Thanks for your reply!
We haven't had the shares issued, or signed the share agreement. We have never received any company accounts. Our primary concern is that having agreed to do the work in return for equity (in July 2012) we could be held to that, and not require payment in cash now.
We are fairly confident the company is insolvent, and hence the shares will shortly be worthless. Additionally we wonder whether, if the offer wasn't legal, it might justify a claim of directorial misconduct and associated personal liability.
The main email 'prospectus' selling us the deal in July 2012 was:
£40 per hour x 40 hours per month = £19,200 / Company is currently around a £5million valuation (on paper) valuing its future potential...
We are looking and have set up for up to £2million worth investment made up of of 1p shares (not 2,000,000 shares) we are currently selling at between 7.5p and 10p per share..
So in percentage terms £19,200 worth of your business is divided by a £5,000,000 valuation = 0.003
£50k = 1% of the company
£100,000 = 2% of the company
So you are buying 10p Shares at 7.5p. In 6 months those shares will be worth 13p per share, in 12 months 20p per share etc etc
When we sell in 3 years we want those shares to be around £7.50 to £15 per share generating you returns of 10-20 times your investment.
So the more you put in, the more you get out.
Since then we have learned that last year the company made £130K profit (which presumably went into the director's overdrawn loan account as it we have a number of cash invoices still outstanding from that period) which would put the business value at around £300K (2 * owner's benefit). Certainly nowhere near the £5 million claimed. [Earlier years' profits were lower].
The statements regarding the increase in share value have also proven to be completely false.
Mainly, as mentioned above, we just want to know whether we can be held to the deal, and whether the misrepresentation might be considered sufficiently serious to provide leverage in getting some payment on the work commissioned.