Colourful Italian entrepreneur Giuseppe Porcelli has realised his dream, a company on the ASX, but will it be a dream for shareholders? Michael West reports.
That Neapolitan Leopard with a spotty track record is back at it again. Giuseppe Porcelli, Manly’s kaleidoscopically colourful software entrepreneur, apparently with a criminal record in Italy for fraudulent bankruptcy, spent most of last year desperately trying to get Assetora (previously Domacom), a fractional property play associated with Porcelli’s struggling Bricklet venture, re-listed on the ASX.
Sadly for him, and his many despondent shareholders, he failed. Another swing and a miss.
It might have been the various attempts by creditors to put the company into liquidation, or possibly just a failure to find enough new money to refloat the sunken ship, but either way he didn’t satisfy the ASX that it was ready to trade publicly again.
Assetora is now an unlisted public company with a whole lot of corporate knots to untangle.
Il precedente
Assetora was not his first swing and a miss at the ASX. His first strike was Mobecom (now Gratifii ASX: GTI) where his attempt some years ago to flick a nascent Lakeba business called Paid by Coins to it in exchange for a vast swathe of shares to gain control went straight through to the keeper.
The ASX umpire ruled foul and the deal was quickly unwound. Paid by Coins was retired permanently, so the shareholders of Gratifii certainly look like they dodged a dodgy bullet even though Gratifii had to write down the significant investment it had made.
Undeterred, Porcelli then hatched a scheme to purchase a banking licence to launch his nascent “Bank-in-a-Box” during the heyday of digital neo-banks.
No worries that he had barely any capital and even less experience in that market, he must have been convinced by Kevin Costener that if he built it they would come. They didn’t.
The licence purchase never even got off the launchpad and the business dissolved in the same way most of Porcelli’s digital children do. Poorly executed thought bubbles that lack sufficient funding, focus and substance to make it past the first throes of excitement that he seems able to generate on a whiteboard.
If there’s one thing Giuseppe seems amply gifted to do, it’s talk a good game.
CaddyShack, CEO of the year antics and turkey sandwiches: Lakeba back in the revenue bunker
That leads us to WhiteHawk Limited (ASX: WHK), his latest interpretive digital dance. This promising cyber security business founded by Terry Roberts, a US-based cyber expert, was listed on the ASX back in 2018 at 20c and promptly rose to over 26c on day one of trading.
The rockets started to sputter soon after and the share price plummeted over the next few years and now sits well below 1c, representing a loss of value of around 99.9%.
Maestro del palare
Enter the entrepreneurial genius, Porcelli. No-one can build businesses like he can. His track record, as described on his own Lakeba website, is impeccable.
Hundreds of employees scattered across the globe with many successes claimed (without any return to shareholders yet, of course).
Despite having limited capital to grow Lakeba’s own ventures, Porcelli decided to invest some of Lakeba’s elusive shareholder funds in WhiteHawk. He even put a chunk of personal shares into his kids’ names in an apparent attempt to introduce them to the thrills of catching falling knives on the ASX.
Phase One got him to the Boardroom,
as the founder was clearly interested in anyone that could help her get the company out of the doldrums. There is no mark better than a desperate mark.
Porcelli was appointed Executive Director and Chief Strategy Officer. This was in addition to his role as CEO at Lakeba, as two jobs are always better than one.
Since he first bought into WhiteHawk, the share price has dropped around 65% from 8c to 0.3c (yes, that’s $0.003), but it seems Porcelli wasn’t interested in the immediate share price.
Eye on the backdoor
The real goal was to sell one of Lakeba’s ventures to WhiteHawk in exchange for shares that would give him effective control of an ASX listed company.
It’s always about control and access to new money, and if it has to be via the back-door then so be it.
So it has come to pass that WhiteHawk recently announced it is buying Quixxi, one of Lakeba’s ventures that was originally sold by Porcelli to Lakeba for more (in cash) than the current sale price (in shares) when he moved from Italy to Australia back around 2014.
Since then it has continued to be his favourite digital child, getting significant chunks of his attention to continue his long-held dream of building a world class cyber security platform.
Never mind that customers disagreed and have stayed away in droves.
According to WhiteHawk’s announcement, Quixxi is currently turning over around $575k. That’s total revenue, not profit … and that’s after more than 10 years of development and promotion.
Who knows what Ms Roberts thinks this will do for WhiteHawk, but she has announced she will be stepping down as CEO and appointing an Australia-based CEO – see if you can guess who might decide that – Porcelli introduced a new Director, Tony Vizza, to WhiteHawk but Vizza got cold feet and withdrew just days later.
Deckchairs
Undeterred as always, Porcelli appointed two other directors, so the planned putsch progressed.
Then lo and behold, who should appear as the new Australian CEO but Adrian Vallino, a Porcelli acolyte who was CEO of a Lakeba venture called Ezidox before it was merged into another venture called DoxAI run by Porcelli’s son, Alfonso.
Two CEO’s in one company gets tricky so one of them had to go, and what better solution than moving Vallino into WhiteHawk to ensure it ran in accordance with Porcelli’s specifications, leaving Porcelli’s son to cut his teeth on DoxAI.
Never mind that Vallino’s experience in cyber security was, according to sources, quite deep enough to run Quixxi before it was sold to WhiteHawk.
The WhiteHawk deal looks eerily similar
to the erstwhile Mobecom/Gratifii deal – some shares up front with a huge number available as performance shares based on an acquisition of a poorly performing subsidiary of Lakeba.
It is not at all clear whether Porcelli personally or Lakeba corporately will get those performance shares if the numbers are achieved, but you can rest assured that Porcelli will hit those performance numbers in any way he can.
Stacks on the mill
It’s not even clear if it is a target based on all of WhiteHawk’s revenue, or just that generated by Quixxi after the acquisition. Given that “success” for Quixxi will only add around $1m of revenue to WhiteHawk’s books, it doesn’t seem like the kind of deal that is going to re-launch WhiteHawk into the stratosphere.
It only needs to improve a little, however, for Porcelli to make a lot of money whereas it would require spectacular performance for early shareholders to recover their investment after all the dilution they have suffered.
The all-important expert’s report on the proposed acquisition has now been released and it is not pretty reading. Stantons, the independent expert, has
declared the proposal UNFAIR, but reasonable.
It is not at all clear how something unfair to shareholders can be reasonable, but that’s how the Porcelli deals seem to roll.
Ka-ching or not to ka-ching?
Judging by the response on Hot Copper, there are the WhiteHawk believers who will grasp at any straw and WhiteHawk realists who have seen Porcelli’s performances before and hold out little hope that anyone but Porcelli will hear the ka-ching of the cash register.
Time will tell if this proposed acquisition is value-creating or just asset recycling and power transferring. WhiteHawk shareholders are paying a lot of equity for a small, largely unproven asset directly connected to one of its Directors and Officers.
If it doesn’t work, then watch for another Porcelli sale to WhiteHawk (unless, of course, he flees back to Italy now that his prison sentence attaching to his conviction for fraudulent bankruptcy has been pardoned, although the conviction itself remains).
ASX director Giuseppe Porcelli criminally convicted in Italy, gets prison pardon
As an indication of the governance that Porcelli will bring to WhiteHawk, his family-run Lakeba enterprise recently held an AGM after several years of ignoring the rules and the writer was lucky enough to attend as the proxy of a disgruntled shareholder.
It was called for one reason only – to approve a new auditor, the 3rd in 3 years.
The Board of Lakeba, now largely devoid of any independent directors following another rash of resignations, issued a statement that it “respectfully disagrees” with the valuations of Lakeba’s various businesses provided by its previous auditors, Hall Chadwick.
The replacement auditors, William Buck, had to be approved by ASIC which, let’s be honest, is a rubber stamp nowadays. Let’s see if Porcelli’s whiteboard and future-casting skills can get the new auditors back in line. As noted in this publication’s previous article, leopards never change their spots.
Good luck to all who cross this leopard’s path.
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.