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QED Connect Inc. (OTC: QEDC) is Today’s Top Stock to Watch from Beacon Equity Research


QED Connect Inc. (OTC: QEDC) is Today’s Top Stock to Watch from Beacon Equity Research

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In the report, the analyst writes, “QED Connect, Inc. is a Software-as-a-Service (SaaS) provider offering Internet-based security software applications to small-to-medium-sized businesses, regional school districts, government agencies and not-for-profit groups. Its Web-based services include e-mail filtering, Internet filtering, blocking and monitoring; anti-virus, instant messaging control, policy management and enforcement; monitoring and asset tracking. The Company provides affordable, on-demand security solutions that enable businesses to monitor and manage Internet usage by the employees at any time, from any location in the world.”

Investment Highlights

Products addressing $19.3 billion, rapidly growing SaaS market

Increasing user concerns regarding viruses, spam and other security threats delivered via the Internet are driving demand for more powerful, but still affordable IT security solutions. Security protocols mandated by industry trade groups and government agencies, limited IT resources, a greater focus on data integrity, and the ever increasing number of remote and traveling employee users are fueling growth of Managed Services, also known as Software-as-a-Service (SaaS). The market for SaaS services is large and growing. According to Gartner Group., the global SaaS market is expected to grow from approximately $10 billion this year to nearly $11 billion by 2009 and more than $19 billion by 2011.

Omni Manager is an affordable, turnkey solution

QED’s flagship product, Omni Manager, combines all essential security applications in a single subscription-based service, providing e-mail and Internet filtering and blocking, anti-virus/spyware, instant messaging control, application usage monitoring, policy management and reporting in one affordable solution. Omni Manager was recently named a finalist in the 2008 Global Product Excellence Awards presented by the Info Security Products Guide, the world’s leading publication on security-related products and technologies.

Large, clearly defined target market

Small companies such as QED compete effectively against large software developers by targeting specific niche markets. QED targets small to medium-sized businesses, school districts, government agencies, and nonprofit organizations. These entities typically lack a dedicated IT staff and rely on third parties for their IT services. QED offers these clients an affordable, turn-key solution for Internet security that is also easy to install and use. Analysts estimate that there are nearly six million small businesses in the US with fewer than 500 employees that could benefit from QED’s Omni Manager solution.

High revenue visibility from new contract wins

QED is enjoying a steady stream of new contract wins. In September and October of 2007, the Company signed contracts with two large Canadian auto dealerships, I/O Magic Corporation, the North Central Arkansas Workforce Investment Area, Wallingford, CT Public Schools, the YMCA of Central Massachusetts, the Living Classrooms Foundation and private nonprofit Marrakech, Inc., among others. We expect the Company to generate significant top-line growth from new contract awards in 2008 and create a sizable recurring revenue stream since its services are subscription-based. We anticipate quarterly revenues for QED approaching a $2.0 million range by mid-year 2008, and quarterly revenues rising to a $3.0 million range in the second half of 2008.

Beacon Equity Research Gainers are MGI Pharma Inc. (Nasdaq: MOGN), Adams Respiratory (Nasdaq: ARXT), Cisco Systems (Nasdaq: CSCO), ETrade Financial (Nasdaq: ETFC), Oracle Corp. (Nasdaq: ORCL), Research in Motion (Nasdaq: RIMM) and Millennium Pharma (Nasdaq: MLNM).

Beacon Equity Research Decliners are Intel Corp (Nasdaq: INTC), Celgene (Nasdaq: CELG), Apple Inc.0 (Nasdaq: AAPL), Amgen (Nasdaq: AMGN), Yahoo Inc. (Nasdaq: YHOO), Applied Materials (Nasdaq: AMAT) and Level Three Communications (Nasdaq: LVLT).

Beacon Equity Research Disclosure

The analysts contributing to this report do not hold any shares of QED Connect Inc. (QEDC) Additionally the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts’ personal views as to the subject securities and issuers. The analyst(s) writing this report recognize and aspire to all of the CFA Institute Guidelines for Independent Research. Beacon Equity Research (“Beacon”) certifies that no part of the analysts’ compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analysts in the report. Beacon Equity Research and its affiliates have been directly compensated a total of six thousand five hundred dollars directly from Equity Alliance International for enrollment of QEDC in its research program. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change.


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