AxisMobile has admitted that it requires more cash.
The shares slumped 26p to 6.5p following the announcement. That values the company at £1.91m so any fundraising would be highly dilutive.
AxisMobile’s technology enables people to see their emails on their mobile phone. It has won a number of contracts with mobile telecoms companies but revenues have been slower in building up than expected. The revenues that have been recognised are also proving more difficult to collect. The cash position has “momentarily deteriorated” according to the company.
The company borrowed $2m in January but it needs to find further finance from somewhere. It admits it doesn’t have enough cash to get to breakeven. The interest rate on the loan is LIBOR plus 5.5%. There were warrants issued in relation to the loan which were exerciseable at 25p a share – so they don’t come into the equation at the current share price.
A fundraising from “strategic investors” is one solution the company puts forward. An alternative is the disposal of all or some of the company’s assets. It will be difficult to get a good price for the assets if the company is a distressed seller.
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