Assignment 1 - Step 3: BrainChip Holdings

When I first opened brain chips annual report, I expected pages of complicated tech jargon, instead I found a fascinating story about a company working on something that could change the way we use technology every day.  Brain chip is an Australian company that designs computer chips inspired by the human brain. These chips are used in smart devices like modern cars, whiteware and security systems. Unlike traditional artificial intelligence a I systems that rely on massive cloud servers, brain chips technology works on the device itself.  This reduces lag, because there's no waiting for data to travel to the cloud and back, it's more private because your data stays on your device and uses less energy which is great for the environment and your battery life. The flagship product is called “Akida” and it's designed for what is known as Edge AI.

What is Edge AI?

Edge AI, refers to artificial intelligence that runs at the edge of the network close to where the data is centred, on your phone, in your car or inside a medical device. Traditionally AI models run in the cloud, which means data has to be sent to remote servers for processing. This causes delays increasing energy use and raises privacy concerns. With Edge AI, devices can process information themselves, for example a car can detect a pedestrian and react instantly without waiting for cloud instructions. A smart home device can recognise your voice even if the Internet is down. A medical monitor can analyse patient data in real time, without sending sensitive information online. BrainChip’s Akida chip is paving the way for a new era of intelligent devices that think quickly, conserve energy and protect your privacy.

That all sounds great right?  Well, it should, this is the general vision from BrainChip founder Sean Hehir, but he would say that. While brain chips technology is innovative the company faces several significant hurdles.  The largest being, it’s still not profitable. In its latest annual report, brain chip recorded a net loss of around US$24 million, despite reporting annual revenue of around $400,000, a 71% increase from the previous year. This growth is encouraging but revenue remains small compared to industry giants and it makes me wonder how long the company can sustain its operations before achieving meaningful sales growth.

While the concept is promising, businesses look cautious about moving away from traditional cloud-based AI systems. Convincing customers to invest in this technology will take time, but as they burn US$24 Million annually, how much of that does BrainChip really have. BrainChip continues to fund itself by selling shares and there looks to be an appetite for it. BrainChip Exceeds Target in Share Purchase Plan - Sharecafe BrainChip Holdings announces oversubscribed share purchase plan

KCQ's from BrainChip's annual repots

The 2024 annual report highlights a significant reduction in employee headcount, from 78 in 2023 to 63 in 2024, which contributed to a 17% decrease in operating expenses. This cost-cutting measure underscores BrainChip’s heightened focus on managing its cash burn rate, a critical priority given the company’s financial position. Despite revenue growth of 72% to US$398,011.00 (that’s right, your boss has a higher revenue than BrainChip), they reported a net loss of $24.43 million for the year. To sustain operations and fund ongoing R&D initiatives, the company remains heavily reliant on equity financing, raising over A$25 million through share sales and its LDA Capital Put Option Agreement. These share sales increased cash reserves from $14.3 million to $20 million, demonstrating that shareholder support is not just important but essential for BrainChip to remain a going concern.

That led to my next question. What is a “put option agreement” and why would LDA Capital offer one? From LDA Capital’s perspective, this arrangement offers strategic benefits. They gain access to shares at a discounted price, which in theory provides an immediate boost to their share equity and providing upside potential if BrainChip’s share price appreciates. It also allows LDA to invest in a high-growth technology company, while getting reassurance that funds are available to keep BrainChip afloat.

In 2024 Gross profit was -$134,914.00, the only year in the 4 years studied, where their revenue from contracts with customers was less than cost of goods sold. My assumption is that the company is continuing to invest in increased production capabilities but the contracts for their Chips have not yet arrived.

Studiosity

This was my first time using Studiosity.  I found it helpful for improving sentence structure and differentiating past and present tense.  I felt it’s use limited for this assignment; a we are encouraged to write in a more reflective tone. That being said, I will use Studiosity in the future, as my writing could use some academic improvement.

Top 3 blogs:

Shelly Williams: https://shellywilliams68984a5875-gytil.wordpress.com/ 

Shelly’s blog is extremely well organised and have high level content. Shelly must have been one of the first live blogs for our unit, which is impressive because in my opinion, it’s also one of the best. Adding a link to the finished assignment Word document, making it easier to receive peer feedback, was a nice touch.

Brooke Mifsud: Home | Balancing Brookes

Brooke’s blog stands out for its professional design and personal touch. Her introduction gives an authentic glimpse into balancing study with a busy family and business life, making the content relatable and inspiring. The visuals and colour palette create a polished, consistent look and her reflections on Brisco Group show depth and practical insight. I particularly enjoyed how her work on Brisco Group gave me new insight into brands I know well from growing up in New Zealand. Brooke combines clarity with creativity, making her blog both informative and enjoyable to read.

Lachlan Ross: ACCT11059 – Lachlan's BlogLachlan’s blog is clear and straightforward, starting with concise introduction that makes it easy to connect with his perspective. His analysis of Hill & Smith Holdings was detailed and insightful, especially the points on sustainability.  I also enjoyed his theory about the shift from hands-on owners to equity investors, it added a fresh perspective on GAAP rules. Overall, his blog is engaging and informative, and adding a few images could make it even more visually appealing.