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CyanConnode – argues “confidence in a strong performance”, but set for cash crunch ahoy AGAIN?

By Steve Moore | Thursday 13 July 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


CyanConnode (CYAN), which describes itself as “the world leader in narrowband radio mesh networks”, has updated on the first half of 2017; “a busy period for the company with key existing relationships strengthened and the company's global reach enhanced”. Sounds encouraging, so why are the shares currently lower at 0.15p?

Financial Highlights Revenue for the period was in line with management's expectations at £0.6 million”. You what? £0.6 million? Not much for “the world leader” and, despite £1.1 million of customer payments collected, “as of 30 June 2017, net cash was £3.1 million compared with £3.9 million at the end of the financial year to December 2016 and £2.4 million at the end of June 2016”.

The actual cash burn story is however far worse than this suggests as the second half of last year included a net more than £8 million cash inflow from new equity after acquisition of subsidiary and the first half of this year has seen a further £3.2 million raised.

Cyan though argues “the order book (£21 million, in addition to anticipated £25 million of software licence and support fees from UK smart metering contract) which the company will commence delivering on during the second half, new opportunity pipeline and growing global presence underpin management's confidence in a strong performance during the remainder of the current financial year and beyond”.

Hmmm. It certainly needs to commence delivering a strong cash performance from the order book otherwise it looks set for cash crunch ahoy again! As questioned then, just how frequently does this company require support on the ‘journey to commercialisation’? Caveat emptor. You’re warned again.


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