QSGI, Inc.(fka QSGI)

[HDOGTX]

Price Objectives.. By Hokie Head

So many factors can increase or change the value of QSGIQ it's crazy.

-First basis is the possible ending 247 million shares outstanding. I say possible because this may not end up being the final share count, it's the highest share count possible. Our legacy shares will be the only way to trade Krusecom once public. It's possible the other shares may never come to market or may even be retired if they are able to get enough QSGI commons at this level on their own.

-If Krusecom is to do $20 million in revenues in 2011, at the current $0.085, we are trading for almost less than 1x sales. The minimum at the rate they are ramping up sales is 5x sales, or a PPS in the $0.40-$0.45 range. If they are profitable and are earning about $0.02 a share, a 25 multiple PE would place it in the same range. Looking at some of the high beta stocks you can probably double that Price/Sales Ratio and double the PPS.

-We also have to consider the value of the NOL. I think QSGI lost approximately $15 million in 2009. Using that amount it would add about $0.06 to the earnings for 2011. Possible EPS then would be in the $0.05-$0.08 range for 2011. 25 PE multiple then would be a $1.25-$2 price per share. So, imo, based upon what we know QSGIQ should be in the $0.40-$0.45 range now. An earlier post stated “financials for pink stocks”, well QSGI/Kruse will uplist to a major exchange by summers end, no doubt about it.

-I like to look a year or two out. At the rate Kruse is growing the business and possible acquisitions down the road I see revenues in the $50-$75 million range for 2012. That would place this in the $1.50 to $2 range based upon the 247 million possible share count.

-If a settlement with IBM is “around the corner” this will be adding some serious value to Krusecom which will strengthen an already clean balance sheet. The settlement, imo, will and can be valued anywhere from $150-$750 million. This would add $0.61 to $3 in cash value to the PPS. So a minimum settlement with IBM should have QSGIQ trading for $0.61 at least just on the cash they will receive.

-Scola, Barbera, Meynarez, Waldman, the new QSGI board of Directors are receiving options for 250,000 each in pre-reorganization QSGI, or our legacy shares. They vest ratably over 3 years in lieu of a cash compensation. So the board of directors are taking QSGI current shares as compensation, If we stay a $0.10 stock their 3 year compensation would total $25,000. I am sure the compensation range will be in the $250,000 to $750,000 area for the three years, making the options or PPS value anywhere in the $1 to $3 range.

There are many other items that should and will spark the PPS besides these. Getting updated filings, removal of the “Q”, merger news, short squeeze, symbol change, uplisting to a major exchange, Kruse news being PR’d, only company is this area publicly traded, etc.

Imo, I see no reason why we should not be trading for at least $0.40-$0.45 now based upon what we know. For those of you that play for the “baggers”, $10,000 here should net you at least $50,000 near term, those that hold longer for dollar + land we are talking an even nicer return on our investment. There are so many wild cards that I am sure we don’t even know about yet. I see Krusecom trading on a major exchange by the fall and sporting a PPS in the $1.50-$2.00 range easily.

Take care folks and don't get shaken from your legacy shares at this level. You will be kicking yourself when they decide to let this run and in a few days it goes from $0.08 to $0.15 to $0.25 to $0.50. Seen it many times before..