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HaloSource – conditional bailout fundraising, kicks the can down the road (not very far!)

By Steve Moore | Friday 21 April 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

HaloSource (HALO) has announced “Board Changes” and that it “is pleased to confirm that the company has conditionally raised approximately £1.9 million ($2.3 million)”. I bet it is…

This is with the announcement following results which explicitly stated that the then current cash “is expected to fund the company until the end of Q2 2017”. It should though be noted that this 1.5p-per-new-share funding is conditional, including on one of the cornerstone investors receiving certain Chinese governmental approvals – the company better hope those come through pretty quickly then!

It is stated that the net proceeds are to “also be used to fund commercialisation of the company's lead removal technology and expansion of its drinking water business”, though it still only “expects to have sufficient cash to fund it through to Q2 2018”.

Noting “the board appreciates the recent support shown by new and existing investors”, a further consequence of this looks to be boardroom change – with President & CEO Martin Coles, Chairman Jerry Wetherbee and non-executive director Michael Ducey all ‘resigning with immediate effect’ – the former two respectively replaced by existing Senior Vice President, Business Development James Thompson (though Coles still “a strategic adviser to the board”) and non-exec Alan Matthews.

However, this just looks to be a ‘kick the can down the road’ fundraising – even on the company-stated trajectory, by the end of this year a scramble for further funding will likely have been commenced. And that is of course only if current funding is able to be completed in time! Natch, the stance remains bargepole/sell.

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