In trying to work out where we are it might be useful tosee what, at the time of listing, the directors said they aimed to do, thenhave a look at what they say about things now.
This is what we were told in the “Introduction &Update: Buddy Platform Limited (ASX:BUD) June 2016”
“IntroducingBuddy.
Internetof Things
When companies can access the data their devicesare generating, they get smarter and they make/save money.
We take data that comes “raw” from devices ..: Werun that data through the customer’s choice of data centers
And by publishing special “APIs”, we answerquestions that customers have of their data. Example: “How many De Lorean carsin NYC have their air conditioning turned on right now?
Customers can plug those APIs into “control room”style dashboards. No developers nor BI tools needed.
Or, connect the data straight from Buddy into theworld’s most popular business tools. There’s no quicker way on earth to getdata from “things” into the software that organizations already buy and use.
Best yet,Buddy can send control signals back to devices, so that the Platform can adjustdevices based on the data they generate, no matter how remote. Buddy is a fullycontained automated monitoring and control engine for connected devices.”
And we were also told that there was a second string to our bow becauseit looked like we would make money from the 1.1 million apps which then usedParse on Facebook.
“Parse
Earlierthis year, Buddy announced a collaborationwith Facebook. Facebookshutting down mobile app backend technologycalled “Parse” they bought for ~$85MM (~$150MMpost-earnout).
Over1.1 million mobile apps use Parse to power their applications/managetheir data.
Buddyis collaborating with Facebook to deploy a versionof Parse on the Buddy Platform.Betaversion deployed to production.
Currentfocus is scale &stabilization. FaceBookreports only 3,500 of 1.1MM appshave migrated, expect volume in Nov-Jan 2017.”
And therewas blue sky too.
For an additional sweetener we were told that we had anacquisition lined up in NovedaTechnologies,Inc.which would make “several tens of millions of dollars inthree year revenue.”
Well,of course it hasn’t happened and Buddy has entered a worrying period.
There are a couple of concerns. One is that the instead ofearning “tens of millions in three year revenue” the Noveda deal fell over and no revenue stream has replaced it. The current position stated in the Half Year accounts toDecember 2018 is that
“RESULTS”
The net lossattributable to members of the parententity for the periodended 31 December 2018amounted to $ 8,099,929 (2017:$7,047,817).
[Based on]
For the six-monthsending 31 December 2018, total service revenueswere $1.3 million representinga 55% increase over $834 thousandin the same period in theprior year.
[which meant that]
After deducting total expenses of$9.5million, the Company recorded a loss for the [half year] periodof $8.1 million. In the prior year, total expenses were $8.4million resulting in a loss of $7.0 million forthe same period in theprior year.
[So the loss increased over the previous period. To be fair there are] total assets of $17.6 million and liabilitiesof $885 thousand
[down from]
At 30 June2018, there was $25.9 million in assets and $1.8 million in liabilities.
[We are surviving because] During the six-months ending 31 December 2017, the company generated net proceeds from financingactivities of $26.9 million.
[but]
For the half year ended 31 December 2018 the net cash used in operating activitieswas $7.2 million compared to $4.4million in the same period in the prior year.
[Our cash receipts were very poor during the half yearbecause]
This includes cash receipts of $1.8 million of which $1.7million was cash received fromcustomers with the remainder coming from $115,000of interest received.
The secondconcern is that far from being an IOT leader we are slowlymorphing into a hardware company which sells Ohms and smart lights and not manyof them either.
No one knows how many Ohms have been sold and LIFX has solda mere two million lights in over 100 countries over a three year period.
That’s an average of 20,000 lights per country per annum,which I would venture is somewhat less than what our local Bunnings sells ayear.
So the company is currently making a loss of about$8,000,000 a half year on piddly sales. At that rate it will run out of moneyin less than two years. A further Capital Raising is inevitable.
And the astonishing thing is that it has a current MarketCap over $70 million dollars.
It no longer makes sense.
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