Poynt Files For Bankruptcy Protection

Poynt, the Canadian firm behind the location-based app of the same name, has filed a Notice of Intention to file for bankruptcy under the Bankruptcy and Insolvency Act (Canada).

Poynts problems stem from a failure to secure funding, which left it unable to meet its commitments. A repayment of $1.5m secured debt funding to Intertainment Media, from whom Poynt had licensed a language translation platform, became due on 29 June. Finding itself unable to make the repayment, the company secured an extension of one week from Intertainment. The new deadline for repayment was 3 p.m. Mountain time on 5 July, 2012. When that deadline was missed, Poynt filed for bankruptcy protection, saying in a statement that it was “not currently in a position to meet the obligations owing to its secured and unsecured creditors and as such, has taken this action under the BIA (Bankruptcy and Insolvency Act) as the most expeditious and economical manner of addressing the interests of its creditors and allowing it to carry on its operations.”

The following day, the company released a statement saying: “By filing the Notice, Poynt Corp. is now in a position to address its obligations to its secured and unsecured creditors in an orderly and efficient manner. The filing provides an initial 30-day period for Poynt Corp. to develop a proposal to be sent to creditors for review and approval, during which period the existing claims of creditors are stayed. Poynt Corp.s ongoing operations and business will continue in the normal course during the Proposal process. Poynt Corp.s Board of Directors and management team are evaluating several opportunities for strategic investment or possible business combinations as part of developing the Proposal, with the focus of the Proposal being to satisfactorily address all creditor obligations and to maximize shareholder value.

“Under the Proposal process, the Company will continue to operate, expand its business and execute on opportunities for growth and monetization,’ said Andrew Osis, president and CEO. ‘With almost 17m users globally and a user growth rate of 20,000 to 25,000 new users daily, the company is in a strong position moving forward to consider a number of strategic investment and combination opportunities that have been presented. These opportunities will allow the Company to maximize our market position and provide increased value for shareholders while dealing with our creditors in an orderly manner.’”

Poynt made its money through advertising, targeting users with ads based on the keywords they used to perform searches within the app. It also had affiliate marketing agreements that include a revenue share on seated dinner reservations and movie ticket purchases made through the app.

Given the fact that the Poynt app, as Osis points out, had an installed user base of almost 17m users, the story illustrates how hard it is to make money from a free app, even one with pretty good take-up.

 

Update:
We asked Michelle Sklar, VP, industry relations at Poynt, for an update on the current state of play at the company. She told us: “Poynt has filed for creditor protection which is not bankruptcy but is under the BIA law in Canada (similar to Administration in the UK). The company is reorganizing but it is business as usual. We just released our Poynt beta for Android, and more announcements are coming down the pipeline over the next few weeks.”

Array