[RawAlex]

AFF appears to be playing out as expected - the big sale price that Lars and co were getting for selling out was more "mythical money" than any real amount of coin. The entire concept is sort of a backing into an IPO, by assembling what appears to be two financial boat anchors together and trying to see if they will float.

The numbers also show something pretty interesting: 1 million average subscribers, 27 million average revenue (243/9) means they take in $27 gross per member per month, approximately. At 18% churn rate, they are retaining 5.5 months, or about $150 per member. Their payouts to affiliates are pretty much in the 100 - 150 per month range, so they are typically making on affiliate sales something like $0 - $50 per member over a 6 month period gross. With an operating income of 17.6 million, that number is somewhere around $2 per month per member net income, or about $11 operating income per member total, and a loss of almost $20 per member over their lifetime.

If nothing else, this is the complete proof that paying $100 - $150 per member isn't a valid business model. At $50 per affiliate payout, they would in theory be profitable (if the same about of business came their way).

Almost 100% of the debt outstanding is the "takeover" of Various by Penthouse, and that the cash position of the company may be left over cash from Penthouse, as AFF has leaked a ton of money this year.

The worst part in all of this is that if AFF closed it's affiliate program tomorrow, The churn would pretty much wipe them out just as they manage to cover their losses and return to profitability, with no user base and no source of income.

I cannot picture this IPO gaining much traction, especially if the potential investors get a look at some of the great file sharing, torrent, and software hack sites that are relying on AFF money to pay their bills.

It's classic, I can't wait to see Lars back as an $8 an hour coder to pay the bills.