Bartercard is a company with a history of unethical behaviour and with their attempted IPO in the pipeline with the Australian Listing authorites I feel it important to bring many of these matters to the surface. In this post I summarise the nature of my concerns in response to a discussion with the ASX where we decided that it would help ASIC to have a further backgrounder to my short formal complaint.
This post is direct and is a challenge to write. Nobody in the industry wants to see the demise of a major player – me neither. The Bartercard Trade Dollar is more useful to me than any other currency at the moment and I would lose financially if Bartercard devalued it or worse.
But . . . the distortions, deceptions and outright chutzpah that has probably made the private company what it is today cannot move into the Public Listing space. If the authorities let the Listing proceed with such a dodgy Prospectus and in light of the revelations in my expose then so-be-it, but as many people attempting to gain by deception have found out to their detriment, I never give up on chasing and exposing the truth. Ever. Just ask the conman Daniel Evans if you’re not sure about that!
The IPO is an amateur job rushed through in a crisis situation by a company in deep trouble. Bartercard in its various company arrangements has massive debt with real pressure being exerted on it in the last year or so, a mountain of a tax liability as a result of enormous deficit spending over many years, a shrinking clientbase, a changing global marketplace and it is so cash-strapped that it (reportedly) is having difficulty paying its wages and bills. The IPO smells like panic, desperation and is not in keeping with a well-organised ethical business developing itself into a strong profitable operation ready for listing, a process that requires a massive amount of work, a good strong trading record for a few years prior to listing and transparency enough to meet ASX’s criteria.
The BPS Technology IPO was developed throughout the early parts of 2014, following discussions with Bartercard in January 2014 in which IRTA offered an exclusive endorsement agreement for their software platform. Trevor Dietz himself says that this is the core reason they decided to float. Trevor states that the conversation was initiated by IRTA. I believe this because what is little-known is that IRTA knew in late 2013 that they had to find another solution and they had burned a lot of bridges in the barter software industry preceding.
Further validating factors for this ultra-short timeline are the dates of company registration, the date of the name-change from Big Payment Solutions Ltd to BPS Technology Limited, the dates of the deal with IRTA and the ultra-short timeline to list (only one month). That’s insane! Some companies can’t even get a full subscription in 3 months let alone one, and they are good ones at that. The ASX knows little about the Barter industry and those up with the play in barter industry either don’t have the money or if they do, they know too much to blow it on Bartercard.
Their restructuring into a technology company on the back of a shonky deal with an industry Association that itself has credibility issues (it’s seem as an old-boys’ network) let alone the politics of a non-commercial operation doesn’t stack up. Bartercard is not a technolgy company and never will be. It’s a sales and marketing operation setup by a guy with the gift-of-the-gab, and a can-do, we’ll conquer the world because we’re Aussies and smarter then you all attitude. A business built on the attitude that “If he’s got a chequebook and heartbeat, then we’ll take his money!” will only last as long as the money lasts.
The spin is unravelling though. The money has now gone. The company is a net liability, not an asset.
From what I can see, the Directors are attempting to structure their new business in a way that strips the assets from the liabilities and of course look after themselves. I’m not sure of the legalities of what they are trying to do, but stripping the brand and assets out and leaving the taxman, minor shareholders and members with the past troubles is clearly immoral.
In regards to the trade deficit not disclosed in the Prospectus it could be claimed that BPS Technologies are not buying the liabilities of Bartercard and therefore it is not relevant. The Bartercard management team say that they are selling and leasing back the branding and IP in order to pay the screaming creditors. They appear to intend carry on trading as a company and therefore not ‘crystalise’ the trade debt.
I’m not a forensic accountant nor a legal analyst but ethics aside I’d like to be able to do that too. It would be cool fun to keep one side of the ledge and dump the other!
My questions (and thanks to those who have helped me understand this whole can of worms):
How could a management team who themselves valued the whole BCI group (including the massive debt pile) at $AUD24 million two years ago only value the assets (without the massive debt pile) at a mere $AUD6.5 million today? Something is not right with the figures in this Prospectus!
How can the Directors in all good conscience pay themselves (which at the end of the day when you strip this deal down is what’s happening)? The clear losers up-front are the current minority shareholders who have seen their company asset stripped by their management team and who get nothing in return. The medium term losers are surely the Taxman and other members of Bartercard as the massive debt pile will not be traded back. The company will be an empty shell, which can be easily scuppered by the team at any time in the future when the dust settles.
This restructuring has all the hallmarks of a pump and dump (despite the Director escrow arrangements); a probable asset strip; pretty scary tax minimisation techniques and an unacceptable treatment of existing partners, investors and key players. Rest assured investors within NZ and Australia, if they’ve done it before, they’ll do it again.
- ASX suspend the application forthwith pending resolution of my core concerns – misleading information, incorrect information and missing information.
- ASIC: investigate the Prospectus just a little, even just a little and actually view the agreements between the various entities, the balance sheets of all the various interwoven companies and let the world see the facts BEFORE they take a cent off the public.
- AU Taxman: Watch out for a massive loss where by my estimates some $AUD10m of GST has come in to the combined group of companies, but will never go back to you!
- Potential Investors: Don’t.
- Bartercard Members: Prepare for a devaluation in the Bartercard Trade Currency and increasing difficulties with a cash-strapped Trade Exchange.
- New partners with Bartercard: Prepare for a failed launch of the IPO and obfuscation and failure to deliver on projections, perhaps even promises. That includes software and App suppliers and IRTA.
- BPS: Engage with the real world honestly. Withdraw the IPO and look for other ways to sort your problems out by getting out of your offices and speaking to people on the street.
So, that all said, if I’ve got anything wrong, please let me know and I’ll apologize and correct it but at the present moment, you have been warned . . . to this blogger, the Bartercard IPO is little more than an asset-stripping and tax avoidance activity, with very handsome reward to key players funded by the minor investors, the Bartercard members and potentially the gullible investors.
The Barter Series
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