3SOF

Profile: GamezNFlix, Inc (GZFX.OB). Formerly known as Point Group Holdings, Incorporated.. The Group's principal activity is to rental on-line DVDs and video games to it's subscribers. The Group provides a large selection of video game rental choices to its customers on a monthly subscription basis. The Customers can sign-up via the web page and get the games shipped to them through first class mail. The Distribution centers are located in a home-based office space in Franklin, Kentucky, with VeeGeeZ maintaining one location and a distribution center in a home-based office space in Santa Clarita, California. The Group operates solely in the United States.

I've seen their website and concept: http://www.gameznflix.com/

Oh God, I just wish I lived in the US, you guys have everything there  

The company already has revenues:

«The Company reported gross revenues of $243,982 and $405,755 for
the three and six months ended June 30, 2005 of which substantially
all of our gross revenues were derived from monthly subscription fees.  
During the three and six months ended June 30, 2005, our subscriber
base averaged approximately 3,000 subscribers per month. »

Revenue growth from the first to the second quarter was about 50%. If the pace of subscriber growth continues at 3,000 per month (it may accelerate), their revenues would grow to about $4M in a year. With gross margins of 42% the company would have a gross profit of $1.68M.

It's current market cap is $7.59M.

A couple of weeks ago this news was out:

Circuit City to Offer GameZnFlix's Online Video Game and DVD Rental Program

I think subscriber growth for this company can go from arithmetic to exponential. The business model makes sense to me and not only to me, since they're already adding about 3,000 new subscribers per month.

The risk here is that recently they increased the number of authorized shares from 2 billion to 4 billion, and for now they have "just" 925 million shares issued and outstanding. But I see costs being diminished from the year ago levels, so maybe, just maybe, with increasing revenues they won't need to dilute the value of shares so much.

I believe in this company's business model. If I lived in the US I would be a subscriber.

So I'll buy 10% of the 3 Pennies on Fire Portfolio at tomorrow's open on GZFX.OB.

Hey Dave,

This one just popped up on my filters recently and ive been watching it as well. I'm fully invested right now so im not sure if im gonna be able to make some room for this one, i hope so cause i think we all can make some money off this one, if not short term like were hoping then definatley long term.

Heres just a copy/paste from my analysis i made on the stock picking board yesterday:

I think there could be some great potentail in this pick. Revs have been increasing steadily over the last couple years. with cheaper rates than the industry leader netflix which is on the NASD and selling for 26/ share. I see the potential for much higher stock prices for GZFX. The fact that GZFX provides video games for rental gives a significant advantage over netflix, allowing it to have potential for a larger customer base. Will that ever happen? who knows, netflix is a solid company that has been doing great since its debut in 99'. GZFX is a newer company and has had significant sales growth in the recent years. I don't think we will ever see this one up with Netflix at 26.00. But with out a doubt i see potential for it being much higher than it is right now at .0082.

Netflix offers 50,000 titles with a market cap of 1.46 billion. GZFX offers 30,000 titles with a market cap of just 7.59 million. I see much room for growth for this company.

Heres some recent financial growth charts.
-fousc

http://biz.yahoo.com/iw/051019/098452.html

Looks to be another gem in the rough.  There will be a CC this Thursday (10-27-05) at 10am central "to discuss the state of the company."  I'll attempt to listen but EOQ craziness has me running around like a chicken with my head cut off.


...from Tuesday:
GameZnFlix to Offer Xbox360 Titles on Day One of Release to the Video Game Market
http://biz.yahoo.com/iw/051018/098294.html
More great news, IMO.

Jody

Bought GZFX.OB @ $0.0086 for the 3Pennies Portfolio

Ameritrade showed the lot size of just 5000 for both the bid and ask of .0084

if this lot size doesn't increase then might I be charged extra commission?

Here are the terms to the agreement with circuit city and GNFX. If this deal pans out it will be huge for the growth and advertisement of GNFX as well as the stock price.

Basically its a trial contract set forth to measure potential performance, lets hope it works out.

ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

     On October 4, 2005, the Company entered into a Services
Agreement with Circuit City Stores, Inc. (see Exhibit 10).  Under the
terms of this agreement, the parties will run a pilot program, to
commence on November 1, 2005 and ending on January 15, 2006, in 17
retail stores and on the Circuit City website to promote the service
offered by the Company.  If the pilot program is deemed a success by
both parties, the parties will expand the pilot program to the
remaining approximate 600 retail locations of Circuit City in the
United States by adding 55 Circuit City stores per month.  Under the
terms of this agreement, the parties will share in the revenue from
the sale of Company memberships through Circuit City.

I plan on buying in sometime before Nov 1st and will continue to hold for long term, depending on the success/failure of the circuit city deal.

-fousc

This is my 1st posting, and it's not going to be a technical one (since most of you are better trader than I am).  However, I do want to share my view on the online rental industry.

I work @ a national video rental chain in Canada (as an analyst), we also have online rental services (game & movie).  Thus I work closely w/ the industry data.  There's a reason why Netflix is not in the online game business.  Because the market is very small (sort of like a niche market).  One of the top video game title this year is Grand Theft Auto: San Andreas (release back in OCT 04), and the total rental revenue is ~18M (over 9 months) - a movie rental can gross that in 2 weeks.  Just for comparison sake, a top rent title can generate ~0.5M US in revenue while a top movie rental can generate at least 7-10Mill US per week.  And there are tons of more titles for movies to choice from.  Realistically, people will not play a game that is over a year old (except Pac-Man), while classic movies will always have a market.

The point I wanna bring out is the only competitive advantage that GZFX has over Netflix, Blockbuster and other online movie rentals is that they offer game rental.  However, this advantage is extremely small.  Except for Netflix, there are no other online rental business is making $$$, the cost is too high (postage, lower turnover = higher inventory cost).  GZFX does not have the titles & inventory to compete w/ NFLX & BBI.

The only potential it has is that it snatches the biggest piece of the game rental pie and hope that BBI & NFLX will takeover them in due time.

I hope this will help you guys a little :-)  Happy Trading!!

Roc914,

Thanks for your posts and honest assessments. After thinking about your market knowledge and insight I see how this is a very competitive landscape for a small player.

I applaude you for the extra look.

basanlas

I also applaud Roc's comments, but don't agree with them. We're not expecting GZFX to take over the market and/or compete head to head with netflix, etc. It's a penny stock, we expect it to do well, specially with their Xbox 360 rentals (this is cool!), and hence appreciate healthily.

Just like we're betting on BRVO, not because we think they'll ever take on Nestle or Yoplait, but because they have a good product with a lot of potential for growth.

I played this pup back when it was PGHI and a few times after it became GZFX before the stock price died.

GameznFlix ran a commercial last year during the Super Bowl http://xrl.us/e2cp . Have a look! IMO it was one of the worst Super Bowl commercials b/c (a) they didn't say anything to differentiate themselves from Netflix or Blockbuster - "No late fees, rent for as long as you like" is the same thing you can do with the bigger players, and (b) it was just an incredibly lame commercial. But that is just one man's opinion (my favorite was the GoDaddy commercial).

The Circuit City news was a big deal. Gives GZFX street-cred. Now they have to capitalize on it.

I'm staying away for the moment based on the chart. About a billion shares were bought above today's close on those two big days in early October. Short term overhead pressure like that scares me. I'm looking at possible entry when the pps meets the lower bollinger band. Not sure when or where that will be b/c the lower BB is off the chart right now. I do wish I'd bought the bounce off the center BB at .005 a week ago. Had it on my watchlist but passed on buying it. So hard to pull the trigger on the way down. For me at least.

applaud for analysis. keep it up.

Irod & Basanlas,

thx 4 yr support!!  Irod, not trying to get into a debate, but GZFX is not a product stock.  It's a service.  I agree with you that XBOX 360 (don't forget PS3) will be huge.  But that will only affect GME, BBY, WAL & MSFT not GZFX.  The margin on games are much lower than movie (cost is at least 2x DVD), titles are less (which means everyone will want to rent the same thing = high inventory).  With no late fees, I will hold onto the game as long as I want and the turns (# of times disc being rented) will be extremely low.

I will recommend GME if you think XBOX & PS3 going to be huge (I really think they will benefit the most w/ XBOX launching and Christmas coming up).  

Anyway, the growth will take years b/c at the end of the day.  It's a service provided to a niche market.

Product, service, you know what I meant.

That's funny you meantion GME, because I bought their stock this morning.

With the incredible amount of Xbox 360 pre-orders they've been getting (they're sold out now), this will turn into a huge profit.

http://www.gamestop.com/gs/360/360_omega.asp

You have very good points, and they're very valid concerns. I appreciate your comments. I still think this should be treated as a penny stock, with the potential the company has for revenue. I'm sure it probably won't be a smashing success story with massive inventory and rentals, but I believe it has somewhere to go. Hopefully it will! Otherwise we'll move on.

My strategy :
A good stock but be patient and wait...A "cup and handle" is preparing...i need a bullish day with good volume

I inquired about pre-ording XBox 360 at GME about a month ago. They had completely presold it already. Then I went to BBY, but they weren't accepting any pre-orders. But the sales guy told me they were going to have 3x as many 360's as their competitors. I'll be in line at Best Buy the night of the release (I'm guessing there will be a midnight release) to get mine.