Skully, which promised Indiegogo backers it would make an augmented reality motorcycle helmet, instead declared bankruptcy.
Image: screenshot/skully

So much for smart helmets.

Skully, the Indiegogo startup that promised a revolutionary augmented reality motorcycle helmet, has gone bankrupt.

The company is filing for Chapter 7 bankruptcy amid reports of serious misuse of company funds.

Skully’s founders, brothers Marcus Weller and Mitch Weller, were replaced in July in the wake of customer and investor complaints about the serious lag time between their donation and any visible progress. The company’s new CEO Martin Fichter promised in a blog post that the company would ship 400 helmets by the end of July.

The end of Skully comes amid reports of a lawsuit that alleges the Wellers misused company funds, spending investors’ money on lavish vacations, several apartments, expensive sports cars and even $2,000 at a strip club.

“Our team is devastated and deeply saddened that our valued partners, vendors, employeesand customers have been negatively affected by what has transpired,” the company said. “We realize there are many unanswered questions and that this is a very upsetting situation. We are truly sorry.”

The 2014 Indiegogo campaign that launched Skully was one of the most successful in the platform’s history. Almost 2,000 backers raised $2.4 million for the company to produce the AR-1, the “world’s smartest motorcycle helmet.” Many of those backers paid at least $1,399 to reserve their own helmet when the product became available.

After that Indiegogo campaign, Skully raised an additional $12.5 million in two rounds of funding, according to Crunchbase.

The helmet was supposed to be equipped with nearly everything a car has, but in a helmet. That included GPS, voice control, a rearview camera, links to phone and music and a host of other features. It was heralded as revolutionary by motorcycle enthusiasts and professionals, tech leaders and publications like Popular Mechanics.

The declaration of bankruptcy means that the original Indiegogo backers have likely lost their money, and definitely won’t see the product they paid for.

“It is with great regret we must announce that SKULLY will formally cease operations, effective immediately,” the company wrote on its original Indiegogo page. “Over the past several weeks our management team has worked feverishly to raise additional capital but unforeseen challenges and circumstances, beyond our control, made this effort impossible.”

Skully’s assets are now subject to liens by a secured creditor, the company said. Its Indiegogo backers are unsecured creditors, who aren’t guaranteed anything in the case of bankruptcy. The company said it was “not aware” if funds would available to those online supporters, but that anyone who donated would receive notice from bankruptcy court and instructions on how to file a claim.

Indiegogo likely wont have any liability in this case. Its terms of service specify that the platform is a venue for fundraisers and that it does not guarantee backers will receive anything from a campaign they support. It warns backers that they use the service at their own risk. Generally, Indiegogo and Kickstarter have avoided liability in cases like these.

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