After its efforts to find an Australian partner fell through, struggling online streaming service Quickflix has turned its sights to China.
Quickflix has signed a memorandum of understanding to acquire a Shanghai-based film and TV company in a bid to form a global distributor of Chinese content.
The move comes just a day after Quickflix announced its agreement to re-sell content from rival streaming service Presto had fallen through.
Quickflix says the unnamed Shanghai company is profitable and generates free cash flow, which puts it in stark contrast to its Australian suitor, which has not posted a profit during its 12 year life and lost $8.6 million during the first half of 2014/15.
It has not said how it would pay for the acquisition, but Quickflix had just $900,000 in the bank at the end of June.
Quickflix was launched in 2003 as a DVD-mail out business and became Australia's first online streaming business in 2011.
But the company has continued to burn through cash and has had to tap its shareholders for additional funds multiple times, contributing to a dramatic slide in its share price, which has slipped from around 13 cents to 0.2 cents in just over three years.
A recent attempt to raise money from its shareholders fell well short of its plans, bringing in just $650,000 of its $5.7 million target.
The launch of rivals Netflix, Stan and Presto has seen its customers numbers decline rapidly in the past six months.
Total paying customers fell 12 per cent to 108,000 during the June quarter, while revenue dropped 15 per cent to $4.2 million.
The Chinese company it is looking to buy produces original film and TV, which Quickflix says would fit well with its streaming platform.
"Combining the Quickflix platform, with original content and accessing large global audiences represents a significant opportunity to unlock the value of Quickflix," the company said in a statement.
The proposed takeover is subject to due diligence and regulatory approvals and Quickflix said it would provide a market update by August 20.
Quickflix shares closed flat at 0.2 cents.
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