14 February 2019 – Adelaide, South AustraliaBuddy Platform...

14 February 2019 – Adelaide, South AustraliaBuddy Platform Limited (BUD.ASX) (“Buddy” or the “Company”), a leader in IoT and cloud-basedsolutions for making spaces smarter, refers to its announcement dated 6 February 2019 ("LIFXAnnouncement") in respect to a binding agreement and plan of merger to acquire 100% of the issuedshare capital of leading smart lighting technology company, Lifi Labs, Inc. trading as LIFX ("LIFX") ("LIFXAcquisition"). 

The Company refers to its statement in the LIFX Announcement that "it has applied for a waiver ofListing Rule 7.3.2 to permit the Earnout Shares to be issued more than three months after the GeneralMeeting" and wishes to provide the following update:

● it will not be seeking a waiver of Listing Rule 7.3.2;
● the Earnout Shares will be issued within the Company's existing 15% capacity under ListingRule 7.1; and
● shareholder approval will not be required for the issue of the Earnout Shares.The Company notes that the maximum number of Earnout Shares to be issued, based on theminimum price of US$0.07, is 7 million.Shareholders are advised that completion of the LIFX Acquisition is subject to the satisfaction and/orwaiver of certain conditions precedent including Buddy completing the acquisition financing andobtaining all requisite shareholder approvals (refer to the LIFX Announcement dated 6 February 2019).

OTHER UPDATESBoth Buddy and LIFX have been thrilled with the messages of support and congratulations from majorretail and platform partners, subsequent to the LIFX Announcement. Buddy and LIFX are pleased toprovide the following updates to shareholders:

● LIFX has achieved a “best-ever” January in 2019, with last month being the first January in thecompany’s history to exceed over A$3.4 million in (unaudited) revenues (over A$4 million ingross revenues, ie: revenues before deductions)

● January (unaudited) revenues for LIFX were in line with the vector required to deliver growthconsistent with prior years (being 70-100% revenue growth year on year since 2015)

● Best Buy in the U.S. significantly outperformed expectations in January

● Preliminary integration work has begun between Buddy and LIFX, with the first visit by U.S.LIFX staff to Buddy’s Seattle officeIn addition, Buddy also wishes to provide the following additional information and clarification inrespect of the LIFX Acquisition:

● The Company’s A$15.1 million in cash (as of 31 December 2018; refer to the Appendix 4Cannouncement dated 1 February 2019) will not be utilised to fund the Cash Consideration orpay down the LoC under the LIFX Acquisition, ensuring those funds are available to fund theworking capital requirements of the combined company

● As part of the debt financing currently being negotiated with debt financiers, the Company willprocure a trade finance facility to fund the costs of manufacturing the LIFX product range, toensure that manufacturing costs of LIFX products need not be borne out of the Company'sexisting cash balance. The Company notes that it is market standard practice for vendors ofproducts like LIFX to employ rotating lines of credit or other trade finance facilities to fundmanufacturing costs in advance of receiving payment for those units

● LIFX reiterates that it is targeting achieving profitable operations in CY2019 and the Companynotes that unaudited revenues and EBITDA for Q2FY19 were A$17M and A$284k respectively(before any contractual reductions for out-of-the-ordinary matters). This includes (A$1M) ofEBITDA from US region import tariffs that were applied since September 2018, and soaccordingly Q2FY19 would have been more profitable were it not for those tariffs

● Subject to shareholder approval, both Buddy CEO David McLauchlan and Buddy ChairmanRick Borenstein will each subscribe for A$150,000 worth of Shares under the Placement.