A Kelowna entrepreneur says the future of a website she created to provide a safe online place for youth has been put in jeopardy.
Mazu CEO Janice Taylor said her 20 staff have already missed one paycheque this month and will likely to receive another come their next payday on Friday due to the Southern Interior Development Initiative Trust creating a roadblock to funding.
The absence of a signature on an agreed loan extension agreement with SIDIT threatens to collapse Mazu’s support from other investors and force the company to close its doors.
Taylor feels she had no other option but to go public to the local media Wednesday with her frustration over her dealings with SIDIT, despite the fact she already has been threatened with legal action in a letter from SIDIT acting board chair Grace McGregor for any comments “malicious and defamatory of SIDIT or its staff.”
Taylor says there have been changes with the SIDIT administrative staff, including three different CEOs since August 2017, that has led to her company’s financial structure and intent being misrepresented to the board, and she claims to have had no opportunity for the board or staff to better understand either Mazu’s current financial status, private investment support or long-term revenue objectives since the loan renewal talks began last September.
“We have an agreement to extend the loan for three years so all we need is a signature on the document for that agreement and we can carry on,” Taylor said.
“Instead, I am hearing around town how we have defaulted on our loan and that is absolutely not true and an irresponsible statement.”
Taylor’s involvement with SIDIT dates back to 2013 when she received a $200,000 seed money investment from the development initiative trust to grow her company as a five year loan.
She made interest payments totalling $87,000 with the option after five years for SIDIT to demand repayment of the loan principal amount or invest it as shares in the company.
At the time, Mazu was valued at $2 million, and has since grown in equity value to $18 million with more than 70 private investors, including some of the staff.
Taylor says the loan extension agreement was for a further 3.5 years under the same conditions.
But Taylor says the hangup in the deal centres around a subordinate clause, in which SIDIT would not be classified as a tier 1 lender under the agreement, allowing other tier one investors, such as a bank or other private financial lending institution, to get first priority in getting paid out if Mazu was to fold.
Taylor argues that as a public trust, SIDIT should not be looking for a quick turnaround profit, but provide a long-term investment that will help companies to grow and generate jobs for their local economies.
“We are the poster child for everything that SIDIT claims to be in their own strategy policy. It was set up for companies like us, particularly those in high-tech that have an idea and need time to go through the ups and downs in figuring out how to turn it into a revenue generating business,” she said.
“We have job growth, are attracting investment, in the last five years gone from 15 to 20 employees, been involved in university co-op programs with students and ended up hiring two as full-time staff. This should be a win-win situation for everyone going forward and instead we have our own version of the wall here where my staff are not getting paid.”