Could selfie drone maker IoT Group do a mid-flight U-turn?

After a challenging 2016 and an odd decision to bring on a New York fund manager as chairman, IoT has signed retailer marketer Steven Kayalicos as chief executive.

Mr Kayalicos is the founder of The Product Group, the exclusive Australian distributor of IoT’s AirSelfie drone.

Mr Kayalicos is a mate of IoT founder director Sean Neylon, who told Stockhead their relationship goes back 20 years.

“He nestled into this position,” Mr Neylon said. “I have the greatest respect for him… and often ask his advice.”

Mr Kayalicos architected a deal to sell the device into Telstra stores, and the company intends to leverage his connections across the Australia and New Zealand retail sector.

He has managed or been a director at retail distributors including shoe store Steve Madden and Directed Electronics Australia.

IoT Group’s main focus is the US, where this year it’s cut distribution deals for its earlier ROVA drone product with seven North American retailers.

“The obvious choice [for chairman was someone] who can support us in financial area in the US,” Mr Neylon said.

“The biggest problem with this company is if we go and do a deal with Best Buy [or] Walmart [or] Bed Bath & Beyond, and the shareholders in Australia say ‘who are they’?”

Mr Neylon would not comment on whether IoT Group was considering a US listing, but did say they wanted to drum up money in the US, leveraging deals with the likes of Walmart.

IoT was also looking for bolt-on acquisitions that could add immediate revenue streams.

But those efforts look like taking longer than expected.

Yesterday IoT announced a proposed acquisition — which sent the company into a recent trading halt — would not proceed.

An option to buy US hoverboard company Cutting Edge also fell through in November.

Mr Neylon hinted the  deals were not passing basic due diligence, or the terms weren’t right.

“I think we should not be shy. We’re a startup so we should be trying to be aggressive [with acquisitions],” he said.

A recent drastic cut in headcount costs – $1 million in the first quarter – was due to a strategic shift in November, he said.

“The past management, under [ex-CEO Simon] Kantor, were tech guys who spent money [on product development],” Mr Neylon said.

“In November we went from being a tech business to a distributor.”

A decision was made to focus on revenue.

Mr Kantor was sacked in September last year after a lawsuit by shareholders in his former company ROAM accused him of selling the company into IoT Group without their knowledge or approval.

IoT Group was formed in a reverse takeover by ROAM of Ardent Resources in March last year.

The case was settled in November.

A second threat of legal action in January 2017 from International Media Distribution, Overlook Management and MySat — who alleged that an IoT Group legacy subsidiary sold their media content, via the Internet without being licensed to do so — has not eventuated.