Yes but is NTQ likely to be a beneficiary of those types if they do their fiduciary duty diligently? |
The point on IHT was just that if the chancellor removes the IHT attraction of (some) AIM holdings then that will remove one of the sources of funding (i.e. institutions offering IHT-mitigation portfolios and HNWI looking for IHT mitigation) and so make the funding environment even more difficult. |
How long it takes to announce they have reached £500K from retail, if they do, will be interesting. Won't be too easy but they had no problem for the £1.5M from deeper pockets.
> 72K investors, many probably at very low holding value. |
Always an IF and RISK.
I doubt IHT comes into it if they achieve a decent % of the potential growth.
Get 50 off into the market and watch the price respond.
The life of a tool can be 7 years, they will be building a cash generating asset base.
There are not many opportunities to get a rentable into a large market at a lower cost of ownership than incumbents at £12.5K per month where mid and smaller customers are asking for an alternative to the big boys.
If it works and is reliable I think they will see product pull from customers and may not need to go overboard on sales costs. |
The issue is cashflow though, isn't it? If they run out of cash it's game over and if they need to flog IP to keep going then they may not get anything like "fair" value. The track record of apparent continuing delays in getting SABER to commercial sales doesn't help sentiment here imo. Nor does the recent experience of relatively bullish finals followed a month later by a heavily discounted raise.
And liquidity is generally awful, so if you buy more you may struggle to sell them if you change your mind.
I may still participate, I'm not ruling it out, but I need a bit more soak time on this one. |
Current market cap is about £3.58M.
109M shares at 5p is about £5.45M.
Do you believe the current market cap is as much as this is worth or that £5.45M is about it or even a discount to the real value?
I think the current £3.58M is too low. |
 I think it's just a very difficult environment in which to raise money for AIM companies at sensible valuations. That's probably not going to change for the better if the chancellor clobbers IHT relief in the budget.
It appears you can already buy in the market at 5p, although I don't know what volume is available. I haven't decided if I'm going to participate yet. If I do buy more, I would rather buy direct from the company so that they have the incremental funds, but if the price in the market dips below the placing price it seems a bit silly.
If they can get an RNS out in the near future confirming receipt of $100k and the start of commercial operations and/or an additional financing announcement, then the price may well react strongly. If they really thought either of those was imminent though, surely they would have waited until they could announce it alongside the equity raise? Unless there's an end-1H going concern issue? Or even an IHT issue - some participants' support dependent on getting it done before the budget?
If they can't get a positive announcement out soon then it feels to me like the path of least resistance is probably down. |
For all we know they have some news in the wings for after this raise is done. Looks like they had no problem getting £1.5M, granted it is small beer.
TBD.
Would like to see this little UK company fight back and surprise everyone. |
Yes, fully expect they will need to. They can't hang about once they have a proven product.
It's full steam ahead and I would expect growth to swamp cost of finance.
The best outcome might be equity stakes taken by some "multi-national, large regional service or directional drilling companies" as then they have captive customers that would share in the success of SABER and align with guaranteeing having customers/sales.
IF THIS WORKS it will be a very useful company to own.
Do you envisage a future raise being at a lower valuation than today?
They may not even have to raise much at £75K per tool to do the 40 to make 50.
The £75K is small batch build of 4 off.
Sales and Marketing will need funding. |
Remember they're talking about wanting to raise more funds by 1Q though, and having to scale back ambitions if they can't.
"In addition to any funds potentially raised in the Retail Offer, to fund further fleet expansion, increase the build of tools for sale, and extend the cash runway, the Company is working to secure additional financing options, which the Directors believe may in future be from debt, industry partnerships or technology licences, with the partnerships and licences being with multi-national, large regional service or directional drilling companies. Should such additional financing not be available in the first quarter of calendar 2025, the Company would reduce its spending plans, in order to extend its cash runway." |
Management have a decent amount invested here, success is very much in their interest.
The whole offer reads as transparent and honest and pleased to see an offer to already existing holders rather than those holding by some future date.
If IP value is to be believed, that's a conservative £18.8M alone.
I'm thinking along the lines of valuation responding as soon as it's proven the only bottleneck to profitable growth is the fleet size. If that happens they should have no problem raising to build a fleet of 50+ at a higher valuation than today and that could happen well before 2027 (needs to). It will raise the hackles of competition. The faster the fleet build, once proven, the more of a threat to the status quo. A trade sale exit looks very possible imho.
No guarantees, dyor etc.
GLA and take care. |
Mind you, their future revenue forecasts are a complete work of fiction. Cavendish have absolutely no clue as to the size and timing of initial contracts, and a few months' difference one way or the other will have a huge effect on the income statement and hence on when profitability is first achieved.
So as usual, it's a question of focusing on the big picture and ignoring the little hiccups that may occur along the way. |
This is after having kept their figures under review for well over a year, maybe two. |
That may be true but there are plenty of profitable, cash generative AIM companies to invest in.The significant majority of these speculative cash burners will dilute you to death, I believe... |
Cavendish have produced a note with some forecasts out to profitability in FY27 and a number for the IP valuation. |
Then no one would ever buy most AIM shares. |
Not just in the IMC presentation pimbake. It was also in the finals.
"Cash flow forecasts prepared up to 30 September 2025 show sufficient cash resources to enable the funding of working capital, completing the testing of the SABER tool fleet and the completion of the build of the initial set of SABER tools in the fleet to enable the generation of revenue from this new technology."
Their getout perhaps is that they're now talking about some expansion, although it feels like it's really down to delay and more realistic assumptions about when they can actually land paying customers.
"The net proceeds of the Placing and Subscription will allow the Company to expand the current fleet of SABER tools to 10, provide demonstrations to prospective customers and for field-trials and provide additional working capital support and to strengthen the balance sheet." |
I think I'm going to skip the AGM today. With the fundraise just announced they're going to feel more constrained than usual in what they can say, and I'm not sure what there would be to say anyway other than a bit of colour around the delays in Australia. |
Not really surprised by the raise in general, but more by seemingly rock-bottom price of 5p. Not sure who determined that price but what a huge discount to the value the board itself believes Enteq is actually worth. I recall the mentioning of 'multiples of the market cap' during the InvestorMeet presentation just a month ago (which was also based on a recent valuation of the IP I believe) when Enteq was trading at c. 8p, so feels very strange to raise funds at 5p a couple of weeks later. I also noticed nothing on the basis of the 5p in the announcements of today, might be good to ask some serious questions on that.
From that perspective, this offer price is a pure gift to the existing shareholder base and directors who will participate. At least good that they also let retail investors participate as well, but still feels strange.
I further also recall that it was mentioned during the InvestorMeet presentation a month ago that there was sufficient cash up to September 2025 based on recent cash flow projections right? Fast forward one month and all of the sudden there is no sufficient cash up to July 2025 without this equity raise, and thereafter more funding is needed? Seems like they have almost no control or insight in the process towards cash flow generation. Might be good to ask some questions on that during the AGM as well.
Hard hit today for all investors who will or cannot participate in this offering though. |
At least they are honest here:
"The Directors believe that if required, future funding may be sourced, potentially from debt, industry partnerships or technology licences, with the partnerships and licences being with multi-national, large regional service or directional drilling companies. This current Fundraising, and the subsequent base case scenario is not expected to be fully sufficient to fund the cash requirements of the Group through to a position where it is able to fund itself entirely from its own cashflow. Therefore, following this Fundraising, it is expected that the Group will require additional funding, from the sources described above, by July 2025, assuming no funds are raised in the Retail Offer. Alternatively, the Company would need to reduce its spending plans some time before July 2025. There can be no guarantee that sufficient funds could be raised at a later date, and any additional equity financing, if available, may be dilutive to Shareholders"
Very tricky, these new product companies. I´m really none the wiser as to whether they go bust or bang... |
I note they still hold out hope of the $100k from the Australian customer being received in 1HFY25 i.e. by the end of September. If this is really the case, it seems odd not to have waited until the end of September before launching the fundraise. On the other hand, the fact that the fall back is "second half of FY25" rather than "early in the second half" or "October" suggests they don't know what's going on with payment doesn't it?
They confirm that "active trial drilling runs of the full system are upcoming." i.e. they haven't started yet. It's just been delay after delay with the SABER journey to commercialisation, which may be par for the course with new technology, but it's very frustrating.
"Customer testing, in Australia, is ongoing, and customer test active trial drilling runs of the full system are upcoming. Contracted rates have been agreed with the customer for subsequent post-trials commercial operations. As previously announced, a purchase order has been received in relation to this customer contract pursuant to which $100,000 is expected from the customer for future commercial services. The $100,000 is now expected to be received in either the first or second half of FY25." |
At least they are doing a retail offer. Anyone looking to take part? I will probably wait to hear how the AGM goes. The directors will be buying in this raise presumably. |
The concept of never owning shares where a fundraise looks likely seems to elude so many. Hardly rocket science.... |
Enough money to see the business through until commercialisation...Should have waited until some positive news on contracts then raised. Very disappointing to raise now. |
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