The motivation for this $15 million capital raising is not yet known. As a shareholder it would have been nice to be informed by AXE of the reasoning by now. AXE has always highlighted their strong capitalisation and no corporate debt. AXE will now have approximately $21million in cash ($6.239 million cash on 30/6/21). I can only speculate about why these funds are needed or how they are going to be deployed. Hopefully on Monday, as the ASX is open, all will be explained. I draw your attention to page 9 of this years Annual Report to state the oblivious:
ACCESS TO FUNDING
The Company does not receive any revenue from its operating business and the Company is reliant on capital raisings and the sale of non-core assets to fund its future operations. Therefore, the Company’s ability to continue to develop its technology is contingent upon the Company’s ability to source timely access to additional funding as it is required.
What intrigues me is a sale of a non-core asset for $10 million (which was on the balance sheet for $15 million and has taken a $5 impairment charge) to iTech was not used to fund future operations. This projected to me at the time that their short to medium term funding requirements was secure. This is a good deal for shareholders as it is an in-specie distribution, therefore, a capital return and is tax-free.
What is not a good deal for shareholders is a $15 million capital raising at a steep discount to the last sale at $1.45. AXE last traded at $1.45 on the 9thAugust. In the ensuing 39 trading days there has been 121,739,090 shares traded or more than half the issued shares turned over at a VWAP of $1.984. Not good for shareholders confidence or chartists. Also, given that since the 9th August that 3 of the 4 major patents have been granted with no technical updates and the A1 biochip has entered the national phase in the US, could there have been a more opportune time a do a capital raising?
I am perplexed as to the timing of why they need to raise $15 million at a 27% discount to VWAP of past 8 weeks on huge volume, when the sale of a $10 million non-core asset has not be finalised. What has changed in the past month or two? Maybe Mr English is just trying to earn this years pay rise?
(20min delay)