Agreed. This capital raise appears opportunistic following...

Agreed. This capital raise appears opportunistic following significant price rise YTD (194.7%!). Historically they've sold a narrative that one of the big selling points of winning contracts is speed to deliver product. Increasing inventory now will obvious assist this and I can buy the logic of a small nimble startup like DRO selling on this front.

To get precise:
The proceeds raised under the SPP are intended to be utilized for the:

1. build up of inventory to support pipeline of opportunities
2. [scaling the engineering team to accelerate] investment into AI and machine learning
3. paying the expenses of the Offer
4. for working capital purposes

1. Inventory
Cash balance of $56.4 million as of 31 March 2024, no debt or convertibles. Committed supply chain payments for inventory of $35.4 million over the next 9 months So we've committed to building $35m in inventory in 2024 as of today. If sales materialize (and the SP has reflected an expectation they will and at a significant level) then we're certainly going to need the money to build up inventory. Now perhaps as i've said the proposition of winning contracts is more attractive because we can say (a) we have stock or (b) we can have the stock by <x> date - they wouldn't be able to back this up if their cash position was too low. Droneshields unique problem here, it appears, is that they can't get financing to enable this. i.e. a $100m line of credit. I'd need to validate this with management but I believe we will continue to see dilution in lieu of debt. Not great, but as a LTH im used it by now.

2. Scaling the Engineering team
On 29 Feb we noted a new initiative on the development of custom higher performance multi-channel software defined radios (“SDRs”) This will take up a lot of talent on this single project:
"DroneShield presently have approximately 90 engineers in its Sydney facility. It is expected that more than 50% of the engineering team will be involved in this initiative, including Radio Frequency, Electronic Engineering, Firmware, Embedded Software, Data Science, Data, Mechanical, System and Quality Engineering."Hence adding more staff is understandable and shows ambition to ramp up the growth of the company - both in headcount and in product suite.

3. Paying for the offer
Raising the $70m will cost us $4.2m. It'll be higher based on how much is raised via SPP. $5m

4. Generic expenses statement - Not much to say here but staffing costs are sure to go up!

Final notes - Our last Captial raise was in Feb 2023 which consisted of a $10.9m placement and $29.4m SPP. This was done at 30c. They went to market seeking $3m in the SPP but capitalized and snagged the $30m. This was the absolute max available to them. Im not sure what the max they'll be able to raise this time will be - you can look this up but i don't care enough to do so.

I suspect we will be massively over-subscribed but they may look to scale back but i thought that would be the case last time. I'm not a fan of our board selling all their shares, then diluting our shares on what feels like soft justification, but as i noted above we are up 194.7% YTD so....