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I am writing this letter to explain the current situation and provide some clarity about what has been going on with Honeycomb and to offer you my sincere apology if you have been caught up in this in any way. I’m not trying to make any excuses or deny my responsibility for what happened. I should have paid more attention to what was going on and acted sooner. I have no one but myself to blame for that. To fully understand how we have ended up where we are, I need to start at the beginning…
I initially had the idea to start Honeycomb, back in 2012, when working on growing Saitek in the US market. I saw a massive gap in the market, between high-volume gaming grade and low-volume,
high-end flight sim equipment.
I built the Honeycomb business plan on utilizing my knowledge and network in both industries, to develop authentic, high-quality products at a price point that a lot more people could afford, by using the mass-production infrastructure of the consumer electronics industry, paired with product fidelity of the flight training industry.
The business plan was finalized in 2012, but even with a solid financial and go-to-market plan, finding an investor and
capital to launch the company proved harder than expected. The start up was too small for venture capital, but too big for an angel investor.
In 2016, I finally found a partner to start Honeycomb with. He was a longtime friend whom I trusted, and I had already been working with to help develop the US market for his video game accessories. I
had presented the Honeycomb business plan to him several times before, but he wasn't in a financial position to commit to being part of the start up at the time. However, that changed when he was able to provide the funds needed to start Honeycomb together through a finance partner.
We agreed that he would be responsible for the financial side of the business, funding the product development and manufacturing as well as using his existing company in Hong Kong as a service
provider to work with our manufacturing partners, to transition the AutoCAD files I provided of my industrial and mechanical designs into a product ready for mass production. Additionally, we agreed that we would use his distribution companies in the US, Europe, and Asia to sell the Honeycomb products, so I could concentrate on product development. In return, he would get a minority ownership stake in Honeycomb. We agreed that he would register the company for us in Hong Kong since it made sense from a development standpoint and the close proximity to our manufacturing partners in Shenzhen.
We had already started the development of the Alpha but finalizing our shareholder agreement and setting up Honeycomb as
a company kept getting pushed off by my partner. Finally, when the company was established, I discovered that it was done so with 100% ownership under the corporate umbrella of my business partner. He explained that it was a requirement by his finance partners, who had a lean against his company as security for the loans and wouldn't provide the funding otherwise. He promised we
would finalize the shareholder agreement, specifying the ownership percentages, which were to be executed once the loans needed for the production and development were repaid. I would never have agreed to those terms in advance (and still don’t) and although I had reservations about the situation, I wasn’t looking to sell my shares anytime soon, so getting a written agreement in place that protected my rights, became a bigger priority than actually having the shares in my hand. However, despite numerous attempts to get it finalized, no agreement has been signed by him to this date.
During the first two years, I focused almost entirely on product development and during this time, I did not suspect anything wrong when reviewing the monthly and annual financial reports. Sales were great, and I had no expectations that we would be profitable from day one. However, by mid-2022, it became apparent that my business partner was in financial trouble and when Honeycomb ended up with a negative result despite having a record year, I started looking into the financials in detail. Once I started going through the books, every invoice and purchase order, one by one, I discovered that the service fees added to the factory cost (for the services provided in Hong Kong) were significantly higher than what we had agreed. In addition, the sales prices on the invoices to my partner’s distribution companies were lower than agreed. When I confronted my business partner about the findings, he assured me that it was just an accounting error and promised to get the books in order. I accepted the explanation and solution but didn’t push to have it done immediately, not wanting to worsen my partner's financial situation at the time. To further help the cash flow situation, I made the mistake of agreeing to a limited pre-order campaign for the Charlie’s once the production schedule had been confirmed by the factory. However, when production was set to begin, I found out that instead of paying for the components required to manufacture the product, all the money received for the Charlie pre-order had gone elsewhere. The situation escalated in July 2023, shortly after we missed the planned shipping date for the pre-orders when the factory partner contacted me directly to inform me that they had still not received payment for the Charlie production or for the several thousand Alpha and Bravo's they had manufactured and were sitting in their warehouse, which I was completely unaware of existed. Additionally, they had a significant amount of outstanding invoices, including for the injection tooling, required to produce the plastic parts for the Charlie. The extent of the situation caught me completely by surprise.
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