Ann: ResApp Successfully Completes $7.5 Million Capital Raising, page-59

"I find this raising distasteful" – You too? So do I.

I emailed Brian and Tony, which provoked a reasonably forthright telephone conversation, which in turn provided a bit more perspective about why a CR and why do it this way. This is my understanding of Brian's comments:

1) Working capital was sufficient only through to early CY2019. And while there are potential revenue sources, nothing is guaranteed at this point. There isn't enough time to rely on being able to stitch up an income.

2) Liquidity was way too low against the market capitalisation of the company, which meant waiting longer to raise would put the risk profile outside the guidelines of potential future backers.

3) A placement is faster, cheaper and less risky than a rights issue. A rights issue has to be held open for several weeks. If the share price were to drop below the issue price during that time the issue could fail to raise the necessary funds, with repercussions for operations and subsequent capital raising activities. On the back of recent price action, retracement seemed a big risk.

4) The reference to "high-quality" investors relates to new investors with a similar strategy to Fidelity, who have solidly backed the company since taking up their first stake.

So I still don't like it... but given that the raising is done, was successful, was necessary, wasn't too dilutive, and if we succeed with Smartcough-C2 may be the last one we need... I can live with the decision.