NoviqTech’s Capital Raise Risks Dilution Without Guaranteed Option Exercise

• Non-renounceable pro-rata offer of 1 new option per 2 shares
• Issue price set at $0.002 per new option
• Exercise price fixed at $0.20, expiring three years post-issue
• Offer targets raising up to $251,000 for general working capital
• Offer closes on 26 February 2025, open to Australian and New Zealand shareholders

Overview of the Offer

NoviqTech Limited (ASX: NVQ), a technology company specializing in software development, has launched a non-renounceable pro-rata entitlement issue to raise up to approximately $251,000 before costs. Eligible shareholders registered in Australia and New Zealand as of 12 February 2025 are entitled to subscribe for one new option for every two shares held, at an issue price of $0.002 per option.

The new options carry an exercise price of $0.20 and will expire three years after their issue date. Upon exercise, each option converts into one fully paid ordinary share. The company intends to seek official quotation of these options on the ASX, subject to meeting listing requirements.

Capital Structure and Financial Impact

The offer, if fully subscribed, will increase NoviqTech's cash reserves by approximately $214,000 after estimated costs of $37,000, which include legal, printing, postage, and regulatory fees. This capital injection is earmarked for general working capital purposes, supporting ongoing operations and the costs associated with the offer itself.

Currently, NoviqTech holds approximately $750,000 in cash as of 31 December 2024, supplemented by a recent $320,000 capital raise in early February 2025. The company’s creditors stand at around $360,000, expected to be settled within normal trading terms.

The issuance of new options will not immediately affect the share capital but may dilute existing shareholders upon exercise. For example, if all new options are exercised, the total shares on issue could increase by approximately 33%, subject to rounding and shareholder participation.

Offer Mechanics and Shareholder Participation

Shareholders cannot trade their entitlement rights, as the offer is non-renounceable. Those who do not participate risk dilution if other shareholders exercise their options. Eligible shareholders may also apply for additional options from any shortfall, though allocation of these excess options is at the discretion of the board and not guaranteed.

Payments for options can be made via BPAY or electronic funds transfer, with a closing date set for 5:00pm AEDT on 26 February 2025. The company reserves the right to extend or close the offer early.

Risks and Considerations

The company highlights that the new options are highly speculative. Key risks include market volatility affecting share price relative to the exercise price, liquidity risks, and potential dilution. Business-specific risks such as the need for future capital, operational challenges in foreign jurisdictions, and reliance on key personnel are also noted.

Investors are advised to consider these risks carefully and seek independent financial advice before participating. The company also notes that taxation consequences may vary depending on individual circumstances.

Outlook

This capital raising initiative reflects NoviqTech’s ongoing efforts to strengthen its financial position and support its growth strategy in the competitive software development sector. The success of the offer will depend on shareholder uptake and market conditions, with the potential to provide the company with additional runway to execute its business plans.

Bottom Line?

NoviqTech’s loyalty options offer is a strategic move to shore up working capital, but shareholder participation will be key to its impact.

Questions in the middle?

• Will shareholders fully subscribe to the new options offer or will there be a significant shortfall?
• How will the company deploy the additional capital to accelerate growth or improve operations?
• What market conditions might influence the exercise of options over the next three years?