Shares in Quickflix, the Australian online and movie rental service, have been placed in a trading halt after the company struggled to raise cash to fund its operation. Questions are also being raised as to the value of its subscribers.
The halt will last until the opening of trade on November 15th.
Earlier this month, the company released its latest financial results, which revealed it was witnessing significant subscription churn. It also admitted it was burning through cash, with the Company spending A$3.5 million during the last quarter.
In its latest financial filings with the ASX, the company said the number of paying customers lifted by 7 per cent to 119,593 during the quarter while total subscriber numbers lifted by 9 per cent to 129,274. However questions are now being raised as to whether the claimed subscribers are actually spending money with Quickflix.
Investigations by an Australian news company reveal the company has been counting subscribers who have only been spending $1 to get access to a trial service as part of a promotion for new subscribers.
It’s also alleged that the Company has resorted to counting gift cards that are supplied to wholesalers despite the fact that these gift cards have not been activated as a paying subscriber.