OZEQUITIES NEWSLETTER FRIDAY NOVEMBER 11, 2005Tel 613 9748 5033...

OZEQUITIES NEWSLETTER FRIDAY NOVEMBER 11, 2005
Tel 613 9748 5033 Fax 613 9748 5463 [email protected]

FEATURE Week’s Special:
BORN AGAIN QUIKTRAK WINS COMPANY MAKER ORDER - RECENT EVENTS MAY OFFER BARGAIN ENTRY
By Jenny Prabhu and Gerald Stanley

Quiktrak Networks Ltd, which went into administration on May 11 2004 was acquired by Multi-trak, an unlisted company in a similar line of business, in September 2004. At a meeting on July 22 this year, Quiktrak issued shares to Mark Pallister and Multi-Trak in a capital raising, and was reinstated on August 10 with Multi-Trak becoming a wholly owned subsidiary.
Multi-Trak was founded in 2004 and conducts a business similar to Quiktrak, so there was no change in Quiktrak’s business or commitments.
A huge deal was announced with China in mid September, followed last week by an announcement of a placement to the Thorney Group, headed by its founder Executive Chairman Alex Waislitz and owned by the Pratt family, who have subscribed for a placement of $4 million at 35c per share with an option for a further $2 million at 35c per share before November 30 2007.
Please note: Contrary to media reports today, the Thorney Group has taken up its shareholding, remains supportive and retains an option to subscribe for the balance (correcting from 'intends to').
The placement is to provide additional funding to speed up the mass manufacture of its new generation DSSS base stations and Quiktrak Transponder Modems.
(Thorney is a patient long term investor who tends to accumulate sizable stakes in stocks.
Notable successes include a stake of 24.57 percent in Fleetwood Corp acquired around 1998 at around $1.50 and sold in June this year when Fleetwood was trading at around $6.40, a handsome profit on Dollar Sweets Holdings on its takeover, and (later taken over) and others. (Other recent investments have included Espreon Ltd, Konekt, IWL and Wentworth Mutual)).

Recent events
On November 9 ASIC issued a summons to Mark Pallister alleging that he sought to obtain a benefit for an associated private company in early 2003. There is no suggestion of any improper conduct relating to Quiktrak.

Mr Pallister yesterday stood down as managing director until the ASIC proceedings are completed. The board fully supports Mr Pallister in his work within Quiktrak and has accepted his resignation to enable the matters which are of a private nature to be dealt with in the appropriate forums.
“The Age” this morning reports Mr Pallister as saying the matter relates to an inter company loan that was repaid when the matter was disputed.
Mark Pallister denies any wrongdoing and will defend the charges vigorously. The charges were also the subject of unsuccessful civil proceedings.

For people who believe the case should not impact on Quiktrak’s performance, any fall in price could offer a significant opportunity.

QUIKTRAK NETWORKS LTD – A SNAPSHOT
Quiktrak Networks Ltd was up until its re-birth this year part of Chris Kyriakou’s stable. It began life as Lennard Oil NL, became part of Chris Kyriakou’s Walhalla group and was spun out of Walhalla in 1996.
The Quiktrak tracking system was originally developed by Advanced Systems Research in a 50/50 joint venture with Lend Lease, and later sold to British Aerospace.
Greg Hurst, one of the original developers at Advanced Systems Research, continued to develop the product at QuikTrak.
Quiktrak purchased the intellectual property and world wide rights from BAE in 1999 for $A400,000, plus taking up BAE’s obligations to QuikTrak Technologies in Adelaide, and operations in the US, Turkey and elsewhere.
Quiktrak owns 20 radio towers in each of Sydney,Melbourne and Brisbane where it continues to operate spread spectrum radio networks. It’s low power spread spectrum beacon approach leads to a simple low cost package suitable for a wide range of applications.
Quiktrak has continued to provide tracking services for cars, fleets of trucks and other equipment, but struggled in the market place, descending to less than a cent before finally calling in the administrators in May 2004.
For the year ended December 31 2003 revenue from the sale of goods and services for Quiktrak was $8.652 million which was a reduction of 13 percent on the previous year. Of this total 51 percent came from the sale of goods and 49 percent from the provision of services. Services comprised mostly the provision of tracking and messaging monitoring over the company’s networks and technical support. The loss for the 2003 year was $4.392 million.
A 1 for 100 consolidation followed in June last year, with a Deed of Company Arrangement executed.
The Quiktrak business became majority owned by Multi-Trak which is majority owned by the Pallister family, in a similar line of business to Quiktrak.
Chris Kyriakou is no longer a shareholder in Quiktrak and has no involvement in the company.

Born Again Quikrak
By the time the July 22 2004 meeting of shareholders was called there was nothing left of the Quiktrak balance sheet with the company starting from scratch under its new major shareholder Multi-Trak, to which it sold all of its business assets for $1.35 million plus GST, excluding stock. Multi-Trak in an earlier announcement said it had 6,400 customers.
Multi-Trak Ltd is now a wholly owned Quiktrak subsidiary. Quiktrak Networks Ltd owns and operates vehicle tracking networks in Sydney, Melbourne, Brisbane and Adelaide with discussions well advanced for the supply of vehicle tracking networks in overseas markets.
*Major deal with China
On September 12 2005 QuikTrak Networks Ltd announced a major contract in Beijing to provide a security monitoring network for 3.5 million assets leading up to the Beijing Olympics.
The supply contract will provide total revenue to QuikTrak Networks Ltd of up to $380 million over the next 5 years through the operation of the QTK Network and the supply of QuikTrak Transponder Modems for use on the network.
QuikTrak Technology was showcased at the urban security exhibition 2005 held in Beijing.
QuikTrak Networks Ltd and China Alarm Holdings Ltd will now work together on new opportunities to install QTK’s Spread Spectrum networks into other major cities within the Peoples Republic of China.
*On October 5 QuikTrak announced it has received an initial order for 100,000 transponders to be monitored on Quiktrak Direct Sequence Spread Spectrum security network in Beijing by early 2006. Quiktrak advised that further base stations to expand the existing network to its second stage in Beijing are to be shipped within the next two weeks.
China Alarm Holdings Ltd secures frequency allocation for China to enable the technical operation of Quiktak’s DSSS security networks in other major cities in the People’s Republic of China.
*First opportunity in the Middle East
On October 24 2005 QuikTrak announced it has entered into an agreement with Wired and Wireless Solutions International S.A.L on October 20 to obtain a frequency allocation in Lebanon to operate a new generation of its proprietary secure static monitoring network for use in home and fixed asset security monitoring in Beirut. This agreement signals the beginning of QuikTrak’s expansion in the Middle East.
The parties have also agreed to the terms of a License and Supply Agreement which it is intended to execute on completion of the spectrum allocation in Lebanon, paving the way for QuikTrak to commence operations in the Middle East.
*Launch of new static monitoring service for home or office
Quiktrak in the next few months will launch its new static monitoring service for home, office and other secured assets.

On November 9 ASIC issued a summons to Mark Pallister alleging that he sought to obtain a benefit for an associated private company in early 2003. There is no suggestion of any improper conduct relating to Quiktrak.

Mr Pallister yesterday stood down as managing director until the ASIC proceedings are completed. The board fully supports Mr Pallister in his work within Quiktrak and has accepted his resignation to enable the matters which are of a private nature to be dealt with in the appropriate forums.
“The Age” this morning reports Mr Pallister as saying the matter relates to an inter company loan that was repaid when the matter was disputed.
Mark Pallister denies any wrongdoing and will defend the charges vigorously. The charges were also the subject of unsuccessful civil proceedings.

QUIKTRAK NETWORKS LTD FINANCIALS
Last Traded price 36 cents
Shares Issued 355.09 mln
Market Cap $127.8 mln
BALANCE SHEET Pro-Forma
27/5/05
Current Assets 1.9
Non Current Assets.. * 25.5
Current Liabilities -
Non Current Liabilities -
Net Assets & Shareholders' Funds 27.4
Intangibles
Net Tangible Assets 27.4
Gearing (Net of Cash) % nil
NA per share (cents) 8.0
Shares Issued (Millions) 343.66
* Shares in Multi-Trak Ltd, value un-substantiated

Cash Flows: 2005
Sep Qtr Pro-Forma
27/5/05
Cash on hand (at open) 0.2 0.2 **
Operating Activities (1.1)
Investing (0.3)
Financing Activates 2.0
Cash on hand at Year end 0.8 0.2
**Cash before capital raising

Directors:
Dr Andrew Unterweger, Exec Chair. Dr Unteweger was the founder and is currently the chairman of the UNICORP financial services group and a director of Unicorp Capital Pty Ltd and Chifley Equities Pty Ltd. He has over 20 years experience in board and executive management, including involvement in several pre and post IPO companies including Davnet, Telemedia Networks, Tawana Resources and others.
Joseph Bongiorno, non executive director replacing Colin Dunkerley who remains General Manager Sales and Marketing. Mr Joseph Bongiorno is the Executive Chairman of the Bongiorno Financial Services Group, one of the oldest and largest independent financial service businesses in Australia with 41 years of experience in accounting, financial management, finance and marketing.
Peter French, non executive director. Peter retired as Group GM of Australian Guarantee Corporation Ltd in 1991 after 31 years at a senor level in the banking , finance and insurance industries. Since retiring, he has worked as a consultant and advisor to Australian, Thai, Malaysian, Singaporean and Indonesian governments on the framing of legislation relating to financial transactions through his private company Labarinth Enterprises Pty Ltd.
Bernard Hui, Co Sec
(Outgoing directors on the change of management were JA Landels, chairman , Chris Kyriakou executive director and B J McGeorge).
Key executives:
Colin Dunkerley co-founded Multi-Trak Ltd in July 2004 and joined Quiktrak in March 2005. He worked for Harvey Norman group as a salesperson, manager, and for the last seven months as a franchisee.
He has confirmed he will continue to voluntarily escrow 12 million of the shares he holds in the company. Colin has overseen the restructure of the company’s sales and distribution base and is preparing for the launch of Quiktrak’s new static monitoring service for home, office and other secured assets in coming months.

Major Shareholders
The Pallister Family Trust 45 percent
Thorney Group 3.2%