In an earlier Email I pointed out that time is running out for holders of Convertible Promissory Notes, Convertible Debentures and other financial arrangements. By 2023 tens of million warrants will expire if the pps is not above $0.05. The principal beneficiaries of expiring warrants will be Directors and Executive Officers as a group of 5 persons, Hoppel and the Carson Group holding altogether about 167 million shares or over 33% insider ownership. Their percentage control would increase as warrants expire. An irony is that the unusual amount of convertible notes expiring over the next three plus years will have provided free financing if the pps does not rise above $0.05 pps. CEO Squires will have been clever indeed.
Considering the average current volume represents about $40,000 or less a day, it would not take much selling to keep the pps below $.05 for a time until significant earnings materialize, and there would be some incentive possibly for one or more large shareholders to engage in selling despite warrants they hold expiring.
An additional incentive to keep pps low, is that two lenders, SBI Investments LLC, 2014-1, and L2 Capital, LLC, will have less incentive to claim up to 50 million shares at a price below $0.05 per share, and they may agree to a deeply discounted settlement that could presumably be paid out of anticipated cash payments this month. When the pps was around $0.10 the litigants were looking for a fast buck, up to $5 million in stock from loans of only $1.5 million.
The putative default according to SBI and L2 was the failure to properly and timely file a Form S-1 with the SEC. That claim and other claims relating to frivolous technical defaults are unlikely to persist with the pps being so low and cash becoming available to pay for a quick settlement for all parties.
QMC claims it has already paid $561,286 (339,000 + 213,650 + 8636) out of the $1.5 million originally loaned by SBI and L2. At a current price of $.025 per share, 50 million shares would be worth $1,250,000, and QMC could legitimately argue it only owes $689,714 equal to about 27.5 million shares at current prices. Assuming QMC receives about $7 million dollars as down payments for two mini Assam reactors this month, QMC will have the means to argue convincingly for a cash settlement of $689,714 or no more than 27 million shares and even fewer shares should the pps rise.. Even accounting for $1.5 million (the original loan amounts) QMC should arguably owe no more than $938,714 not accounting for legal fees and interest. What is not clear is whether or not there are conversion features with the original $1.5 million loans at an exercise price of more than $0.05 that are expiring in a year or two. If so, management would have additional leverage against the litigants, especially if the pps remain low.
Putting an end to this expensive and inane litigation should be a top priority for management. I predict a settlement with the litigants will be reached this year.
I intend to keep buying. At these prices per share stocks are deeply discounted permanent warrants. A DCF analysis should show this to be a fact.
