Something doesn’t add up at IOT and the ASX wants to find out what that is
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The ASX is side-eyeing a series of deals made by smartwatch/selfie drone/blockchain company IOT Group (ASX:IOT) over the last year, and the people behind them.
The market operator wants to know just how much of the money IOT promised its long-suffering shareholders has arrived, and why it’s signed deals with three companies all associated with one man.
In a five-page, 14-question letter to the company, the ASX demanded answers on everything from how much cryptocurrency IOT holds and how much it’s worth, to exactly why it was holding back initial coin offers (ICOs) that — IOT said — were worth $6m to the company.
IOT Group tried and failed to sell digital TV subscriptions, smartwatches and selfie drones before getting into the blockchain business in April 2018.
But it’s been even worse at blockchain than it was at selling selfie drones, making exactly $3713.30 from that sector so far according to its response to the ASX, despite promising millions of dollars in revenue.
IOT signed a power offtake deal in April 2018 with a group looking to revive a defunct Hunter Valley power station to create a “Blockchain Applications Centre”.
That was followed by four deals reliant on that happening — one of which the ASX didn’t query — two in its new guise as a cryptocurrency “advisor”, and two under its old Internet of Things (IOT) persona.
The ASX asked for copies of nine agreements from April 2018, background checks on directors and shareholders in three of them, and evidence of due diligence on all of them.
The deals reliant on the Redback power station were Abacus Mercantile and Crypto Mining Australia as clients for the site, and Lakeba Corp and Royalti Blockchain Group (RBG) as service providers to said clients.
Crypto advisory deals with RBG and another company called Enigma Mining followed.
Other deals were made with NetObjex to work on IOT ideas, one to buy a pool chemical analysis device, and another to provide IOT consulting to a property developer called PropertyBay.
Before this series of deals were completed, founder Sean Neylon sold all of his stock in the company in October 2018 and then resigned from the board in February this year.
Of these deals, a Timothy Sommers is the sole person behind the pool analyser and Enigma Mining — which signed a deal, announced to the ASX, with IOT two days before it was even registered as a business.
He sits on the board of PropertyBay, incorporated as a business in May 2018, alongside IOT founder Sean Neylon. In its query letter, the market operator pointed out that both Mr Sommers and IOT’s new CEO Mark Roper list themselves as cofounders of RBG on LinkedIn.
The ASX also noticed that PropertyBay and IOT share an office, as reported by Stockhead in February.
IOT said Mr Sommers introduced himself via LinkedIn in April last year, a day after they announced to market the Hunter Valley arrangement, and has “extensive experience” in both the Internet of Things and blockchain.
He introduced the above deals to IOT.
From all of these deals IOT has made $271,731: an online crypto-miner access platform has delivered almost $4000 to date and PropertyBay had paid about $268,000 by the end of December.
Hunter Energy CEO Jim Myatt confirmed to Stockhead they’d exercised their option to buy the Redbank power station and were looking at six to nine months of planning, with commissioning expected in 2020, so if the the Blockchain Application Centre happens it’s still a long way off.
But an alleged $6m worth of cryptocurrency hasn’t been paid.
IOT said its initial coin offer advisory deals with RBG and Enigma still haven’t started because of the rubbish market for ICOs.
As Stockhead reported at the time, IOT was promising its shareholders large returns from these deals — $5m in the case of RBG.
RBG was supposed to pay out five million tokens valued at $1 each, and Enigma another five million valued at 20c each.
While IOT has a piece of paper from each company saying they are the proud owner of a total of $6m worth of tokens, they are worthless until they’re listed on an exchange via an ICO.
Enigma was also supposed to pay 10 Bitcoin a month for advisory services.
In October last year, IOT blamed unnamed “Australian authorities” for a six-month delay in getting these tokens to market, introducing a new factor: the only possible way they could be listed was on a regulated token exchange.
The need for a regulated exchange to list the tokens was not a factor in the original announcements.
This article was updated on September 6 as it incorrectly stated that former IOT director Ian Duffell was on the board of PropertyBay.