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Wireless software developer Innaworks sacked about 37 employees on Thursday because it has run out of money and investor support.

The start-up, which received US$5 million in funding in March last year, was in need of another injection, but some investors did not approve of the terms in financing deals and refused to put up more cash, chief executive Daniel Schneersohn said.

'We had offers, but unfortunately there was some level of disagreement among shareholders - they couldn't agree,' said Mr Schneersohn, former Asia senior regional director of computer security firm Symantec.

'Some of them decided not to invest in the company because they didn't believe in it,' he said.

Directors made decision to close shop on Wednesday night.

On Thursday, staff posted a notice outside the office explaining the situation and replaced the company's Web site with a message that the site was 'temporarily disconnected'.

Mr Schneersohn said the economy was so lacklustre that firms did not have many options and could not find a 'white knight' or financial saviour in a short period of time, unlike two years ago.

'Sometimes companies are caught in the middle,' he said.

Mr Schneersohn was brought into the firm to give it new direction at the end of last year.

He renamed the company, launched in 1997 as media60X, and started work on a three-year strategy.

Innaworks developed Java-based, application-development tools for mobile phones and hand-held devices, which would tell mobile-phone users which bank machines, restaurants and car parks were close by.

However, demand had not lived up to expectations.

'Wireless Internet is not happening anywhere near what people were forecasting six months ago,' Mr Schneersohn said.

In early April, Mr Schneersohn said the company had enough cash to run for another year before seeking more investment.

However, he said yesterday that executives had realised at the end of the first quarter that more money was needed to keep it from running into the ground.

They were looking for interim financing of about US$1 million to US$5 million in the past few months.

Clients of the company, which employed about 40 people in April, included Pacific Century CyberWorks, SmarTone, CNK Telecom in China and MobileOne in Singapore.

Mr Schneersohn said Innaworks had products and intellectual property.

'It's too bad to see a company like this one be treated that way by investors who just give up and walk away,' he said.

On Thursday, accountancy firm Ferrier Hodgson was appointed liquidator.

Ferrier Hodgson partner John Lees said: 'It is too early to forecast what will happen.'

However, the usual situation was selling the business, or at least the assets, Mr Lees said.

Innaworks, which owes money to four or five major creditors, had at least one expression of interest from a potential buyer, he said.

Mr Schneersohn said the company still had about US$1.5 million in reserves, but needed to pay off creditors, suppliers and staff.

The liquidators also had to settle the rent contract on the office, which was set to run until May next year.

'If we close the office this week, we will be able to pay everybody what we owe them,' Mr Schneersohn said.

Some companies ran until they were completely out of cash, but Mr Schneersohn said Innaworks officials did not want to do that.

'We are all keen on behaving properly,' he said.

Most staff had not suspected the company was going to close until they heard the news on Thursday, because Mr Schneersohn tried to keep them motivated and made sales pitches until the last minute.

Mr Schneersohn said the staff reacted well to the news.



Shareholders agree to disagree as funding dries up and investors reject appeals for more cash