Property fund manager and equity release provider DomaCom has allayed concerns about its capital position, at least for the time being, by negotiating an extension on a convertible note issue.
DomaCom raised A$2.95 million of funding by issuing convertible notes in late 2018. It later secured an additional $650,000. Both note issues have been extended for 12 months, reducing the need for additional capital by $3.6 million.
In the company’s half-year financial report auditor Grant Thornton said “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.”
DomaCom made a loss of $2.6 million for the half and suffered a cash outflow of $1.8 million in the December half. At the end of the period it had net working capital of just $1 million left.
The company said the agreement with its convertible note investors allowed it to focus on delivering its products.
DomaCom has an unusual fractional property investment arrangement, designed to meet the needs of self-managed superannuation funds.
It has big ambitions in the equity release, shared equity and affordable housing segments, and will be an interesting player in the housing finance market if it can get its products off the ground.
Last year it launched a home equity release product based on a share equity structure. However, it only completed accreditation of an initial group of financial planners in the past few weeks and is yet to make any sales.
It is also working on a Shariah compliant mortgage, a rent-to-own product and an “essential worker” product that is designed to leverage the government’s affordable housing lending facility.