Cipherpoint Ltd (ASX:CPT) continues to build a solid pipeline for its cp.Protect and cp.Discover products, having won a small order for the use of cp.Discover through the company’s partner in Singapore.
The company’s largest customer in Germany continues to be provide support and Cipherpoint is confident of further orders in due course.
Operations are continuing with staff in Germany, the US and Sydney working remotely with regular video and conference calls.
Existing customers have permitted any support and or account meetings to be undertaken on the same basis.
All international and in-region travel continues to be suspended.
Operating cash costs were lower in the March 2020 quarter at $995,000 compared to $1.09 million for the December 2019 quarter.
Focusing on new platform development
While some potential sales have been deferred as several enterprises have indicated they have reviewed their capital expenditure and operational budgets, Cipherpoint’s near-term focus has been to support and retain its staff, service existing customers and enable product trials.
It is also using the current period to focus on new platform and product development.
Investment and co-venture discussions
Cipherpoint has been meeting with potential equity investors in Europe given the focus of the business in that market.
All discussions have been conducted under suitable non-disclosure agreements and are preliminary and non-binding in nature.
One structure that has been discussed is creating a joint venture entity into which the business of the company will be transferred with new European investors injecting capital into that vehicle.
The company has taken preliminary advice that, subject to the final terms of any arrangement, this would not be a disposal of its main undertaking as its main undertaking before the transfer will be the same as after any such transfer.
Any such arrangement may require consultation with ASX and potentially shareholder approval.
A potential European investor is conducting due diligence on the business and has spoken with the company’s largest customer.
There is no guarantee that these discussions will result in any venture or investment.
Funding and SPP
Cipherpoint has decided to seek a modest capital raise to extend its current cash runway until September 30, 2020, the first half of its FY21.
The board has decided to conduct a Share Placement Plan (SPP) to raise up to $500,000 under which shareholders each will be entitled to subscribe for up to $30,000 of shares at a price of 1.3 cents per share.
Documents are being prepared and will be issued shortly. It is proposed that the offer will be open until 5pm on Friday, May 8, unless otherwise varied.
Shareholders will note that the ASX has waived SPP requirements for the number of shares issued to be limited to 30% of the issued capital and the issue price to be at least 80% of the VWAP.
The SPP issue price is a matter for reasonable determination by the board.
These temporary measures will expire on July 31, 2020, unless ASX decides to remove or extend them.
The decision of the board on the terms of the SPP has been made after assessing the alternatives in the context of Coronavirus Economic Response Package Omnibus Act 2020, the concessions made by the ASX on capital raisings during the COVID-19 crisis and also reviewing comparable market discounts.