The BrainChip Holdings Ltd (ASX: BRN) share price has returned from its trading halt and crashed lower on Thursday.
At one stage the shares of the developer of software and hardware accelerated solutions for advanced artificial intelligence and machine learning applications fell as much as 22% to 7.3 cents.
They have since recovered slightly, but are still down 16% at 7.9 cents at the time of writing.
Why is the BrainChip share price crashing lower today?
This morning the company's shares returned from their trading halt after the successful completion of the institutional component of its 1 for 4 accelerated non-renounceable entitlement offer.
According to the release, the institutional entitlement offer raised $6.7 million before costs, and will result in the issue of approximately 112.7 million new fully paid ordinary shares at an issue price of 6 cents per new share.
This represents a 36% discount to the last traded price of BrainChip's shares on June 24.
Why is BrainChip raising funds?
The release explains that the proceeds of the entitlement offer will be used to fund the ongoing product development of its Akida product and its manufacture with Socionext.
The proceeds will also be used to fund the subsequent introduction of the Akida Neuromorphic System-on-Chip, working capital, inventory build-up, and to facilitate production and general availability of the Akida product in 2020.
BrainChip's CEO, Louis DiNardo, said: "We are pleased with the strong support from both existing shareholders and a number of new high-quality investors in BrainChip. This is an exciting time for the Company, with strong validation of our technology and strategy received in the form of our joint program with Socionext – one of the world's leading ASIC design and development houses."
He added: "We are also excited to offer our loyal and supportive eligible retail shareholders an opportunity to participate in the Retail Offer on the same terms as the Institutional Offer. The Entitlement Offer enables the Company to continue its development of its unique, and market leading neuromorphic neural network SoC, in order to bring true AI to the edge."
The retail component of the entitlement offer will open on July 3 2019. Eligible retail shareholders who hold shares on the record date of June 28 will have the opportunity to apply for new shares at the offer price.
Other small caps on the move on Thursday include the Bubs Australia Ltd (ASX: BUB) share price which has rocketed 18% higher and the LiveHire Ltd (ASX: LVH) share price which has risen 10%.
