Dexit cuts staff; explores sale
21 July 2006 | 4250 views | 0
Canadian small value payments firm Dexit is laying off almost half its staff and scaling back operations as it explores 'strategic options' for the business.
In a statement the vendor says in response to "overtures from several potential strategic investment partners" it is reviewing strategic options and has hired US financial advisor Kirchner to manage the process.
The options may include partnerships, business combinations and investments.
At the same time the company is reducing the number of staff from 55 to under 30, realigning product development, reducing rent and other overhead costs and cutting resources in non-core areas.
Dexit is also reducing the number of locations in and around Toronto where consumers can use the Dexit rechargeable token for electronic payments.
John McBride, CEO of Dexit, says: "We believe this initiative will enable the company to realise higher value for its significant technology investment to date and focus our people and financial resources on key opportunities."
Formed in 2001, Dexit launched its e-payment tag in Toronto in 2003. More than 450 merchant locations were accepting its tag payments by December 31 2005, and more than 50,000 consumers were registered for the service.
But the company has failed to turn a profit. For the fiscal year ended December 31 2005, revenue was C$4.7m, while net losses came in at $6.7 million. For the first quarter of this year the firm reported revenue of C$859,941 and a net loss of C$1.87 million.
Worryingly, in today's statement, Dexit says that "substantially all" of its year-to-date reported revenue was from a licence and exclusivity deal with Bell Canada.
That agreement expired last month and Dexit says the two companies "continue to negotiate in good faith", but there is assurance that an agreement will be reached. If a deal is reached, Dexit says it will be "substantially different" from the original licensing deal.
The vendor does say that it will receive no revenue from the Bell Canada partnership for the second quarter this year.