Hapless HAB Housing leave shareholders in the dark

In yet another example of the investor power vacuum, HAB Housing Ltd have filed yet more heavy losses whilst associated companies play swinging doors and restructuring games.  

HAB took £1.8m off Crowdcube investors in 2013 and then another £2m of Crowdbnk investors via a Bond in 2017. Results have so far been on the disappointing side and the GAP between the £8m predicted profit for 2018 and £1m loss is substantial. 

What is more worrying for investors is the silence that has accompanied this. Shareholders we have spoken to say they have been told nothing or very little. HAB Land, an SPV used to purchase land and the company the Bond is in, have now handed over 75% plus control to Bah Restructuring Ltd. McLeaod the TV star who headed up this HAB Crowdfunding share sale has resigned from both HAB Land and HAB Financing plc - as have many other directors. Whilst the building works may not have been busy, the swinging doors certainly have been. 

For a Group that told investors in 2017 that they planned to be building 500 new houses a year by 2020, they seem to have been a little optimistic - or is that misleading? This appeared on  https://www.codeinvesting.com/raising-finance-for-smes-hab-land-interview/. 

A Suit that Fits enters the realms of fantasies and nightmares.

Simply - it doesnt. Never has done and never will. ASTF funded on Crowdcube and Envestors. Went bust, was exhumed and now sits on the edge of the hole about to slip back in. Meanwhile it appears investors may well have lost more cash. 

This isnt a case of a poor idea or even a good one poorly executed - although execution has not been great. This is about a team who will, by looks of things, end up wanting to kill each other. A team made up of various cultures where it also appears these cultures and their differing attitudes, may have clashed. The story has more twists than a bowline.

We have written about ASTF many times - here - we may make it into a book.

Enough from us  - below is the latest mini saga  - for a read when on a boring train journey.

Since this went out, another desperate email has gone out to SHs asking for more cash.  

Good afternoon. I am afraid to say that your help is needed, please read on. Following the recent raise to buy out David Hathiramani and Keith Watson I would like to provide you with a candid timeline of events and the current critical position of the business. A total of £203,000 was pledged from our investor network, however only £160,000 was actually transferred post raise. Adjustments were made to budgets and I had every confidence with your support I could drive the business forward and deliver on the objectives outlined. The day following the raise, David's discontentment was evident at the buy out fee achieved against the amount pledged. A series of challenging text messages were sent to me demanding more money then was communicated to our investor network,with spurious claims of historical money being owed for services rendered, only communicated once the round had closed. I held firm and committed no more then what was agreed. I believe that David's discontentment continued to put significant strain on our relationship to this very day. During the raise I was lead to believe that the official and legal side of the buy out would take around a month, at which point David and Keith would exit and share certificates would be issued, the new board formed and a fresh start ready for all. To this date the buy out is still not complete, following taking on the role of leading the company there was little to no handover and David and Keith hold all historical investment and financial records which have not been handed to our solicitor in a timely way. It was decided that David would oversee the transaction until today when I intervened challenging why some 5 months later there has been little to no progress. I quote a part of the response here "Part of the delay issue has been due to not receiving coordinated instructions or full  responses to the various emails I have sent". I have now arranged a call for tomorrow with our largest investor and the solicitor where I aim to understand how this process may be expedited. The funds raised went to the company you initially invested in, DKSG Bespoke Ltd which owns the ASTF brand, and leases this to Tailored Franchises Ltd whose ownership structure replicates that of DKSG. This is a company I am a co-Director of, holding a bank account with Lloyds Bank. I have had no access to this account or until recently up to date statements which were assured weekly, the account has essentially been held to ransom by my co-Director and the only person with access to it Keith Watson. I still await a statement for June to have full visibility on the outgoings and an understanding of the true current balance despite requesting it one week ago today. On inspection of historical statements I see David has paid himself £17,700 in recent months, a figure I am yet to receive any justification for and was not agreed with me, his co-Director. The impact on the business as a result of this has been significant. £50,000 of the amount raised was intended to fulfil the outstanding orders, as communicated during the raise I was unable to take any new orders until we made a start in completing the historical ones, as such we have not taken a single new order this year and funds raised have been used to sustain the business in the hope the buy out would complete, we could make old orders, take new ones and commence trading again using every penny for the purposes communicated. The constant stalling with the buy out has been detrimental to the business to the point where Tailored Franchises Ltd has zero cash is unable to make business critical payments to suppliers or staff payroll this week. My understanding is there is around £25K remaining in the DKSG account which would cover these expenses, however David is unwilling to release funds meaning I essentially have to close the trading business immediately unless David relents or I am able to rally support from you, our investors. In recent months operating costs have continued to drop and if we expedite the buy out and raise a relatively modest amount of cash I believe we still have a business that can essentially flourish, however I am effectively fighting for something that I am not drawing a salary for and have committed not to in the upcoming months. Short term (as in the next 24 hours) I need to raise £50K to see us through the next month, by which point I would expect us to be self sufficient and be able to commence trading again. I have looked at institutional lending for which we are not eligible however I believe we would be eligible for a Funding Circle Loan. This is a high interest loan that requires a personal guarantee. I am happy to offer this personal guarantee such is my belief in the business. I am also looking at a personal loan so I can contribute where necessary and claim back when the business is back on its feet. I appreciate the context of this email is startling, I frankly feel quite startled also and like I have been fighting a losing battle against people presently yielding more power than I. Whilst late in the day felt it appropriate to reach out in an attempt to rally support before it is too late. I understand there are likely to be many questions, whether I/Tailored Franchises achieve the mission outlined here. I would like to invite you all and openly invite David Hathiramani and Keith Watson to an event on Tuesday 8th July whereby I /we can answer any questions or concerns this email may raise or how the companies persistent failings lead us to this point, in the interim my sole focus must be survival so please forgive any late responses to questions etc. In exchange for £50,000 raised in the next 24 hours. We offer BOTH 10% equity in both businesses AND complete complete payback of the amount you support with at this stage over 12 months next year - a modest liability to the business of £4,166.66 a month. You can commit from £500 up to the full £50,000, funds will need to be received by the end of tomorrow. If you wish to support please just reply to this email and I will come back to you immediately, any other questions please email ..............................(my other account) and I will come back to you when time permits. I thank you for your time and will send a progress update tomorrow. Kind regards Daniel Warwick

Kokoon lowers valuation by 20% at the end of their Seedrs round to 'accomodate' a £525k investment from an EIS fund.

We strongly recommend that if you want to be cheered up, you read the Kokoon Kickstarter forum. Now in breaking news, the company has written via Seedrs to existing SHs about an exciting development. 

Hard to know where to start with Kokoon  - makers of the sleep enabling headphones that have given thousands of Kickstarter backers sleepless nights, waiting for delivery. 3 years on, the latest batch of comments (4,997 in total) on their pitch page are hilarious - provided you are not a shareholder. We particularly liked this one - 

I listed mine on Ebay with no reserve! Get a great deal. And yes, I will actually ship them to you quickly.

Now in a final twist to their latest ECF round - they started on Crowdcube and are now on Seedrs - they have told SHs that the valuation of this round - which has been on Seedrs for ages - is coming down by 20% to accommodate a large EIS fund investment. So the Crowd was allowed to be over charged but not the EIS fund? Fills you with confidence and belief in ECF doesnt it. 

Oh and we forgot to mention the main reason for the email was to tell SHs they could now take up their pre emption rights at this new exciting discounted value. Are you that stupid?

On the Seedrs pitch there is no mention of the problems with delivery to over 7500 KS backers, the demands for refunds, the breakages, the product downgrading and software inadequacies. What they do tell punters is that they have pre sold £4.5m worth. How much is owed back in refunds, lost in breakages and not delivered at all after 3 years. Those numbers are not available at this time.  

You do have to ask if Seedrs under Jeff Lynne would have allowed this nonsense. 

Syndicate Room's Made in Mind Keeps em Rollin Rollin Rollin..........

Made in Mind (MIM) went into administration on 25 June. It had raised £352k on SR in 2014. Now a version of it is appearing on Kickstarter even before the initial administrators report is out. Shareholders are scratching their heads.

This is a new one for us. The letter sent out to SHs in MIM made the usual excuses and apologies. It made no mention of the just launched KS campaign -

https://www.kickstarter.com/projects/muone/mu-book-wireless-fast-charger-and-carry-case?ref=7vt3bx

The KS campaign is for a version of the product sold by MIM but states that the owner of the campaign is now Discovery Club Ltd. The KS campaign page states

We've had a bit of a shake up. "Mu' and "Made in Mind' now live in the house of Discovery Club Limited. An unlikely crew, with an unlikely knack of delivering great innovation. Between us we've successfully launched dozens of products, raised over £1M for projects via Kickstarter, have won numerous industry awards.

Discovery Club was incorporated on 14 March 2019 and has one Director - Matthew Judkins. Matthew Judkins was the founder of MIM - so actually the same old crew. Judkins is described in the Syndicate Room pitch as 

' MiM was co-founded by Matthew Judkins, who has over 10 years’ experience working in commercial positions within the SME sector.'

Matthew is also the guy who wrote to SHs telling them that MIM was being put into administration. 

So SHs might want to know what is going on. We wouldnt mind either. The IP and all that, legally belongs to MIM and its SHs, until such time as the administrators sell it to the newco, Discovery Club - if they are happy that this is legal and within their remit to look after the creditors. In Matthew's goodbye letter he failed to mention Discovery Club but he did mention MIM debts of over £300k. He also talked about the IP being worthless. 

Just in case you wish to be more confused, Made in Mind Ltd owns 100% of Made in Mind Mu Ltd, which is currently not listed at CH as in Administration - both founded by our friend Matthew.

If anyone can shine a light on how on earth Matthew can be actively raising funds using the MIM IP whilst MIM is in administration, then please do so. Maybe the administrators gave him a licence to do so? If so, why didnt he tell his own SH's when he wrote them a letter full of crocodile tears? 

Was he going to try and pay them back or pay off the £300k debts but keeping it a special secret perhaps?? 

Move 'em on, head 'em up, Head 'em up, move 'em on, Move 'em on, head 'em up, RAWHIDE
Cut 'em out, ride 'em in, Ride 'em in, cut 'em out, Cut 'em out, ride 'em in, RAWHIDE

Angelberry's sluggish death is all to familiar to Equity CF investors

Ryan Pasco and James Taylor applied to have their 2014 Crowdcube funded company quietly struck off in May 2018. Now in June 2019 is is still listed at CH as active with the Voluntary Strike Off suspended. Someone didnt like it. 

Angelberry stopped functioning as a company 2 years ago - we have written about them here 

So Crowdcube investors not only have a dead company but they cannot at the moment claim loss relief. We do not know why someone has stopped the striking off but a guess whom be that there is some dispute between the founders and shareholder/s or directors that has not been settled. It is crap way to run a business even after it has failed.

Are Crowdcube helping? Silly question.

This is just one of many examples and it is a very good reason for investors to join ECF.Buzz, where they know they will get up to date reliable information and if they bother to carry out the due diligence we have designed, they might just have avoided this crater. Site launching for real on 10th July 2019.

Our Buzz Rating for Angelberry has been under 20/100 since the start of 2017. 

Crowdcube's Mindflood DIYs its own Liquidation.

Mindflood or Patchworks, a tech company based out of NI, raised money on Crowdcube in 2015. Shareholders have heard nothing since 2016. Now in June 2019, they are told that the company is closing and they will receive some small change - donatable to charity.

According to Mr Heinz (no relation) the founder, investors would receive 5p per share on winding up against the share price of 73p. He doesnt apologise or even mention how inconvenient this might be.

In 2016, the company issued 139k C Prefs to Techstart NI and one other much smaller investor. These shares had a catch - in the event of liquidation the holders were first in the queue after creditors to be paid out. So ahead of the Crowd. To confirm this the company passed a new set of Articles - only voted on by A SHs. Most of the Crowdcube gang were Bs.

So as the paperwork states, the sale of the company's IP to an undisclosed buyer for £250k has enabled the £136k paid by Techstart to be repaid in full. Phew for them. Was there some personal guarantee?

What's left has been calculated by Mr Heinz to give the Crowd 5p per share. This is after he has allowed for £30k to be spent on the DIY liquidation. No mention as to who gets this is obvious.

One positive here is that there are no creditors left unpaid. And of course, as Heinz is keen to point out, Save the Children can benefit if you dont want the small change causing a hole in your pocket.

Another interesting point is that the DIY calculation includes not only the payment in full of the C prefs but they are also included in an extra £7k share of the final pot - despite the fact that the Articles state they are not entitled to a dividend. We think that might be wrong - not that it makes any real difference.

The company made steady losses until all the investment was gone. 

What a mess after 4 years. Just shows that it is worth knowing your way around share issues, share rights and Articles of Association if you dont want a surprise email pinging your inbox.

Closing our Indiegogo Campaign ready for LIVE Launch of ECF.Buzz

Now that the live site is launching in July as planned, we are closing the hugely successful Indiegogo start up campaign. This will take a few days so you can still join via this route for now. 

In July you will be able to join our Crowd via the live site ECF.Buzz and you can become one of the many members who has access to our data and information on all things to do with Equity Crowdfunding. Together we can all help to turn what is currently a mess getting messier, into something worthwhile.