BRN: Byebye Retirement Nestegg

There are literally hundreds of punters on HC excitedly talking up BRN and dreaming of sweet tendies. Very few however can explain why it should be worth $1b.

I do not think BRN is worth $1b, or anything close to it.

Here are several reasons why in my view BRN is a screaming sell, not a screaming buy, and why I think that anyone putting money into BRN at this level will likely be waving much of that money goodbye.

First, a couple of points on the CEO:

1. …when it hit 40c Isaid what's going on, when it hit 50c I started scratching my head”. – that’s a direct quote from Louis DiNardo himself. If the CEO himself thinks this is crazy, does that not tell you something?

2. Literally just one month ago, DiNardo gave out 37.5m 15¢ options and 37.5m 20coptions as partial consideration for a funding agreement which – even if youignore those options – was extremely low risk for the funder. Those options are today worth some $36m in intrinsic value alone. Either DiNardo knowingly gave someone tens of millions of dollars for free, or he thinks BRN is worth vastly less than its current value. Either way, you have a huge red flag.

Till now BRN has had a miniscule and declining revenue stream. FY2020 revenue was $US13,397, which was an 80% drop from FY2019’s $US66,635, which was itself more than a 90% drop on FY2018. Sure, they’re hoping to soon sell some chips (more on that below). But regardless, looking forward, even the CEO won’t provide a revenue forecast. The most he’ll say is that “investors can expect ‘significant’ revenue in 2021”. He also said “significant depends on your viewpoint”. One can imagine how little revenue would be required to claim the company has “significant” revenue compared to its $13k for 2020.

BRN has a history of talking big and delivering small. Akida was meant to be available commercially in 2019. Then it was meant to be 2020. Now they’re talking 2021. In 2021, will they be talking about 2022? History would suggest that yes, yes they will.

These “big fund managers” that some people point to as validation. Regal put in less than $3m at 3c and started selling that stock immediately. They went substantial and then less than two weeks later, were no longer substantial, because they’d started selling down when it hit 4.5c. Is that the action of a fund manager that thinks this is the Next Big Thing and worth 60c+? I’d say it’s a sure bet that if they have any stock left, they’ve been selling the hell out of it recently. As for Thorney, Alex Waislitz’s best investment was the engagement ring he put on Heloise Pratt. That’s where his bankroll came from – not from being some uber-genius. The other funds that are holding…oh wait, there aren’t any. Does that tell you something about what professional investors, people who do this for a living, think of BRN?

And finally – have you ever seen a company’s share price run up this quickly, and not see that company quickly raise capital? Regardless of the funding agreement they paid $$$$$$$ for a month back, BRN would be mad not to raise now – and I think it highly likely BRN will do exactly that. If it does, that will be at a major discount, and the share price will likely drop to the raise level or close to it.

best,

FD