Blue Calypso (BCYP), an under the radar mobile shopper engagement platform company, is apparently on the move; shares of Blue Calypso are up a whopping 300% over the last 90 days after a fall from much higher pricing trailing twelve months. It should also be noted that this ramp in equity performance is in the face of a long-standing "going concern"-warning listed in public filings by Blue Calypso. So, what gives? Maybe nothing, maybe quite a bit. In any case, the Blue Calypso story is getting interesting and for now that's enough to get me to follow along.
First, Blue Calypso has had news flow; and in the under $100 million market cap space that helps. Since February 2016 Blue Calypso has reporting the following:
Repaid Debt Tied To An Uplisting Effort: In late-2015 Blue Calypso issued a bridge financing vehicle (via a senior convertible note) that was meant to finance a successful uplisting to a major exchange - at the time (and currently) Blue Calypso traded "over the counter" on the OTCQB. But, shortly after issuing the senior convertible note general market volatility made an uplisting effort not realistic and not optimal. In response - and smartly I believe - Blue Calypso pulled back and pulled out; still though, it had the convertible note on the books. In February it dealt with the note and finally washed its hands of the entire unfortunate effort. By paying the note down and out, Blue Calypso avoided any interest payments and/or dilution - a relative coup considering how things played out. Worth noting as a final thought here, Blue Calypso had/possibly has uplisting aspirations. This will matter when it comes to its ability to raise funds, its marketability to institutions, and to common share trading volume/liquidity. My guess is the company makes a run at a bigger "board" sooner rather than later. We'll have to wait and see.
Private Placement: Following the good news regarding the senior note payoff, Blue Calypso proceeded to raise much needed liquidity via a private placement with "certain investors". With $350,000 in gross proceeds (ex. any additional funding associated with the transaction via future warrant exercise) Blue Calypso now had at least some semblance of visibility into its next "major" round of fundraising. Liquidity is liquidity and the market, at the time, rallied ~25% on the news.
Patent Reversal: From some asking around that I've done - I've chatted with a contingent of existing Blue Calypso investors (including one major shareholder), I've chatted with Blue Calypso management, and I've chatted with a party that's not invested but highly interested in the story - I've come to the conclusion that Blue Calypso equity pricing has to this point been more "patent news" driven than driven by the underlying fundamentals associated with its business. (Blue Calypso has a substantial patent portfolio protecting its intellectual property which it is currently using to defend/make an offensive move in court; actually, a major patent litigation firm is defending Blue Calypso on a pro bono basis - which matters to me). This was never more apparent than in early-March 2016 when shares went on a ~100% run over the span of just days - running from ~$1.50 to ~$3.00. On March 3, 2016 Blue Calypso got news that a meaningful patent decision had been made in court in Blue Calypso's favor. While not pretending to be anything of a legal expert, from what I've gathered form the Blue Calypso 10-K filing some of these patent suits could yield model-altering awards. The big takeaway here, if you care more about the underlying fundamental business at Blue Calypso than the patent portfolio - a case I'm trying to make today - the patent portfolio becomes a cost-free, long-dated CALL option on the company that's associated with equity ownership. Oh yeah, it could also provide the occasional opening to wash shares in an effort to optimize cost basis; neither are anything but net positives to the story.
More recently, Blue Calypso has had news as well - both fundamental and forward looking. Within the last few weeks Blue Calypso has announced that it has retained an investor relations firm - possibly looking to raise investor awareness in an effort to set the table for an uplisting - and more importantly that it has secured a strategic investment with Harold Brierley, Chairman and CEO of The Brierley Group, a loyalty consulting and venture development firm. This "strategic investment", which brought a $1 million windfall to Blue Calypso and substantially solves its liquidity needs for the mid-term, also comes with a few extras. Brierley, who has participated in two prior rounds with Blue Calypso since 2011 and owns ~12% of the outstanding common stock, will provide "senior advisory" services to Blue Calypso and will retain the ability to make a single nomination to the company's Board of Directors.
What I take from this round completion with Brierley is this: Brierley is now millions of dollars of capital exposure deep, owns a significant amount of Blue Calypso, and would make millions if the company's tight float moves higher; it being so tight, the float could move (and has moved) dollars on even minimal viability or market share indicating news. I don't think that Brierley, who is an elder-statesman to be sure, is content to watch Blue Calypso navigate uncharted waters alone - I believe he'll be taking a very active role in business development on a go-forward basis. What does this mean? Again, it could mean a little or it could mean a lot. But it's interesting the what the last five months have done for the company - Blue Calypso is essentially at a "reset point" that few in small-tech get to experience.
With Blue Calypso for the first time in a long time having a firm balance sheet, all things considered, and with Blue Calypso for the first time ever having a direct pipeline to industry contacts across verticals it's targeting (via Brierley), I think Blue Calypso could be (as it recently stated in a press release) at an inflection point. Speaking with management, again I chatted briefly with CEO Andrew Levi, this is something that I don't think will go wasted. Levi, despite having many opportunities to "pump" the Blue Calypso story to me, is reserved, measured, and serious; he's not the type of CEO, at least from what I take from our conversation, that's going to blow a "reset" opportunity. We'll have to wait and see how things turn out, but that's my guess.
I'm not invested in Blue Calypso just yet and have no intentions to do so at this exact moment. But I'm going to watch the story here and see what happens. If Blue Calypso can show operating momentum and the market doesn't move on it, I will. I'm a fan of micro-tech, especially micro-tech with patent portfolios dug in enough to entice major patent law firms to go pro bono; so, I'll be watching.
Good luck everybody.