It was once in Samsung’s sights, now this Australian company is battling to survive
By David Swan
Australian smart earbuds maker Nuheara has fallen into voluntary administration after failing to reach a commercial deal with its business partner, Taiwanese semiconductor giant Realtek.
Nuheara, which specialises in smart hearing aids and was previously a takeover target for Korean tech giant Samsung, signed a memorandum of understanding with Realtek two years ago, with the companies jointly working on a next-generation chip that would power Nuheara’s earbuds.
Nuheara CEO Justin Miller.Credit: Trevor Collens
That relationship deteriorated over a dispute over licensing fees and royalties, however, and Nuheara has been unable to pay a looming $2.5 million loan, which was in the form of a convertible note, to Realtek. Nuheara raised $1.85 million in capital from investors in April, but the looming cash crunch has led its directors to now put the company in the hands of administrators.
“The directors of Nuheara Limited resolved to appoint Martin Jones, Matthew Woods and Clint Joseph of KPMG as administrators of the company on Wednesday, 7 August 2024 pursuant to Section 436A of the Corporations Act 2001,” Nuheara’s board said in a statement to investors.
“This decision was taken by the board to best enable the company to conclude its ongoing strategic review, given the impending maturing of its $2.5 million convertible note. This convertible note is held by Realtek and has a maturity date of September 7, 2024. The company is disappointed that it has been unable to reach a satisfactory commercial agreement with Realtek regarding the convertible note.
The IQbuds2 MAX.
“Separately, the company has yet to receive an executed commercial and royalty agreement pursuant to the May 17, 2022, memorandum of understanding with Realtek. The administrators will continue to work with Realtek to execute this agreement, which is considered important to the strategic review process.”
The move caps a difficult few months for Nuheara and its investors. In its most recent set of financial results the company posted a net loss of $12.6 million, from revenue of $1.9 million. Nuheara announced in May that Miller would accept a 60 per cent cut to his monthly salary.
The company was most recently valued at about $22 million and its shares, which were last priced at 8¢, are suspended from trading on the ASX. Its board has been seeking a potential buyer as part of the strategic review, which was initiated in April.
Nuheara’s earbuds are known for their extra features such as personalised sound and speech enhancement. In January, Miller was on the ground in Las Vegas showcasing Nuheara’s new earbuds at the world’s largest consumer electronics show, CES.
“Nuheara’s next-generation hearing medical device featuring a single chip solution, means reduced size and increased performance to meet, and some instances exceed, the performance of much more expensive products from the five global hearing aid manufacturers,” he said at the time.
“Through this single chip solution, Nuheara is progressing multiple opportunities to supply interested OEMs with their own branded solutions, further increasing our revenue streams. The demonstration of our next gen product at CES 2024 – which was previewed to OEMs under a non-disclosure agreement – was incredibly well received.
“It was great to also spend time on the ground meeting our customers in Walmart and Target and demonstrating our leading Over-the-Counter (OTC) medical hearing aids.”
Nuheara is based in Perth and in 2016 released its flagship product, IQbuds, then listing on the ASX the same year through a reverse takeover of Wild Acre Metals. It became the first consumer wearables technology to list on the ASX.
Nuheara in 2019 was on the receiving end of a takeover bid by South Korean electronics giant Samsung, which lobbed an $84 million acquisition offer for the company when its shares were trading at 7¢. Samsung reportedly made multiple conditions in its offer, including that Nuheara’s board provide shareholders with a unanimous recommendation for the offer, and that the company divest fully from its mining interests.
Samsung then backed out of the deal at the last minute, reportedly because it realised the deal would need to be disclosed to the market.
Nuheara’s managing director, Justin Miller, and KPMG administrator Martin Jones were approached for comment.
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