BTL Group (symbol BTLLF) has retraced 50 percent since it peaked in the first week of June. Many readers reached out asking what to expect from BTL Group’s stock price, and whether we are on track for our 9 USD price target.

The company published financial results on August 31st. They also gave an update (press release) of their technology platform. In this article we summarize the highlights from the financial results, the MD&A and the Interbit press release.

BTL’s technology platform Interbit the company went into a DX Beta version in August of 2017. According to the management “the Beta version sets the goal of demonstrating the developer experience of interacting and building applications directly on Interbit and brings the platform one step away from being launched in a live commercial environment. Interbit has already been distributed to a small number of selected partners who will be providing critical feedback.”

Furthermore:

Further to the June 5, 2017 press release, the Company has seen interest from a now larger consortium in the “go-to production phase” of its European energy trading project. The “go-to production phase” is designed to build on the success of the recently completed European energy pilot and if it proceeds, will seek to create a live, commercial version of an energy trading solution that will demonstrate significant cost savings that can be applied across numerous areas of the energy sector. “The level of interest we are now seeing in the go-to production phase is exciting, but we are committed to keeping the group at a manageable level to ensure we deliver the most value within the aggressive timelines we have set,” said Dominic McCann, BTL’s Executive VicePresident, Sales & Marketing.

The outlook published in the MD&A:

The Company’s roadmap for the remainder of 2017 is to launch the Interbit platform in Beta, upon which the Company intends to run the go-to -production phase of its European energy project.

Other revenue generating energy and finance projects are also now being discussed with our partners.

The revenue, loss and assets over the last 12 months:

• June 30 2017: revenue 43,244 – loss (1,526,288) – assets 3,713,806
• March 31 2017: 329,683 – loss (352,396) – assets 1,435,601
• December 31 2016: 184,079 – loss (635,555) – assets 2,036,283
• September 30 2016: 226,591 – loss (343,617) – assets 1,084,448

Regarding their cash position and cash needs this is what they released in their financial documentation:

The cash on hand as at June 30, 2017, will not be sufficient to meet the Company’s liquidity requirements for the next twelve months. Accordingly, the Company has undertaken financing initiatives which will serve to augment liquidity.

The Company has no credit facilities with financial institutions. Accordingly, its financial instruments consist of cash, sundry receivable and accounts payable and accrued liabilities. Unless otherwise noted, the Company does not expect to be exposed to significant interest, currency or credit risks arising from these financial instruments.

At this time, the Company is not anticipating an ongoing profit from operations, therefore it will rely on its ability to obtain equity or debt financing for growth. The Company may need additional capital, and may raise additional funds should the board of directors of the Company (the “Board of Directors”) deem it advisable.

Note that BTL closed, on April 6, 2017, a non-brokered private placement for aggregate gross proceeds of $3,105,000.

The number of shares outstanding:

• March 2016 15,376,080
• June 2016 15,021,805
• March 2017 18,463,876
• June 2017 17,836,982

How to interpret BTL’s company results and the chart

So that is a lot of information, but, at the same time, these are the key pieces of information. Our take on things:

1. Revenue has come down significantly. That is not good. A starting tech company with losses but strongly growing revenue is a great combination, but increasing losses on declining revenue is a bad thing. It is imperative for BTL to drive revenues on the short term.
2. The company has shown the ability to raise capital. It will not be hard probably, given a strong interest among investors and venture capitalists, to raise the money they need. That should be a plus.
3. The technological platform is evolving, which is certainly great. However, BTL arrived at a critical point: it will become clear pretty soon how fast they can make their platform economically viable. It makes sense that investors become prudent at this stage (read: stock price retraces) until there is a confirmation from customers that they want to pay for BTL’s service.
4. BTL slightly reoriented their platform to become a “blockchain as a service” on which companies can develop. Our technological gutfeeling says this could become booming business but how exactly clients will react on this remains to be seen (customer validation is required).
5. BTL’s stock price bounced exactly at the bottom of May of this year. In May, the stock price exploded when the company released promising news on their Interbit platform. Will it be the different this time? We don’t know but there is certainly a need for promising results, not simply good news but news that indicates customers are willing to pay and/or new orders.

BTL Group arrived at a critical juncture in their technology evolution. The market wants to see promising results of their technological product. That is what we read not only in the documentation of the company but also in the chart.

Long term we strongly believe BTL can be a leading blockchain pure play. Short term BTL has to really prove their platform shows signs of economic viability.

(Click on image to enlarge)