Market Overview

Fear Grips Shares of Independent Film Development Corporation as Investor Sell-Off Continues


By M. Morhamus

Investors involved with the Independent Film Development Corporation (OTCBB: IFLM)-- an emerging international distributor and producer to the multi-billion dollar Independent Film Industry-- have seen shares of the company plummet over 90% in the past several months.  Rumors attribute the decline to investor uncertainty over the possible "death spiral" financings with Junior Capital disclosed in recent filings.

Small-Cap Investors fear that the once promising company may be forced into bankruptcy as so many others who enter into those financing agreements wind up having to do since deal terms often turn out to be toxic and difficult to escape.

Disclosures with the SEC show that Independent Film Development Corporation's overall plan to acquire and develop independent films for production, sales and distribution, with a goal toward significant partnerships with mini-major and the major film studios, has had its recipes for success compromised since it entered into agreements with Junior Capital Inc.

The company had previously announced that it had hired a third party to develop an Internet based entertainment web property specializing in social networking and resourcing, production, development and distribution for independent film and television industry. Its revenue model was to sell and market services to the community of entertainment professionals and non-professionals in the form of classifieds, education forums and advertising, as well as providing a stable for unique projects to fit in the overall company umbrella. It now appears that publicly stated goals of launching that website are at risk and may not come to pass.

It has become increasingly clear that the company's financial health may be under pressure as a direct result of those agreements, and investors have been selling off their shares for fear of losing their entire investment.

Filings with the Securities and Exchange Commission show that On July 1, 2011, the Company entered into an exchange agreement with Junior Capital Inc. ("Junior"), pursuant to which Junior exchanged a $350,000 promissory note for a $350,000 convertible debenture (the "Junior Debenture"). The Junior Debenture accrues interest of 10% and matures on July 1, 2012. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the common stock on the date of issuance, or $0.05 per share of common stock on the date of conversion as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company's common stock. As of June 30, 2012, $100,000 of the $350,000 debenture was converted into 2,000,000 shares of common stock.

On October 25, 2011 the Company issued a convertible debenture/note payable to Junior Capital, Inc. for $20,000; $15,000 of this amount was advanced to the Company prior to signing the debenture and prior to the year ended September 30, 2011. The remaining $5,000 was received in October 2011.  The Debenture accrues interest of 10% beginning on October 25, 2011 and matures on October 25, 2012. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the common stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company's common stock. As of June 30, 2012 $20,000 of the principal face value of the Junior Debenture remains outstanding.

On January 11, 2012, the Company entered into a $33,000 convertible debenture with Junior Capital Inc. ("Junior"). The Junior Debenture accrues interest of 10% and matures on January 11, 2013. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the Common Stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company's common stock. As of June 30, 2012 $33,000 of the principal face value of the Debenture remains outstanding.

On March 15, 2012, the Company entered into a $40,000 convertible debenture with Junior Capital Inc. ("Junior"). The Junior Debenture accrues interest of 12% and matures on March 15, 2013. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the Common Stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company's common stock. As of June 30, 2012 $40,000 of the principal face value of the Debenture remains outstanding.

On June 5, 2012, the Company entered into an $18,000 convertible debenture with Junior Capital Inc. ("Junior"). The Junior Debenture accrues interest of 12% and matures on June 5, 2013. Junior has the right to convert all or a portion of the principal into shares of common stock at a conversion price equal to fifty percent (50%) of the average of the closing bid price of common stock during the five trading days immediately preceding the conversion date, or fifty percent (50%) of the closing bid price of the Common Stock on the date of issuance as quoted by Bloomberg, LP. Pursuant to the terms of this debenture, the holder shall not be entitled to convert a number of shares that would exceed 4.99% of the outstanding shares of the Company's common stock. As of June 30, 2012 $18,000 of the principal face value of the Debenture remains outstanding.

IFLM management could not be reached to comment on any of these matters. One year ago, the publicly traded firm stated that it had planned to launch their web property prior to the end of Dec 31 of 2011. As of this date, the site has not launched and shares have reached sub-penny levels.

 

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