Augmented reality outfit Thred has been hit by a dose of hard reality as the threat of shares coming out of escrow threatens to put renewed pressure on its share price.
Thred shares (ASX:THD) were down a heavy 25 per cent at just 0.3c in the wake of a statement that a large tranche of shares would come out of a trading hold on June 17.
When trading in the company’s shares resumed on the share market in mid-2016, a block of 234.5 million escrowed shares could not be traded for a two-year period.
The company disclosed earlier today that this trading freeze ends on June 17.
That block of shares is equal to 15 per cent of the shares on issue.
An estimated 200 million shares of those coming out of the trading lock up are held by a venture capital backer of the company, the Hong Kong based Key Holdings, which has no immediate intention of selling down.
“There is no intention to exit this position in the near term,” said David Whitaker, who is a director of the Hong Kong investor Key Idea.
Mr Whitaker also pointed to the ease of Thred completing a recent raising as an indicator of ongoing investor support.
Thred has a platform which can be monetised, which is why it has the continued support of the offshore investors, he said.
Base metals to messaging to augmented reality
Thred underwent a capital reorganisation in mid-2016, when it transitioned from base metals to online messaging.
Shares were issued at 5c as part of a series of steps which included undertaking a backdoor listing, which gave it entree to the share market.
Since coming to the ASX, the company has struggled to develop a viable business. In September it pivoted again — this time changing from messaging app to augmented reality.
It’s also been forced to turn to investors recently to raise fresh funds.
In April, Thred sought to raise $2.4 million via a share issue which was priced at 0.4c. Most shareholders shunned the issue, with just $527,000 raised from existing shareholders.
The balance was raised from the underwriter of the share issue, CPS Capital, which has now emerged with a 30 per cent stake in the company.
The funds raised through the recent share issue were needed to undertake additional research and development work, which was intended to commercialise its intellectual property, while also boosting working capital.
At the end of the March quarter, Thred had $2.2 million in cash, with outlays in the June quarter estimated to run at $805,000.
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Cash in the quarter was boosted thanks to the Vivid lighting festival which is underway in Sydney, where Thred had an ‘inaugural partnership’ to deliver a range of augmented reality features aimed to “engage, entertain and educate attendees”, it said earlier this year when disclosing the deal.
Revenue of $225,000 is to be booked from the festival.
Thred is seeking to commercialise its “augmented reality and geo-locked chat platform” Sweep, which is available through iTunes and Play Store. It is also seeking to leverage this platform to access other distribution channels.