The Brainchip Holdings Ltd (ASX: BRN) share price has returned from its trading halt on Thursday.
In morning trade, the semiconductor company's shares are down 7.5% to 18.5 cents.
Why is the Brainchip share price sinking?
Investors have been selling down the company's shares this morning for a couple of reasons.
One is the announcement of a capital raising and the other is the release of its quarterly update.
In respect to the former, Brainchip has announced a $25 million equity capital raising. This comprises a fully underwritten institutional placement to raise approximately $20 million, a fully underwritten sale of existing securities from LDA Capital, and a non-underwritten share purchase plan (SPP).
These funds will be raised at 19.3 cents per new share, which is a surprisingly modest 3.5% discount to where the Brainchip share price last traded.
According to the release, proceeds from the equity capital raising will be used to support the commercialisation of the company's Akida 2.0 technology and the development, commercialisation and productisation of its new TENNs product.
It believes the latter represents the next evolution in its product portfolio and builds on its existing position in neuromorphic technology.
Commenting on the equity raising, the company's under fire CEO, Sean Hehir, said:
I am very pleased with the outcome from this capital raise, which will allow BrainChip to continue its efforts to bring Akida 2.0 to market as well as develop new products based on our TENNs algorithm that will compliment and accentuate the strengths in our core Akida technology. We are also very pleased to have received the support of a number of quality Australian institutional investors, and to be able to offer our retail investors the opportunity to invest on the same terms through the SPP. At our AGM in May, shareholders made it clear they wanted us to consider adding an SPP into any future capital raise. We heard that message loud and clear, and we have added an SPP into this placement precisely for that reason.
Quarterly update
It was another bitterly disappointing quarter for the company in respect to cash receipts.
Brainchip reported less cash receipts than a Boost Juice stand for the three months, pulling in just US$48,000. This was despite spending over US$3.9 million on operating activities during the period.
Management blamed its long sales cycle times and once again "remains optimistic based on the number of active engagements and level of interest from our prospective customers."
The Brainchip share price is down 48% since this time last year.
