GeoOp to raise funds in the new year to get to break even
GeoOp plans to raise fresh capital in the new year after a scuttled initial public offering across the Tasman to help the management app developer break even.
Chair Roger Sharp told shareholders at today's annual meeting in Auckland the company will need to raise new capital in 2018 to cover costs while it nears breaking even, after which it will invest in accelerating its growth ambitions. The Auckland-based company raised $1.7 million from directors after quitting a planned float across the Tasman when it reached an impasse with the Australian Securities Exchange, and Sharp said the firm's needs access to capital and liquidity meant it couldn't accept restrictions imposed by the ASX limiting its ability to tap that market.
"After much discussion and debate, your directors initiated a dialogue with NZX to remain in New Zealand and to migrate from NZAX to the main board," Sharp said in speech notes published on the NZX. "GEO needs access to capital and liquidity, and it cannot subject itself to prohibitive restrictions that would preclude it from tapping the equity markets as opportunities arise. So, we elected to stop, rethink, and stay at home. The NZX has been very constructive in this process."
GeoOp's decision comes at a time when the New Zealand stock exchange is facing growing competition from its Australian counterpart for domestic tech companies, highlighted by Xero's recent decision to shift to a sole ASX-listing.
Sharp said the company's cash burn is already slowing, but that cost cutting won't be enough to break even.
"We will undertake a modest rights issue and placement in the New Year to get to break even, then invest to speed up our growth profile," he said. "The intention is to convert some of the convertible notes in the rights issue and redeem the balance for cash either from the rights issue or from future positive cash flows."
The shares last traded at 25 cents, valuing the firm at $9.7 million.