QuantGate Systems Inc. (QGSI)

[Potse]

My concern with the quarterly report......

Accumulated a few shares around the 16-17 cent area for another possible short-term trade back over the 20-cent level. The OTC market has somewhat cooled off recently, but I am anticipating we have not seen the last of some moves/spikes in the QGSI share price in the near-to-mid term. Quarterly report should be appearing sometime within the next week or so, and I wanted a few extra shares just in case anything interesting shows up in that report or if any important corporate development materializes shortly after.

I did not get a chance to read through the Q1 report until Friday afternoon, and sent the company an email late Friday afternoon expressing my concern that the report provides no information about the $1 million financing that was completed during the quarter. I was planning to purchase one final block for trading purposes after the price broke under the 13-cent level, but decided to wait until the company provides an explanation/clarification on this matter. I still have not received any response from the company at the time I am writing this.

Here are the key things that concern me......

1) The August 25 press release seems to definitively state that the financing was completed during the quarter (money was received and shares were issued). However, there is no information in the Q1 financials that indicate this occurred.......

QuantGate is also delighted to announce the completion of a non-brokered Private Placement financing (the "Financing") in the amount of USD $1 Million. Pursuant to the offering, the Company received Gross proceeds of USD $1 Million, via a Secondary Offering (the "Offering") by the issuance of 5 million shares at USD $.20 per share. The entire financing was subscribed by an arms-length, Strategic Investor.

2) I have considered the possibility that maybe I am just misinterpreting that paragraph, or maybe there is something in the terms/conditions of the financing that pushes actual delivery of money/shares to a date past the end of that quarter. However, at a minimum I would certainly think the "subsequent events" section of the quarterly report would mention this financing. It does not. It seems almost inconceivable to me that neither the financials nor the subsequent events section contained any kind of information about the $1 million financing.

3) During the quarter the shares outstanding only increased by a little over 100K (one of the note holders converted his loan at 25 cents). If the most recent verified share count (October 15) from the transfer agent is accurate, the shares outstanding has only increased by 1.12M since the end of the quarter. It is possible some or all of that increase could be from note holders converting at 25 cents. I would think by now (almost 2 months since the completion of the financing) the 5 million shares from that financing should have showed up in the most recent verified share counts on QGSI's OTC Markets profile.

There could be a simple/logical explanation for all of above, but until the company provides some confirmation/clarification on the status of that financing I probably will not entertain the thought of purchasing any more shares and may have to seriously rethink my commitment to this investment.