YPB/CODEIFAI "CDE")
So, after some 10 years and going through more than $85 million of shareholders funds, (and racking up $85 million plus of losses) CDE report $109,000 of sales revenue for the 3 months ending September 2024. It was not just a bad quarter as for the first 9 months of 2024, they've only achieved $450,000 of receipts from customers. Need we be reminded that they have 3 offices-Australia, China and Thailand, probably 30-30 staff , spent a fortune on acquiring technology companies, patents and R&D, and borrowed and spent like there is no tomorrow and then to come up with such pathetic results (having never once made a profit in any quarter or year), and a revenue and profit trajectory that has gone nowhere but down for the last 4 years.
It says a lot about the ineptness, incompetence and dishonesty of their senior management, especially of the chairperson/CEO and directors who seem to be more interested in spinning out widely optimistic and misleading announcements about how well the company is doing and behind closed doors working out ways to ensure they have their next pay packet covered. Borrow, borrow and borrow more!
In reality, CDE with their anti-counterfeit suite of solutions have a dud product offer that is technically flawed pitched at solving a problem that the market has long forgotten and minimised and not prepared to invest their good money in. The main technical flaw is that the carriers of their exotic microparticles such as inks and tags requires the firing of bright light source (such as the flash on a camera) to detect these micro-particles. They themselves have previously mentioned that of the detection of these micro-particles via a smartphone camera is not up to their standards, especially in harsh light situations implying that being able to detect their micro-particles is neither completely fail-safe nor foolproof, especially when the phone's camera setting is not to fire the flash. The use of a flash is now very minimal given how well modern smartphone can take pictures in very poor light conditions without using their flash feature. It is therefore an inconvenient impost on consumers to select flash setting should they want to check if a product is fake or genuine-they won't do it.
It appears now that even their management has given up on 'flogging this dead horse"-witness their statement in the 4C announcement of their change in direction that they will "focus on strengthening the company's new strategic direction of 'Digital First' with a deliberate move away from anti-counterfeit with material science (tracer, scanner and Motif Micro)" being their ConnectQR and hoping to make another go at it by selling QR codes, and distancing themselves from their horrible past by name change from YPB to CODEIFAI.
It now looks like their acquisition of Motif Micro is going to be an epic failure-not only that they paid around $8.9 million for that company, but since that acquisition running up R&D costs of $3m plus without having a product that they can take to market, except for dribs and drabs, paid for trials that have yet to materialise into anything meaningful, or growing income streams. Motif Micro is still in their books valued at over $5 million, and thus will have to suffer impairment charges meaning further big losses on their bottom line.
With the strategic change in direction announcement CDE will have difficulty holding on to their clients who are trialing or have signed up for the BrandProtect and associated anti-counterfeit solutions when it is doubtful of what support they will receive in the future. It means CDE will take an immediate hit to their revenue at a time when they desperately need to grow revenue which won't be coming any time soon from their ConnectQR offering.
This change in direction will certainly be "transformational" but it won't be in the way CDE wants you to believe. Far from it, CDE is not first to market with many well established players ( to name a few-Scanova, Unitag, Flow Code, Beacon Stac, QR Stuff, Go QR, and Canva) having a significant head start on CDE and who have regularly added features and enhancements to their QR product offers. At least Canva is showing support for CDE's offering.
Since the release to the market of their Connect QR solution in March 2024, CDE tell us that they have close to 1000 subscribers but they won't tell us what it is worth revenue wise. It doesn't seem to amount to much given that for the whole September 2024 quarter they only had $106k in receipts from their customers. They're not telling the market because they are probably embarrassed by how little revenue has come from it.
In coming quarters and even years, revenue growth will not support payback of the $2m loan CDE has taken out, with payback of $250k per month beginning 12 months from now. It will be interesting to watch how CDE trims costs, especially remuneration of their directors and senior management, and how they can afford to run 3 offices.
The evidence of woeful self-serving leadership and management is so apparent. A share consolidation move that reduced shares on issue from around 10 billion to 400 million, only to see in a matter of 18 months, shares on issue then going from 400 million to over 2.6 billion, ensuring that their share price can't get off the floor at 0.1c. Meanwhile they have made arrangements to borrow $2m so they can keep the doors open.
CDE needs a change of leadership and management - JH needs to go.
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