Tuesday, December 30, 2014 10:52:41 AM
Recent 'Ques' Selling Pressure Investigation
Re-posting my opinion from Ques board, in regards to some recent selling pressure, why we may have seen it, and ideas why Ques investors should focus on the derivatives that have been issued by Ques board and not the short term price action, if you believe in the pricing of these options, and incentives for option holders to realize vested conversions.
From the deeper dive:
In filings, this is a condensed summary of shares available to be sold, or sold from filing data.
( I used March as the starting point, as Zorn shares were the first to vest in March YTD )
100k - Zorn (no longer at Ques) 100k shares fully earned
240k - Issued for marketing
250k - Warrants exercised, converted to common stock
50k - Direct share sale by Quest
200k - Ross shares (options) vested on 11/20/2014
--------
840k shares
Average Volume 10 Days 50k
Average Volume 20 Days 100k (1 month)
9 months (March to now) 9x100k = 900k shares
-----------------------------------------------------------
840k known shares available or sold in open market / 900k average vol.
Taking all this into account, a large portion of all those shares that were sold or possibly sold, have been mostly absorbed, quite easily into the retail side investor, without substantially impacting the share price.
Using CMF money flow 'chart perspective' below, this absorption appears to be nearing a complete cycle from 2014 filing data perspective.
To put into further perspective, using CFO Ross option grants as an example (Form 4), 3.4m shares (options) were granted in filings. 200k of 1.2m options vested 11/2014, the vesting schedule of the remaining 1.2m option lot is twenty (20) equal quarterly installments over a five year period.
The other 2.2m lot (totaling 3.4m shares) has a vesting schedule into year 2024, with an accelerated vesting schedule when revenue targets are hit (100m, 200m, 300m).
The strike price of these conversions is $.50, anything under .50, the option is under water.
If we look at other derivatives that have been issued by Ques, based on revenue targets, the strike price of the warrants are $1, $2, or they are under water. Of course, any board, at any company can re-price options and warrants or issue new warrants, but I suspect re-pricing comes under the scrutiny of agencies, and is not a common practice.
The highest price warrant in filings:
When/If the Company makes it to the NASDAQ or AMEX or larger exchange, 2,000,000 warrants at $3.00 per share vest and become exercisable. These warrants expire on January 9, 2017.
In summary:
The recent selling pressure, which is not really much in the bigger picture, is nothing out of the ordinary for a company that has set out on a fast growth trajectory. Part of the growth is bringing talent on board, acquisitions, service outsourcing etc., at the cost of issuing stock option benefits, which in the short term, applies pressure.
When the pps does meet up with valuation, it will have the floor of the growth of the company, and should maintain the valuation. I think anyone who has the mindset to invest here alongside the stock options public available data (1-2 years), will be huge winners, nothing new here that existing Ques investors haven't already taken into account on the Ques board.
Summing up in charts
Re-posting my opinion from Ques board, in regards to some recent selling pressure, why we may have seen it, and ideas why Ques investors should focus on the derivatives that have been issued by Ques board and not the short term price action, if you believe in the pricing of these options, and incentives for option holders to realize vested conversions.
From the deeper dive:
In filings, this is a condensed summary of shares available to be sold, or sold from filing data.
( I used March as the starting point, as Zorn shares were the first to vest in March YTD )
100k - Zorn (no longer at Ques) 100k shares fully earned
240k - Issued for marketing
250k - Warrants exercised, converted to common stock
50k - Direct share sale by Quest
200k - Ross shares (options) vested on 11/20/2014
--------
840k shares
Average Volume 10 Days 50k
Average Volume 20 Days 100k (1 month)
9 months (March to now) 9x100k = 900k shares
-----------------------------------------------------------
840k known shares available or sold in open market / 900k average vol.
Taking all this into account, a large portion of all those shares that were sold or possibly sold, have been mostly absorbed, quite easily into the retail side investor, without substantially impacting the share price.
Using CMF money flow 'chart perspective' below, this absorption appears to be nearing a complete cycle from 2014 filing data perspective.
To put into further perspective, using CFO Ross option grants as an example (Form 4), 3.4m shares (options) were granted in filings. 200k of 1.2m options vested 11/2014, the vesting schedule of the remaining 1.2m option lot is twenty (20) equal quarterly installments over a five year period.
The other 2.2m lot (totaling 3.4m shares) has a vesting schedule into year 2024, with an accelerated vesting schedule when revenue targets are hit (100m, 200m, 300m).
The strike price of these conversions is $.50, anything under .50, the option is under water.
If we look at other derivatives that have been issued by Ques, based on revenue targets, the strike price of the warrants are $1, $2, or they are under water. Of course, any board, at any company can re-price options and warrants or issue new warrants, but I suspect re-pricing comes under the scrutiny of agencies, and is not a common practice.
The highest price warrant in filings:
When/If the Company makes it to the NASDAQ or AMEX or larger exchange, 2,000,000 warrants at $3.00 per share vest and become exercisable. These warrants expire on January 9, 2017.
In summary:
The recent selling pressure, which is not really much in the bigger picture, is nothing out of the ordinary for a company that has set out on a fast growth trajectory. Part of the growth is bringing talent on board, acquisitions, service outsourcing etc., at the cost of issuing stock option benefits, which in the short term, applies pressure.
When the pps does meet up with valuation, it will have the floor of the growth of the company, and should maintain the valuation. I think anyone who has the mindset to invest here alongside the stock options public available data (1-2 years), will be huge winners, nothing new here that existing Ques investors haven't already taken into account on the Ques board.
Summing up in charts
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