After sinking to a 52-week low of 0.040 on Monday shares of Poynt Corporation (TSX-V: PYN.V) are slowly moving up on Tuesday, inching to a high of 0.045 with trading volume consistent with their average. While PYN.V is trying to build off recent disappointments shares remain at a level far below where they were at just two months ago when they were trading as high as 0.120 and many feel that the best days for the provider of mobile local search and advertising services may well be behind them.
Last week PYN.V announced they had revised the terms of their previously announced private placement, shifting from up to 140,000,000 units at a price of 0.05 per unit to an agreement with Canaccord Genuity Corp. in which the Agent agreed to sell on a “best efforts” private placement basis, up to 120,000,000 units of PYN.V at a price of 0.05 per unit for gross proceeds of up to $6,000,000. An additional $3,000,000 could be raised if Canaccord exercises an option up to 30 days following the closing date of the Base Offering to acquire up to an additional 60,000,000 units.
It goes without saying PYN.V needs the money and has said they intend “to use a significant portion of the net proceeds of the Offering to repay a currently outstanding secured loan, to satisfy outstanding payables, and the balance will be used for general working capital purposes.” That being said, there is obviously no guarantee that the private placement will generate the aforementioned proceeds.
PYN.V is certainly hoping they will see a favorable return on their recently introduced premium advertising alternative Brandscape which offers advertisers a persistent page takeover within search verticals of the Poynt Platform. According to a previous press release issued by PYN.V this advertising alternative provides advertisers with “100 percent Share of Voice within the search vertical of their choice – gas prices, businesses, movies, events, people and restaurants.” In turn this will enable advertisers to “get in front of users in a timely way when they are looking for relevant information.”
Essentially what Brandscape offers advertisers is the ability to “hone in on millions of users by owning an entire category without competing banners for maximum brand exposure.” That sounds like a perfect fit for advertisers but just how well received it is by users has yet to be seen. The platform could produce an adverse reaction from users who simply dismiss advertisements when they are searching for options on deals.
To their credit PYN.V has done a solid job on growing their unique users, surpassing the 16 million mark with these users performing more than 70 million local searches monthly on all major smartphone and tablet platforms in nine countries. If PYN.V is to succeed that trend in growing users will have to continue as their entire business model revolves around serving up advertisements related to search results.
A slowdown in users would likely shore up any advertising dollars being brought in so while PYN.V has to create a platform that is attractive to the advertiser they must also provide a service that users find valuable. PYN.V is in an extremely competitive market as more and more companies are entering the GPS-enabled mobile local search and advertising arena. This means PYN.V has to stay ahead of the pack and that takes money but unfortunately that’s not something Poynt can boast about at the moment.
As it stands Poynt is available on Android, iPhone, Windows Phone and Nokia devices, along with BlackBerry smartphones and BlackBerry PlayBook Tablets in Canada, the United States, Europe, India and Australia. The company is also moving forward with a joint venture with the People’s Republic of China’s China Youth Goyor Technology (Beijing) Co., Ltd. to expand the Poynt Platform into China, a move that could significantly boost their user base.
The move into China could be what defines PYN.V as they have invested a considerable amount of capital in this joint venture and during the first quarter 2012 that joint venture produced an initial version of the Poynt China app made available for download for Android devices with intentions to develop launch and monetization plans for the Poynt China platform in the near future.
Just how big is China for PYN.V? In the company’s 2011 year-end financial report they noted, “Through both geographic expansion and new preload agreements, our position in the mobile application space is strengthening. We expect to exceed 40 million users by the end of 2012, including 20 million new users from our China Joint Venture.” To say that China is critical may be an understatement.
Investors should get a clearer idea about the direction of PYN.V in the near future as this private placement plays out but even if they see the full $9,000,000 from the deal a significant chunk of that would simply be going to take care of outstanding debt.