Buddy Technologies the manufacturer of the LIFX smart globe and various smart house systems has reported that losses have more than doubled from $6,641,141 to $12,538,835 after the business was caught out by the ASX fudging their revenues in Australia.
The $5,897,694 increase in losses comes as the business moves to launch new products including a LIFX Smart Switch 2-button Glass light switch.
Priced at A$109.99 the product is manufactured by a “new” Chinese Company after their previous supply sold components meant for the Australian Company after they failed to pay his invoice.
Margin in the new product is set to exceed 40% according to the Company.
The Company said, “The release of this new product forms an important pillar in the Company’s commitment to grow margins, diversify its supply chain and grow further its business into trade and wholesale channels”.
David McLauchlan CEO & Executive Director has admitted that COVID has caused major problems for the Company as well as having a “significant impact” on their supply chain.
As a result of the slump in profits and their failure to supply retailers the Company has moved to what McLaughan describes as a “disciplined cost cutting effort”.
This saw staff at their Melbourne offices take “voluntary pay cuts to help the Group see its way through the pandemic” claimed the CEO.
He added “We reduced our office space, cut travel expenditure, trimmed back engineering programs where we could, and focused even more aggressively on channel costs, promotional expenditure and margins”.
The cuts were implemented as Hardware and DIY stores as well as the likes of Harvey Norman and JB Hi Fi reported increased sales and demand for smart home products and demand in the category soared, in some cases was over 100%.
“Regrettably, for reasons tied to both our supply chain and financing, we were unable to meet all of that demand due to inventory constraints, but nonetheless saw strong customer demand for smart lights that industry tracker NPD subsequently reported as being greater than 100% growth year on year” McLauchlan claimed.
He also admitted in filings with the ASX that the business had been refinanced and that their term and rotating debt facilities had now been “placed with a new partner”.
That partner is PFG.
McLauchlan said that as a result of the refinancing, the business had between November 2020 and January 2021, “ordered more product than they had in the prior 3-month period. In order to replenish key retail partners and get product back on shelves”
This involved the business air freighting some products into Australia.
Another issue faced by the business was multi-packs.
In 2020, the business experimented with selling 2-packs and 4-packs of their most popular products and pricing them in such a way as to encourage upselling a customer from a single light to a 2-pack or from a 2-pack to a 4-pack.
They claim that consumers are now “Swinging meaningfully over to multipacks”.
The Group has decreased payables and total borrowings by $4,132,542 while also decreasing intangible assets by $8,800,000.
