Norwood raising falls short of target

25/07/2016 - 14:53

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Telecommunications company Norwood Systems says it still has enough funds to meet its development objectives for the coming financial year, despite failing to raise a minimum $1 million in a priority offer which it had previously said would be needed to fund those goals.

Norwood chief executive Paul Ostergaard.

Telecommunications company Norwood Systems says it still has enough funds to meet its development objectives for the coming financial year, despite failing to raise a minimum $1 million in a priority offer it previously said would be needed to fund those goals.

Perth-based Norwood announced a $5 million capital raising last month, which included a $3.5 million placement and a $1.5 million priority offer, both priced at 3.5 cents a share.

The company said at the time that it would need the minimum raising amount to meet its budget for operating expenses throughout FY17, including development and completion of apps and platforms.

Today it announced it had raised $3.5 million from the placement, but failed to reach the minimum subscription amount of $1 million for the priority offer.

All funds received under the priority offer were returned to investors.

However, chief executive Paul Ostergaard said despite not receiving minimum funds from the priority offer, the company still had enough capital to meet its product development objectives for FY17, with $3.91 million in cash on hand as of June 30.

“Whilst we are disappointed that market conditions were not conductive to shareholders via the priority offer being able to take up the same opportunity as placement participants, we are confident in the current and expected financial resources of the company,” he said.

In a statement, the company estimated a 'base case' scenario of $1.2 million in quarterly expenditures but said the figure didn’t assume any material revenue from customers.

It also plans to receive a research and development tax credit refund of about $700,000 prior to the end of the year. 

Norwood shares closed 12 per cent lower at 2.2 cents each. 

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