Icetana AI Raises $2.65M in Underwritten Offer as Iraq Project Nears Deal

Entitlement Offer Details and Pricing

Icetana AI (ASX: ICE), a specialist in AI-driven video analytics software, has announced a renounceable entitlement offer to raise approximately A$2.65 million. The offer allows existing shareholders to acquire one new share for every two shares held as of the record date, priced at A$0.02 per new share. Notably, this price represents a 33% premium to the company's closing share price prior to the announcement, signaling confidence in the company's valuation and prospects.

The entitlement offer is fully underwritten by Lance East Holdings Pty Ltd, a substantial existing shareholder, ensuring the capital raise will be successful regardless of shareholder uptake. This underwriting arrangement, while providing certainty, could see Lance East's voting power increase from 15.95% to nearly 44%, subject to certain conditions and assuming full underwriting participation.

Strategic Use of Funds

The proceeds from the entitlement offer are earmarked primarily for supporting ongoing sales and marketing efforts ($1.4 million), product development ($900,000), and working capital ($350,000). This allocation underscores Icetana AI's focus on scaling its commercial footprint and enhancing its technology platform, which is critical in the competitive AI video analytics sector.

Progress on Baghdad Safe City Project

Icetana AI is advancing through the final stages of a proof-of-concept with a significant potential client in Iraq, the Baghdad Safe City project. Working closely with regional partner Al-Technologia Al-Alia Co., the company has received positive feedback on its solution's performance, with only a few technical hurdles remaining. A non-binding letter of intent has been provided by the partner, with a potential purchase order valued at up to US$1.1 million (approximately A$1.77 million) contingent on successful completion.

While this opportunity could materially impact Icetana AI's revenue, the company has been transparent that no contractual commitments have yet been secured, and the outcome remains uncertain. Market watchers will be keenly observing developments here, as a successful contract could validate Icetana AI's technology and open doors to further regional expansion.

Capital Structure and Convertible Notes

Upon completion of the entitlement offer and assuming conversion of existing convertible notes held by substantial shareholders Macnica, Inc. and Skiptan Pty Ltd, Icetana AI's share capital could increase to approximately 438 million shares. The convertible notes, issued in late 2024, will convert automatically following the entitlement offer, further strengthening the company's capital base.

The company has structured the offer to provide maximum flexibility for shareholders, including a top-up facility allowing investors to apply for additional shares beyond their entitlement. This approach aims to balance shareholder participation with the underwriter's role in supporting the raise.

Outlook and Market Implications

Icetana AI's capital raise and progress on the Baghdad Safe City project come at a pivotal time as the company seeks to expand its footprint in AI video analytics. The premium pricing of the entitlement offer suggests confidence from both management and investors, while the underwriter's involvement provides a safety net. However, the uncertainty surrounding the Iraq project contract tempers immediate revenue expectations.

Investors will be watching closely how the entitlement offer is received and whether the company can convert its proof-of-concept into a binding contract. Success in Iraq could serve as a strong validation of Icetana AI's technology and open further opportunities in the Middle East and beyond.