BrainChip Share Price Down As It Amends Capital Deal (ASX:BRN)

On a mixed day of trading for the ASX, BrainChip Holdings Ltd [ASX:BRN] is embodying the volatility.

The AI tech stock had a flat open before edging into the green. But by midafternoon, it swung back into the red before levelling out to a neutral spot, which is where it is currently.

A sign that may suggest investors are unsure of what to make of the latest news out of the company. Because as management announced this morning, they’ve amended their key deal with LDA Capital.

Let’s take a closer look…

New terms, more cash

By now, BrainChip shareholders should be very familiar with LDA Capital, the firm that has been bankrolling the stock’s operations of late.

And now, as of this morning, the terms of the Put Option Agreement have been changed again. This time adding a further $65 million of available funding until the expiry of the deal in December 2023.

Because of this, it has also allowed an extension on the remaining $5.3 million drawdown too, pushing the final decision for this to 28 February 2022.

Following that, a second and subsequent third drawdown period will immediately proceed. Both of which are set to end on 31 December 2022 and 31 December 2023.

So BrainChip will have plenty of options — literally — for tapping any necessary cash. A deal that should ensure they are well resourced as ongoing development of their novel chips continues.

As CFO Ken Scarince comments:

We have been very pleased with the LDA Capital relationship and look forward to working with their team to finance the Akida™ commercialisation strategy and to support the development of successive generations of our industry leading technology. In order to keep our substantial lead in the edge AI market, we will continue to aggressively invest in our technology.

How to Limit Your Risks While Trading Volatile Stocks. Learn more.

What’s next for the BrainChip Share Price?

With this amendment now sorted, management will surely be feeling confident to pursue their ambitious goals.

After all, developing new technology like that of BrainChip’s isn’t cheap. That’s why getting this reliable capital source has been vital to their ongoing plans.

So all we really need to see now is some actual output. And until then, investors will have to simply wait patiently.

In the meantime, though, if you’re looking for other AI stock ideas, then there are more options. You can check out our latest report of five AI stocks that are primed for growth, right here.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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