Ann: Completion of Upsized Underwritten $100m Placement, page-114

Yeah, I considered that. It's a tricky one. They clearly think they can position themselves well with more inventory and working capital. I think it's also likely that they realised from the last sale, done out of inventory, that their customers dont want to wait months for the delivery. If they get an enquiry, and have the inventory on hand, then they might be more likely to get the order. I think they must believe that they can scale themselves rapidly and that the $70m of inventory could quickly be liquidated for $120m of cash (for eg. Cant remember their GP margin). It's not unreasonable to assume that either. If they'd said that, Id probably have figured it was reasonable.

What annoyed me was that they released excellent sales info to the market (no figures, but the Nato contract has strong potential), and then did a huge cap raise, favoured away from their existing holders, and at prices that ignored the amazing news they just released. And because they priced it so cheaply, they were inundated with buyers, so they upped it from $50m to $70m, and then to $100m. What higher potential we get from that extra $50m - not necessarily anything at all.

It was just very poorly done and with no concern for the impacts to their existing base.

That said, the company is still a good potential company. Product seems solid. Orders seem to be be flowing. I like it. It just has high management risk.