K-TIG Faces Cash Burn Amid Acquisition and Capital Raise Plans

Quarterly Performance and Cash Flow

K-TIG Limited (ASX: KTG), a technology company specialising in high-speed welding solutions, reported cash receipts of $390,000 during the December 2024 quarter, primarily from fulfilling turnkey welding system orders delivered to customers in the United States. Despite this revenue, the company recorded a net cash outflow from operating activities of $339,000, reflecting ongoing investment in staff, manufacturing, and administrative costs.

At quarter-end, K-TIG held $344,000 in cash, supported by a recently completed $500,000 convertible note raise. This capital injection, secured from a sophisticated investor, is earmarked for working capital needs including salaries and professional services. The convertible notes carry a 20% discount conversion feature tied to the next capital raise, subject to shareholder approval.

Strategic Acquisition of Metal Powder Works

In a significant strategic move, K-TIG entered into a binding agreement to acquire 100% of Metal Powder Works Inc. (MPW), a Pittsburgh-based specialist in high-quality metal powders for additive manufacturing and advanced applications. MPW’s patented DirectPowder™ process offers a mechanically controlled method to produce metal powders with up to 95% yield, vastly outperforming traditional atomization methods that yield 20-30%.

This acquisition positions K-TIG to expand its footprint into the additive manufacturing supply chain, leveraging MPW’s low-energy, low-emission powder production technology. The process enables precise control over particle size and morphology, critical for downstream applications such as sintering, melting, and conductive pastes. Completion of the acquisition awaits shareholder approval at an extraordinary general meeting scheduled for 11 February 2025.

Capital Raise and Future Funding

To support its growth ambitions and integration of MPW, K-TIG lodged a replacement prospectus on 24 January 2025 to raise between $7 million and $10 million at an issue price of $0.20 per share. This capital raise aims to strengthen the company’s balance sheet and fund ongoing operational and strategic initiatives.

Operationally, K-TIG has implemented cost efficiency measures to manage its cash burn, reflecting a disciplined approach to expenditure amid the capital raise process. The company’s cash runway is estimated at just under three quarters based on current operating cash flows, underscoring the importance of the forthcoming capital raise.

Outlook and Market Positioning

K-TIG’s proprietary high-speed welding technology continues to disrupt traditional fabrication economics, offering up to 100 times faster welding speeds than conventional TIG welding. The addition of MPW’s advanced powder production technology could create synergistic opportunities across fabrication and additive manufacturing sectors, potentially broadening K-TIG’s market reach and product offering.

While the company’s near-term financials reflect the typical challenges of scaling innovative technology businesses, the strategic acquisition and capital raise signal a clear intent to accelerate growth and enhance shareholder value. Market participants will be watching closely for shareholder approval outcomes and the successful completion of the capital raise.