There seems to be a myth that XPE needed to raise capital at the time of the CN.
There is a big difference between "need" and "want"; it is one of the first things one learns in commerce: mandatory v. discretionary expenditure.
If one subscribes to the theory that a dollar saved is worth more than a dollar raised, taking into account fees and dilution; would XPE have been more prudent to abandon the CR at the time of the CN? Would it have been prudent to cut back on expenses such as the high salaries, nearly $400k in travel in the first half-year, high inventory build-up in JCT... And await a better time to raise? Key word: prudent.
Hindsight would obviously say "yes".
1. The CN has been cancelled and so XPE didn't raise the $10m which was apparently "needed"
2. Marty says in the Q&A here:
http://www.asx.com.au/asxpdf/20161122/pdf/43d2ywycg4npfb.pdf
"The organisations that Xped are seeking to license our technology with, are very large
multi‐national corporations, that expect to see a well‐capitalised Xped, which offers long
term surety to reduce their own risk and exposure."
Here we are 7 months later and what deals do we have with MNC's?
1. Solekai? According to LinkedIn premium, Solekai's staff has halved within the last 2 years.
2. Arcadyan? Possible. But we signed a deal with Arcadyan and it seems to still be in place after the CN was cancelled.
3. Daxatek and Advanced Semiconductor Engineering were signed after the CN was cancelled. That is, XPE was able to sign MNC's without the capital base in place.
The words of XPE v. the actions of XPE.
And
foresight to cancel the CR?
How much foresight was needed?
The SP was at the then low and there was some uncertainty in the market re: US elections. These 2 factors may have impeded a CR. An experienced Director and Corporate Advisor should, in my honest opinion, have been aware of this. What happened next?
The placement with the sophs was cancelled. Why? In my honest opinion because it failed to be filled. Because, honest question: who in their right mind would cancel a soph placement in favour of a CN aka lender of last resort? Here is where it gets tricky though.
Marty says: "Athan has done a great job raising the funding through a convertible note with global fund “L1 Capital Global Opportunities Master Fund” at a premium to the share price. This required the Company to enter a short period of suspension to finalise the agreements, which were being negotiated on the cusp of the US elections. In accepting the $10m facility, the Company decided to cancel the placement and chose to offer an SPP to existing shareholders with a 1:1 attaching option. The company values its shareholders and would rather offer a capital raise via an SPP to its existing shareholders rather than seek additional funds from new investors."
Hmmm... Honest question: Could it be the BoD and/or their advisors thought the CN was a better deal than a soph placement? After all, the BoD was quoted by multiple people at the last meeting that the CN has not been responsible for the SP capitulation. But the BoD cancelled the great deal too.
Side note: as a fun exercise, re-read the Q&A again, then read the latest update. Key bit: Marty talking about ADRC. "I am confident with the team that we have, and with the opportunities OEMs and ODMs that are currently in discussion, that Xped will be able to transition from our MOU deliverables in 2016 through these phases to revenue in 2017."
(20min delay)