GeoOp quits planned ASX IPO, gets more shareholder funding

Chairman Roger Sharp said "We are disappointed but resolute and will continue to build this business"

GeoOp has quit plans for an initial public offering and Australian listing after reaching an impasse with the Australian Securities Exchange, and will instead stay on the NZAX and rely on cornerstone shareholder North Ridge Partners for funding.

Earlier this year shareholders of the unprofitable management app developer backed plans to raise at least $A2 million in an IPO and list on the ASX but the company was told earlier this month it needed more capital to meet the Australian stock market operator's requirements. Rather than change tack, GeoOp instead secured up to $NZ1.5 million from North Ridge through a two-year convertible note and will resume trading on the NZ Alternative Market.

"We have spent considerable time and effort to work through these matters but ultimately have been unable to reach an outcome that addressed ASX requirements without materially changing the offer or restricting GEO's operational plans," chairman Roger Sharp said in a statement. "We are disappointed but resolute and will continue to build this business."

GeoOp went public in 2013, selling shares at $1 apiece in a private offer before its compliance listing on the NZAX. The stock last traded on the NZAX at 22c before undertaking a two-for-one share consolidation in July which sees it listed at 44c. At the time, GeoOp said that was needed to meet the ASX's minimum share price of 20Ac.

The move to an ASX listing would have followed its business across the Tasman where it generates 60% of sales and its management team already operate.

The company today said it's "progressively" cutting costs and anticipates cash burn to "reduce materially in the coming months" once the development of a new enterprise platform and product upgrades are completed. It will give a horizon to break even when it releases first-quarter results in November.

The convertible note is expected to fund GeoOp's operations for the rest of the 2018 financial year and, subject to shareholder approval, will convert to equity or be repaid when the company raises equity in calendar 2018.

"The company's intention is to offer all shareholders the opportunity to participate in its next equity issue in the expectation that the majority, if not all, of its convertible note facilities will be converted to equity," it said. A vote on the conversion will be held at the annual meeting later this year.

(BusinessDesk)


29 · Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

29 Comments & Questions

Commenter icon key: Subscriber Verified

Poor ex-Wunkerkid Weldon simply cannot get anything right in his legacy, can he?

First NZX, then Media Works and now, GeoOp refuses to leave this shores so that he cannot be associated with this disastrous IPO.

Reply
Share
  • 0
  • 0

Another dog company trying to raise new money

They should contact Powerhouse and the Christchurch City Council for funding - they seem have a bottomless pit of crazy money and no rules attached

Reply
Share
  • 0
  • 0

Invest in Housing as investing in NZ companies and Technology is a waste of money.

Property Investment is the only option for Kiwis !

Reply
Share
  • 0
  • 0

What about Xero, A2, Synlait etc

Reply
Share
  • 0
  • 0

Why be listed on anything? I would delist and concentrate on selling my product

Reply
Share
  • 1
  • 0

Good companies list to become great companies. That's what the share market is for - profile, credibility and access to capital to fund growth, and yes in some instances for the original owners to free up some of their capital.

Trouble is that the great unwashed idiotic investors and unscrupulous manipulative promotors and bankers out there use the listing market to part the naive and greedy from their money and funds.

Great examples of good companies becoming great - Mainfreight, Ebos, A2 Milk, Ryman, infratil, Diligent, Trustpower, Xero and Synlait.

Great examples of listings to part the naive from their money - Feltex, GeoOP, Wynyard, Veritas, Snakk, Pike River Coal, Plus SMS, South Canterbury Finance pref shares, Vmob and almost all the backdoor listings.

Reply
Share
  • 0
  • 0

I meant, Geop should delist. I wasnt questioning the sharemarket

Reply
Share
  • 0
  • 0

They may have new funding via convertible notes, but at what price? No mention of # of notes to be converted to shares, the interest rate (probably VERY onerous!), nor the pricing of the notes. Yet again, director's trying to pull the wool over investors eyes by not fully disclosing to the market how badly this will dilute existing shareholders (they already mention yet another funding round after this one!), nor giving any type of forecast. Investors here are completely in the dark, just as the company slashes costs and kills growth. Yet another "growth" company in a death spiral, forever bound to the least favoured board of a backwater market!

Truly feel sorry for anyone still holding shares in this... thing...

Reply
Share
  • 1
  • 0

Ah, but the market loved GeoOP when it was listed? In fact, the share price doubled because of the hype that this was going to be the next Xero! All ably stoked by a high profile Chairman at that time but alas, whose star has burned out along with his credibility?

Reply
Share
  • 0
  • 0

Yes, it rode the coattails of Xero, but the Chairman you refer to already had their credibility shot to bits through previous "managing" of listed companies. Well, at least anyone paying half-attention and doing a bit of research would have known this!

Reply
Share
  • 0
  • 0

Not to mention this was the ASX listing costs as disclosed in the prospectus small print - the majority of these costs will still be payable.....

Lead Manager Fees
150,000 if 2 million raised
240,000 if 4 million raised
330,000 if 6 million raised

Legal fees
240,250

Investigating Accountant fees
190,000

Other accountancy fees
108,650

IPO Insurance ( wonder what this is?)
35,000

ASIC and ASX fees
81,400

Other costs
81,886

Must be time for Paul Marsden to tell us this is a great company?

Reply
Share
  • 0
  • 0

What to do with stocks that are in a death spiral? This company keeps getting propped up, spending inordinate amounts of time and cash on finding capital to fund day-day operations rather than generating their own capital through sales. Their original business was/is worth zip and all they've done is prop up their capitalisation through a silly acquisition that bore no resemblance to the core (sic) business. Now no-one can afford to let it sink and lose all that money.. North Ridge should just refuse to fund it, kill it, delist and see if they can make something of it... The NZX should take a fether from the ASX cap and start killing off some of these messes that just dilute the value of the market. Shame on the Directors for letting this carry on.

Reply
Share
  • 0
  • 0

If you're a retailer, sell into liquidity, move on to a much, much better company and never, ever look back at this roadkill...

Reply
Share
  • 0
  • 0

"GEO’s major shareholder NRP has agreed to provide a two year, secured convertible loan facility (Facility) of up to NZ$1.5m to provide the Company with funding, subject to meeting operational milestones, as it rolls out its new offerings." --- this from the NZX release.

Not the funding is subject to meeting milestones - so this can be pulled at any time. The loan will be secured so will give North Ridge control of what is left. Wynyard also had a loan facility that proved worthless because of the conditions.

Reply
Share
  • 0
  • 0

At some stage, you have to wonder if this will become an issue for Xero. GeoOp is one of their better funded add-on partners (as far a capital raised, not profitability) and if they fold, they will lose some credibility given they have built a product that requires add-ons to work for their customers.

Reply
Share
  • 0
  • 0

They are one player in a very crowded space with no real advantage, integrate with several accounting apps - not just Xero, and Xero are playing with much larger numbers and opportunities.
So no impact.

Reply
Share
  • 0
  • 0

If GeoOp falls over, I am not sure how many customers they have, but they will all be spending thousands to re-intergrate into a new add-on including time to retrain staff. And which option do they pick from the crowded space - how do you know they aren't next to fall over (as I said, GeoOp was well funded - they have burned through millions) so surely the lesser known ones will be struggling too.

That is the biggist issue as a Xero advisor, not knowing which add-ons are suitable to recommend to your client which that recommendation potentially putting egg on your face.

Given you invest in this space (disc: happy investor by the way), you have no doubt seen lots of companies that you decided not to back because they are not financially viable, and will no doubt run out of money when their mortgage caps out of their Angel backers reassess their support.

Reply
Share
  • 0
  • 0

Have a look at 9 spokes they have done a lot of this small business app integration etc. I understand that the suppliers across a range of sectors / segemtns have been vetted by several organisations.

Reply
Share
  • 0
  • 0

Xero is already starting to compete with some of its add-on providers, and won't lose any sleep if Geoop falls over. Xero recently announced "projects", which appears to be a simple job management module for service businesses. This will force the likes of GeoOp to move up the value chain and provide more sophisticated products, which involves more demanding customers, higher cost of acquisition and longer sales lead times.

Reply
Share
  • 0
  • 0

New Zealand company lets knock it down!
Kiwis love to hate their own country and any tall poppy cut it down.
Get back to good old bricks and mortor and snuff out any Technology or Inovation especially if it is Made in New Zealand!

Reply
Share
  • 0
  • 0

NZ company? This company took money from NZers, including from taxpayers, spent it without much to show and then, decided to bugger off to Oz. What a laugh!

Reply
Share
  • 0
  • 0

What a lame argument. I hope you are a GeoOp shareholder to support your argument.

This is not a real tech company, there's no innovation here, it's just one of those that was pumped and dumped by merchant bank/brokers, and now gives the sector a bad name.

Reply
Share
  • 0
  • 0

GeoOp is not a real Tech company? Come on you are so negative you have lost your mind.

I thought I have heard it all but this beat up by obvious competitors takes the cake.

Reply
Share
  • 0
  • 0

Just about every company is a "tech" company it is just to what degree etc. I suspect the comment is more that they have technology that is not unusual or unique / novel - may have been in the past but not today.

To get high valuations in the "tech" space you need some real point of difference and also some real momentum - Geo-op does not appear to have either.

Reply
Share
  • 0
  • 0

Time for NZ to revisit IPO 1.0 and VC 1.0 as the criteria is not so different. The problem with NZ companies is that they are small, fail to attract VC funding of size and then run off and do an IPO. Good VC's and PE funds screens and so many of the NZ ASX IPOs were passed over by NZ and international institutional investors. Not baked or sustainable. The world view is that companies start with private capital, grow, get customers, sell, get more private capital and only when they can near stand and walk so they even think of an IPO. Aussie IPOs are born on a market that used to be used for speculators for mining rights and nothing has changed. If you list at the minimum price as CropLogic did, then valuation is meaningless - if you pre-IPO funding at a 45% discount to the IPO price as CropLogic did, you just lock in an incentive to flip, if your shares trade down, you can't raise further capital and if you are micro (so less than $20 mil), you have no liquidity. The costs are huge, management is distracted. Game over. But the good IPOs listed above all did the more classic route and were able to attract private capital on their way to the IPO. IPO 1.0 and VC 1.0 - only screen and invest in good companies with a future and a real plan.

Reply
Share
  • 0
  • 0

I had little choice but to hold on or cut my losses.

Now with this new turn, we have seen a massive amount of manure on the faces of the management and board. Seriously, you could not make this story up.

Now they are going have some kind of bridging loan to carry them through and are releasing some new development to wipe out the competition?

So, only two scenarios.
1) Xero projects kills them off
2) if they have any form of innovation that is actually any good, any one of the 10 or 20 competitors can replicate and release for a 1/10 of the cost and quicker than you can say “oh crap we can’t list on the ASX”

Please someone put this company out of its misery.

Reply
Share
  • 0
  • 0

There are no technical innovations to speak of. Their biggest innovation has been to extract money from Callaghan. Tax payers can look forward to that until 30-06-2019.

Reply
Share
  • 0
  • 0

Wonderful news for investors in Australia, not being sucked into this joke of a company. Terrible news for GEO investors who will continue to enjoy the ride to $0, as more dilution is coming their way.

Reply
Share
  • 0
  • 0

GeoOp has excellent financial fundamentals considering it's current share price and revenue metrics.
GeoOp being closely aligned with Xero and it has similar growth stratagies that in turn bodes well going forward as an investment.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.6806 -0.0050 -0.73%
AUD 0.9006 -0.0027 -0.30%
EUR 0.5781 -0.0041 -0.70%
GBP 0.5157 -0.0035 -0.67%
HKD 5.3229 -0.0306 -0.57%
JPY 76.2440 -1.2190 -1.57%

Commods

Commodity Price Change Time
Gold Index 1277.8 -0.310 2017-11-16T00:
Oil Brent 61.3 -0.480 2017-11-16T00:
Oil Nymex 55.1 -0.160 2017-11-16T00:
Silver Index 17.1 0.100 2017-11-16T00:

Indices

Symbol Open High Last %
NASDAQ 6794.7 6797.8 6793.3 -0.15%
DJI 23433.8 23433.8 23458.4 -0.43%