Bartercard revised its Prospectus shortly after my blogging highlighted serious concerns. In this post I summarise the changes and make comment. Bartercard appears to be following in Microsoft’s footsteps – issuing a faulty product, responding to negative feedback and then quietly issuing an update once the public has found the bugs. I should be sending my bill for proofing and legal advice to them an requesting a decent slice of the $3m they claim that they paid to produce the first dodgy document! The changes also reveal some real doosies of double-talk. I end with direct advice, the IPO is a pig, the company will never in a month of Sundays achieve anything like its projections and my recommendation is don’t invest.
You can download my bartercard prospectus comparison of the two documents in PDF form (775k).
The power of blogging
Their first document (The Prospectus) was rushed though over a 6 month period (February-July 2014) and issued on 31 July 2014.
I blogged criticisms on that day:
Bartercard wants to list
31 July, 2014
I then followed up on the next day with more serious criticisms, highlighting the fact that IRTA Esecutive was, how can I say this nicely, being a little naughty behind their members backs.
Bartercard should not list
2 August, 2014
All hell would have blown up in the IRTA Halls of Power as a result of this as IRTA hadn’t coordinated the
spin media release on the secret deal and was caught with it’s pants down and sleeping at the wheel! I blogged about this crisis:
Crisis at IRTA
3 August, 2014
I lodged a complain with the ASX over a clearly dodgy document:
ASX Complaint – BPS Technology
4 August, 2014
I turned the heat on IRTA:
4 August, 2014
Then gave feedback from the industry:
The industry responds
5 August, 2014
The revised Bartercard/BPS Prospectus was issued on 5 August, 2014 and FINALLY after a crisis meeting and no doubt a VERY hot hotline between Bartercard and the IRTA Executive, IRTA put out a pathetic excuse for the shonky backroom deal that many of the Board probably didn’t even know about:
IRTA confirms deal with Bartercard
6 August, 2014
Incredibly, they then removed it from their website however three Barter Industry commentators had taken up the feed and it remains online elsewhere for posterity!
The Key Changes
The Bartercard Prospectus changes are essentially tweaking wording, obviously to attempt to cover their butts.
The Directors have adjusted dates, given themselves the ability to choose who or who can’t get in the door [are you worried Bartercard?]; allowed themselves the freedom to change dates and documents [once bitten, twice shy perhaps?]; beefed up their justification of wild projections by spouting on about the enormous potential of USA and UK.
The more subtle changes though indicate a thawing of relationships and they’ve put a lot more heat on their ‘partner in crime’ (IRTA) by making it clear that their figures and projections came from IRTA. Nice one Bartercard . . . you’re really loyal to your new partners in business aren’t you?
They’ve also obviously had a pow-wow with IRTA to try and get their stories straight (OMG!) and have simply made it even more obvious that there’s skulduggery afoot.
They’ve addressed most of my concerns with word changes, essentially rewriting the document to cover themselves. It’s all BS anyway so it’s easy to rephrase things to look good eh?
Specific examples of change
Here are some examples of the integrity that the Board of Directors of this ‘top achieving’ company show. Remember that they have just spent some $2.9m to prepare this Prospectus[!]:
ADDED: Application Form
You forgot that first time round? A $3m project forgot the Application Form? Gulp! UPDATE: Explained satisfatorily by Trevor Dietz as a requirement of an Australian IPO.
ALTERED: The Tess and Bucqi Platforms are
provenfully developed technologies.
Changing the phrase “proven” technologies to “fully developed” technologies is interesting. Do the spin-meisters want us to know that there is no further work to do, or they feel that the first spin was not quite spun enough? Whatever! The hope that an App will save the (or any) company is all part of a grand illusion no matter the case.
Bartercard seeks to increase its cardholders to 100,000 by FY16 as a result of growth planned for the business in the USA and UK.
They’ve beefed up their comments on projected growth coming from the USA and the UK. With falling figures on all fronts at home [see the comments from a Bartercard Franchisee who is VERY specific about this falling performance for five years and even more so under the whiz-kids who stitched together this Prospectus], they forgot to mention that this then is their only hope of survival.
Bartercard, and all people considering investing into this sham of an investment, please listen to me for one minute . . . never in the history of mankind has making a small bad business into a big business made it good. ALWAYS, making a small bad business bigger simply makes a bigger bad business. You should be making your small bad business into a small GOOD business which will then naturally grow into . . . um . . . guess what . . . a bigger GOOD business!
INSERTED: The historical records of the Bartercard Trade Exchange show that the average transaction value of more than a member is $25,000 per annum.
This insertion is clearly an attempt at addressing my questioning of their membership income projections. This is just a smokescreen and MAY be factually correct but is a pathetic poorly worded phrase that in no way answers the key questions I asked.
INSERTED: Tess acknowledges that Exchange Operators are free to choose whatever software they feel best suits their circumstances.
This reference is most likely to alleviate concerns that people may think that they are the global marketplace and want to be King Kong and that eventually people will have to use their system to trade. I’ve stated that it is their intention to own the industry clearing systems because, well they stated it, in their Prospectus of all places, and that they will get there with IRTA’s help of course! The natural progression from owning the lion’s share of the international barter clearing business is that they will cement their position of strength. Intention, coercion and then legislation generally follow in quick order. With Bartercard’s track record at dishonest business practices, IRTA Members would be well advised to steer clear of anything to do with Bartercard. Assume the worst until proven otherwise.
INSERTED: Significant growth is planned in the Bartercard business over the next 5 years. Most of this growth is expected to arise as a result of developing the USA and UK businesses. The growth plans described below have been devised following a detailed analysis of the market in the USA and UK. The underlying assumptions around these growth expectations have been developed based on the prior historical experience of Bartercard roll outs in new territories. History has shown that each franchisee needs approximately 500,000 people in a territory in order to generate the optimal number of merchants. The rollout timetable for the USA has been based on the experience of the actual roll outs in Australia and New Zealand. A demographic analysis has been completed of the UK and USA and it has been broken into operating regions based upon that analysis.
Dear Trevor Dietz and your suit-and-tie geniuses in Bartercard Head Office, I’m delighted that you are now referring to your “prior historical experiences” [that’s tautology BTW; all historical experiences are “prior”] rolling out in new territories . . . please let me remind you what you may have forgotten to mention and make a few comments to help potential investors get a handle on what has happened ‘prior’ historically with Bartercard rollouts . . .
- You failed badly in the USA through stupidity and a bad ‘Aussie attitude’. You went bankrupt with a Chapter 11; dumped the industry in it to the tune of MILLIONS; scored a marketing coup with IRTA promising to pay out 50c in the dollar, who then used Universal Currency to fund it and then didn’t even pay out what you promised rubbing salt into their wounds in the process. Oops!
- You failed in Canada with a massive disaster that will prevent you ever returning there in living memory!
- You trashed the UK market; have a Bartercard Trade Dollar/Pound that’s currently well down in the market valuation stakes; then proceeded with your modus operandii which is to rape and pillage exchange owners who consider selling to you. Yes, I know this is all ‘prior’ historical stuff and the new Bartercard has a new loyalty App that will save the company [sarcasm] but this immoral aggression was still happening this year, in 2014, with your top UK guy right in the middle of it. Oops! I predict sirs, that your “significant growth” in the UK may not materialise in the same manner that you dream of.
- Your rollouts in multiple countries I can think of haven’t really worked very well have they? I’m counting the countries that I know of where you’ve entered ‘prior’ historically that you will never be able to enter again because of the mess you’ve created for yourselves and I’m already onto my second hand counting without even referring to the written records or my tipline.
Sorry guys but I feel compelled to repeat my analysis and warnings that Bartercard’s growth projections as detailed in their dodgy Prospectus are pipedreams; that the projections of growth in the USA and the UK are the stuff of Mother Goose and that the entire purpose of the Bartercard IPO is to asset strip and to enrich the Directors who all know that this is the only way to stave off disaster and get something back from their very poor investment and even poorer management of the modern Titanic called Bartercard.
4.7.2 SPECIFIC ASSUMPTIONS
The following pages detail the specific assumptions which have been used in preparing the Forecast Consolidated Income Statement for FY15. The Company has reviewed each of the assumptions and is satisfied that in all cases there is a reasonable basis for the use of the assumption.
a. Reasonable Basis for Bartercard Assumptions
The detailed assumptions disclosed below have been adopted for the Bartercard operations following an analysis of historical performance. All key fees and charge rates have been set at the historical levels achieved in the various markets in which the business operates. Transaction volumes and values have been based on the historical achievement of those business units. Member numbers have been set at the historical levels achieved in each of the markets in which the company operates.
Significant growth is anticipated in the USA. This growth has been forecast based on the experience of the Bartercard businesses in opening new areas of business and following an analysis of the USA market.
b. Reasonable Basis for Bucqi Assumptions
The forecast assumptions for Bucqi have been based upon the results of a Bucqi trial which operated from January 2014 to April 2014. The assumptions were further tested as a result of the initial marketing period from May to June 2014. All assumptions used are based upon that trial data.
c. Reasonable Basis for Tess Assumptions
Tess assumptions have been derived following an analysis of the Trade exchange market conducted by IRTA, the Industry body for Trade Exchanges. The Directors have used this analysis from IRTA given IRTA’s significant experience in the Trade Exchange industry.
Sirs, and any potential investor into BPS Technology Ltd, may I please help you understand the nature of the analysis that IRTA has conducted? It’s actually an Association BTW that is supposed to represent the Members’ best interests, despite your attempt to subvert it from its original goals, but whatever!
The analysis you no doubt refer to was initiated and conducted by me, personally in conjunction with Ron Whitney, in his professional capacity of the Executive Director of IRTA. I initiated the research in December 2013 in order to demonstrate that another turkey who, like you, claimed to have the world’s biggest exchange was just talking steam. I liaised with Ron throughout the period Q1, Q2 2014 and produced the most accurate picture of the industry that is out there at the moment. I took information from Ron’s best guesses as he has a lot of experience in the industry. I sought validation of turnovers, numbers and relevant facts from him and his contacts but I also complemented his knowledge and undertanding with that of many others in the industry who provided me with statistics, opinion and advice. The bottom line is that we all know that NOBODY KNOWS! Ron and I worked on this closely and he asked to be able to use the resultant graph under the IRTA name. I agreed that he was welcome to use the graph with JOINT copyright. It’s my graph, the whole thing conceptualised for my purposes, researched by me but then made available online.
I think that I know what I’m talking about!
While I might not know everything, your figures are most certainly wrong and are grossly inflated.
The key points I’d like to make are:
There is NO STUDY that has established an accurate measurement of the industry*. People come to me asking for this information on occasion – and, like Ron, I can only offer my best-guess. My best guess is 500-600 exchanges and half of them are either dead or in trouble with high deficit spending, bad debt and other inflation-related issues. My best guess is that the industry is in decline or at best has declined in the last 5 years and has plateaued.
IRTA has not completed any formal analysis, nor can it ever. There is NO WAY of accurately measuring a fast-moving target (downwards BTW) in a volatile industry with Johnny-come-latelys and mee-too-operators popping up then disappearing again quickly all over the place.
The only person that I know of who believed in the sorts of numbers that you are quoting in your Prospectus is a guy who also claimed to have the world’s biggest commerce network with a presence in dozens of countries and turnover in the billions. I revealed his real identity and game of deception in The Ormita Report, another Australian, born Mr David James Anthony Harlow who changed his name to Daniel Mensi Evans after convictions for fraud in New Zealand and then took on the world with Ormita fraud. Ninety-nine percent of his words too were hot-air.
You’ve really thrown your new business partner IRTA ‘under the bus’ on this one no doubt to protect yourselves in the eventuality that the figures are ever called into account, outside my blog. If you get away with all of what you are doing, please remember to thank me for alerting you to your exposure.
4.9 HISTORICAL PERFORMANCE
BPS was formed on 17 January 2014 for the purposes of completing the Transaction. It has not traded since formation and as a result, no historical information has been provided.
Barter Futures is the ultimate holding company of the group which owns BCA, BCUK, BCIA and BCIB. The businesses and assets of these companies are to be sold to BPS as part of the transaction. These companies have traded for many years and produce audited financial statements.
Barter Futures’ consolidated financial statements were prepared as special purpose financial statements. They do, however, comply with all of the recognition and measurement requirements of the accounting standards.
They have also been prepared on a basis which is consistent with the accounting polices adopted by BPS as discussed in Section 4.12.
The following table shows the consolidated financial statements of Barter Futures (the owner of BCA, BCUK, BCIA and BCIB) for the last two financial years.
Sirs, may I please for the sake of clarity for your future investors explain the changes, the reasoning that I believe that you have changed in the Prospectus and what I think is the significance of some of the things you are doing.
- You have altered your prospectus immediately following my blogging with HEAPS of changes. This is a MAJOR event and worthy of consideration. You really should have thought of all this before you went public with a sub-standard document.
- You now want people to know how the actual figures were derived i.e. from where your consolidated figures came. You didn’t before but you do now. You won’t let your validating account talk to anyone and you won’t issue supporting documents. Anyone with half a brain will see what you’re up to!
- You have inserted a validating statement along the lines of “We’ve done it by the standards mentioned in Clause 137b, subsection 129e” but I’d like to ask you this question . . . “What about the US GAAP standards?” Surely they would be appropriate and you could go global, or would you be a little more exposed perhaps? I will help the public just a little here understanding just one of the issues – real simple – the cynical side of me says that this dodgy Prospectus would fail if they DID use the United States Generally Accepted Accounting Procedures. If the Directors would like me to explain more, I’ll be happy to go into it all further. If you’re curious, just ask the Directors why they limited their IPO to Australia and New Zealand and watch them hop from one foot to another before finally putting one of them into their mouth.
- Potential investors should ask to see the audited financial statements referred to. They will see that these “audited” accounts also include footnotes referring to off-balance trade liabilities . . . Oops! Bartercard or BPS will not likely furnish them to you so if you want copies, contact me directly and I’ll oblige if I can.
CHANGE: 4. These figures have been sourced from the unaudited financial statements of Bartercard NZ ==> The Bartercard NZ business has been operating for many years but as the business is not audited, no historical results have been disclosed.
And there is a final shining light in all the changes – a disclaimer for their mates at IRTA:
IRTA has given, and has not withdrawn, its consent to be named in this Prospectus in the form and context in which it is named. IRTA has not authorised or caused the issue of this Prospectus and takes no responsibility for any part of this Prospectus other than references to its name.
Perhaps they should have done this way back when the original deal was done?
I asked BPS Tech for copies of the appropriate agreements. They refused saying that they were confidential between the parties. OK So a company attempting to list enters into material agreements with others but they are confidential? Hmmm . . . that attitude wouldn’t go down well if it was a public company methinks! ASIC take note.
Interesting to note also that this short, once sentence section has been beefed up considerably:
9.11 RELATED PARTY TRANSACTIONS
The Founders are currently directors and the major shareholders of Barter Futures, the ultimate holding company of the BF Group. As a result, the Directors consider that each of the agreements entered into between BPS and the BF Group are related party transactions.
The Directors are comfortable the Transaction is on an arms length basis as:
1. the independent Non Executive Directors have approved the transactions with related parties;
2. the Company has conducted a benchmark analysis of the price earnings multiples to be paid on all contracts to ensure the prices agreed are in line with market prices for similar assets; and
3. the Company has conducted an impairment calculation of all assets acquired to ensure no assets are stated at a value in excess of the recoverable amount.
As a result of these procedures, the Directors are satisfied that the agreements are on an arms length basis.
That’s cute that they now include this disclaimer! I’d like to know more about this “benchmark analysis of the price earnings multiples to be paid on all contracts”. And to think that this was done in a fast couple of days between the release of the first Prospectus, then my blogging and then the new Prospectus – golly only a short few days. I guess I could do that one too in a couple of days if I had a cigarette packet and a pencil.
This whole thing just stinks of spin. It’s a poor piece of marketing BS that has not a scrap of evidence that validates a thing – their core reason for trying to go public (according to Trevor Dietz) was IRTA’s offer to give an exclusive endorsement of their software – they forgot to let IRTA know they were releasing that secret deal in their IPO and it’s now VERY much in doubt that the Global Board of Directors even knew of the secret deal (let alone signed off on it)
Their projections are built heavily upon information supplied most likely verbally in a pub and inflated to high heavens for appearances’ sake.
The software suddenly becomes a “fully developed” technology when a few days before examination it was only a “proven” technology.
Really, it just goes on an on like a drunken bum trying to tell a bad joke . . .
There are more changes in there too, but what an embarrassment of an IPO with a $3m price-tag that includes so many changes, altered figures and so much waffle-talk corrected to be a little more waffly just so as to avoid potential claims of incompetence. They should have just shut up and let the original Prospectus stand instead of trying to cover-up their mistakes and leaving more evidence for us to see what’s really going on. It really is like two pigs arguing over who’s the prettiest when they’re both on their way to the bacon shop!
On that line of thought, there’s an old saying I used for the heading of my second book – LIPSTICK ON A PIG:
“A hog in armour is still but a hog”
Thomas Fuller (1732)
Bartercard’s IPO is essentially still an asset strip; the Prospectus is still a dodgy document to say the least and the company can never achieve ANYTHING LIKE its projections.
It’s a pig.
I’ve had my say . . . don’t invest into BPS Technology if you expect to get any dividend.
* There is a VERY remote possibility that in the time after I produced The Ormita report, IRTA has conducted an analysis of the industry but this would have been a major undertaking, would have been trumpeted far and wide and would have been known by many in the industry. Considering the timeline and the chances of any secret analysis of the industry without their knowledge I call BS on your Prospectus and IRTA’s role in this. Any investigators into your affairs will be wise to seek the audit trail upon which your claims are based. Where is the study? Who did the analysis and as always QUO BONO – who benefits.
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