cMoney Inc (CMEY)

[THESTCOKHUNTER]

This Mobile Payments Company May Self Destruct In 15 Minutes

C$ cMoney, a mobile payments startup based in Houston, is having quite a week. On Friday, the company announced an impressive funding round of $100 million from private equity firm AGS Capital Group. In total, cMoney has secured $115 million in funding commitments from AGS and a NY-based firm called Kodiak Capital Group.

The latest announcement was picked up by a few news outlets, including the WSJ’s Venture Capital Dispatch which touted cMoney as “a start-up with a funky name [that] has an ambitious plan for replacing consumers’ debit and credit cards with a mobile-payment system.”

Sounds like another promising company in the red-hot mobile payments sector—a market that Nokia, PayPal, and a host of startups like Zong are trying to crack. Except, I don’t buy it. There is too much hype, and too little actual product coming from cmoney.

That highly-touted $100 million funding, for instance, turns out not be a venture round at all, but rather an equity line of credit (a lot more on that later). And the company is being sued by a CEO it recruited. Read on for a tale of a bizarre reverse merger, promises of million-dollar fees, and a young, 28-year old founder who lists among her accomplishments and qualifications her childhood sports activities, including “dance, gymnastics, soccer, softball and tennis.”

What is cMoney?


What is cMoney?

The company, which launched in March 2009, is developing a mobile application that will let users send or receive money via temporary connections. According to reports, the application will be linked to a users’ credit cards and accounts. When s/he wants to make a purchase, the user logs-in to the app, submits information on the transaction, punches in a password and retrieves a code. The user will be able to give that code to a cashier for payment and after 15 minutes the code will expire.

Like many startups, the company’s product is not ready for market, it’s in the “demonstration” phase. However, cMoney has struggled to meet its own deadlines. According to an April press release the launch was scheduled for this summer, then a May SEC filing predicted a fall release, and now, in its latest press release, the company is predicting a 2011 launch.

Beyond the delays, the structure of the startup itself, is odd: cMoney acquired a company called Bonfire in May 2010 in a reverse merger transaction. According to an S-1 filing, Bonfire had no active operations and was previously a business based on “producing, marketing and selling audio recordings of folk tales, fairy tales and other children’s stories under the brand name ‘Bonfire Tales.’”

Bonfire also disclosed in late March, just before the merger, that it had “no cash and a working capital deficit of $28,845.”

In fact, there was only one employee, the director, Tim DeHerrera, who was scheduled to resign after the deal.

Unless cMoney wanted to tap Bonfire’s rich trove of children’s fairytales, why would a mobile payments company purchase a seemingly defunct company with only debt, no synergies and virtually no employees? The only real interest here, seems to be Bonfire’s status as a publicly traded company, trading over the counter as a penny stock (under ticker symbol PINK:BNFR). Reverse mergers are typically done by companies who cannot go public in a more straightforward fashion.

The Case Of The Missing CEO

On May 6, 2010, cMoney named Lawrence Krasner to the position of CEO, Krasner is a fairly seasoned veteran of Wall Street, as a former Senior Vice President of Lehman Brothers, a Senior Manager of Ernst & Young, and a VP of JPMorgan. Sounds like a solid coup for a fledgling startup, except Krasner never spent a single day as cMoney’s CEO, according to the company’s SEC filing.

Instead, Krasner is building a legal case against the company, suing them for damages in excess of $700,000 and 1,950,000 in fully vested shares of the company’s common stock, according to a filing. I reached out to Krasner on Friday, but he said he could not comment at the time. The company says the claims “are without merit.”

The founder of the company, Jennifer Pharris, has assumed the role of CEO and Chairman of cMoney. With the exception of a thin LinkedIn profile and her official bio on cMoney’s website, there’s very little information available on Pharris online. However, that official bio is worth a read— if you can make it through the syntactical quagmire:

Jennifer Lynn Pharris, 27 , is a College Girl who turned to the Corporate World with her quest to save time and money in the new age revolution of instant gratification, she designed a revolutionary product called C$ cMoney !

Jennifer was born in Dallas, Texas lived there for (12) twelve years with her family and was very active child in dance, gymnastics, soccer, softball and tennis winning top awards and always known as a leader.


Her high school career outside Memphis, TN graduated her with Top Honors and was recognized as Who’s Who in American High School Students and active member of SADD, FTA, FHA, and DECA and received a scholarship awarded through FTA.

While attending college at Middle Tennessee State University outside of Nashville, TN, she concentrated her degree plan in business, marketing and economics. Jennifer was a Kappa Delta legacy member wherein her mother and grandmother were former members as well. Jennifer was active in her community and various social affairs.

Jennifer while attending college began work on dream concept which was to eliminate the need for Mom and Dad to wire transfer money to her account when she needed money at College, but Jennifer created a better way, just send the money to me on my cell phone. That small step back in college and some (4) four years later has evolved a new company, C$ cMoney and worldwide patents.

Jennifer and her love for Houston moved back home to the Houston Area after college with the one plan in mind which was to follow her dream and build her company. Jennifer gives all the credit to her relationship with the “Lord” and her active time with her church, Fellowship of The Woodlands which helped her to reach her goal. Jennifer’s goal was to make Houston the New Top Technology City with her new revolutionary product called C$ cMoney !

http://techcrunch.com/2010/07/11/this-mobile-payments-company-may-self-destruct-in-15-minutes/