Home > Latest News > LIFX Not Very Smart, False Revenue Claims, As Supplier Sells Components

LIFX Not Very Smart, False Revenue Claims, As Supplier Sells Components

Part 2: The resignation of three directors at any Company will raise flags, but for Amazon, JB Hi Fi and Harvey Norman, supplier LIFX which is owned by Buddy Technologies, the move has thrown the supplier of IOT devices and smart light bulbs into a tailspin with questions now being asked about their future with the Company admitting that they are currently facing major supply problems.

Buddy Technologies chairman Rick Borenstein recently accepted the resignations of non-executive directors John van Ruth, Alan Robert Sparks and Rosemary Batt.

Back in in late April the business issued a statement to the ASX after serious questions were raised about sales reporting and the Companies financial health, they admitted in statements to the ASX that their key supplier in China sold stock which the Company claims was set aside for the LIFX manufacturer.

Currently Buddy Technologies the owners of LIFX are trying to raise at least $6.5m from shareholders as part of a multi-pronged plan to remain solvent.

The move comes as several new brands such as Monster move into the IOT market.

“LIFX is seen as an expensive brand with several competitors offering cheaper solutions and superior technology,It’s as if they see themselves as Philips” said one retailer.

The Adelaide based business whose LFX offices are based in Melbourne, has spent the last 18 months pushing into the US market with a lot of success with deals at Costco, Target, Walmart’s Sams Club, Best Buy and Amazon according to Company executives.

Now ASX investigators are questioning the Company due to admissions that information contained in some of their statements were not correct.

BUD who describe themselves as a leader in IoT and cloud-based solutions has admitted that their March 2021 financial accounts was “incorrect”.

They claimed that March 2021 was on track to be the Company’s highest revenue month ever, with revenue expected to be more than double 2020.

They also claimed that March revenues were expected to exceed the combined holiday revenue for November and December 2020 and that this period would deliver that highest monthly “positive” EBITDA in

the Company’s history.

The Company was then forced to admit when challenged, that the statements were based on erroneous information and these milestones were ultimately not achieved.

The Company advises that customer revenue for the March 2021 quarter was only A$5.0 million.

One industry executive said, “This is nothing really especially when one is selling to Costco, Target, Walmart’s Sams Club, Best Buy and Amazon in the USA and the likes of JB Hi Fi and Harvey Norman in Australia”.

We can also reveal that while the Company was in the recent trading halt, the LIFX supply and operations team were notified by their Chinese manufacturer that an entire production run’s allocation of a critical semiconductor component for the Company’s smart lights which was being held for LFX products  had been sold to a third party without the Company’s knowledge.

It’s not known whether this was because the Company had not paid for the components.

The Company claims that as a result and because of the lack of a required LED driver chip component, the Company’s manufacturing operations  was halted until further notice.

The board of the Company claims that the “This introduces a material uncertainty as to the Company’s ability to manufacture the products needed to meet the Company’s revenue and earnings guidance for H2 FY2021. As a result, the Biddy Technologies Board has withdrawn all guidance.

The Company has admitted that they have “Never faced a component shortage that has brought manufacturing to a full pause”.

The Company has had teams in Melbourne and China searching for alternative components from other suppliers with executives now claiming that they have found new suppliers.

Observers have told ChannelNews that this sort of move could take months to resolve.

Based on volume shipments of product for the year the Company advises that it is slightly ahead of its supply forecast.

One shipment did arrive in May and that has been distributed to stores the Company claims.

The Company claimed that that, as of 31 March 2021, the Company had A$5.2 million of inventory on hand and received an additional A$3.9 million of inventory in April 2021 (with an additional A$1.3 million of inventory in transit).

At historical margins, this inventory has a maximum sales revenue value to the Company of approximately A$14.8 million.

The Company said that “Given these recent developments, the Board is continuing to closely monitor the Company’s expenses and cash flows and will remain diligent with respect to the careful management of expenses that was initiated at the beginning of the COVID pandemic”.

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