Israeli technology company HearMeOut (ASX: HMO) is freezing its activity in order to save costs, according to a notice by the company to the Australian Securities Exchange, on which it is listed. The company's stock has been suspended from trading for a month. At its last share price, the company had a market cap of A$4.5 million, somewhat less than its A$13 million valuation when it held its IPO on the Australian Securities Exchange in late 2016.
HearMeOut is headed by Moran Chamsi, one of its founders, alongside Issy Livian, Yaki Gani, Lior Menashe, and Moran Saar. The company developed a platform that is a sort of voice-based social network allowing users to post and listen to audio clips. Among its investors is Yitzhak Mirilashvili, who held 11.9% of the company after the IPO.
In its notice to the stock exchange, HearMeOut states that is has placed its wholly owned subsidiary HMO Israel on ‘care and maintenance’. HearMeOut was incorporated in Australia in 2016 for the purposes of the IPO, but the Israeli company was founded before that, in 2014. According to its IPO documents, the company was set up "with a vision to develop an alternative to current social networks."
The company says that all staff of HMO Israel have had their employment contracts terminated effective 12 July 2018, and that it has "terminated all influencer and general marketing contracts associated with the HearMeOut platform and has given notice in relation to leases and other related contracts." This, the company expects, will save approximately $200,000 per month.
HearMeOut said that its board had carried out a strategic review of the operation of the HearMeOut platform, and had determined that "the significant future capital needs required to achieve scale of operation of the HMO business to make it a sustainable business were in excess of the Company's current cash resources and new funds necessary to achieve the same were not available via capital raising given the sentiment in the market towards early stage technology companies."
The board found that in that situation a viable "business case" could not be found for the platform, hence the decision to suspend all actives immediately.
The company's announcement hints at the possibility of a sale of its assets, stating: "With costs associated with the platform greatly minimised (and stabilised) it is the intention of the Board of the Company to determine what value, if any, can be achieved from the platform and users, the IP associated with the platform, data collected and key strategic contracts."
HearMeOut is one of seventeen Israeli companies listed on the Australian Securities Exchange. In an interview with "Globes", Chamsi said, "The social world has undergone a change. When you see posts or tweets from Donald Trump or Lady Gaga, it could well be that a digital content company posted them in their names. In our opinion, the voice is the last authentic thing in social media, and that's where we want to be."
The company aimed at the vehicle market, and signed an agreement with car maker Ford. It also recruited former CNN presenter Larry King, who has millions of followers on Twitter, and who started using HearMeOut's platform in December. According to HearMeOut's financial statements, King received 150,000 options at an exercise price of A$0.20. This was also the IPO price of the company's shares. HearMeOut's latest share price is just A$0.07.
The company said, "HearMeOut has progressed in business terms in a major way and made impressive global achievements. However, as an Australian public company, we are aware of changes in the Australian market. Therefore, the company is preparing for a new track, out of concern for its shareholders and the value of the company."
Published by Globes [online], Israel business news - www.globes-online.com - on June 19, 2018
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