rubbish. Caveat Emptor will no doubt cover any liability.

Only when questioned by us on the forum did they admit the pre packed deal part. By significant cuts we assume they meant leaving behind all their creditors. In essence investors in the Crowdcube pitch were having their investment in Crumpet Cashmere used to pay for the prepacked deal with Crumpet England - without their knowledge. 

This could have been useful information, given what we now know. Crumpet England was finally closed in October 2014, some 6 months after Crumpet Cashmere was already losing investors' money. Less than 12 months later, the money had all gone and the management team were looking for the next out.

Ruby and Rudy was incorporated on the 25 August 2015, just around this time. It has the same management team as both Crumpets. According to the liquidator for Crumpet Cashmere, its assets were sold to R&R for £3,000 before the company went into liquidation. The management team claim this was in the best interests of creditors. Creditors who according to the liquidator will receive nothing. 

All of this sad saga could easily have been avoided had the Crowdcube out to lunch dept been awake. Armed with the full story it seems likely that the pitch would have failed. This would have saved investors £160k and yet more creditors another £260k. 

We helped the Times put together a piece on this which came out today -  http://www.thetimes.co.uk/tto/business/industries/consumer/article4656180.ece 

Luke Lang of Crowdcube commented  - '' Investors can be assured that we are committed to ensuring transparency and have rigorous due diligence processes in place.” Phew that's fine then, we were worried things had got out of control.

Why we need a regular format for information shown on ECf pithces

There is a current pitch on Crowdcube which is an excellent illustration of why we need some regulated format for the information ECf platforms publish.

In this pitch the financials have been presented in such a way as to heighten the net profit. This is done firstly by claiming the previous 12 months accounts were for the Group and that any amortisation or depreciation is taken into account at company level. Then for the projections, the company have used some accounting scheme which is not explained but appears to limit the depreciation to tiny a percentage of what is a large capex . It refuses to give any details of this accounting system because it claims it is commercially sensitive.

So the net result is, or more accurately could be, that the profits for this company as published in the Crowdcube projections, have been materially over stated. We have no way of telling. Crowdcube clearly didnt bother to check these things before the pitch went live. In fact its more likely that Crowdcube wouldnt spot these discrepancies anyway  - they never have before.

No one here is breaking any laws; the whole area is a minefield. That's why it needs addressing

By filing all financial projections with an independent third party, sponsored by the government, and setting out some basic rules for how accounts are to be laid out, all of this could be avoided. If pitches didnt like the formatting, then its a good guess that what they are offering is not what it appears be.

In this way investors would have a much better chance of seeing a ROI and therefore ECf would have much better chance of a sustainable future.

Crowdcube wrong yet again

Yet another example of the very poor DD that Crowdcube use has just been posted on the platform.

Pimoroni is a new pitch. The financials or more specifically balance sheet is wrong.

Filed accounts to YE June 2014 show retained profits at £191,760 and paid up share capital of £15,370. According to Crowdcube's projected 2014/15 accounts (YE June 2015) net profit was £94,443. No dividends were paid out so this money is added to retained profits leaving it at £286,203. According to these Crowdcube 'accounts' no equity investment was made for the year so paid up share capital should be the same as 2014. However the retained earnings given are £267,290 and the paid in share capital has gone up to £52,870 or an additional £37,500. This addition is not accounted for anywhere.

That aside, take care with the fact that the profits for 2015 appear to be below the ones for 2014, which is not mentioned in the pitch of course. The stock holding YE 2014 was £112k but had gone up to £205k in Crowdcube's accounts for YE 2015 - although as we all now this could easily be an error on their part. Stock maybe a problem as in their first year of trading, they had only £12k of stock at YE but had managed a £87k profit. The build up of old stock after 2012 maybe an issue if you consider the large number of lines they carry.

Poor information does make it quite difficult to make any sort of considered judgement.  

Actually dont trust me as what I just told you may not be strictly true

It looks like the Skin Analytics pitch on Crowdcube may have passed its due diligence whilst the DD dept at CC were out to lunch; that would be anytime, any day apart from Sunday.
In the pitch the company makes various claims - we covered one earlier relating to its link up with Vitality Life.

One such claim is - 

"Our innovative machine learning algorithms work in two parts....... ​By combining these two features, we will meet the NICE guideline for melanoma diagnosis."

However the NICE Guidelines published only 3 months ago state they...

".....do not routinely use ... computer-assisted diagnostic tools to assess pigmented skin lesions."

So in fact Skin Analytics do not and will not meet Nice guidelines, despite what they claim.

This is clearly a specialist area and has complexities that we wouldnt wish to claim to understand. The problem here, however appears to be that neither do Crowdcube. If they do have a DD department, which we find unlikely, then why didnt they read the NICE guidelines? Skin Analytics may well be able to change the NICE guidelines in time but this does not alter the fact that under the current guidelines, which are only 3 months old, their system would not be considered acceptable. So why claim the contrary?

Finding a diagnostic tool for melanomas is an important aim but making claims that your company meets NICE guidelines in order to obtain investment from the public obviously shouldnt be allowed. Where are the FCA?

UPDATE -

Following the clearly misleading statements made by this pitch and the acceptance of them by the Crowdcube out to lunch dept, the pitch and Crowdcube have now changed these claims. Instead of the company's gadget meeting NICE guidelines, they now say they will work with NICE to ensure the guidelines are changed - so that the gadget will then meet them! Surely this sales approach should be looked into seriously by the FCA? 

If someone had not bothered to point this gross error out on the forum, then investors would have put money into this company under what they have now admitted are false pretences. Are we therefore to believe that the Crowdcube forum is the new FCA?

Timbergram cant see the wood for the lack of trees.

Timbergram is raising money on Crowdcube. Crowdcube claim to thoroughly vet all pitches before they are published. Anyone reading this blog will know what we think about this claim.

As an example of Crowdcube's DD department's long lunches, we thought we would check out Timbergram's claim, made explicitly in their Crowdcube pitch, that they plant a tree in Africa for every 10 cards they sell. So they claim to have sold 200,000 cards to date and that means they must have planted 20,000 trees.

Their projections show them selling 1m cards a year, equating to planting 100,000 trees in Africa pa. That clearly starts to build up quite a forest.

When questioned about this, the company has decided it does not in fact plant any trees, anywhere, ever. The truth is that it donates a small amount of money to a charity, who are involved in tree planting in Africa - they have no idea how many. The numbers used by Timbergram are complete nonsense and to date they have contributed enough money to plant a small copse. They admit this and have now changed the pitch accordingly.

The equity offer made by Timbergram and 'vetted' by Crowdcube with the inclusion of the tree planting, is wholly misleading. Lunch anyone?

Crowdcube due diligence went home early - again.

For crying out loud guys how difficult is it to copy a date from Companies House?

We reported on a new pitch on Crowdcube, Rocksolid Life, which had an incorporation date of 1970 according to Crowdcube. This was before the founder of the company had been born.

They have now corrected this but the blithering ijiots have still got it wrong - it was 2015 not 2014 numb skulls. Too much time spent PRing guys.

Crowdcube Due Diligence - Caught alseep on the job.

If you needed any more evidence that Crowdcube don't bother with due diligence -  here it is.

A new pitch on the site  - Rocksolid Life - claims in its opening remarks to be a company that has been going since 2013. If you then go to the Company page of the pitch it states that Rocksolid Life Ltd, reg # NI630400, was incorporated on 1st January 1970.

If you bother to check the contradictory information Crowdcube supply with Companies House, you will find that it is all wrong. Rocksolid Life Ltd - the company you are being asked to invest in, was incorporated in 2015. There is another Rocksolid Life (Eur) Ltd which was incorporated on 13 March 2012 and is owned by the same person as the owner of the Crowdcube pitch company - but this date doesn't feature in the Crowdcube shambles. In turn, this company is wholly owned by Aj Locum Solutions Ltd, founded in 2009.

So what we have here is a Government backed platform, who spend enormous sums on their own promotion claiming that they carry out thorough due diligence on the pitches they offer to punters - providing information that is total rubbish and has not a shred of truth about it. Can you trust Crowdcube  - simple answer is no.

The pitch business itself has little to recommend it and as it's almost impossible to know who you are investing in, will almost certainly complete its funding round as so many others have before it. When will people wake up.

This time, you cannot be serious!

GF Foods (York) are back - hard to believe but they are. This business, whose first incarnation was eventually dissolved in 2011, 2 years after going into administration with creditor debts of £350,000, has used Crowdcube before.

It now values itself at £2.5m having only shown losses to date in its two years of trading. It seems impossible that people will be stupid enough to give them money but then you would think that Crowdcube would have been sensible enough to have declined their approach. The mess the last GF Foods left behind has cost £80,000 in fees to sort out and left a lot of very angry creditors. Whats more the two directors now asking for our money on Crowdcube, had taken out loans from the old GF which despite legal attempts by the administrators to reclaim, were never repaid.

You have to ask given the history of this company and its directors, why this is being allowed 3 months before their next set of accounts are due to be filed for YE 03/15 - why are they not told to file them now? Even Mac could be forgiven for blowing up over this one!