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A strategic review announced earlier this year, along with a $1.85 million capital raise in April, was not enough to stem the tide at Perth-based hearing technology company Nuheara (ASX: NUH) which has been placed into administration.
The appointment of Martin Jones, Matthew Woods and Clint Joseph, of KPMG, as administrators comes as the company faces a looming cash crisis with the impending maturing of a $2.5 million convertible note next month.
The convertible note, which matures 7 September 2024, is held by Taiwan-based Realtek Semiconductor Corporation, a business partner with which Nuheara has been negotiating to secure new terms for the debt.
“The company is disappointed that it has been unable to reach a satisfactory commercial agreement with Realtek regarding the convertible note,” says Nuheara, the developer of a revolutionary wireless earbud product known as IQbuds.
Nuheara struck a strategic partnership with Realtek in 2022 to develop chipset, or a group of integrated circuits, and technology solutions to capitalise on hearing-related markets globally.
The partnership was initially aimed at helping Nuheara deliver its next generation of hearing aid products by integrating Realtek’s advanced chipset.
Components of Nuheara’s intellectual property, including smart hearing processing and self-fit technology, were planned to be embedded on Realtek’s integrated circuits with Nuheara to receive a royalty fee for each circuit sold.
Nuheara has revealed today that it has yet to receive an executed commercial and royalty agreement from Realtek in relation to this deal.
“The administrators will continue to work with Realtek to execute this agreement, which is considered important to the strategic review process,” says the company.
Nuheara says the administration process is the best way for the company to complete its strategic review in light of the looming maturing date of its convertible note.
The cash shortfall comes despite the company raised $1.85 million from investors in April with the funds to be applied to supporting sales and marketing activities, while expanding its internal resources and capabilities.
The capital raise followed a successful launch of Nuheara’s FDA-approved over-the-counter hearing aid as well as growth in the company’s US retail footprint.
In a sign of serious problems emerging within the company, Nuheara announced in May that CEO Justin Miller had agreed to a temporary cut in his monthly salary of 60 per cent until the end of the strategic review process.
Nuheara posted a net loss of $12.6 million in FY23 from revenue f $1.9 million. Most of the company’s costs are related to product development, administrative costs and marketing expenses.
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