QuantGate Systems Inc. (QGSI)

[Potse]

Reply to some private messages......

Over the last few weeks I have received some private messages regarding QGSI-related items, including my reaction/comments I made about the 2019 annual report in post #1850. I think the easiest (and most productive) thing to do is try to address a number of things here in this post.

I'm still holding my full position. Even though I may sound critical/frustrated/irritated at various things in QGSI's filings, I am probably more optimistic than ever before that I will get the kind of return on my investment that I was hoping/expecting. At the risk of having a bunch of egg on my face, I'm reasonably/pretty confident that QGSI is going to have its time in the sunshine.

Lack of press releases: I think it is generally well-known that OTC Markets can be somewhat fickle in how it treats/perceives companies that issue a lot of press releases prior to becoming current (or very close to current) with their OTC filings. It is entirely possible that QGSI was advised by its securities counsel and/or the IR firm to not get overly aggressive on the PR front, especially if it was going to take awhile to get its filings updated.

I am reasonably confident we will be seeing some nice activity on the investor relations front this year. I've mentioned this before, but I think it is worth repeating. QGSI did not issue a press release regarding the integration with Interactive Brokers (NASDAQ: IBKR). I don't know if they are planning to issue a PR about that, but if that press release is still lurking out there, it is something that can potentially spark some movement in the stock. Investors/traders sometimes love seeing small OTC companies associating with large public companies.

I would be somewhat surprised if QGSI's investor relations activity doesn't include some type of video-based presentations, conferences, webinars, etc at some point. My guess/hunch is that occasionally we will get something more than just static press releases. I don't read/speak Portuguese, but for anyone interested you can watch a Brazen Capital presentation that Leonardo Cardoso made about a week or so ago. The first person you see/hear in this video is Roger Correa (who is one of the recent new additions to the Brazen team). The words "powered by Quantgate Systems" come up on the screen around the 51:35 minute mark when Cardoso talks about robotic trading. Also kind of interesting to note that Eric Gaigher can be heard very briefly around the 56:10 minute mark......

https://www.linkedin.com/in/rogercorreaconsultor/

Jameson Asset Management: It would be nice if we could get some explanation of what that whole Jameson thing was about. Clearly, something was going on. Websites were registered, a corporate website was developed/designed, the website was brought active, etc. Up until Quantgate recently redesigned/updated its corporate website, there was still a reference to the $50M that Jameson had under active management.

Jameson is kind of like an Unidentified Flying Object that landed in the middle of the town square, the town folks took selfies standing next to the craft, and then it took off and was never seen again. Very strange/puzzling that QGSI doesn't seem willing to acknowledge this or clear up the mystery. Even Randy Polley (who was one of guys involved with Jameson) completely removed all references/information about Jameson Asset from his LinkedIn account.

Bridgerock Technologies: The ownership/relationship status between QGSI and Bridgerock is something that deserved much more detail/clarity. That August 2016 press release and the cached websites all clearly show that Bridgerock became a wholly owned subsidiary of QGSI. The apparent inconsistency between what QGSI disclosed in 2016 and what now appears in the current filings is something that should be more fully addressed.

Redeemed preferred shares: I don't know why the 2016 and 2019 annual reports show inconsistencies in the number of preferred shares that were redeemed between June 2015 and May 2016. There could be a logical explanation for this, but I don't have any concrete guesses/ideas of what it might be.

Post-split share counts associated with pre-split dates in the 2019 annual report: I actually don't see anything wrong with how they handled the outstanding share counts in sections 1 and 2 in the 2019 annual report. In the last paragraph of the report, the company makes this statement: "All share and earnings per share information have been retroactively adjusted". I've seen other companies handle their reverse splits and share count disclosures in their periodic reports in similiar fashions. For example, David Lazar reverse split one of his shells in late February 2020. This is the 2019 annual report he filed, showing a retroactive adjustment to the share counts.....

https://backend.otcmarkets.com/otcapi/company/financial-report/244308/content

Change in conversion ratio of the Series A Preferred: My assumption is that QGSI did provide proper notification to NVSOS of the conversion ratio change (via one or both of the May 8 2019 NVSOS filings), so I don't see/anticipate anything was illegal on that front.

Those 2019 NVSOS filings were actually a large part of the reason why I became interested in the stock and started accelerating my purchases. They were the first indication to me that some type of increased corporate activity was going on at the company.

Now, as to the reasons why the ratio was changed and whether that change will ultimately have a negative impact on those of us retail shareholders remains to be seen and is open for debate. Factoring in the 1:5 reverse split, the 1:26.67 ratio on the Series A Preferred should get adjusted to a 1:5.334 ratio. It is possible that QGSI received something in exchange for that ratio change, or maybe Marsha Collins and Debra Swain wanted that change to help maintain their equity control of the company.

Considering the sisters have been involved in this stock for so long, and seem to have been generally supportive of the company (basically from its inception), this conversion ratio change is not something I am overly concerned about at the moment. If we see a large participation increase in QGSI's private placement/notes offering, and/or we find out that management/friends/associates have participated in that offering, that would be a pretty good sign that other people are not too concerned about the preferreds as well.