Ocho Chocolate raised $2 million in 32 hours in a 2017 crowdfunding campaign after news the city’s Cadbury factory would close.
But yesterday the company announced it had "no prospect of achieving future profitability" as currently structured.
A proposed voluntary liquidation later this month could result in the loss of 11 jobs.
The original Ocho chocolate company was launched in 2013 and operated as a small craft chocolate company until 2017, when it was incorporated for the purpose of the Own the Factory crowdfunding campaign.
Dr O’Malley led the campaign, which attracted 3549 investors.
He led a second round of crowdfunding in 2021, to recover from lost income because of the Covid-19 pandemic and in the hopes of establishing stores in Auckland, which raised another $498,000.
While serving as managing director during the pandemic, he had deferred all his payments — about $70,000 — because the company "was that tight for cash".
Now it looked like he was not going to be paid back for his services during those 18 months.
"Did I put my heart and soul into it? It occupied my life for most of the last three years."
Dr O’Malley, who was chairman of the company until October last year, said when he left he did not think it was in "such a precarious situation".
"It’s still a shame to lose it. That was the whole reason I did the fundraise."
Ocho chairman Pete Lead said the board, which had only been involved for the past six months, believed the company was unable to trade out of its financial situation and had "no prospect of achieving future profitability under the current business model".
A special meeting would be held on June 26 to consider and pass a resolution to appoint a liquidator.
The decision had not been made lightly, and the board would ensure the company’s 11 staff would continue to be paid until a liquidator was appointed.
Speaking to the Otago Daily Times, Mr Lead said there was no one catalyst that led to the announcement and it had arisen from a "really sober assessment" of its financial position and forecast.
The last year had been their best for revenue, but costs had just grown faster.
The company had taken a few big swings, from trying to get country-wide distribution in supermarkets to being made an Air New Zealand in-flight snack, which would have put Ocho in a very different position had it pulled any of those off.
"But unfortunately, luck was against us".
Ocho was solvent and had been paying its invoices on time until now, Mr Lead said.
The board was making sure it could close the company "with dignity" and make sure people received what was due to them.
After the closure of the Cadbury factory, a proposed liquidation was undoubtedly another blow to Dunedin chocolate lovers, he said.
He hoped someone could step up to continue the brand’s story.
He believed the community would rally behind whoever that might be.
"Dunedin has a legacy and we have the skills and capability within the city - it’s just a matter of all supporting each other and finding a way to make it work."
