re: Ann: Quarterly Update and Appendix 4C Dec... Both Mr Gann &...

re: Ann: Quarterly Update and Appendix 4C Dec... Both Mr Gann & Ausmitch have valid points.

I totally agree with Mr Gann's points. I have been following this stock for years, since they started operations. They have been promising a lot, but have yet to deliver sustainable profits. As can be seen from the quarterly update & cashflow report, their "surge" in subscriber growth is really from the acquisition of the Telstra Big pond DVD business. It was not organic growth, but rather an acquisition, so it should not be called a "surge".

The second point I've noticed from their cashflow statement is their model is not that scaleable as they predicted it might be. Despite the growth in subscribers, they have yet to show a profit.

Ausmitch, the following quote: 'Quickflix is finalising negotiations which if concluded will introduce a major strategic partner and funding for the Company' This is another way of saying..... Sorry guys, we need more $$, even though we just raised approx. $4.7mil 5-6 months ago. QFX essentially burnt $6million in the 5 months to Dec 31, 2011.

With this new capital raising, QFX really need to raise approx. $20 mil. Anything less means they will have to come back to shareholders within a year. Their cash burn rate is really high. An alternative would be a much smaller raising, but reduce advertising & marketing costs. Yes, there would have been upfront costs in relation to signing the deals with the movie companies, but I believe they are negligible up front costs. There is a once off up front costs of acquiring the big pond DVD business, but still they have an operating cash OUTFLOW (i.e. not including the big pond acquisition costs) These movie companies have a model where they earn the bulk of their revenues when a subscriber watches a movie from their stable.

The bulk of QFX's revenues still come from the DVD mailout business. This would only benefit serious movie buffs (i.e. @ least 3-4 DVDs/week). For casual and occasional users, the local movie rental store is still the go. Even for people who like watching 1-2 movies a week, there are new low costs kiosks (like red room & oovie) which rents new releases any day for $2.95. You don't have to stuff around mailing the DVDs back to QFX & you don't have to wait for the DVDs to come in the mail. & you don't have to worry about the DVDs not reaching before the weekend. :)

The reason why I got interested again after following the stock for a long time is their online streaming business. However, after some prompting from Mr. Gann, I went online to look at their online movie library. Have to agree that the people who are interested in watching their online movies are probably pple who don't really know how to use the internet. :)


As I've mentioned yesterday, this looks like an interesting stock, but I was waiting for the quarterly to paint the true picture. This stock can be pumped by management with countless "significant" & "tremendous" announcements, but numbers don't lie. They tend to tell you more about how the company is functioning. If I had shares in the company I will be taking some profits here, probably holding onto some in the hope that punters can drive up the share price on the back of a significant player taking up a stake.

Information is leaky in this company.... just look at the share price rise before the samsung/HBO deals. Management can talk the talk, but they need to walk the walk too. I don't really like stocks that have been pumped full of "significant" & "great" news to drive the share price up before a capital raising. QFX have not been able to walk the walk over the past few years, so I will stand aside until they can show sustainable profits.

Take profits. Most people that bought in the last year would have done well & made some profits. It's time to bank some.

Happy Investing.