The builder of the Factom Protocol, Factom Inc. had quite the financial difficulties over the past few years and now the blockchain company filed for bankruptcy as we are about to find out more in our blockchain latest news.
The blockchain company based in Austin-Texas, declared voluntary bankruptcy saying that it is currently not in the position to pay its $7.5 million debt. A submission filed in Delaware reads:
“It is desirable and in the best interests of the Company and its stakeholders to file a voluntary petition for relief.”
The red flags started emerging in early March when Factom Inc. told the investors it faced heavy liquidation unless it received more funding by the end of the month. It did receive some interest at first according to the company’s announcement but then they made a new announcement saying they weren’t able to find a lead investor after all. Factom Inc. has now chosen the Chapter 11 route which allows it to restructure the business and then pay the creditors over time. The company’s board submitted a new reorganization proposal with its bankruptcy filing which will be evaluated by the administrators. The company raised $18 million from investors in a series of funding rounds.
The chairman David Jevans previously said that the closing down of the company will not have an impact on the running of Factom Protocol, a trustless data provenance layer that is built on top of the Bitcoin blockchain. As a part of the proceedings when filing a bankruptcy, Factom declared publicly its balance sheet. It is clear that the company which received a grant from the US Department of Homeland Security was in heavy financial issues for some years.
The losses escalated since the launch in 2013 and then in 2016, the company reported a $2.6 million loss with an additional $4.3 million loss the following year. it seems that the company tried to cut back after the major losses reached $5 million in 2018 and the $4.8 million in 2019. Factom did cut employee wages by under $390,000 between 2018 and 2019, the compensation for company officers increased by more than $260,000. There was an increase of $430,000 in other deductions including legal fees. There was no further comment from the company.
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