Tough year for three big company flops

WHILE some listed companies had a tough year, these three took it further.

Predictive intelligence software producer Veriluma was named a “cool vendor” by global technology research firm Gartner prior to its listing on the ASX in 2016 at 7c a share. Despite clients including the Australian Department of Defence and corporate and commercial law firm Gilbert +Tobin, it was always going to be a tough sell to investors, many of whom may have a hard time understanding predictive analytics, and therefore find it difficult to value. Veriluma declared revenue of just $146,266 for FY17 and a loss of $1.86m. Although it raised $3.5m in capital when it listed, its cash reserves had been reduced to just $200,000 by November the following year. Shares were frozen at 1.5c in September and irate shareholders were denied the chance to air their grievances when the annual meeting was shut down in two minutes.

The company went into voluntary administration in November and a buyer is being sought.

Online retailer Surf Stitch had been a market darling since listing in 2014 at an offer price of $1 a share.

A difficult retail market and rapid international expansion hurt the online surfwear retailer and it has been forced to offload assets. In 2016, SurfStitch suffered huge losses, a share price wipe-out and the exit of founder Justin Cameron, who resigned by email. Last year two class actions were launched and in August the directors called in administrators, who are now seeking recapitalisation offers. They were suspended from the ASX at 6.8c.

Music streaming company Guvera never actually listed. The company, backed by Amma Private Equity, was aiming to raise $80 million through the issue of shares at $1. The music streaming service claimed 14-million users across 10 countries, but the ASX blocked the move citing the reputation of the market. Guvera copped criticism over its cash burn, debt level, related party deals, and business model. It lost $80 million for the first nine months of FY16.

Operations ceased in May last year and potential classaction lawsuits have been flagged on behalf of shareholders. An elderly Hervey Bay farmer has sued Amma after pumping $8.7 million into Guvera. The company’s former executives have denied claims the farmer did not understand what he was doing when he invested.