Digital media company migme has been forced to extend its suspension on the ASX to complete a planned capital raising, which it said would be essential for the business to remain viable.
The company entered a trading halt on June 30 pending the release of information about a capital raising, with the details yet to be disclosed.
The Singapore-headquartered company then announced it had received a $2 million commitment from Chinese app developer Meitu Investment; however it is still working with its shareholders to finalise the raising.
“We are seeking an extension of the current ASX suspension by two weeks so as to complete our financing process in an orderly basis,” Migme said.
“In spite of the company’s progress, a successful financing is essential for the financial viability of the company.”
“The company is working with its key shareholders to ensure it is properly funded without materially compromising shareholder value.”
Meitu’s $2 million investment adds to $38 million raised by Migme since it listed on the ASX two years ago.
Investors paid $1 per share in September last year for the company to raise $10 million; that compares to a $7 million raising three months ago, which was priced at 60 cents per share.
According to Migme’s March quarter report, the company grossed $7.1 million from operations but racked up about $12.7 million in operating costs.
That equated to a net outflow of $5.6 million.
If the company continued to burn cash at the same rate in the June quarter, it would have used up most of the $8.9 million in cash it had at March 31.
Chief executive Steven Goh said the board of the company was endeavouring to secure the funding on terms that delivered the best possible outcome for shareholders.
“Subject to securing adequate working capital, the company will work towards a position of delivering, in the new year, cashflow positive operations whilst continuing to grow revenues and grow and engage users,” Mr Goh said.
