Telix QSAM Inc (QSAM)

[BuddyWhazhizname]

QPWR 10-Q: Accelerating towards oblivion

Turns out the $40K in revenue the reported in the 10K for engineering services was the down payment on the system ordered by that customer in Florida. Another $50K from that customer has been added to deferred revenue.

Going back to the 8K where this contract was announced (page 18):

On January 21, 2016, the Company signed its initial Technology Sales Agreement with a Florida-based company in January 2016, which is expected to provide approximately $160,000 in revenue to the Company over the following four months as it achieves progress milestones and delivers a 10kW waste-to-power system to this customer.

It's now four months later. Not only is the system not delivered to the customer, but no progress payments have been made. No progress on this sytem is described in the 10Q. Has it even been built yet? We know it isn't running.

They are still holding $250K as deferred revenue from Pheonix Power, which means they have still not got an engine to run for 200 hours. (Note 5)

So here's their plan to stay in business (page 24):

"Management believes the Company will start generating higher revenues through the sale of its Q2P Engine and CHP Systems within the next six months"

And here's how they are going to implement the plan to make their engine work right so they can sell it (page 24):

"research and development decreased to $186,938 in 2016 from $322,455 in the previous year period (42%) primarily due to constriction of funds."

Their technology doesn't work. It has never worked. Chris Nelson has been telling people he anticpates engines going into production "in the next six months" since he became Managing Director of Cyclone-WHE in 2010. And the biggest share of funds raised by QPWR has gone to executives and consultants (sometimes the same people) while R&D is being choked off.

The monthly cash burn is $150K. The debenture, convertible notes and term loan all restrict their ability to issue more stock. March 31st there was $28K cash on hand. There are no assets that can be sold for cash, even if they weren't fully secured by creditors. "On April 29, 2016, the Company’s three independent Directors loaned to the Company a total of $60,000".

They haven't gotten a single progress payment on the only order they have, and it was supposed to be delivered by now. They've got nothing to sell to generate cash. They are reduced to borrowing from directors just to keep the lights on.

That $150K term loan comes due on July 15, 2016.

Time to start advertising the shell.