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Buddy Technologies (ASX:BUD) share price down 10% as suspension lifted

ASX 200 investor looking frustrated at falling share price whilst sitting at desk
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Today, a suspension on trading of Buddy Technologies Ltd (ASX: BUD) shares was lifted. In early trade, the Buddy share price fell as much as 16.67% to 5 cents before making a partial recovery. At the time of writing, the Buddy share price is trading at 5.4 cents, representing a 10% fall from its last closing price of 6 cents.

Why were Buddy shares suspended?

Shares in Buddy Technologies entered a trading halt on 28 October 2020 before being suspended on 30 October 2020. Buddy Technologies requested a voluntary suspension of trading in its securities prior to the announcement of legal proceedings concerning an equity financing agreement. An announcement was released today about the legal dispute.

What is the legal claim?

According to Buddy Technologies, it previously entered into an equity financing agreement with CST Capital which was terminated prior to being drawn upon. CST Capital later brought legal action against Buddy Technologies with a notice of the action sent to Buddy’s registered office, however, due to COVID-19 lockdowns, Buddy Technologies did not receive the notice. As Buddy Technologies did not defend the claim made by CST Capital, the court issued a default notice in favour of CST Capital which required Buddy to pay unspecified damages.

Buddy Technologies stated that its legal team was now working to have the judgement set aside and to defend the claim. According to Buddy Technologies, the claim by CST Capital is misconceived and it does not believe that any damages are owed. 

According to Buddy, its business has continued as normal with existing financing partnerships unaffected by the legal issue outstanding. 

About the Buddy share price

Buddy Technologies provides internet of things (IoT) solutions to its clients. It has been listed on the ASX since 2015. 

Earlier in November, Buddy Technologies announced that the final maturity date on the debt associated with its acquisition of LIFX in 2019 had been extended from 30 October 2020 to 31 December 2020.

In the quarter to 30 September 2020, Buddy Technologies had revenue from customers of $7.7 million, up 43% on the prior quarter. Earnings before interest, tax, depreciation and amortisation (EBITDA) were $32,000 in the September quarter, the company’s first quarter of positive EBITDA. Cash on hand at 30 September 2020 was $2.6 million. 

The Buddy share price is up 800% since its 52-week low of 0.6 cents and is up 35% since the beginning of the year. The Buddy share price is up 170% since this time last year.

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Returns as of 6th October 2020

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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