Saturday, 3 December 2016
Flavourly snacks leave a very bitter taste.
This is really hard to believe.
Flavourly, a very poorly run snack subscription service, initially raised money on Angels Den and then in 2015, over £500k on Crowdcube. The Crowdcube investors bought in at £1.2m - which for CC is low.
We have written a lot about Flavourly here. It has been disaster since day one so this should really come as no surprise. It's the way it's been done that takes one's breath away.
Now shareholders have received an early and very unwelcome Christmas Present from the directors/majority shareholders of Flavourly Ltd - Andrew Veitch, Ryan O'Rorke and Kevin Dorren - remember those names.
These directors/shareholders have gone behind the backs of the Crowdcube shareholders and triggered the Crowdcube Drag Along clause, which states that all shareholders must sell their shares if the majority holding agrees to the sale. The text is below
We, Andrew Robert Veitch, Ryan Lrwin O'Rorke and Kevin Matthew Dorren (the "Selling Shareholders"), together holding a majority percentage of the A Ordinary Shares of the Company, have agreed to transfer all of our interest in our shares in the Company (the "Sellers' Shares") to the Proposed Buyer (the "Sale"). We, therefore, constitute the Selling Shareholders for the purposes of article 10 ("Article 10") of the articles of association of the Company (the "Articles"). Pursuant to Article I O, we, the Selling Shareholders hereby give you, the remaining shareholders of the Company (the "Called Shareholders"), notice that you are required to transfer all of your shares held in the Company (the "Called Shares") to the Proposed Buyer. This notice, therefore, constitutes a "Drag Along Notice" (as such term is defined in Article I O) and is given pursuant to and in accordance with Article I O (the "Drag Along Notice").
No one was asked but they are now having to agree that they will sell their holding - at a massive loss. In fact the email we have seen says absolutely nothing by way of explanation or apology. These 3 geezers are exactly what Crowdcube promotes.
The 3 directors/shareholders of Flavourly have sold all the company's shares to Drinkshare Holdings Ltd. The total sum made from this sale is to be £118k - against the 2015 valuation put on the company at the time by the same directors of £1.2m.
Wait there is more.
Drinkshare Holdings was incorporated in November 2016. It has no trading record. The sole director is one Alistair Duncan Stewart, whose record speaks for itself. The company as yet has no shares issued. Stewart is listed as an investment specialist who seems to get involved in liquidating companies.
So what is going on here?
Why didnt Flavourly follow the normal process and just close down like so many Crowdcube funded companies? This way investors do at least get some money back, but it seems unlikely to us that Drinkshare is going to turn this company around and if it was, why couldnt CC shareholders have a piece of the action?? They did after all hand over in excess of £500,000 to Rorke and his mates. That has all now gone where?
Utter shambles. Or Scam? The 2015 valuation was low to entice £500k into their bank. We have to assume that most of that has now gone. It's all perfectly legal of course....for the moment.
Finally, as a reader kindly pointed out, anyone who claimed S/EIS with Flavourly will have to repay HMRC. Nice.