1. Unique Solutions is kaput
The board of directors of MeID, which is the rebranded name for Unique Solutions Ltd, voted to cease operations yesterday, and all employees were given termination notices, effective immediately. The move came after secured creditors initiated foreclosure proceedings.
Unique Solutions was started by Tanya Shaw, a graduate of Dalhousie’s Costume Studies Design Program who was celebrated as a “innovator” for repurposing her sewing pattern company as a technology company. The basic product was a body scan booth similar to the booths found in airport security, and the idea was that people could get scanned and then their body images could be matched to clothing without the customer trying on the clothes.
Through the years, Unique Solutions was a darling of the cliquish start-up promoter set (see #2 below). Shaw was named to the Dalhousie Faculty of Management Advisory Board, which celebrates her with the usual nonsense babble typical of business promotion:
Ms. Shaw, as founder and President of Unique Solutions Design Ltd., has spent her career providing strategic solutions to many aspects of “individuality” and “fit.” Her technically savvy nature and sharp business acumen have resulted in the development of numerous products and applications that provide both resolutions and revolutions, related to body measurement and body data.
And Nova Scotia Business Inc “invested” $5.6 million of public money into Unique Solutions. As I reported in 2014, nearly all of that money evaporated in a failed scheme to place body scan booths in American shopping malls, and yet NSBI has never publicly written down the investment.
It turns out that people like trying on clothes, and the body scan booth may seem intrusive. The company never generated much real income.
Company financial statements I obtained (behind paywall) show that for the first six months of 2013, Unique Solutions had just $15,000 in sales. In the same six months, the company had $11,153,379 in operating expenses. As of June 30, 2013, Unique Solutions had a deficit of nearly $84 million.
I suspect that the current operating deficit for Unique Solutions is considerably over $100 million. We’ll know the exact figure when bankruptcy is filed, probably later this week.
The closure was announced to shareholders in a letter cowritten by CEO Tuoc Luong and board chair Frances Kordyback. Click here to read the letter to shareholders.
According to the letter,
Senior secured creditors have outstanding loans of $1.7 million and junior secured creditors have loans of more than US$31 million. Those loans take priority over the claims of unsecured creditors, which in turn, rank ahead of Preferred Shareholders and Common Shareholders. The Preferred Shareholders’ priority claims represent more than US$8 million. Consequently the liquidation process will need to generate more than US$41 million in order for Common Shareholders to receive any form of distribution. We can offer no expectations as to the level of proceeds that may be realized from a liquidation process. However, we believe it is unlikely that material proceeds will be realized based on, among others, the general lack of investor interest in our most recent financing round.
Translation: investors, including NSBI, are shit out of luck. Beyond some gently used office furniture and the potential for the booths to be sold as novelty items (I’ll buy one for 100 bucks!), the company has essentially zero assets.
NSBI hasn’t made a statement since yesterday’s announcement.
Incidentally, the celebrated innovator is nowhere to be seen. “It’s interesting that Tanya is not even mentioned in [the letter to shareholders],” writes one shareholder to me. “Where the hell is she? It’s small of me, but I hope she took a bath on this — but I somehow doubt it. She DID manage to use Unique to heighten her own profile, develop decent contacts… my guess is that she will end up on some board or teaching entrepreneurship someplace!”
2. Our failed business press
Besides the Halifax Examiner, no media outlet has reported on the collapse of Unique Solutions. Think about that: $5.6 million in public money has completely evaporated, and it’s a non-story for the CBC, for
allnovascotia.com (see note below), and for Metro.
The biggest raspberry, however, goes to the Chronicle Herald, which not only failed to report on Unique Solutions’ misfortunes, but straight-out lied about the company. As I wrote in November 2014, a week after my initial investigative report on Unique Solutions:
But the Chronicle Herald didn’t just miss the Unique Solutions story, and it didn’t just make a couple of mistakes. Rather, the paper falsely framed the story, failed to publish facts it should’ve been aware of, published facts that were incorrect, and otherwise misled and deceived their readers. To recap:
➡ From 2005 to 2009, Nova Scotia Business, Inc. invested $5.6 million in Unique Solutions, all of which was converted to an equity stake in 2009.
➡ In December, 2012, Chronicle Herald columnist Peter Moreira reported favourably on Unique Solutions’ then-ongoing roll-out “body scan” kiosks in shopping malls across the US.
Earlier this year, I pointed out that Moreira is in the employ of provincial economic development agencies that fund the very companies he writes about in his column, a clear conflict of interest.
As a result of my article, the Chronicle Herald changed its policies, and now appends a statement to the columns calling attention to the conflict. (The policy change also revealed a conflict with columnist Gail Lethbridge, who had written favourably about opening up off-shore gas and oil drilling without disclosing she owns a company that services off-shore operations.)
With Moreira’s December 2012 column promoting Unique Solutions, however, he got it right. At the end of the column, he wrote: “Full disclosure: The principals of Entrevestor have a small investment in Unique Solutions.” This is good, but it is precisely that investment that becomes problematic in the Chronicle Herald’s subsequent coverage of Unique Solutions.
➡ In early October of this year, Chronicle Herald reporter Patricia Brooks provided an overview of the province’s equity investment in corporations, including $5.6 million invested in Unique Solutions, but failed to attempt to value those investments now, or to even question the companies’ performance.
Had Brooks taken even a cursory look at Unique Solutions, she would have discovered that the very expansion plans Moreira had written about in 2012 had collapsed. While body scan kiosks were placed in over 70 malls in the United States, they were all abruptly pulled from those malls last year, a fact I discovered simply by calling the malls and asking.
➡ In August, 2013, after the kiosks were removed from malls, five of them were repurposed for use in Bloomingdales stores. The drop from 70 to five kiosks was a substantial set-back for the company, but Chronicle Herald reporter Bill Powers failed to mention that kiosks had been removed from malls and uncritically regurgitated the company’s positive spin on the issue.
➡ A few months later, even those five Unique Solution kiosks were removed from Bloomingdales, another downturn for the company unnoticed (or purposefully ignored) by the Chronicle Herald.
➡ Having so uncritically plugged the company, the Chronicle Herald gave short-shrift to last month’s Nova Scotia Securities Commission ruling against Unique CEDC, a community economic development investment fund (CEDIF) established for the sole purpose of raising money for Unique Solutions. The Chronicle Herald did not send a reporter to the hearing, and its coverage of the ruling consisted entirely of a re-written press release.
The paper made no apparent attempt to contact either the CEDIF or Unique Solutions for comment, and evidently no reporter was assigned to look into issues related to the CEDIF.
➡ Had the Chronicle Herald assigned a reporter to the CEDIF issue — which after all concerned a company the paper had given significant promotional plugs to, and which Brooks had failed to further investigate for her piece on equity investments — the reporter may have discovered, as did I, that last year [in 2013] the CEDIF devalued its investment in Unique Solutions by over 80 per cent — a $2 million investment was reassessed at just $349,332. Assuming Nova Scotia Business, Inc. had a similar write-down, the initial $5.6 million in public investment is now worth about $1 million.
➡ Since publishing the article last week, I’ve learned that all investors — both investors in the CEDIF and directly into Unique Solutions — have been kept abreast of the devaluation of their investment. That means that Moreira — who plugged the company as a worthy investment in 2012, and who has a personal investment in the company — has been fully aware of the tanking performance of Unique Solutions, but has not kept his readers up to date on the story.
As Moreira is an investor with direct knowledge of the company’s financial position, his failure to convey that knowledge to Chronicle Herald readers is at best a disservice to those readers, and at worst dishonesty in order to protect his own investment. The failure to tell readers of the company’s falling financial position also underscores Moreira’s continued conflict of interest as a paid promoter for start-ups while writing about the same companies for the Chronicle Herald.
➡ In the wake of 2013’s devaluation, SEC documents show that Unique Solutions has raised another $4.5 million through investors. I’m told that local investors who had already lost money on their investment were urged to invest more so that their initial investment wouldn’t be completely worthless. Shouldn’t the Chronicle Herald have been aware of these events and have reported on them?
➡ Apparently in a bid to respond to my story on Friday, Unique Solutions has found a sympathetic ear at the Chronicle Herald, and today the paper has published a puff piece promoting the company.
The article contains this bit: “Unique Solutions has attracted attention for the scanning booths it has installed in large American shopping malls. The booths scan consumers’ bodies and then recommend retailers with the best-fitting clothes.”
Of course, those scanning booths are no longer in malls, but the article fails to mention that important point.
How is this responsible journalism? How is the Chronicle Herald not outright lying to its readers? With the company now trying to raise more capital, this reporting looks to me like borderline investment fraud.
Ian Thompson, the Associate Publisher at the Chronicle Herald, was deputy minister at the Department of Economic and Rural Development and Tourism from 2008 through 2011, and so in charge of the NSBI file. Moreover, Thompson was appointed to the NSBI board in January 2009, and so oversaw both $2 million in assistance extended to Unique Solutions in March 2009 and the conversion of the entire $5.6 million to an equity stake in June 2009.
Thompson, in his previous career as a provincial manager in charge of economic development, oversaw the Unique Solutions mess, and now he’s in charge at the Chronicle Herald. It is perhaps no surprise that Chronicle Herald business reporters take a “see no evil” approach to Unique Solutions. [Thompson subsequently left the paper.]
After I published the above, the Chronicle Herald published an op-ed by “angel investor” Dennis Connor, who wrote:
The Ivany commission has called for bold action on many fronts and I would suggest that Tanya Shaw, the team at Unique, and its many supportive investors define exactly the kind of boldness this province needs to get behind.
Anyway, as an investor in Unique Solution, Peter Moreira was sent the letter to shareholders I linked to and quoted above. He promoted the company in his column, and now he knows Unique Solutions is kaput, but will Moreira tell his readers? Or will he continue to lie to them? Will the Chronicle Herald assign a scab reporter to cover the collapse of Unique Solutions, and if so, will the scab report on the paper’s past disservice to readers?
The role of a business press is not simply to cheerlead. The point of any press, business or otherwise, is to scrutinize, criticize, reveal new information, and give full context so that readers — investors, policy makers, citizens — have a complete picture of reality.
Cheerleading does no one any good in the long run, and it costs us a hell of a lot — truth, integrity, and in this case, $5.6 million.
Update: Friday, August 5; allnovascotia.com managing editor Judy Myrden writes:
I would like to correct an inaccurate claim brought to my attention in an August 3 item.
“Besides the Halifax Examiner, no media outlet has reported on the collapse of Unique Solutions. Think about that: $5.6 million in public money has completely evaporated, and it’s a non-story for the CBC, for allNovaScotia, and for Metro.”
This is inaccurate.
Rather than “not covering” Unique Solutions, our subscribers are well aware that allNovaScotia has extensively covered this company for the past 11 years.
We have been in the forefront chronicling its many tribulations.
In April 2015 reported that NSBI’s entire equity portfolio, including Unique Solutions was written down by 70%.
We first reported on the company’s debt woes in November 2015 when the firm made an application to transfer control to a new U.S. subsidiary. We’ve followed it throughout the court process since then, writing four more stories until the transaction was completed in January.
All these stories contained information on Unique’s financial challenges as well as NSBI’s massive write down of its investment.
In 2014 we reported on Unique’s sanctions for breaking NS Securities laws, and in 2012 we reported that Ms. Shaw is married to Peter MacNeil, the former head of NSBI’s venture capital.
In between we’ve followed the developments of the company, from the hiring of the new CEO and several lawsuits that have been filed against it.
Our first story on Unique was published in 2005.
My apologies for the mistake.
3. Oil dumped on Glace Bay Food Bank’s garden
Someone dumped oil all over the Glace Bay Food Bank’s community garden, reports Sharon Montgomery-Dupe for the Cape Breton Post:
“We are a non-profit organization and the garden is there to help feed people in the community, [said food bank coordinator Patricia Hurley].
“For some idiot to do something like this infuriates me. They are taking food out of the mouths of families in need.”
“You cannot only smell it but you can see it on the plants, on the leaves. We can’t use these plants now. I’m so mad, this is absolutely ridiculous, taking food out of the mouths of people who need it. “
Hurley said they couldn’t give out vegetables in the family’s orders in the past unless produce came on the Feed Nova Scotia truck or was donated.
“We couldn’t afford to buy them.”
1. Cranky letter of the day
Well, the circus is back in town. We are invited to observe, even participate in, the latest round of entertainment relating to the future of our world.
We have the clown car full of consultants, the juggling politicians, the special-interest illusionists and the bureaucratic gymnasts — all the familiar elements.
This time it is ostensibly about energy and climate change. Meanwhile, in the real world, how are we doing?
First, we’re buying 10 diesel buses for our transit system. These used cast-off climate-damaging, health-compromising fossil-fueled dinosaurs will have a higher life cycle cost than the new electric buses which increasing numbers of local transit authorities are now putting into service.
Second, we committed for 19 new diesel school buses. This is a particular tragedy since our children will be riding around breathing the fumes. Again, there are Canadian-made electric school buses which have a lower life cycle cost, so the decision to buy these polluting machines doesn’t even make economic sense.
Third, Maritime Electric covers the province with fossil-fueled metre-reading vehicles. There are multiple brands of EVs, which would serve this purpose with a far lower life cycle cost and no climate damage. Think ME will be in the forefront of energy improvements from the circus?
Make no mistake about it — it is not the pronouncements of politicians or the signing of international treaties, but these small local decisions, multiplied by the millions, which determine whether humans will continue to prosper. I despair.
Harry Smith, Bonshaw
Halifax & West Community Council (6pm, City Hall) – here’s the agenda.
No public meetings.
No campus events.
Scheduled as of 7am:
1am: NYK Delphinus, container ship, sails from Fairview Cove for New York
6am: ZIM Shanghai, container ship, arrives at Pier 42 from New York
6am: ZIM Tarragona, container ship, arrives at Pier 41 from Valencia, Spain
7:15am: Nolhanava, ro-ro cargo, arrives at Pier 26 from Saint-Pierre
10:30am: Grande Senegal, car carrier, arrives at Autoport from Sagunto, Spain
11:30am: Prometheus Leader, car carrier, sails from Autoport for sea
4:30pm: ZIM Shanghai, container ship, sails from Pier 42 for Kingston, Jamaica
4:30pm: ZIM Tarragona, container ship, sails from Pier 41 for New York
4:30pm: Grande Senegal, car carrier, sails from Autoport for sea
5:45pm: NYK Demeter, container ship, arrives at Fairview Cove from New York
Midnight: Onego Ponza, general cargo, arrives at Pier 27 from Szczecin, Poland
7am: Oceanex Sanderling, ro-ro container, moves from Pier 36 to Autoport
8am: Veendam, cruise ship, arrives at Pier 22 from Sydney with up to 1,350 passengers
5pm: Veendam, cruise ship, sails from Pier 22 for Bar Harbor
Some stuff happened at Halifax council’s meeting yesterday, but I didn’t have time to write about it this morning…. I had to track down those ships, see. But I’ll discuss council on The Sheldon MacLeod Show, News 95.7, at 2pm today.
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