RipeTime was founded in 2016. It aimed to revolutionise quality control of the global fruit supply chain. Photo / File
RipeTime was founded in 2016. It aimed to revolutionise quality control of the global fruit supply chain. Photo / File
A bitter falling out between shareholders of a failed technology company that owes the taxpayer at least $1 million has led to the liquidator investigating allegations that intellectual property and other assets may have ended up in Australia.
Horticulture analytics technology company RipeTime collapsed in July in a welter ofinfighting between directors, founders and shareholders.
Administrator now liquidator Conor McElhinney of McGrathNicol told the Herald his ongoing investigation into RipeTime and actions of its directors and related companies includes probing allegations by a former director that a company registered in Australia, or other parties, may "have misappropriated RipeTime's intellectual property and other assets".
The allegations have been made by RipeTime co-founder and director Jon Lowy. RipeTime was not trading at the time the administrator was called in.
The allegations are "categorically" denied by Ross Shannon, chairman of RipeTime since October 2018 and a 27.8 per cent shareholder.
Shannon, in a written statement to the Herald, said the allegations "are untrue and mischievous and part of a deliberate and sustained effort to disrupt the company ..."
Shannon's son Jonathan Shannon was chief executive of RipeTime. He owns 20.05 per cent of the shares. The two had invested more than $2.5m in the company since October 2016 and advanced a further $400,000 including interest, the statement said.
The Australian company was registered in Australia in April last year as Ripetime Pty Ltd. In February it was renamed Post Harvest Learning Pty Ltd.
Australian company office records show the Shannons are shareholders of Post Harvest along with some other RipeTime shareholders and creditors.
Ross Shannon said Post Harvest was established "to develop alternative technologies to address the market opportunities identified by RipeTime, but which RipeTime's technologies had, after four years and $5 million of invested capital, proved incapable of addressing commercially".
"The technology does not infringe on any of the patents held by RipeTime. Post Harvest has provided details of its patent application to an independent patent attorney, appointed by the liquidator, and will abide by his determination," his statement said.
McGrathNicol's final report as administrator said 17 unsecured creditors of RipeTime are owed $2.4m.
This includes a claim of $1.02m by taxpayer-funded government innovation agency Callaghan Innovation from grants to the company.
Liquidator McElhinney told the Herald he is awaiting advice from lawyers and responses from parties holding RipeTime's assets.
He said his investigation covered an allegation that RipeTime funds were used to set up the Australian business.
Also under investigation, he said, were all other receipts and payments made from the last capital raise in December 2018 "including allegations that another related party misappropriated funds from RipeTime's bank account".
The liquidator is conducting a sale process for the assets, reported by McGrathNicol to be net $2.45m in July.
Callaghan Innovation's website shows that in 2016 RipeTime was awarded a growth grant capped at $5m, which was due to expire in June last year.
The company also received a project grant of $152,098 excluding GST in 2015.
The administrator's report said there had been a breakdown in the relationship between board members, shareholders and with a contracting engineering firm.
Jon Lowy, formerly of RipeTime. Picture / Supplied
There was also a dispute with a key founder of the business involved in the IP development. Lowy said that was him. His employment with the company was terminated last year.
The report said the board had become "fractious".
Legal action between some directors was in progress when administrators were appointed in July.
The disputes had severely affected the company's ability to secure required funding to complete development and commercialisation of its technology, said the report.
Lowy has told the Herald he and RipeTime co-founder Grant Sargent were the directors embroiled in legal action with other directors.
He said the litigation was over governance issues and RipeTime's constitution and shareholders agreement.
Lowy said RipeTime was founded in 2016, "a side branch" of his masters degree at AUT in 2003. It aimed to revolutionise quality control of the global fruit supply chain.
Lowy's Mokoia Investment Group holds 4.7 per cent. His company Salvo is a creditor. It was contracted to produce a small production run of devices and provide premises and resources for RipeTime, Lowy said.
In May last year, founders Lowy and Sargent appointed themselves directors as was their right, he said. Lowy had previously been a director from 2015 to March 2018.
Company records show RipeTime's directors today as Lowy, Sargent, Jonathan Shannon, Ross Shannon and Michael Van Tinteren, who owns 6.68 per cent of the company.
Australian company records show the principals of Post Harvest - previously registered as Ripetime Pty Ltd - as Ross Shannon, Jonathan Shannon, Van Tinteren and Mitch Denton. Denton is among creditors of RipeTime.
US Patent records show Lowy filed a patent for "apparatus and method for measuring a gas" in July 2017.
The liquidator's report notes "Post Harvest Learning Pty, formerly Ripetime Pty, is an Australian company, ultimately owned by Jonathan Shannon, a director of RipeTime (New Zealand)".
"Post Harvest applied for a patent on 10 February 2020 for "a gas monitor and method of detecting gas, including a ripening monitor".
"Post Harvest has advised that the patent application relates to a technology that is different from, and does not infringe upon, the US patent held by RipeTime. We are continuing to investigate the applicant of the Australian patent and its impact on the US patent and expect to include further information in relation to this patent in the liquidator's sale process," the report said.
Lowy has said to the best of his knowledge, RipeTime raised between $7m and $8m in its time. It had received Inland Revenue Department research and development
tax credits and seed funding from the NZ Venture Investment Fund, he said.
