A New South Wales-based risk management technology business has collapsed, with debts expected to be close to $1 million, as the uptake of its software has been slower than expected.
CorProfit Systems was placed in administration on November 29 and Murray Godfrey and David Iannuzzi were appointed as administrators from Veritas Advisory.
The company develops risk management technology for businesses in sectors such as banking and finance, construction, manufacturing, mining and telecommunications.
As well as developing the technology, it also provides consulting and training services.
Godfrey told SmartCompany the company’s product wasn’t taken up by the market as quickly as predicted.
“Lots of money was invested in R&D and in getting the product to market, but it’s had a slower than expected take up in the marketplace,” he says.
“Lots of money was invested by people to fund the program, so you have a situation where the business has run out of cash.”
Godfrey says at this point he’s still in the process of assessing the business.
“I have indicated to staff when I was with them on Friday for the most part we’ll be trading as normal while the assessment continues and trying to service the company’s customers as best as possible and we’ll also be looking for a sale,” he says.
“There are several interested parties. We’ll deal with those and also be entertaining other parties to see if we can get a sale. I’m sure there is someone who can see the value in the product.”
At the moment the company has nine employees and as yet there haven’t been any redundancies.
Godfrey says he estimates the debt is just under $1 million, not including investor money.
“The ATO isn’t owed very much thanks to R&D offsets, the employees are owed a significant amount of money and I believe the investors would make up the majority of the creditors,” he says.
“Unsecured creditors are very significant, but in the scheme of things it’s not huge dollars.”
Godfrey says he hasn’t dealt with many failed technology companies this year; however CorProfit Systems’ mistake was having a incompatibility between the amount invested in sales and product development.
“In any business which has a new product and you invest everything in the product, rather than in sales, you have a mismatch,” he says.
The first creditors meeting is scheduled for December 10, 2013.