Who needs accounting? Or financial reporting? Drew Morrison-CityGuru, Inc. has been scrapping by for almost five years without either. But, if you’re a CityGuru Investor or Shareholder, this can seem like sailing across stormy seas without a captain, compass or charts!
Founder Drew Morrison contends CityGuru is not operated all that differently from any other Startup company, operating on a shoe-string budget and bare essentials—including accounting. But upon closer examination, CityGuru’s methods of record-keeping and documentation seem non-existent. During deposition, he testified he “may have” some digital records, but most consist of hard copy—copies he is not quite sure where to locate. The only known semblance of an accounting system seems to be his own checking account balance, maintained by the bank, rendering the CityGuru, Inc. record keeping more of a Sole-Proprietorship than a corporation.
So, what is the big deal about Accounting? Who has time for record keeping, and what does it matter–as Drew Morrison might argue—if you’re in the marketplace making money?
This post explains why a proper accounting system is not only desirable—it is mandatory in order to run any business venture. Much like a medical blood test which reveals the true state of health of the human body, proper accounting reveals the true state of health for a business venture. Without it, investing becomes mere gambling, placing the Investor at the complete mercy of the founder’s word.
POINT IN CASE: WHAT HAPPENS TO MY INVESTMENT MONEY WHEN I WIRE IT TO DREW MORRISON-CITYGURU?
If you invested in Drew Morrison-CityGuru anytime in 2015 or before, you were instructed to wire your savings/funds to one of several bank accounts. These accounts consisted of both personal accounts and accounts set up in a business name—but all were under the sole signatory authority of founder, Drew Morrison; and all without transparency to investors. In many cases, your funds were mixed with that of other investors as well as the founder’s own personal funds.
To date, the monthly bank statements for these accounts are the only accounting records available for any of Drew Morrison’s companies such as Path Investment Group, LLC, On The Go Technologies or CityGuru, Inc.
And this is where the lack of appropriate business accounting begins to create problems for one and all.
Bank records released under Court Order reveal that since 2010, Drew Morrison raised over $637,000 in multiple rounds of “investment” funding. In return investors were offered promissory notes, debt instruments and/or promises of Company Stock.
When during deposition testimony Drew Morrison commented he was experiencing financial difficulties in making his rent, was asked what had happened to the funds he had raised since 2010. He claimed he didn’t know though the trail of withdrawals and transfers from those same accounts seem to suggest those funds supported his lifestyle throughout those years.
This only proves the point how effective even this simple accounting (scanty as it may be) provides insight to cash flow—the life blood of any business!
POINT IN CASE: WHERE IS THE FINANCIAL REPORTING FOR MY INVESTED FUNDS?
Drew Morrison is quick to point out that many of the withdrawals and transfers from his personal accounts housing investor funds are for necessary “expenses”; expenses necessary for the cost of doing business and promoting the CityGuru brand. He also is quick to point out that as founder and “The Talent” of CityGuru; it is at his sole discretion of how he uses these funds.
It can be argued that a company founder and even officers should have certain autonomy to operate day to day activities without consulting investors or shareholders. But, that argument is predicated upon the proper financial reporting to investors and shareholders the nature of how their funds are being used.
Of course, financial reporting is impossible without a reliable accounting system to document that data and information.
While under the inducement of court orders, Drew Morrison has revealed a portion of his business “expenses”, he has yet to explain to investors and shareholders why they have yet to reap a return in principal, interest or dividend.
But then, without an accounting method or system, Drew Morrison probably doesn’t know the answer, either. How can a founder report to investors how the Money Trail is taking so many twists and turns if he doesn’t even know where the Trail is?
Whatever you want to call it: accounting, bookkeeping or financial reporting, a company can only flounder without it.
POINT IN CASE: HOW WAS MY MONEY INVESTED?
Nothing drives the point in case for the necessity of proper business accounting than does the Investor-Shareholder question: “How was my money invested?”
Even in deposition testimony, Drew Morrsion could not offer an intelligent answer to that question other than it was used to cover his “expenses”. Whether it is due to his own naiveté or lack of business acumen, the lack of a reliable accounting system that stands up to inspection is now wracking havoc upon him with woes of litigation.
For CityGuru Investors/Shareholders this wracks havoc upon them as well. Without accounting or any customary record documentation, they are left wondering what happened once they wired their money to the founder? Where is it? What happened to it? …Will I ever see my money again?
The havoc of having no accounting system to rely upon is these investors are rendered as those who have no means to EXIT their investments!
The lack of legitimate CityGuru accounting can hit investors doubly hard. New Investors contemplating providing much needed funds to continue the company will likely hesitate at the total absence of transparency of the founder and company. Government agencies, such as the IRS, could intervene with unsolicited assistance. The founder’s own litigation challenges will become the litigation woes of those invested in him.
POINT IN CASE: IS DREW MORRISON-CITYGURU, INC. A LEGITIMATE BUSINESS IN WHICH TO INVEST?
The sheer absence of legitimate accounting and ability to report financial status can and does bring into question the legitimacy of the business venture as one worthy of investing one’s life savings.
Without accounting, the most common questions concerning ANY business venture cannot be answered. Consider these:
- How much revenue is CityGuru generating? What is its cash flow?
- What is CityGuru’s burn rate? What are its operating expenses?
- What is CityGuru’s tax liability?
- What assets does CityGuru own? What value?
- How much and what are CityGuru’s debt-legal liabilities?
- What is CityGuru’s Break-even point? Is CityGuru operating at a profit—or loss?
- When will CityGuru turn a profit? Pay earnings to Shareholders?
- What is the Shareholders’ Equity in CityGuru?
- What business licenses, fees, registrations are due of CityGuru?
- What is the valuation of CityGuru as a company?
- What is the Share price of CityGuru stock?
Simply put: without legitimate, verifiable accounting, these questions cannot possibly be answered. Without this accounting, generating customary financial reports such as Balance Sheets, Profit & Loss Statements, Cash flow Statements and Shareholders Equity Statements is impossible. Without this financial reporting, the performance and success of any business venture cannot be MEASURED or SUBSTANTIATED.
Accounting: who needs it?
DREW MORRISON: MEA CULPA
In rare moments of humility, founder Drew Morrison readily admits he is “not good at record keeping. Never have been.” As a salesperson he also readily admits he is out of his league when it comes to accounting. Whether it is from naiveté or lack of business acumen by CityGuru’s leadership, we as Current CityGuru Investors would demand that immediate and remedial actions be taken to implement a business accounting system that is transparent, verifiable and capable of providing transparent financial reporting.
We resolve that ongoing “expenses” as claimed by Drew Morrison should include the worthy expense of creating, implementing and maintaining a CityGuru accounting system. Our CityGuru accounting system doesn’t have to be a complex, sophisticated system requiring a team of CPA’s. Simply applying even a little “Old School” bookkeeping, recording and operations documentation is enough to keep both the IRS satisfied and to provide CityGuru Investors/Shareholders the confidence of how our money is being managed.
WHAT EVERY CITYGURU INVESTOR/SHAREHOLDER SHOULD KNOW:
Liked this post? Please leave a comment, or subscribe to email alert as the news breaks. There are LOT more posts coming!