It was reported last month that AR motorcycle helmet company Skully was close to shutting down. But despite a botched acquisition deal, the departure of its founders, running out of cash, and failing to complete orders, some executives held out hope that the company's fortunes could be turned around. Now, it appears that was just wishful thinking.

Skully has formally ceased operations and intends to file Chapter 7 Bankruptcy, which doesn't require a plan for repayment. Meaning that those who pre-ordered one of its $1500 AR helmets are highly unlikely to get a refund. All of the company's assets are now subject to liens held by a secured creditor.

Rival firm Fusar has launched the Skully Owner Stimulus program, which offers those customers who never received their helmets a credit equivalent to spend on its own smart helmet technology.

It seems Skully's two founders, brothers Marcus and Mitch Weller, may have been responsible for a large part of the company's financial difficulties. The pair, who started Skully three years ago, were ousted last month by board members after the takeover by Chinese firm LeSport fell through. But a new lawsuit by their former assistant suggests there may have been more reasons behind their departure.

As reported by Buzzfeed, the complaint alleges that the brothers considered Skully's money, $2.5 million of which was crowdfunded via an Indiegogo campaign, to be their "personal piggy bank."

One of Isabelle Faithauer's responsibilities was "managing the books of Skully," under the Wellers' supervision. She claims the pair used the company "as a tool to pay their personal expenses" and abused Skully "in such a fraudulent manner it rendered the corporate entity a sham."

The lawsuit highlights 19 examples of the alleged false expenses, including:

  • Rent for a personal apartment in the Marina district of San Francisco, then the subsequent moving and painting expenses when they moved to the Dogpatch.
  • A "world tour" trip that included $2,000 for limos in Florida, $2,000 for a strip club, and $2,345 worth of paintings from Hawaii.
  • Mitchell Weller's Dodge Viper, which was claimed for insurance following an accident, as well as the new Viper purchased by the company to replace it.
  • A payout of $80,000 to an unnamed co-founder, which was recorded as a trip to China.
  • A Lamborghini rental during a personal vacation.
  • Restaurant meals and personal groceries charged to the company AMEX card.

The claims, if true, bring to mind the Ant Simulator situation earlier this year. The game was canceled after lead developer Eric Tereshinski discovered his business partners spent crowdfunded and investment money on strippers and alcohol.

In a statement on its Indiegogo page, Skully wrote: "Our team is devastated and deeply saddened that our valued partners, vendors, employees and customers have been negatively affected by what has transpired. We realize there are many unanswered questions and that this is a very upsetting situation. We are truly sorry."