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June 20, 2005
Activepoint, the sequel
Galit Yemini
Israel's Internet companies are making a comeback. Even ones that barely survived the bubble of the late 1990s are making a comeback and some, undaunted by the traumatic memories, are even heading to Nasdaq.
The Israeli firm Activepoint is a case in point: it has started the process of listing on Nasdaq's OTC market.
Activepoint was founded in 1997 by On Tavor. Financed partly by grants from the Ministry of Industry and Trade's chief scientist, the company's forte is context in search.
Its search technology is unique in that it is not looking only by naked words. Activepoint's engine is based on the word's meaning in the context of the sentence.
Its product is geared towards the virtual stores that are now common on the Internet. It is connected to the virtual store's database and instead of searching the entire Internet, searches only the site's database.
Imagine a virtual salesperson who reads your minds
Imagine you are shopping at a virtual Internet-based store. Instead of combing the store for hours seeking the product you want, you are greeted by a small window with a virtual salesperson who guides you to your heart's desire, based on the regular natural-language questions you type.
For example, you type "I want a cable that connects a television to a video". The virtual salesperson will present you with the relevant products and all the pricing and other information you need in order to make a purchase.
The company has registered several patents on its search technique, but it has competition. Being an English-language engine, by the way, it does not support Hebrew and can't work on Israel's Hebrew-language commercial sites.
Activepoint has started to sell its product, and it changed ownership over the years. It also started to drown in the Internet bubble hurricane. By September, 2003 it was on its last legs: the staff was fired and On Tavor went to court to seek protection from creditors. To cut to the chase, new private investors - the American businessman Michel Harvey, a relative of CEO Moshe Ofer and additional foreign investors - came on board. Helped by $2.5 million investment, they rehired the workers and started afresh.
At the moment the company has six customers, including the British virtual department store MFI and the American electronics chain Maplin Electronics. The company still needs to prove the product's stability and benefits to the customer, so that it has yet to see revenues from these customers.
But it needs more capital and is therefore thinking of Nasdaq, though money is more a long-run thing. Activepoint has filed a prospectus with the SEC and at the moment is waiting to list on the OTC Bulletin Board (OTCBB), the small company stock listing. The company expects to win SEC approval for a listing by the end of 2005. The listing will not be accompanied, at the start, with capital raising.
The company wants to float its shares to the public by assigning shares to public company and strategic partner, MobilePro. When the company is fully listed, MobilePro will distribute some of the shares it received to its shareholders in a stock dividend which will create the initial float and a liquid trading environment without the need for a full prospectus. Activepoint expects that its future revenues will bring it a valuation of between $7.8-13 million.
In the prospectus that was filed with the SEC, Activepoint states that it is a "high risk" investment. According to the prospectus, the company finished 2004 without revenues, with losses reaching $1 million. In 2003 it had only $31,000 in revenues. Details have yet to be released regarding 2005.
The CEO, Moshe Ofer, is optimistic. "For the second stage", he said, "we plan on raising capital through the market. We hope to raise up to $10 million. The market is ripe for our product, which couldn't be said during the bubble era."
Read the article in The Marker |
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