Mobecom: Reversal from Crypto Investment, Is it a Good Sign?

Mobecom: Reversal from Crypto Investment, Is it a Good Sign?

On 9th January 2020, Mobecom Limited (ASX: MBM) announced to reverse the prior investment made in the AirCrypto platform through the binding Share Sale and Purchase Agreement with Lakeba Ventures Pty Ltd. The AirCrypto Platform is a blockchain cryptocurrency exchange platform developed to aid airBux app to convert cryptocurrency it holds to buy the goods and services or any application across the participating merchant of airBux.

MBM made an announcement on 13th May 2019 regarding the acquisition of 51% interest in AirCrypto through issuing 9,945,650 ordinary shares at the price of $0.101 per share to Lakeba along with 50% share in the gross revenue of the AirCrypto Platform as royalty. And in line with the recent reversal announcement, Lakeba has agreed to cancel the above 9,945,650 shares in the Company depending on shareholder approval and independent expert opinion on the transaction.

To know more about MBM offering please read: All that investors need to know about Mobecom’s Primary offerings - Paid by Coins and airBux

Why MBM Announced the reversal of Investment in AirCrypto?

To understand the decision let us gauge through the historic strategic choice of the company. At the time of investment in airBux, the company’s long-term investment strategy was to develop the Direct to Consumer (D2C) business. However, in due course of time the strategy changed and in June 2019, Mobecom shifted its focus to Business to Business (B2B) instead of Business to Consumer (B2C) segments.

The paradigm shift in strategy happened when the company realized simple and considerate revenues post the new contract to Nedbank Limited, a leading South African Bank. The contract would allow Nedbank to integrate airBux Enterprise Engagement Platform (EEP) in their corporate mobile or desktop applications to facilitate the launch of a new and enhanced loyalty and rewards programs to its customer base. The signing of airBux EEP with Business to Business to Customer (B2B2C) scheme has proven to be successful with one of the biggest financial services company. The contract is expected to generate several hundred thousand dollars in FY20 from its SaaS licensing.

Additional Strategy Toward MBM Revenue Growth

As of June 2019, ended quarter the company planned a reduction in operating cost in FY20 apart from generating revenues from client’s platform. In line with the cost reduction strategy initiated by the Company to increase the revenue growth and achieve breakeven on a monthly basis in FY20. The initiative toward cost reduction delivered positive outcome with the improvement of 30% in operating costs in the next quarter i.e. September quarter.

In the milieu of which the company carried out major restructuring exercise closing four of its Singapore subsidiaries and they are: -

  • Airbux Holdings Pte Ltd
  • Airbux Singapore Pte Ltd
  • Lifeiq Pte Ltd
  • Onit Media Asia Pte Ltd

Also, the company appointed two liquidators to liquidate two of its Australian subsidiaries i.e. IQ Awards Pty Limited and Endless Awards Pty Limited. Apart from the above, Mobecom has also shown an intention to shut down the Airbux Cloud Currency Pty Ltd, a non-operating South African subsidiary.

The restructuring decision is expected to result in lower finance, accounting, filing and audit fees and thus attaining a significant reduction in operating cost, a move toward the company’s plan to achieve breakeven in FY20.

Reversal from Crypto Investment, Is it a Good Sign?

The decision made by the company is not exclusively concerning Bitcoin or Crypto investment but toward the long-term strategy of the company. In fact, 2019 has been the profitable year for Bitcoin and prices recovered 4x from dramatic fall in December 2018 to maximum in June 2019 at USD 12,920.54.

Presently, the price of Bitcoin is around USD 8090 as of (AEDT: 2.28 PM) 13th January 2020 as shown below.

Source: Thomson Reuters

However, it is pertinent to note that the Cryptocurrency is yet to be developed or still need momentum in direct customer market to be beneficial and generate revenues to meet the breakeven point of the company. The Bitcoin has also demonstrated significant rally with gold prices showing correlation of above 62% in 2019. The recent recovery of prices with incremental trends portrayed Bitcoin as a good alternative to gold.

Good Read: Bitcoin: A Year ASX Journey and 2020 Outlook

CEO views on the reversal announcement of AirCrypto

Stock Information: Trading suspended in July 2019 due to the noncompliance of ASX Settlement Operating Rules related to the suspect of transaction breaches of chapter 10 of the listing rules. The share last settled at AUD 0.042 on 26th July 2019.


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