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Trade Creditors Banging On Quickflix Door As Company Tries To Raise $6.7M

Trade Creditors Banging On Quickflix Door As Company Tries To Raise $6.7M

ChannelNews
understands that trade creditors are currently more than $8M with a large chunk
of this liability due to be paid by December 14th.

While
promotion subscribers have been rising the core DVD subscriber base has fallen
according to insiders at the Company.

“There
were consumers who paid good money for a DVD” said one concerned Quickflix
executive.

CN
understands that DVD subscriptions are down between 30 and 40%.

“Quickflix
is surviving on the wholly reliant goodwill of their trade creditors and one
has to seriously question whether Quickflix is a serious going concern in light
of Netflix coming onto Australia next year” the executive said.

They
added “In its current format no amount of capital will turn around the business.
If new shares are issued the current shareholders will see their shareholding
diluted by up to 50%”.

Chief
executive Stephen Langsford who gave himself a massive pay rise recently
despite making no profits for the past four years and with the future of his
Company looking decidedly wobbly, in light of Netflix’s announcement last week
that they will officially launch in Australia in March 2015 claims that he needs
the additional capital to protect itself from the arrival of US streaming giant
Netflix in March next year.

Quickflix plans to issue five new fully paid ordinary shares for every four
shares to raise $5.7 million and will offer its customers an additional capital
raising to raise up to $1 million, according to an announcement lodged with the
ASX.

Langsford denied the capital raising was specifically in response to Netflix’s
plan to come to Australia, but said the company plans to use the moola to build
its marketing and content platforms, which may include getting more exclusive
content and expanding its pool of recent-release movies.

The company recently announced a deal with Sony to stream some of its video
assets. Including Breaking Bad.

Quickflix share price has plunged from 13.85c early last year to just 0.3 cents
on Friday.

Insiders
who have had access to Quickflix financials said that the Company is currently
running out of cash. “One year’s survival requires at least $10M or another 2-3
billion shares. They claim that the Company has lost its ability to excite more
investment at any value.

The WA based
Company has been to the market 13 times since 2010 to raise capital with all of
it being spent on marketing, acquisition fees and high salaries for directors.

An
administrator told ChannelNews that the assets of the Company have some value
and could be sold to pay out creditors, however the their disc library asset which
they acquired from Telstra BigPond for $500,000 is now valued at less than
$95,000 due to declining demand for disc content.

Insiders value
the business at between $500K and $1M.

Recently Stephen Langsford the Executive Chairman and CEO was awarded a 44 per cent pay rise to $392,413, while Mr Simon Hodge, Executive Director and CFO saw his pay packet rise by 38 per cent to $349,597.