Hexima Halts AI Acquisition, Holds $1.64M Cash Amid Strategic Pivot
Hexima Limited has called off its planned acquisition of AI developer Real Thing Entertainment, ending the quarter with $1.64 million in cash and a cautious outlook on future strategic moves.
- Proposed acquisition of Real Thing Entertainment cancelled
- Quarter-end cash balance of $1.64 million
- Net operating cash outflow of $258,000 for the quarter
- Refund of $100,000 to director-related entity due to acquisition cancellation
- Company remains focused on biotech IP portfolio and exploring new opportunities
Acquisition Plans Abandoned
Hexima Limited (ASX:HXL) announced on 31 January 2025 that it will not proceed with its proposed acquisition of Real Thing Entertainment Pty Ltd, an AI platform developer with an international presence. The decision came after the board assessed that key conditions precedent, including shareholder approvals and capital raising tied to ASX re-compliance, were unlikely to be met.
This move marks a significant strategic pivot for Hexima, which had been actively pursuing diversification beyond its core biotech intellectual property assets. The cancellation was formally communicated on 3 December 2024, signaling a retreat from the AI sector for the time being.
Financial Position and Cash Flow
Despite the setback, Hexima closed the December quarter with a solid cash position of $1.64 million. The company reported a net cash outflow of $258,000 from operating activities, primarily driven by ongoing compliance costs, professional fees, and expenses related to the aborted acquisition process.
Notably, the company refunded $100,000 to a director-related entity, representing monies received in advance for a share subscription linked to the cancelled acquisition. This refund underscores the financial adjustments necessitated by the deal’s collapse.
Strategic Outlook and Operational Focus
Hexima reaffirmed its commitment to leveraging its biotech intellectual property portfolio, where it retains royalty rights. The company indicated openness to exploring additional strategic opportunities, though it did not provide specifics on potential targets or timelines.
With an estimated seven quarters of funding available based on current cash reserves and operating cash burn, Hexima appears positioned to maintain operations while reassessing its strategic direction. However, the absence of new acquisition activity raises questions about the company’s growth trajectory in the near term.
Governance and Compliance
The quarterly report included disclosures on payments to related parties, which were consistent with normal commercial arrangements for directors’ fees and remuneration. The company also maintained compliance with ASX Listing Rules, providing transparency on its financial and operational status.
Chairman Geoffrey Kempler authorised the release, emphasizing the company’s ongoing commitment to shareholder communication and regulatory adherence.
Bottom Line?
Hexima’s acquisition retreat leaves its biotech IP core intact but casts uncertainty on near-term growth catalysts.
Questions in the middle?
- What new strategic opportunities might Hexima pursue following the acquisition cancellation?
- How will Hexima manage its cash burn to extend its runway beyond the estimated seven quarters?
- Could Hexima revisit AI or other tech sector acquisitions once market conditions improve?
