Micro-X’s Capital Raise Highlights Risks of Retail Offer Uptake and Execution

• $3.3 million raised via placement and institutional entitlement offer at 7 cents per share
• Retail entitlement offer launching February 13 targeting $2.7 million
• Strategic $2.4 million placement with Billion Prima at 9 cents per share
• Funds to support medical imaging focus and new product development
• Directors and key management participated, with some shares subject to approval

Capital Raising Success

Micro-X Ltd (ASX:MX1), an Australian innovator in cold cathode x-ray technology, has successfully completed a $3.3 million capital raise through a $2.0 million placement and a $1.3 million institutional entitlement offer. Both were conducted at an offer price of 7 cents per share, representing discounts of around 10-14% to recent trading prices. This funding round is part of a broader $6 million accelerated non-renounceable entitlement offer (ANREO), with a retail component set to open on February 13, 2025, targeting an additional $2.7 million.

Strategic Partnership and Funding

In parallel, Micro-X secured a $2.4 million strategic placement with Billion Prima, a Malaysian developer of specialised screening products, at 9 cents per share. This investment is part of a $5.6 million partnership aimed at commercialising portable baggage and parcel scanners using Micro-X’s proprietary NEX Technology. The strategic partnership not only provides capital but also a pathway to global security market applications, complementing Micro-X’s pivot towards medical imaging.

Focused Shift to Medical Imaging

The capital raised will underpin Micro-X’s sharpened focus on medical imaging, particularly the development of mobile X-ray and CT products. The company has discontinued its Argus security product line to streamline operations and concentrate resources on high-potential medical imaging technologies. Notably, Micro-X is progressing a Head CT imaging trial and early development of a Full Body CT scanner, supported by a substantial ARPA-H contract offering up to A$25 million in non-dilutive funding over five years.

Shareholder Support and Management Participation

Existing substantial shareholders demonstrated strong support by exceeding their pro-rata entitlements in the institutional offer. Additionally, all directors and key management participated in the placement, committing $280,000, with $200,000 subject to shareholder approval. The company expects to have approximately $10.35 million in pro forma cash following completion of the placement, entitlement offers, and strategic placement, providing a solid financial foundation for upcoming commercial milestones.

Next Steps and Market Implications

The retail entitlement offer will open on February 13 and close on February 28, 2025, offering eligible shareholders the opportunity to participate on a 1-for-10 basis at the same offer price. The non-renounceable nature of the offer means entitlements cannot be traded, placing the onus on shareholders to actively participate to avoid dilution. Micro-X’s management is optimistic that the capital raising will enable the company to execute its revised strategy effectively, focusing on tangible commercial outcomes in medical imaging and leveraging its proprietary technology platform.

Bottom Line?

Micro-X’s successful capital raise and strategic partnership set the stage for a critical growth phase focused on medical imaging innovation.

Questions in the middle?

• Will the retail entitlement offer achieve its $2.7 million target amid market conditions?
• How quickly can Micro-X commercialise its Full Body CT and Head CT products with ARPA-H funding?
• What are the risks and timelines associated with monetising the company’s security assets through partnerships?