California-based distribution company Hardcar crashed hard as the company was facing a big tax bill and no willing investors. In its death spiral, the company also laid off employees without wages that were owed to them. Yet, the “out of business” company was apparently still making cash drops and deliveries until a co-founder stepped back in to shut the operation down for good.
On The Road
Todd Kleperis founded Hardcar as a way to help cannabis companies move large amounts of cash. The company had security vehicles and relationships with banks and the business was growing. Kleperis though became more interested in another company he was creating on the banking side called Payzel. In order to focus on Payzel, he sold his interest to a group called Apollo. Or so he thought.
Kleperis hasn’t had any involvement with the company on a day-to-day basis for some time and was essentially waiting for the deal with Apollo to close to recoup some of his investment in the company which was hundreds of thousands of dollars. Apparently, an Operating Agreement was never signed which put the deal into question but Kleperis had moved on trusting the buyers would complete the paperwork. The company was on solid ground and he felt that it was in good hands. Apollo had allegedly invested over $300,00 into the company so it seemed like they too were motivated to make Hardcar work.
Apollo though didn’t like what it saw after spending some time with the company. The new CEO Joe Zerucha was unable to keep Hardcar going and questions were swirling about his management. At one point, there was a rumored deal that Manifest Seven Holdings (OTC: MNFSF) would buy Hardcar, but that never came to fruition. In March 2022, Manifest Seven filed a notice that it was discontinuing the operation of its cannabis bulk wholesale products and finished goods distribution services. The company wrote, “The discontinued cannabis distribution operations accounted for $3.32 million of revenue and a net loss of $2.76 million during the three quarters that ended August 31, 2021.” Manifest 7 is in default on its loans and most recently announced that its President and Chief Legal Officer had resigned. Zerucha confirmed that Manifest Seven would not be a white knight and that the deal was ended in December 2021.
With no “deal” on the books and a looming tax bill as well, this was apparently what prompted the Apollo group to decide to pull the plug. According to Kleperis, when Zerucha replaced former CEO Salvatore Moccia the excise taxes were up to date and had been paid. Since Zerucha took over, the taxes went unpaid and eventually grew to almost half a million dollars. He was allegedly using the tax money to pay for other items, which isn’t allowed.
Apollo also supposedly felt the company wasn’t in good shape structurally and was a hodge-podge of cobbled together licenses. The company also supposedly operated for a year without a license in good order – another problem that was bound to get caught by regulators. In other words a hot mess, not worth saving or investing any more money into.
Without the Apollo money or the deal and a co-founder who believed he was no longer a majority owner, the money wasn’t there to keep the company going. Employees weren’t getting paid on time and the situation was only getting worse. The Chief Operating Officer Morgan Dodson resigned on April 29, 2022, suggesting that the company was operating in a manner that wasn’t legal, which made her uncomfortable. Like Kleperis, she was equally confused as to the ownership of Hardcar. She brought her concerns over operations that weren’t within state regulations to Apollo, thinking the company was a majority owner, only to be told to take it up with Zerucha – that he was the owner. Morgan was not only an early employee, but she also invested in the company. Zerucha was in the driver’s seat, not Apollo.
With everyone jumping ship, employee Blake Villa began informing customers the company was closing and to find a new distributor. Then Villa was let go without pay weeks before his wedding. He took to social media and aired his grievances. Zerucha told Green Market Report on May 18, that there was “significant misinformation in the public space and that Hardcar was not closing down.”
Understandably, customers were confused. Was it closed or not? One small brand saw its limited inventory held captive by Hardcar. The brand, that asked to not be named, asked for its inventory back from the company that was allowing Hardcar to share some warehouse space. But the company declined and said that was up to Zerucha. The brand said it was asked to send thousands of dollars on an unpaid invoice, but the invoice wasn’t provided. The company owning the warehouse space did not respond to a request for comment.
Not long after Zerucha insisted the company was still operating, Kleperis stepped back in and terminated his employment. He has also stated that he is returning all inventory to the companies whose products remain and closing every account. Kleperis along with other investors have lost thousands of dollars with the decision to close the company. Accusations of theft, taking money from non-accredited investors, and other misdeeds are being tossed around and lawsuits are a likely outcome. Kleperis claims Zerucha was found to have comingled the client’s money and not deposited customer payments into the company bank account. All major issues are easily documented by the company. Zerucha denies all of the allegations by Kleperis.
At least the brands will get their products returned, even if they are now once again forced to find another distributor.