Troubled social media app maker HearMeOut says it’s not dead yet
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It’s been a very quiet start to the 2019 financial year for Israeli tech company HearMeOut, but it popped out from trading suspension on Monday to tell investors that it “wishes to continue to operate the HMO platform”.
HearMeOut (ASX:HMO) makes an app of the same name, a kind of audio version of Twitter that lets users share 42-second audio posts.
It’s infamous for the bizarre decision to sign 15-year-old Danielle “Cash Me Ousside” Bregoli, who rose to viral infamy off the back of a Dr Phil episode and has since gone on to become a rapper named Bhad Bhabie, to the platform, alongside 85-year-old broadcaster Larry King.
But back in July the company went off the grid, shuttering the doors and sacking a heap of staff. Prior to that, it had used $4 million worth of shareholders’ money without ever taking any customer receipts.
It has been in trading suspension since May when it launched a “strategic review”.
“The board wanted to determine if a viable ‘business case’ existed for the platform in its current state. Unfortunately, [that] could not be found,” the company later told investors.
The review found that it couldn’t afford to reach the scale HearMeOut needed, and the board would have to find a way to extract what value it could from the company’s assets. It ended all influencer and marketing contracts and shut up its Israeli operations.
But now the company says the platform has a future focused on Australia, the US and India, and has reduced its expenses to less than $14,000 a month.
“Together with current advisory board members David McGrath and Jon Housman, who are both still retained by the Company, HMO intends to actively pursue content and branded marketing opportunities in Australia, the USA and India – where the HMO platform has a strong user base,” the company said in a statement.
HearMeOut also says several Israeli-based executives continued to work for no pay following the termination of their contracts as it moved its operations from Israel to Australia.
But those executives will soon receive termination payments totalling nearly $125,000. HearMeOut says it has also agreed to pay founder Lior Menashe a tick over $48,000 for “technical support services performed for the company”, as well as 3m options.
The board is also undergoing changes. Founder Moran Chamsi will resign when he gets his termination money, while founding chairman Howard Digby has agreed to re-join the company as a non-executive director.
The announcement HearMeOut released today implies that co-founders Yitzchak (Issy) Livian and Mr Menashe are also leaving.
“The board of HMO would like to extend its thanks and gratitude to Moran, Issy and Lior for all the work they have done for the Company over the past 24 months and wish them great success in the future,” it said.
But it makes no mention of either Mr Livian or Mr Menashe tendering their resignations.
The company had $1.3m in the bank at the end of September.