The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

ArawakX’s assertion that it faces no creditor demands is contradicted by complaints it has failed for months to settle a $28,000 bill due to the firm that serviced its crowd-funding portal, regulators alleged yesterday.

Christina Rolle, the Securities Commission’s executive director, in an October 5, 2023, affidavit said the capital markets regulator had on September 26 received notification from a debt collection agency that The Bahamas’ first-ever crowd-funding platform had failed to settle the claim despite negotiations that had been ongoing since at least early June 2022.

Noting that D’Arcy Rahming senior, ArawakX’s chairman and chief executive, had last week asserted the company “is not the subject of any financial claims or demands as at the date hereof”, Ms Rolle argued that it “was, and still remains, indebted to persons including the provider of its ArawakX crowdfunding platform.

“On September 26, 2023, the Commission received an e-mail complaint with attached invoices running from March 2022 to July 2022 from GGR Inc, a collections agency acting for CrowdEngine, a provider of services to the respondent for the ArawakX crowd-funding platform,” the Securities Commission chief continued. “The e-mail revealed that the respondent has this outstanding claim, being indebted to CrowdEngine in the amount of $27.916.”

The CrowdEngine revelation came as Ms Rolle argued that, “well before the Commission’s investigation” into ArawakX began, the crowd-funding platform “became insolvent through its own actions, particularly due to excessive operational spending and a lack of revenue to support their operational spending.

“The trigger for the investigation of the respondent’s insolvency was the Commission’s review and analysis of the management accounts prepared by the respondent and received by the Commission at the time of the on-site examination,” Ms Rolle alleged. “Based on the information provided, the Commission calculated a negative working capital of $213,626.”

Those accounts, signed by Mr Rahming, showed ArawakX as having a net worth or solvency of just $14,272 at end-July 2022 with a $2.323m accumulated deficit (total losses since inception) having almost wiped out $2.337m in total capital. And the draft financial statements provided by LDL & Associates, ArawakX’s external auditors, disclosed accounts payables and accrued expenses totalling $1.2m.

Other liabilities included the $1.9m due to investors who had subscribed for equity shares in ArawakX, but had not been approved by the Securities Commission; some $349,605 in bank loans; $293,957 due to a related party; $181,329 owed to clients; and $50,000 worth of redeemable preference shares. “Therefore, the respondent’s own classification of their debt total is approximately $4m,” Ms Rolle added.

Correspondence between ArawakX and CrowdEngine reveals that Laura Summerhays, an accountant for the latter, warned the crowd-funding platform on May 9, 2022, that it would have to cut-off its portal and associated support due to non-payment.

“Unfortunately, we will not be able to extend the courtesy longer than we have already done so,” she wrote. “Although we’ve had a long-standing business relationship, during the course of our partnership payment has been consistently past due over 30 days, and longer in some instances for most of the time you’ve been a client and now we’re approaching 90 days in this current iteration.”

Acknowledging the difficulties faced by start-ups such as ArawakX, Ms Summerhays added: “Although we believe in you as a company and are rooting for you, we cannot keep providing services without being compensated.

“We incur operating costs as you do and, although we would love to keep working with you, we cannot let your invoices go beyond this point.”

CrowdEngine reached its decision to cut-off ArawakX’s crowd-fund portal despite a last-ditch plea from Mr Rahming on May 6, 2022. He said the platform was on the verge of “exclusively” developing a Bahamas Government Savings Bond product that “will entitle is to 0.5 percent of a $2bn-$3bn market”.

CrowdEngine’s decision provoked a withering response from Mr Rahming on June 7 last year. “We explained to you that we were undergoing another round of funding and our cash was not consistent at this time,” he charged. “You responded by cutting off our administration rights and essentially crippling our business.

“While we may not have been consistent in payment, we have paid even during the lockdowns of 2020 with the pandemic when we were unable to launch our company nor earn any operating revenue. We did not use the system until August 2021.

“During this period we paid about $60,000 without generating any revenues. Then we paid an additional $24,000 while in operations. Admittedly these payments were inconsistent as we are a start-up.” Mr Rahming closed by promising that ArawakX would pay its bills.

CrowdEngine, though, said it had sent multiple e-mails and warnings requesting payment, and argued: “We have gone above and beyond to accommodate and work with you.” This involved supplying the software and associated services, plus customisation and build-out of the crowd-fund platform.

The matter was then turned over to the GGR Inc collections agency, which both sought to negotiate a settlement with ArawakX and obtain the monies due. After several months’ back-and-forth, the e-mail chain shows it threatened to “file a formal complaint with the Bahamas Chamber of Commerce” on October 11, 2022.

“Due to no response, I have copied the Ministry of Finance’s Compliance Commission in order to open an inquiry complaint against your business due to non-payment,” GGR’s Aracelli Carrillo wrote on November 29, 2022.

ArawakX blamed its lack of response on having dismissed its former chief financial officer, Michael Turnquest. D’Arcy Rahming junior, the platform’s chief technology officer, wrote on March 17, 2023, that CrowdEngine was wrongly branding the matter “a theft of services” because it had cut-off ArawakX and then continued to bill for services that were not rendered.

Despite further promises of settlement, no payment was allegedly ever received, leading GGR to complain to the Securities Commission and share the e-mail thread on September 26, 2023.