Since, after expenses, the raising will be closer to $4 million than $8 million;
The directors consider that if $4 million was raised under the SPP and the Overseas Offer, this would have the following effects:
1 - The directors believe that this would severely restrict the execution of the Company’s current business plan and would require additional funding in February 2014. The directors believe this could negatively affect both the Company’s ability, and the supply chain partners’ willingness, to accept orders at the higher 1,000 volume level and to pass on the resulting lower component costs. This would have negative implications for gross margins and the Company’s ability to offer lower selling prices as demand increases.
2 - In response, the Company would seek to reduce both operational and capital expenditure across all its facilities. Engineering cost reduction and research and product development work would be severely curtailed and staff numbers may be reduced.
3 - The directors would seek to increase the Company’s level of cash resources. Potential sources of future funding may include, but are not limited to:
a) Securing debt financing for working capital requirements;
b) Further issues of equity.
Not sure if they have already allocated the proceeds from the sale of the powder plant and the initial funds from Synergy International. Those amounts could subsidise the poor response to the raising and bring us closer to the $12 million originally sought...
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