Tiny Qonnectis is at present in an embryonic stage, but seems to have an interesting product with great potential. Their flagship product connects energy and water meters to the Internet via Qonnectis' own server and users' website, providing 24-hour real-time accessibility as well as the opportunity for instant data comparison and updates as frequently as every 15 minutes. This avoids the costs of traditional meter-reading methods (i.e. reading by eye or the more recent "drive-by" technology). The new technology has already saved one early customer a reported 180,000 after it spotted a water leak and alerted the user. Early adopters include utilities such as Scottish Water and Generale des Eaux Lyon, plus public sector clients such as the NHS, the RAF and various District Councils (the list is numerous, so please see QTI's press releases for the whole picture). In November 2005 QTI announced a distribution deal with Compteurs Farnier of France, providing potential access to the USA and Canada in addition to the French market.

The business case for QTI seems strong: the product is inexpensive and provides cost savings both in terms of labour-saving and of cutting wastage. Sales include an element of subscription on a five-year basis; it seems logical that satisfied customers will both increase their number of meters in use and come back for further subscriptions after the five-year period has elapsed. The potential market is huge. The real question is, when will QTI achieve break-even?

CEO Mike Tapia previously built up the Talisman remote/drive-by meter-reading business, which was then sold to Severn Trent Water Co around 1997.

Does anyone have any figures on the Talisman sale, or perhaps on Compteurs Farnier? It would be good to get some idea of the current market.


EDIT: New charts added, 21Dec2007.

I attended the AGM yesterday but was then seduced away for the evening so unable to log in again till tonight.

Very positive mood and clearly big opportunities for sales to all the water companies as well as direct sales to the end-user (e.g. businesses, NHS Trusts, football clubs).

It was great to see Leakfrog in the flesh its a neat gadget that clips directly onto a water meter. Enquiries are coming in from above-mentioned types of customers, both in the UK and from the Continent and even as far afield as Australia. QTI has three in-house sales staff who are responsible for developing partnerships and sales channels so the company is not risking big overheads in an increased sales force of their own. The move to smarter (but cost-effective) offices means that they now have suitable premises where high-level sales negotiations can be conducted. QTI will be attending relevant exhibitions, e.g. Ireland next month, UK in May, and EU later in the year.

Government moves to encourage utility monitoring will (in my view) only increase, and I am confident that QTI have a ready-made market for their products. The sp may dodge about a bit but its worth a long-term hold I reckon and thats coming from someone who can be a bit impatient at times!

Never mind QTI Toya, tell us more about your seduction last night. Only joking haha.

Morning Oily!

Morning.

Thanks Toya - was anything said at the AGM that would clarify the above point (369) about H1 turnover and was there any indication of when they expect to break even?

Jmac: no distinction was made between turnover from Leakfrog vs iStaq but the latter continues to sell and we know that the first order for Leakfrog was worth 200k so anything else in H1 would be attributable to iStaq. Not sure about break even point - thought they'd made a 2k profit in H1 following the 200k order, but may have got that wrong.

i dare say Toya was taking the CEO's inside leg measurement to inveigle her way to some hard fact

Does anybody know the price per unit for leakfrog in order to estimate sales potential? How many did Thames get for 200k?

Armshare includes a report on a meeting with MT on 15/1 which says that QTI maintains a 60% gross margin on Leakfrog if they sell it at 100. IF that is what Thames paid then they bought about 2000 units.
Even if QTI made a gross profit on those of 120k it's still difficult to see how they could have broken even in H1 without a big increase in sales of iStaq and a substantial reduction in fixed costs.

Morning all. Good points, everybody, and thanks to Toya for reporting from the AGM!

JMAC, you are quite right about the break-even. If QTI can make 60% gross margin across the board and all the other figures remain in-line, they'll need to do around 1.85 million turnover to break even. I have long maintained that the 2 million mark is what they'll need to hit to be profitable - the good news is that margins seem to be strong and this therefore seems to be attainable.


PDYOR, etc.

but Toya has still not divulged to the panting mob exactly what she gleaned from the CEO's inside leg

RNS out indicating Barclays Stockbrokers increased it's holding to more than 6%

Cynic and co: sorry, I got distracted by the chatter at the meeting and clearly didn't focus on asking the right questions, nor making notes on the minutiae of figures and measurements!

Guess I'm not too concerned since Thames Water Authority, alone, have millions of customers - and that's just one of many Water Authorities. I'm confident that the company is following up plenty of sales leads and that they have sufficient experience to turn these into revenue during this year.

Got to get back to keeping an eye on RIO and XTA as I cashed in profits this morning and bought back in again later.

I see QTI's stand is near the food and drinks - they've clearly got the right priorities....

http://www.esta.org.uk/esta/uploads/ESTA%20aM&T%202008%20exhibition%20layout%20v2F.ppt

Good - best place to be if you want to make sure everyone can find your stand!

1st February 2008

Qonnectis plc
(AIM: QTI)

Issue of Equity


Qonnectis plc ('the Company'), the energy and environmental data monitoring
service provider for utilities and major commercial users of energy and water,
announces it has agreed that the principal amount of the loan stock, all
interest outstanding thereon and any other obligations of the Company pursuant
to the loan facility, loan note instrument and debenture dated 28 August 2007
between the Company and Security Change Limited (the 'Loan Facility') shall be
satisfied by the allotment to Security Change Limited (or to whom they direct)
of 25,000,000 ordinary shares of 1p each ('Conversion Shares').

The parties have agreed that the conversion price be 1p per share, which
represents a premium to the closing market price the day before the Loan
Facility was announced on 29 August 2007.

Application has been made to The London Stock Exchange for the Conversion
Shares, which will rank pari passu with the existing shares in issue, to be
admitted to AIM, and admission is expected to become effective on 7 February
2008.

Following this notification, the total number of shares in issue stands at
243,608,023.

Dont know who Security Change Ltd are but they appear to have done rather well out of the 250,000 loan they extended to QTI last August (like 100%). Not so good for sharehoders as their hodings diluted by 10%.

Yes, but seems to have been factored into the current sp.

Perhaps but now shareholders own 10% less of the company and no doubt Security Change Ltd will be looking to off load their 25 million shares.

A lot depends on how many shares they dispose of, how they do it and in what time frame but on the face of it a 10% dilution (which has been more or less expected for months) shouldn't have much effect on the sp in the medium term.