Migme, a social networking app listed on the Australian Securities Exchange (ASX), which reported to have more than 30 million monthly active users (PDF), says that it’s considering a sale of its business or relisting elsewhere to stay afloat.
The company issued a statement today, saying it is in the process of a “refinancing and recapitalization.”
“Such recapitalization may include the sale of the underlying business and/or the migration of the company to an overseas exchange,” the disclosure says.
Migme CEO Steven Goh confirmed in an email to Tech in Asia that Migme, whose share price has been on a decline, plans to delist and find a “future home” elsewhere due to difficulty raising funds.
According to today’s announcement, Migme is also looking to “finalize a series of convertible note transactions” by April 17, meaning it wants to take in fresh cash, while also trimming down its operating costs and turning into a “substantially more focused organization.”
The firm began raising an additional US$6 million through issuing convertible notes in late 2016, but progress has been slow.
In Steven’s view, Migme’s struggles are related to a larger change in the market. “It’s the sum of a few things, but the ASX listing is a key negative factor.”
Steven believes the Australian market’s interest has returned to mining and away from the tech industry, which has had a consequential impact on the business. “That’s ‘locked’ our access to capital,” he says.
The company made a string of bold acquisitions all throughout 2015 and 2016, beefing up its social networking functionality with media, gaming, dating, and shopping services. But it couldn’t monetize successfully.
It’s still not at a point of reaching cash-flow positive operations, Migme’s 2016 financial report reveals. Operating losses for the year after tax increased from about A$21 million in 2015 to more than A$24 million in 2016. The company ended 2016 over over A$280,000 in cash and cash equivalents, down from over A$8.6 million in 2015.
It decided to discontinued ecommerce site Shopdeca, one of its acquisitions in Indonesia which had contributed to growing losses.
However, it’s not all bad news. Revenue went up from A$12 milloin in FY15 to A$21 million in FY16, and the user base “continues to grow in key markets and on key platforms,” the company said.
Migme locked in additional funding on several occasions, including a US$6.2 round announced in August 2016, from investors like Foxconn-subsidiary FIH Mobile Limited and Indonesian media company MNC. Prior to that, the company underwent a restructuring and laid off parts of its staff to increase efficiency.
Some things went wrong that weren’t publicly recorded. In 2016, Steven had an accident, which fractured his spine. This made running the company additionally more difficult.
“I was only part functional for about four months,” Steven tells Tech in Asia. He’s still in the recovery process.
Amid falling share price, Migme requested the suspension of trade in February 2017.
It’s unclear at this point whether Migme intends to resume trade once the issuing of convertible notes is complete.
“We will have something to say about the future home of the company later this month,” Steven says.