Bristol tech company collapses months after being bought for more than £1m

A tech and marketing company in Bristol that was sold earlier in the year for more than £1m has collapsed. Redcliffe-based 3radical was snapped up in a reverse takeover deal by London-listed Electric Guitar Plc in April.

The company has instructed Paul Ellison and Christopher Errington of KRE Corporate Recovery to market 3radical's business and assets for sale. It is understood that KRE will be appointed administrators with a view to completing a pre-packaged sale of the Bristol firm.

Electric Guitar said the board of directors made the decision after it failed to secure new funding to support the business.

The announcement comes just two days after Electric Guitar suspended its trading of shares on AIM as it seeks to clarify its financial position. The company has been working on a so-called buy-and-build strategy since acquiring 3radical seven months ago. It completed the all-share acquisition of data business Mymyne in August, which it said resulted in 'significant synergies and cost-savings' for 3radical.

But its share price has continued to decline since the reverse take over despite Electric Guitar investing £250,000 in sales and marketing.

"It has taken longer than expected to benefit from the fruits of such activity although this is now starting to show," the company said in a statement. "Therefore, the board has been actively seeking additional capital beyond its existing resources to be able to proceed with its buy and build mission, beyond just bringing the 3radical business to profit.

"However, the company's declining share price has not only inhibited its ability to pursue its buy and build mission, but has also made an equity fundraising difficult at this time."

Electric Guitar had been courting prospective investors in Singapore, where it has a presence, and had secured "in principle" substantial new funds, it said. But it is understood the investors pulled out "unexpectedly" claiming the market was "insufficiently liquid".

"This combination of factors led the Electric Guitar board to conclude that, absent substantial additional funding in the short term that was not now available, 3radical's business could not reasonably be expected to be able to pay its historic and ongoing liabilities as they fall due, despite 3radical's management's positive longer term outlook for the business," the company added.