Dotz Nano is making less money than ever and investors are p*ssed
Dotz Nano (ASX:DTZ) investors are peeved: the company released its annual report today and despite a massive drop in revenue, director fees are still going up.
Full year revenue fell by 86 per cent to $US15,395 ($22,000).
But share payments to employees, directors and corporate advisor Otsana Capital tripled, to $US1.5m; total director and senior management remuneration rose 72 per cent to $US2.2m (including payments to individuals who have resigned).
The company made a $US5.7m loss in 2018, a major blow for a company that was supposed to have commercialised its nano-dots tracking and identification technology in 2017.
The stock was down 7 per cent to 7.7c on Friday afternoon.
In an interview with Stockhead earlier this year, Dotz’ new-ish CEO Uzi Breier said the company was turning a corner.
But he’s got his work cut out to make people believe that.
At the start of January, Dotz made its “first” sale into the plastics industry.
But investors with long memories will know the company signed a deal to sell into that sector two years ago.
So should shareholders believe this announcement? Or the first one? Or, indeed, any that have come in between?
Dotz has suffered a trust deficit with investors since an unfortunate event last year involving a deal — subsequently cancelled — directors vesting their performance shares on the back of it and then having to cancel them once the ASX stepped in to say, sorry, the deadline was actually yesterday.
Mr Breier said the plastics deal to an unnamed Swiss firm for $US100,000 was the first under the new strategy.
He promised Stockhead that investors can expect more like it within the next six months, and indeed the company followed up with a $300,000 deal with an unnamed company doing lubricants at the end of January.
In November 2017, Dotz signed a formal contract with a company called ColorPlastic that promised $300,000 of sales a year, conditional on specific purchase orders for dots-enhanced products.
Dotz also signed a deal with a Chinese company called CisticPoly that claimed they had a minimum commitment to buy $2.5m worth of dots in 2018, and $15m over two years.
The out in this contract was that sales were conditional on CisticPoly or any of their clients approving a product including the dots — this also never occurred.
The company confirmed to Stockhead no sales were made through either contract.
The final nail in the coffin carrying shareholder trust was a $10,000 contract with a US company called Pflaumer. It was signed in May last year and cancelled in July.
The board claimed this deal meant they’d hit a milestone giving them 132m performance shares — except they got the date wrong. Those shares expired the day before they signed that deal, not two weeks later.
At least three other MoUs and purchase agreements have largely failed to materialise into sales and money in the bank.
Mr Breier drew a line under the more than six MoUs, pilots, commercial-deals-with-conditions and contracts signed before he joined in mid-May last year.
“I don’t think new deals will come out of these arrangements,” he told Stockhead.
“Some of them are still alive… sometimes when you start having direct conversations with customers, sales can follow.
“Theoretically it’s still there but I don’t have high hopes that [the past] strategy will work.”
He said this was because the prior strategy was to sell via distributors and the dots, nano-technology that can be added to all kinds of products from olive oil plastic to track them, were too complex to be sold via third parties.
But given the ugly mutterings online about Dotz being a “lifestyle company” for the board, Mr Breier has his work cut out to revive the excitement of 2017, before shareholders began feeling like they were being taken for a ride.