Attempts to keep a troubled business alive hit a snag this week as Magor Corp. (TSX-V:MCC), backed by local tech icon Terry Matthews, said it was preparing to make an application for bankruptcy protection and delisting from TSX Venture Exchange.
Trading of the Wesley Clover-backed company’s shares were halted on Nov. 21. That followed an announcement in September that it would be undergoing a strategic review, a term often used when companies search for a buyer or further sources of funding.
The Kanata-based company continues to work with Sampford Advisors on the strategic review process.
Losses have been mounting for Magor for over a year. The company, a provider of video collaboration software, posted a loss of $1.56 million in its first quarter ending July 31, a slight improvement over losses of $1.58 million the same period a year ago.
The quarter came after a 22 per cent drop in annual revenues, with the company bringing in $1.77 million for the fiscal year ending April 30, down from $2.25 million a year previous.
The company had been sustained by contributions from Mr. Matthews, Magor’s chairman, who loaned the company $975,000 at the end of the fiscal year. In September, it took out an additional loan of $690,000 from another company owned by Mr. Matthews.
Despite its challenges, there had been bright spots for Magor in the past year. While reductions in on-premise software sales were significant, the company’s transition to selling subscription-based software raised recurring revenue to $630,085 in fiscal 2016, an increase of 60 per cent year-over-year.
“The company is actively working towards driving the recurring revenue model," Mr. Matthews said in an August statement.
In that same month, Magor also lost its CEO as Mike Pascoe stepped down from the role. Since that time, Magor’s chief financial officer Brian Baker joined the board and has filled the CEO position on an interim basis.
The company now has a 30-day stay of proceedings to protect its assets as it restructures and establishes a proposal to repay its creditors.
Magor could not immediately be reached for comment.