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IMHO, unquestionably YES!
You got GAME, gameccks1! I completely concur with your conclusions. Happy trading in the new year!
Guys/Gals - I think we're missing something in this latest 10-Q.
From page 30: BTW, these numbers represent ONLY 6-months of selling!
Operating Revenues
In the three and six month periods ended June 30, 2015 we generated $307,245 and $601,251, respectively, in revenue, versus $69,820 and $99,011 for the three and six month of the previous year. 500% Growth in REVENUES. WOW!!!
The increase is due to two factors: (i) in the first quarter of 2014, the Company was just beginning its sales efforts, so Quarter 1 of 2015 is the first full quarter comparison; and (ii) we have additional sales from the acquisition of Xtreme Technologies, Inc. which occurred in the first quarter of 2015 (see Footnote 11). We expect that over the coming months, our sales and marketing efforts will result in significantly increasing sales.
Gross profit
For the three and six months ended June 30, 2015, our gross profit was $71,995 (23% of revenue) and $141,348 (24% of revenue) compared to gross profits of $6,083 (9% of revenue) and $3,388 (3% of revenue) for the three and six month periods ended June 30, 2014. 2,000% Increase in GROSS PROFITS. AWESOME!!!
The increase in gross profit dollar amount and in gross profit percentage in 2015 from 2014, is a direct result of the acquisition of Xtreme Technologies. We are able to amortize the manufacturing and management overhead of the two companies over a larger sales base, and therefore generate a better gross margin.
Look for this stock to BLAST OFF in the not too distant future.
Trek, see my post below. I discuss the pertinent points reported in the 10Q. Cheers!
I'm no genius either. However, what choice did Eakle et al have IF they are serious about Alkame winning in the marketplace? They had to BUY the patents and the patented processes under whatever circumstances existed, all the while expecting to clean up the messes, contractual & other, after closing the deal once they had gained full legal and financial control.
Not a very complicated scenario and resulting decision, IMO.
Cheers!
Everyone - Let's first look at the basics...
ALKAME HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended
March 31, 2015 | March 31, 2014
Revenues $ 294,006 vs. $ 29,191
Note: l) Revenue Recognition
The Company recognizes revenue in accordance with ASC-605, “Revenue Recognition,” which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or title has passed; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.
What does this mean? ALKM is finally SELLING and EARNING REVENUE! Plus, this is ONLY for 3 MONTHS. I'm no Pollyanna, but this is great news, IMO, compared to what we've seen before.
Second, ...the purchase of Xtreme Technologies is COMPLETE, and ALKM now owns the patents for their product!
On January 13, 2015, the Company completed the acquisition of Xtreme Technologies, Inc., an Idaho corporation.
Under the Agreement, Amendment, and Second Amendment, Xtreme became our wholly-owned subsidiary and we acquired the patents on the proprietary process that we believe is the most technologically advanced in water treatment systems for complete hydration. We assumed the operations of Xtreme and continue its business of distributing technologically enhanced bottled water.
Upon closing of the acquisition, we discovered that Xtreme was operating at a loss for the prior year and that it required a substantial cash infusion. We have begun a program of upgrading the production line, reorganized personnel, and began an effort to increase sales of the division so that it returns to profitability as quickly as possible.
Our primary objective now is to introduce, promote, aggressively market and establish channels of distribution to sell our product to a wide range of consumers, first in the United States, Canada and Mexico, and then globally.
Investors - Take heart. Significant progress has bee made cleaning up the Xtreme Mess. Now Eakle et all can get on with making it a true going concern with REAL SALES, REAL REVENUES, and REAL NEW CUSTOMERS in North America.
GLTA!!!
Here are the FACTS, APJ...
Positive Operational Developments Noted by Management in the latest 10-Q:
1. The company significantly reduced operating costs and improved operating efficiencies. Still it’s not enough to stop the dilution of our stock investment due to the company’s need for cash, which runs dry in January of 2016 without more financing through stock sales or bank funding, all of which are on the table and could happen.
2. QS Energy Pool, the acquisition millionaires who’re now working with the company think they have several good oil & gas E&P prospects worth buying in the near future. This kind of acquisition potentially could provide us the cash inflow we need to avoid further stock dilution by management and to fund operations after January, 2016.
Status of Current Customers and Sales Prospects Reported by Management:
TransCanada Pipeline Lease – This deal was terminated Oct. 2014 due to several issues with the current design of the AOT. Management is committed to re-designing the AOT to resolve all engineering issues for their current and future customers. There’s probably not much hope this deal will revive itself until several months, perhaps years, down the road. Probably a lost oppty. ?
Kinder Morgan Pipeline Lease – The company tried to make (3) AOTs work on this pipeline, but there were problems with all three. Management and KM agreed to do further laboratory testing and effect any needed AOT system modifications and then install Unit 4 during the first quarter of FY 2016. Keep your fingers crossed on this one! ?
Newfield Exploration Lease – In October 2014, the company entered into a Joint Development Agreement with Newfield to test a commercial prototype of Joule Heat, and combined Joule Heat and AOT technology, on a crude oil pipeline serving the Greater Monument Butte oilfield located in the UT Uintah Basin. The Joule Heat lease, begun in June of 2015, is still operational. ?
Mexican Offshore Oil Transport (Prospect) – In August 2015, this customer’s offshore platform was assessed by company personnel for a potential deployment of the AOT viscosity reduction technology as a solution for super-heavy crude oil flow assurance. Following this site visit in Mexico, all parties executed an NDA and are proceeding to negotiate something. ?
Major Southern U.S. Oil Pipeline (Prospect) – RECENTLY, the company negotiated a preliminary agreement to deploy the AOT with a major pipeline operator in the southern part of the US. This could lead to a REAL SALE without previously required AOT testing.
Norway’s Statoil (Prospect) – RECENTLY, one of the company’s overseas partners report a potential deal with Norway’s Statoil to develop the AOT’s subsea capabilities under a government funding umbrella. Again, this could result in a fully tested AOT sale to a government customer. ?
Iraqi Oil Offloading Platform (Prospect) – RECENTLY, another company partner overseas have met with Basra officials (a second time) about installing the AOT on pipeline that serves this petroleum offloading facility in southeaster Iraq. This could result in a long-term AOT contract with a government customer. ?
Happy Thanksgiving to Everyone!
Boy, do they SUCK at writing their company letters and filings...
Everyone – Below you’ll find highlighted excerpts from the latest Letter to Shareholders and the SEC filing distributed this week by QSEP’s management. I’ve tried to rearrange the content and throw away the useless filler info to give us a clearer picture of the status of this company’s operations. BTW, I’m still confident in QSEP’s prospects in the long-term. What’s long-term? Probably a window that encompasses 24 months from today. Our hoped for substantial increase in stock price could happen in a few months or in 24 months, but it will happen during this timeframe in my humble opinion. However, be aware that the stock price could drop further before it climbs higher. ?
Okay, let’s get to the recap of what’s being reported. As mentioned, I think it’s mostly positive news and very much in line with my revised expectations given what we now know about the talents of QSEP management based on the events of the past couple of years. BTW, I think QSEP management overall gets a “B-“ for performance this year. So, my expectations are that they’re just slightly better than average as a group. I think GREGG BIGGERS, on the other hand, is a very good manager and he needed the past year to add several more competent team members to help him realize the full potential of this operationally challenged company.
MY RECAP:
Positive Operational Developments Noted by Management:
1. The company significantly reduced operating costs and improved operating efficiencies. Still it’s not enough to stop the dilution of our stock investment due to the company’s need for cash, which runs dry in January of 2016 without more financing through stock sales or bank funding, all of which are on the table and could happen.
2. QS Energy Pool, the acquisition millionaires who’re now working with the company think they have several good oil & gas E&P prospects worth buying in the near future. This kind of acquisition potentially could provide us the cash inflow we need to avoid further stock dilution by management and to fund operations after January, 2016.
Status of Current Customers and Sales Prospects Reported by Management:
TransCanada Pipeline Lease – This deal was terminated Oct. 2014 due to several issues with the current design of the AOT. Management is committed to re-designing the AOT to resolve all engineering issues for their current and future customers. There’s probably not much hope this deal will revive itself until several months, perhaps years, down the road. LOST OPPORUNITY ?
Kinder Morgan Pipeline Lease – The company tried to make (3) AOTs work on this pipeline, but there were problems with all three. Management and KM agreed to do further laboratory testing and effect any needed AOT system modifications and then install Unit 4 during the first quarter of FY 2016. Keep your fingers crossed on this one. ?
Newfield Exploration Lease – In October 2014, the company entered into a Joint Development Agreement with Newfield to test a commercial prototype of Joule Heat, and combined Joule Heat and AOT technology, on a crude oil pipeline serving the Greater Monument Butte oilfield located in the UT Uintah Basin. The Joule Heat lease, begun in June of 2015, is still operational. ?
Mexican Offshore Oil Transport (Prospect) – In August 2015, this customer’s offshore platform was assessed by company personnel for a potential deployment of the AOT viscosity reduction technology as a solution for super-heavy crude oil flow assurance. Following this site visit in Mexico, all parties executed an NDA (non-disclosure agreement). ?
Major Southern U.S. Oil Pipeline (Prospect) – RECENTLY, the company negotiated a preliminary agreement to deploy the AOT with a major pipeline operator in the southern part of the US. This could lead to a REAL SALE without previously required AOT testing. ?
Norway’s Statoil (Prospect) – RECENTLY, one of the company’s overseas partners report a potential deal with Norway’s Statoil to develop the AOT’s subsea capabilities under a government funding umbrella. Again, this could result in a fully tested AOT sale to a government customer. ?
Iraqi Oil Offloading Platform (Prospect) – RECENTLY, another company partner overseas have met with Basra officials (a second time) about installing the AOT on pipeline that serves this petroleum offloading facility in southeaster Iraq. This could result in a long-term AOT contract with a government customer. ?
So, what does it all mean? It means that QSEP is a small technology company that is going through the ups and downs, the trials and tribulations, of a NEW TECH company. It’s a gamble, YES, but I think it’s showing good SALES PROSPECTS with, YES, some Costly Lessons Learned, but with FAR MORE deals on the table than at any time in the past 3.5 years. Folks, I think we’ve got a WINNER here, but we need some LUCK and some PATIENCE to get this investment across the FINISHLINE.
Until next time…Cheers!
November 10, 2015
To all QS Energy shareholders,
Before delving into QS Energy developments, I’d like to wish the United States Marine Corps a very happy birthday today, November 10, on behalf of the entire management team. We extend our deepest gratitude to all men and women in uniform, as well as all veterans, for their sacrifice and for upholding their duty to protect this great nation.
As documented in recent QS Energy news releases, shareholder communications and SEC filings, we continue to pursue our bifurcated strategy of commercializing industrial solutions designed to optimize the global pipeline infrastructure, while simultaneously seeking to acquire undervalued assets that have the potential to generate bottom line revenue and significantly enhance shareholder value. With the downward pressure on energy commodity prices continuing unabated, we believe the ideal conditions are in place to support our acquisition strategy.
During our business development efforts throughout the past year we have had encouraging, high level discussions with operators and transporters in Europe, the UK, the Middle East, Canada and here in the U.S. Based on our interactions with the executives and engineers with whom we have met, it is clear that the drive to reduce costs and optimize existing infrastructure remains a top priority within the industry, making the benefits of our technology solutions more compelling and potentially of greater value than at any time previously.
I’m pleased to report that we have recently negotiated an agreement to determine the efficacy of a customized AOT system for a top tier, North American pipeline operator. QS Energy will conduct tests on oil sourced from the operator’s pipeline network at Temple University, in order to determine AOT’s ability to reduce the viscosity of the feedstock during transport. It is our hope that this will lead to an AOT installation on the operator’s midstream infrastructure in the Southeastern United States, paving the way for additional deployment opportunities with our current partners and new prospective customers.
Overseas, due to the efforts of our distributorships, we have made inroads with large oil producers and nationalized energy entities in several foreign markets. In Oslo, Norway, our partner Norront AS has engaged in discussions with Statoil ASA and is positioning AOT for possible development funding under a government research program.
Following extensive crude oil testing and hydraulic analysis for a state-owned oil transporter in the Middle East, Energy Tech Africa (ETA) will in the near future meet with officials in Basra for a second round of negotiations for an AOT deployment on a primary line carrying crude oil to a marine offloading facility. These and several other opportunities in play may provide the high profile showcase necessary to engender widespread interest in the use of electrorheology for viscosity reduction, and thereby additional AOT deployments.
As a result of ongoing discussions with several investment banks, we are confident that we will secure financing for working capital funding requirements, both for acquisitions and to extend the Company’s runway. Concurrently, with the assistance of our QS Energy Pool advisors and our Board Members, we have identified a number of acquisition targets that would lead to immediate revenue generation. The current commodity pricing down cycle has created a buyer’s market for discounted oil and gas assets, reshaping the industry landscape and benefiting our acquisition strategy enormously. We intend to capitalize on these circumstances to the greatest degree possible.
Of course, the development and refinement of any nascent technological innovation is time consuming, and fraught with risks and detours. Perfecting and commercializing industrial equipment for use on multi-million dollar crude oil pipelines, which requires certification by several levels of government and approval through intensive industry review, adds incalculably to the challenge of bringing a “better mousetrap” to market. Yet, working together with our partners, customers and supply chain fabricators, we have proven the safety, efficacy and value of our technology in the laboratory and in the field. Under our new auspices of QS Energy and with the added leverage of QS Energy Pool as a financial instrument, it is our intent to prove the commercial viability of AOT and Joule Heat to the fullest extent possible, and thereby to execute strategic deployments and generate substantial revenue.
As we close out yet another momentous year I’d like to take the opportunity to wish our shareholders the happiest of holidays and a very Merry Christmas. In particular, I extend a special thanks to our Board, employees and consultants, the staff at Temple University, our industry partners and distributors, and those who have assisted in the ongoing development of AOT and Joule Heat. Collectively, it is our goal, and my personal objective, to ensure 2016 will be a pivotal period of transition for QS Energy as we solidify our status within the industry and increase cash flow through the acquisition of assets, as well as the deployment of our technology solutions.
Happy Holidays and best wishes,
Greggory M. Bigger
Chief Executive Officer
QS Energy, Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
? QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
QS ENERGY, INC.
(Exact name of registrant as specified in its charter)
735 State Street, Suite 500
Santa Barbara, California 93101
TransCanada Keystone Pipeline, L.P. Lease (“TransCanada”)
On August 1, 2013, the Company entered into an Equipment Lease/Option to Purchase Agreement (“Lease”) with TransCanada Keystone Pipeline, L.P. by its agent TC Oil Pipeline Operations, Inc. (“TransCanada”) which agreed to lease and test the effectiveness of the Company’s AOT technology and equipment on one of TransCanada’s operating pipelines. The initial term of the lease was for six months at an amount of $60,000 per month. During the initial term, either the Company or TransCanada had the right to terminate the Agreement for any reason on 90 days written notice. TransCanada had an option to purchase the equipment during the term of the lease for approximately $4.3 million.
In June 2014, the equipment was accepted by TransCanada and the lease commenced. The Company accounted for the TransCanada Lease as an operating lease, and recognized lease revenue of $180,000 and $240,000 for the three and nine months ended September 30, 2014, respectively.
In 2013, the Company entered into an Equipment Lease/Option to Purchase Agreement (“TransCanada Lease”) with TransCanada Keystone Pipeline, L.P. by its agent TC Oil Pipeline Operations, Inc. ("TransCanada") which agreed to lease and test the effectiveness of the Company’s AOT technology and equipment on one of TransCanada’s operating pipelines. As previously reported in our 10-K report filed with the SEC on March 16, 2015, in June 2014, the equipment was accepted by TransCanada and the lease commenced and the first full test of the AOT equipment on the Keystone pipeline was performed in July 2014, with preliminary data analyzed and reported by Dr. Rongjia Tao of Temple University. Upon review of the July 2014 test results and preliminary report by Dr. Tao, QS Energy and TransCanada mutually agreed that this initial test was flawed due to, among other factors, the short term nature of the test, the inability to isolate certain independent pipeline operating factors such as fluctuations in upstream pump station pressures, and limitations of the AOT device to produce a sufficient electric field to optimize viscosity reduction. Although Dr. Tao’s preliminary report indicated promising results, QS Energy and TransCanada mutually agreed that no conclusions could be reliably reached from the July 2014 test or from Dr. Tao’s preliminary report. As a result of this test, the Company modified its testing protocols and contracted with an independent laboratory to perform follow-up tests at the TransCanada facility. This independent laboratory performed viscosity measurements at the TransCanada facility during subsequent testing in September 2014 and submitted a report which concluded that i) data indicated a decrease in viscosity of crude oil flowing through the TransCanada pipeline due to AOT treatment of the crude oil; and ii) the power supply installed on our equipment would need to be increased to maximize reduction in viscosity and take full advantage of the AOT technology. Although the power supply was constrained, subsequent analysis of the Report and related laboratory testing at Temple University revealed a limited sampling of test conditions at TransCanada under which the electrical field within the AOT was sufficient, in theory, to fully treat crude oil flowing through the treatment vessel. Though statistically inconclusive, viscosity measurements of these limited test samples indicate AOT treatment by the prototype equipment under commercial operating conditions resulted in viscosity reductions reasonably consistent with expectations based on previous laboratory tests. While more testing is required to establish the efficacy of our AOT technology, we are encouraged by the findings of our independent research laboratory and the results of subsequent comparative analysis of data collected under laboratory and commercial operating conditions. We look forward to further development and commercialization of our technology.
*** The TransCanada Lease was terminated by TransCanada, effective October 15, 2014.
QSEP Management Lessons Learned: The Company has modified the design of the AOT power supply such that future installations of the AOT device are expected to achieve sufficient electric field to optimize viscosity reduction.
Kinder Morgan Crude& Condensate, LLC Lease (“Kinder Morgan”)
On July 15, 2014, the Company entered into an Equipment Lease/Option to Purchase Agreement (“Kinder Morgan Lease”) with Kinder Morgan Crude & Condensate, LLC (“Kinder Morgan”) under which Kinder Morgan agreed to lease and test the effectiveness of the Company’s AOT technology and equipment on one of Kinder Morgan’s operating pipelines. Equipment provided under the Lease includes a single AOT Midstream pressure vessel with a maximum flow capacity of 5,000 gallons per minute. The equipment (1st Unit) was delivered to Kinder Morgan in December 2014 and installed in March 2015.
The initial term (“Initial Term”) of the Lease is four months, with an option to extend the Lease for up to a maximum of 84 months. During the Initial Term, either the Company or Kinder Morgan may terminate the Agreement for any reason on 45 days’ written notice. Lease payments shall be $20,000 per month; provided however, that in the event the Equipment is removed from service at its initial location during the Initial Term, the monthly lease payments shall be reduced to $5,000 until the Equipment is placed back in service at its new location, at which time the Lease payments shall resume at $20,000 per month. The agreement further provides that Kinder Morgan shall have an option to purchase the equipment during the term of the Lease for a fixed price of between $600,000 and $1,200,000, depending upon the date of purchase.
In April 2015, the AOT pressure vessel experienced an electrical short and was replaced by another AOT pressure vessel. Subsequently, it was determined that the AOT needed further modification and as a result, a modified AOT unit was installed in July 2015. Subsequently, the Company and Kinder Morgan agreed to hold off acceptance of the AOT unit subject to further laboratory testing and system modifications which are scheduled to be completed during the first quarter of FY 2016.
A replacement unit was installed May 2015. The AOT (2nd Unit) also presented with low impedance when flooded with crude condensate from Kinder Morgan’s pipeline. Laboratory tests previously run on at Temple University on condensate samples provided by Kinder Morgan indicated the condensate was non-conductive; however, the condensate is known to have a relatively high density of semi-conductive particulate matter suspended within the fluid. Similar conditions were experienced in earlier prototype tests at the Rocky Mountain Oilfield Testing Center (“RMOTC”). At RMOTC, the pipeline had a high concentration of highly conductive particulate matter, which tended to concentrate at the base of the AOT when installed horizontally, causing the AOT to present with an electrical short. This issue was solved at RMOTC by converting to a vertical configuration, which allowed the particulate matter to flow naturally through the AOT. Based on experience at RMOTC, Dr. Tao expressed a high level of confidence that converting to a vertical configuration will resolve the issue of conductive particulate matter.
In June 2015, QS Energy engineers performed a series of tests and internal inspections on the AOT unit, which identified other potential design issues that could impact electrical impedance. Based on these findings, a number of internal components of the AOT were retrofitted or remanufactured to improve both efficacy and efficiency. The remanufactured AOT unit (3rd Unit) was delivered to Kinder Morgan facility in Texas and was installed in its new vertical configuration in July 2015. Installation and pre-start safety tests were successfully completed and preliminary testing initiated in August 2015. Initial results were promising, with the unit operating generally as expected. However, voltage dropped as preliminary tests continued, indicating decreased impedance within the AOT pressure vessel. QS Energy personnel and outside consultants performed a series of troubleshooting assessments and determined that, despite modifications made to the AOT, conductive materials present in the crude oil condensate continue to be the root cause of the decreased impedance.
*** Based on this result, QS Energy and Kinder Morgan personnel mutually agreed the best course of action was to hold on final acceptance of equipment under the lease and temporarily suspend in-field testing to provide time to thoroughly test samples of Kinder Morgan’s crude oil condensate in a laboratory setting and make system modifications which are scheduled to be completed during the first quarter of FY 2016.
QSEP Management Lessons Learned: The Company realizes that 3 failed tries with the AOT proves it is NOT READY for prime time and therefore more R&D is necessary to bring it to market, especially with major pipeline operators.
Southern Research Institute (“SRI”)
Southern Research Institute (SRI) was been engaged by QS Energy to investigate the root cause of the crude oil condensate impedance issue by replicating conditions experienced in the field utilizing a laboratory-scaled version of the AOT and crude oil condensate samples provided by Kinder Morgan. In addition, QS Energy retained an internationally recognized petroleum pipeline engineer to review the AOT design and suggest design modifications to resolve the crude oil condensate impedance issue. This engineer has studied design details, staff reports and forensic photographs of each relevant AOT installation and test. Based on these investigations, specific modifications have been proposed to resolve the impedance issue. Subject to final design analysis and laboratory testing, we have developed a plan to temporarily remove the AOT from its current installation for retrofit and reinstallation.
Mexican Offshore Oil Transfer Prospect
In August, 2015, QS Energy was invited to an offshore oil transfer platform in the Gulf of Mexico. This offshore platform was assessed by QS Energy personnel for a potential deployment of the AOT viscosity reduction technology as a solution for super-heavy crude oil flow assurance issues. Following the site visit, all parties executed non-disclosure agreements in advance of detailed analysis and in anticipation of developing an onsite AOT testing program subject to laboratory testing and case studies performed on oil samples to be provided by the offshore platform operator.
Newfield Exploration Company (“Newfield”)
In 2014, the Company began commercial development of a new suite of products based around the new electrical heat system which reduces oil viscosity through a process known as joule heat (“Joule Heat”). The Company is designing and optimizing the Joule Heat technology for the upstream oil transportation market. The Company filed two provisional patents related to the technology’s method and apparatus in the second quarter and fourth quarter of 2013, respectively. The first of the two provisional patents was finalized and submitted to non-provisional status on April 29, 2014. The second of the two provisional patents was finalized and submitted to non-provisional status at the end of the third quarter 2014.
In October 2014, QS Energy entered into a Joint Development Agreement with Newfield Exploration Company (“Newfield”) to test a commercial prototype of QS Energy Joule Heat equipment, and combined Joule Heat and AOT technology, on a crude oil pipeline serving the Greater Monument Butte oilfield located in the Uintah Basin of Utah. This test of the Joule Heat technology provides ideal conditions to demonstrate efficiency and efficacy. The Uintah Basin is 5,000 to 10,000 feet above sea level with average low winter temperatures of 16ºF. Crude oil pumped from the region is highly paraffinic with the consistency of shoe polish at room temperature. Uintah's black wax crude must remain at a minimum of 95ºF and yellow wax above 115ºF and therefore requires a substantial amount of heat to keep it above its high pour point. Operators in the upstream market often run at temperatures of 140ºF to 160ºF. Newfield, like many other companies in the region, incurs significant operating expense in the form of fuel and power used to heat the waxy crude and counter the cold climate conditions characteristic of Utah.
*** The Company’s first Joule Heat prototype was installed for testing purposes at the Newfield facility in June 2015 and the system is operational.
QSEP Management Lessons Learned: The Company understands that changes to the prototype configuration will be required to achieve commercial effectiveness of this heating system.
Dr. Carl Meinhart
We are working with Newfield and Dr. Carl Meinhart to modify the prototype configuration for observed pipeline and Joule Heat operating factors. In addition, QS Energy has provided a scaled-down version of the commercial Joule Heat unit for static and flow-through testing at Southern Research Institute (SRI). Testing performed by SRI in September 2015 demonstrated the ability the Joule Heat technology to deliver significant temperature increases in the laboratory setting. We are continuing to evaluate key factors in commercial equipment operation in the laboratory prior to finalizing design modifications. Once design modifications are finalized, we plan to remove the Joule Heat unit from the field for retrofit and laboratory testing of the prototype in advance of redeployment for in-field testing. Testing and modifications of this first prototype unit will likely continue through the first quarter of 2016.
The Company is working in collaboration with Newfield, SRI, Dr. Carl Meinhart, and our manufacturing partner to design and build an AOT prototype unit, for operations in the upstream crude oil pipeline market (“AOT Upstream”), specifically configured for pipeline operating factors observed at Newfield’s Utah site. Our original plan was to retrofit an earlier prototype device previously tested at RMOTC; however after multiple site visits and discussions with Newfield, it was determined a new, smaller unit, specifically optimized for Newfield operations would be more appropriate for this field test opportunity. We plan to jointly test the AOT Upstream prototype unit under typical upstream commercial pipeline conditions on Newfield’s pipeline in conjunction with the previously installed Joule Heat unit.
QSEP Management Lesson Learned: The Company recognizes that both AOT and Joule Heat will require significant customization for some clients before they will sign a contract to buy them.
QS Energy Pool, Inc.
In July 2015, the Company formed QS Energy Pool, Inc., a wholly owned subsidiary of QS Energy, Inc., for the sole purpose of taking advantage of asset acquisition opportunities in the oil and gas operations market. QS Energy Pool is specifically targeting the acquisition of one or more operating companies or properties with proven positive cash flow, providing operating income and bottom line revenue which are both accretive to and synergistic with QS Energy, Inc.’s current operations. QS Energy has identified multiple attractive opportunities to acquire producing oil and gas field operations. Our strategy is to acquire producing oil and gas fields with production profiles of at least ten years, proven long-term development rights, and demonstrated positive cash flow at commodity prices as low as $25/barrel of oil and $2.00/MCF of gas.
Our stock price continues to plummet, and from QSEP management we hear crickets.
A Missive on OPTIMISM for the Longs
There’s been a lot of downer commentary on Quick Strike here of late, and I’ve been part of it mostly because of the deafening lack of communication from our beloved company’s leaders. As a consequence, I’ve asked myself, over and over again, “WHY is this the case?” Is it the NDAs, lack of sales completion, AOT engineering bugs, what? After much consideration, I’ve concluded the following:
Let’s connect the dots: We’ve heard during past 18 months many tidbits of great news. I won’t repeat these…Zerosnoop can do that all too well, and I appreciate his and others efforts here to give us that reassurance. Yet, the silence from Gregg continues. ? If I am the CEO of any company, and especially one of this lowly stature, I’m talking it up every time I get the opportunity and particularly to long-term shareholders to whom I am beholden even if only in an ETHICAL way. More dots…Gregg Bigger is an ex-marine. Consequently, he is both ETHICAL and COURAGEOUS if he’s nothing else. Most can agree on that. As an ex-military man, he follows orders, i.e., he’s COMPLIANT, probably to a fault…yes, NDAs count for him. Those points notwithstanding, Gregg must know that without SALES RESULTS his job is in jeopardy. For G’s sake, our former CEO was booted for less despite communicating vociferously to us (e.g., recall those qtrly Shareholder Update slicks). So, what’s up with how Gregg justifies his existence as CEO to the investor powers that be? ANSWER: Gregg must be comfortable in his “close to the vest” knowledge of something BIG happening SOON that will cover his arse with major shareholders and thankfully us too.
Longs, prepare to celebrate. ?
Cheers!
Zeroedin, THANK YOU for your service to America!
Here's the text of my email to QS Energy Investor Relations yesterday:
"QS Energy, Inc. CEO and Chairman Greggory Bigger Appointed to U.S. Rep. Ryan Zinke's Veterans Advisory Committee"
Guys – I don’t expect you to answer this email. Wish you would explain though. I hold ???K of shares. Yes, I’m tiny shareholder comparatively speaking. However, I’ve got a serious complaint about your release of these inane PRs like the one you released today. What are you doing to us out here? You release this trivial information about Gregg (I’m happy for him), and the market for our stock tanks by 25%! Do you hate us out here? Don’t you see the connection? Why are you releasing anything but real NEWS of an AOT contract or progress toward closing such?
PLEASE STOP TRYING TO SOOTHE THE MARKET WITH INANE, “SHOW NO PROGRESS” TOWARD COMMERCIALIZATION PRs!!!
We don’t need this kind of help.
(Note: iHub has restricted me to (1) post per day; so don't expect a response from me until tomorrow, if at all.)
What does this have to do with CLOSING an AOT SALE?
QS Energy, Inc. CEO and Chairman Greggory Bigger Appointed to U.S. Rep. Ryan Zinke's Veterans Advisory Committee
Not trying to be a negative Ned here, but this is NOT what investors want to hear about. Hey, I love our military veterans too, but our CEO needs to announce something material that relates to earning his $300K/year salary while diluting our collective shareholder interests month after never-ending month.
Glad to know someone likes us.
Who cares what the reasons are...I for one am simply GLAD to see our pps going in a DIFFERENT direction for a change.
GLTA!!!
PLEEZ, we DON'T need another product commercialization to tax this management team. They're clearly already struggling with the 2 products they're currently trying to sell/install. Not bashing, just being pragmatic.
GLTA!
Same here, holter. Chagrinned
Sadly, shl468, you can only take that stock loss IF you SOLD. If it's just a paper loss because the company pps has been in a FREE FALL for months, you'll have wait it out with the rest of us OPTIMISTS hoping that Gregg et al will CLOSE A SALE. LOL!!!
Agree, Tripp1, it's a LONG-TERM play. If you're not ready to hold this one for years, then move on to something less risky. I'll say again: GREAT PRODUCT with NEWBIE MANAGEMENT, but they are trying to get the shipped righted by establishing what's on the books via the latest set of financials. Give them time, and they'll eventually get it right.
GLTA!!!
Yank, you are a foolish businessman, IF that is what you are, as you so often claim. Banks make A/R loans, which are Working Capital loans, every day of the week for small businesses like ALKM that need cash flow to fund their sales development and ongoing operations. What school of business accounting did you attend? Jeez, such and amateur!
And, you guys on this site consider him an expert? WTFIWWY!
Yank, you are out of your league in realm of bank financing. All they need to do is find a Las Vegas banker who deals in the small to mid-size commercial accounts market. They would love to have this company pledge their accounts receivable against a prime + 5 line of credit, ALL DAY LONG. It's what bankers live for.
Frankly, no one can know WHY the pps is falling. However, a company that spends the time and effort to contract a CPA firm to do a legitimate accounting of the financials is NOT, IMO, run by wayward fools.
Eakle et al wanted to find their baseline financial situation. They now have that and it's certified. Yes, it cost them time and money, but they now have completed that milestone.
Next step is for Eakle and team to start managing the business by securing accounts receivable financing and taking care of production to meet current and future customer demands.
It's not rocket science. We simply need to be PATIENT and, YES, ask a question or two when things seem to be out of sync with reality and sound business practices.
GLTA!!!
Holter - I believe we shareholders are in a foot race between illiquidity and brand awareness both of which requiring capital inflows of one form or another. If Mr. Eakle and his management team can find a banker who'll factor their receivables (either from their distributors or from their retailers, as the case may be), we ALL WIN.
For the uninitiated, FACTORING is a financing method provided by commercial banks to small businesses with viable accounts receivables. Essentially the banker provides a loan to ALKM collateralized by their sales accounts receivables at a percentage discount to the book value of the receivables.
This gives the struggling small business managers the funds they need (without having to dilute ownership) on a month by month basis at a reasonable interest for the risk level they represent to the commercial bank, say prime + 5% or something like that. It's a WIN, WIN, WIN. Management wins because they get the working capital loan they need to manage the company's growth. The banker wins because he/she gets a new commercial loan on the books with the deposit accounts of a viable small business. Shareholder win because we get a growing investment value with NO MORE DILUTION.
Hope Mr. Eakle chooses this methodology to finance our collective futures together.
GLTA!
WIG - If you're a long-term investor as I am, you buy more because eventually management is going to get it right, especially now that the CPAs have the reporting situation under control. Alkame water is going to rule the roost of bottled waters someday, IMO, and this fact will not be lost on Eakle et al. If they were crooks, they would have extricated themselves along with their ill-gotten gains long ago, again, IMO.
Cheers & GLTA!
IMO, this 10-k answers many of my questions. These risk factors are pretty much standard operating procedure for penny stocks.
Here's my take after reading the entire report.
1)Alkame has a great product with outstanding potential. We all knew that. YAY!
2)Management is trying to clean up the messes created by Xtreme's management.
3.)Alkame is selling significant bottles of water. HURRAY!
4.)They need some kind of cash inflow/financing in order to expand their operations to the level necessary to make them PROFITABLE. That said, they're losing much less money than in the previous year. YES!
5.) In order to be successful, they need a serious lender or angel investor to enable them to reach "escape velocity."
Fellow investors, it's a good report. Your investment is secure for the moment with significant upside potential. However, unless Eakle et al can get their hands on new capital, we are at risk for significant share dilution for the remainder of this and next year.
All in all, IMO, I think we've weathered the initial storm of startup risk. Pray for manna from heaven in the form of bank financing for receivables or something similar that won't cause further dilution.
Cheers to all!
Thanks, Finckus. BTW, nice truck! . If this is a warehouse, perhaps "fixing the factory room floor" is not such a bad answer?
I hate to admit it, but Yankee is right on this one point: Alkame management SUCKS BIG TIME. These issues are kindergarten problems for a competent management team. ALKM's management, sadly, is of the lowest echelon as indicated by their continuous inability to get a great product onto store shelves.
Regardless, this may be one of those few instances when a CUTTING EDGE TECHNOLOGY based product is so overwhelmingly GOOD that even SUCKY management can't screw it up in the long run.
Alkame, GLTA!
I'm a committed long in ZERO. However, this latest PR seems like just another distraction to get in the way of FOCUSING ON signing a real AOT contract that brings in real revenue. Your collective wisdom?
I'm in, Flu!
Astutely noted and explained, MBA! BRANDING RULES, especially nowadays when one slipup can put a major athlete or celebrity in court or help him/her LOSE his bread and butter endorsement contracts. Can anyone say "Tiger Woods"?
STWA Letter to Shareholders - May 8, 2015
"These are just some of the initiatives we will cover during our Shareholders Meeting and in the second half of 2015. We hope to have additional updates on our current projects for AOT and Joule Heat, as well as our strategy for creating sustainable value at the meeting. We remain in discussions with financing parties and are looking to improve our capital position and ability to be opportunistic in the market.
2015 will be a year of continued investment in R&D, but equally important, further advancements in the commercialization of our technologies in the midstream, upstream and gathering markets.
I'll echo my comments from February: communication is very important to me and to our Board of Directors and we're going to place a great deal of emphasis on speaking with you all throughout the year.
We truly appreciate your support and look forward to speaking with you at our 2015 Annual Shareholders Meeting, and keeping you informed in our quarterly and other updates moving forward. Thank you and all the best.
Greggory M. Bigger
Chief Executive Officer, Chairman of the Board
To this letter so sincerely written, I respond: WTF?
That is a dubious response from a CEO who's pulling down $300K per year. I'm very disappointed. He's dropped a couple notches in my mind as a bona fide CEO with adept managerial skills. What happened to the CEO who valued shareholder transparency. .
On the upside, he's probably not a crook, but his integrity and intelligence are now debatable in my book.
Sorry, everyone. We can only hope that some company in the oil pipeline industry will take a risk on purchasing AOT before the others who remain stubbornly ensconced on the sidelines. Say your prayers.
Thanks for the updates, nowhook1.
24 hours away from knowing...Given what we do know about Gregg Bigger, I find it difficult to believe he doesn't comprehend what he's doing as our CEO.
He's not so young and dumb that he'd ignore his team's advice and our protestations to hold the SHM in SB to maximize shareholder involvement. Hence, I have to assume that he KNOWS WHAT HE's DOING by changing the SHM's venue (after so many years in SB).
If he's not a coward hiding from shareholder ire due to historical lows of our pps (it's equally hard for me to believe an ex-military guy with his credentials has even an ounce of cowardice in his psyche), then there must be a VALID REASON for holding the SHM in Hawaii.
Perhaps it's not a contract signing or better. But if not a contract, there are a number of great things he could announce that would be heralded by us "stay at home and wait for the news" shareholders.
What that news could be,I haven't a clue. However, my logic suggests that we will get good news that moves this stock's pps higher. Maybe it's not going to make us all rich Monday, but even if it gets us moving away from these all-time LOWS, I'll be encouraged.
Good luck to everyone tomorrow!!!
Me2!
I bought more shares today because ultimately I believe that ZERO can't survive without good news sometime in the near future. For all of our sakes, I pray that my hunch is right. GLTA!!!
WELL SAID, FML2013. Show us the MONEY, Gregg!!!
Well, from the 8-K, we see that Xtreme's bookkeeper was involved in some kind of malfeasance, "cooking the books" so to speak. This means that when Alkame's auditors discovered the cooked books, they had to extend the timeline for completing a fully audited financial statement to ensure absolute accuracy in their final report.
This is all good because it ensures for us, the shareholders, that we'll see the truth in the next set of numbers, AND it means that the crooked bookkeeper and his friends are being ousted from future dealings with Alkame. HURRAY for Mr. Eakle and his auditors!!!
DITTOS, Jaymark!!!
Exactly, Whacky! What's the point in this PR? To boost the ego of Mr. Whelan. Hey, I'm glad he's a supporter of AOT, but let's get on with the substantive work, Mr. Bigger. CLOSE A SALE!!!
Thanks, Mkelly, for repeating what I've been saying about this poster for months now. He exhibits the same pattern of behavior/posts for another penny stock I hold (ticker = ZERO). He's not interested in investing or furthering the success of either of these great companies. It's his JOB to do what he's doing to put down these tickers so that someone (perhaps it's his game to win) can profit from a downward drifting pps. Either way, he works at the behest of his motivation/desire to see a company fail in the market not succeed.
What a nitpicking nit??? LOL!!!
You are as wrong as you are in support of Alkame. They do for penny stocks.