Digislide slips into administration
ASX listed projector start-up hits the wall
Award winning digital technology start-up Digislide has been plunged into administration after collapsing in a mountain of debt and irate shareholders.
The South Australian tech company, which was armed with a slew of innovation awards for its digital mini-projector technology, went into administration in December appointing PPB Advisory. Following a disressing first creditors' meeting earlier this month, shareholders voted in favour of replacing the administrators with BDO Australia.
The company’s sudden fall from grace came weeks after it had secured a potentially lucrative national US distribution deal for its products through retail giant Walmart, via international partners Ingram Micro and Navarre. Amazon.com and Office Depot had also picked up the South Australian company’s product range.
The administration began in late December, after talks with Sydney-based investor Multi Vendor Support Services (MVSS) collapsed. The two outfits were in discussion over payment terms of unpaid debts amounting to over $AU500,000 in convertible notes.
The Register understands that MVSS has sent letters to fellow creditors in order to potentially team for a class action against Digislide directors.
According to the Adelaide Advertiser, the creditor’s letter from MVSS founder Mal Fraser-Clay claims that Digislide abused investors' faith and relied on Christianity to "separate people from their money".
Clay writes: "My investments in Digislide, whether by way of capital support or loans, were made as a direct result of the representations of the (company). These representations now appear questionable. I am personally seeking legal advice to resolve my concerns; I suggest you also consider the same.
"I encourage you to join me in a possible class action to recover our money from those responsible for these circumstances with which we are now faced.”
Digislide shares have been suspended from trading on the ASX since September. Trouble was brewing for the ambitious company as early as March last year when it became embroiled in a wrangle with Austrade over denial of funding.
As reported by The Register the Australian government had withdrawn support for the company under its Export Marketing Development Grant program. The company revealed in its half-year financial statements that Austrade had denied grants relating to $AU500,000 of overseas marketing expenses, a decision that company is appealing. The Australian Taxation Office was also auditing the company's GST account.
In February 2011, Digislide company secretary Jeff King claimed that the Australian Government owed the company about $AU800,000 in tax and export marketing grants, an amount that would help the company survive while it worked toward breakeven.
Digislide’s auditors, at the time, Hayes Knight, warned of the inherent uncertainty of the company as a going concern, noting it remained dependent on raising further funds from shareholders to remain solvent.
The company posted an annual loss of $AU2.41 million in the year to June 30, based on sales revenue of $AU325,904. ®