- The company ousted its founder and CEO last year over cash burn concerns.
- 1-Page was seen as a Silicon Valley success story until its share price crashed dramatically in 2016.
- The company is a perfect encapsulation of shifting trends in Australian-listed companies.
A technology company which started as a miner has just switched again to become a cannabis company.
1-Page today announced it was becoming a medical cannabis company, buying 100% of the parent company of the HAPA Medical Group based in Germany, and changing its name to European Cannabis Corporation Ltd, pending approval from the ASX.
ASX-listed pot stocks have been on a steep run higher recently as investors bet on the potential of a new market.
The move by 1-Page to a seemingly more attractive opportunity isn’t the first reinvention of the company.
The junior Australian mining company InterMet Resources became 1-Page in late 2014, a high-tech startup selling software said to simplify the recruitment process and save money for companies.
It was one of the pioneers of a trend called back door listings — tech companies finding an easy path to ASX listing by putting on the shell of a dormant mining company.
At that time the 1-Page founder San Francisco-based Joanna Riley told Business Insider the ASX listing would enable the company to provide “transparency and security to clients”.
The goal was to become a $1 billion company. Listing in Australia, rather than going to a venture capitalist which usually insist on a large chunk of equity, meant the company founders wouldn’t have to dilute their ownership as much.
“Our intention is to go onto the NASDAQ,” the then 32-year-old said. “The NASDAQ looks at the ASX as a strong springboard.”
The market liked the idea of a human resources startup. And it had some good customers including Red Bull and First Republic Bank.
The company’s shares went on a steep ride, hitting $5.69 in September 2015, less than a year after opening at 20 cents and raising $8.5 million in equity capital.
At one stage the company had a market capitalisation of more than $700 million but revenue in just the tens of thousands.
But eventually the wild ride ended when the revenue didn’t grow as expected, not getting anywhere near the monthly costs running of around $2 million. The operating loss was $14.3 million in 2015.
The shares last traded at 16.5 cents.
The company’s latest available half year results — to July 2017 — show a loss of $4,555,638 and revenue of just $3,000.
In May 2017, the company suspended the operations of the US subsidiary, One Page Company Inc, and finished a layoff of the majority of the work force. At that time, 1-Page was looking for a buyer.
The medical cannabis transformation aims to give shareholders with an immediate exposure to the German medical cannabis market through HAPA, established last year.
“The HAPA team have focused on building relationships and applying for and securing the necessary licenses and permits to operate the business in Germany, secure sources of supply of pharmaceutical grade medical cannabis flower and oil, and the opening of the first two of its medical clinics in Berlin and Dortmund are expected in the next 4-6 weeks,” the company said.
1-Page is paying €1.3 million, with a 430,000 euros nonrefundable deposit, for the German company.
The company estimates that it will have cash of $23 million post acquisition, “sufficient capital to execute its plans in relation to the growth, development and expansion of the existing HAPA business”.
At the end of October last year, 1-Page reported it had $26.33 million in cash.
1-Page founder Joanna Riley (she reverted to her maiden name after divorcing her husband in 2016), was ousted from the 1-Page board in May last year in a shareholder vote after concerns about the cash burn. CEO Peter Kent was removed a month earlier, just a week after the duo had outlined a turnaround strategy for the business.
At that point, the AFR reported that the 1-Page board, led by non-executive director Andrew Chapman of Merchant Funds Management, wanted to shut down the business and turn it into a shell “with the hopes of attracting a startup for a backdoor listing”.
Riley whose CV includes working at the FBI, international model, and sportswoman, is now CEO and co-Founder of Censia, another human resources solutions company. It says it had “artificial intelligence solutions that dramatically shorten the recruiting cycle, lower turnover, and automate the low value, manual recruiting processes bogging talent teams down today”. Kent is her CEO.