QFX looming default and insolvency event scenario

Besides the results of the abysmal FY14 Finacial Report there is a far more pressing and urgent financial issue at hand for QFX Board to resolve before 30th December.

And that is expected payment within six months from 30th June of the following Trade and Sundry Payables



30th June QFX Cash on hand was only 2.4m plus a further capital raising of 3.4m

"Cash at bank at 30 June 2014 was $2.4 million. Since then the Company has raised further capital of $3.4 million."

Given average cash burn over last two financial years of $691,406 per month (lets round that down to $650,000) gives the following estimates from 30th June cash position..


30th September cash on hand $3,850,000
30th December cash on hand $1,900,000

Appears that QFX urgently needs to raise roughly 6m before 30th Dec to meet Trade & Sundry Payable requirements. Otherwise QFX will be in default and any one of those creditors can call liquidation event on the company as per ASIC rules.

Even if there was no cash burn since June 30th. QFX still had 5m in the bank they are still well short of being able to pay 8m



http://www.asic.gov.au/asic/asic.nsf/byheadline/Small+business+-+what+is+external+administration?openDocument

Problem for unsecured creditors though, QFX has no assets, company has negative equity (technically insolvent) which has increased from 6.3m in 2013 to 10m in 2014

Hence the usual auditors warning.



So where is QFX going to get the money from to meet its financial obligations before 30th Dec? Certainly on past and current performance there is absolutely no hope of QFX trading their way out of this hole. And given the very low uptake from the recent attempts to raise more capital that's likely out of the question as well.

From the years of CRs and Loses Investors have likely had enough. Certainly going by the poor results of last CR & SPP, seems to be the case. Last SPP only raised 1.8m and already the SP is below that level.

Unless some white knight shows up in form of a take over (which seems to be investors last desperate hope), or current liability deadline is somehow able to be extended beyond the next three months. QFX could possibly default on those current liabilities and go into Liquidation before January 1st.

Even without the above current liabilities due. QFX are still desperately now short of cash once again at current burn rates. By 30th December they will be back to 2m in the bank which is the historic minimum level for raising more capital.,

With the above scenario quickly drawing to a conclusion within next three months, no wonder the SP has fallen below 1c from the recent pump.


Kat.