It offered flavours of cola, grape, blueberry, menthol, tobacco and mint, saying each vape had 40mg or 4 per cent nicotine, “the perfect amount to help you make the switch or simply enjoy the nic hit.”
The marketing added: “Sick of losing your pod device? Tired of carrying a portable charger around to your mate’s party? Look no further”.
The company spelt out its mission: “Tomorrow is a local brand, by Kiwis for Kiwis. It is our mission to provide the best products for a competitive price in order to aid smokers in reaching their smoking cessation goals”.
The business had been owned by Auckland businessmen and sole director Nicholas Fitzgibbon with Miles Illemann, but Illemann reduced his holding, so Fitzgibbon had a 78 per cent share.
Fitzgibbon and Illemann appeared in Remix Magazine in a 2020 article headlined ‘The Kiwi entrepreneurs trying to make NZ smokefree by 2025″.
But things did not go well with the e-cigarettes to the point where just before Christmas, the shareholders decided the business couldn’t continue.
On December 14, they called in the liquidators.
Rachel Mason-Thomas and Jeff Meltzer of Meltzer Mason explained the sorry turn of events.
The six-year-old business had started out specialising in the nicotine pouch market but in 2020, regulations changed so it had “pivoted” to importing vapes, they said.
“As part of this restructuring a shareholder left and the director bought their share of the business,” they said, referring to Fitzgibbon.
But then air freight became uneconomic and sea freight required larger volumes of product.
So Fitzgibbon changed tack, only to be thwarted by something unexpected.
“The director funded a significant sum to enable the sea freight import, however, this subsequently fell through when the freight company declined the shipment due to lithium batteries in the vapes,” the liquidators said.
NZ Smokefree had to revert to air freight which was a significantly higher cost.
But then something else unexpected happened: several multinational companies entered the vaping market and they were able to sell the product at a price the company could not match, the Meltzer Mason accountants said.
“This led to reduced sales, and an inability to meet the company’s debt obligations.
“The final issue facing the company is the Government’s interpretation of regulations of vaping products, which effectively leaves these products unlawful and therefore unsaleable,” they wrote.
Bad omens
Then came the next big shock. Last year, the Ministry of Health issued a list of banned vaping products following a review of vape substances.
Although the liquidators did not specifically mention this action, they referred to Government moves which appeared to spell disaster for Omen vapes.
“The decision was therefore taken to place the company in liquidation,” they said.
The total estimated deficiency from the business was put at $1,979,383.
Wages and holiday pay are owed of $16,600 and that is likely to meet a 100c in the dollar distribution ratio.
Inland Revenue is listed as a preferential creditor owed $39,000 in GST and employee deductions.
About $1.49m is owed to shareholders.
Fitzgibbon and Illemann were approached for comment. Secured creditors are listed as being owed around $140,000 and unsecured creditors $329,000.
ANZ Bank, Frank Accounting, Hammond Storage, Janus Investments, Nic Fitzgibbon, NZ Couriers, Primepac Industrial Prospa, RH Dewhirst, Rothbury Insurance, Russell McVeagh, Shopify, Spark and TNL International are listed as unsecured creditors.
Secured creditors are Flexicommercial, L & F and Melanie Hobcraft.
On the asset side of the balance sheet, the company has $25,900 cash in the bank and $166,000 worth of inventory - most likely all the vapes it now can’t sell because due to Government moves, they are illegal.
The likely realisable outcome of selling that $166,000 of inventory is put by the liquidators at zero.
The liquidators listed the shareholders in the business as Nicholas Paul Graeme Hobcraft Fitzgibbon, Evan Leonard Clarke, Matthew Debono, Scott Illemann, Ciaran Ryan, Snowball Nominees, Kyran Winterburn, Anna Illemann and Lloyd Mackay.
South Korea’s Jung Kook Lee has a 2 per cent share.
It is “unlikely” any money would be paid to creditors.
