Bankrupt and Distressed (BAD) Research and Due Diligence

[Madclown]

There isn’t anything I don’t know that I “should know better than”. It is you that fails to grasp where the numbers come from, which ones are relevant and how an R/S does or does not affect value. I am not using the authorized share count. In my first valuation, I was using the outstanding count from docket #332 PDF page 19. That chart shows the effects of the reverse split before the new equity raise that causes further dilution. The reverse split issue is irrelevant in terms of what the collective stake of QSGIQ holders is worth. Splits don’t affect aggregate value. The main dilutive effect would come from the additional $1 million equity raise that is contemplated and the nearly 100% increase in shares issued under that scenario if the R/S were to happen first.

Let’s look at a best-case scenario in which there is no reverse split and there is no additional dilution from an equity infusion, shall we? I’ll make it nice and simple so even you can follow along. On docket # 332 PDF page 18 shows that there would be 237 million outstanding shares in this situation (no r/s and no equity raise). With 600k in EBITDA and a 5x multiple, the EV would be about $3 million. QSGIQ holders will collectively own 13% of the equity in the company. Let’s say all $3 million is equity. So 13% of $3 million is $390k. Now, to get to a value for QSGIQ you divide the value ($390k) by the number of shares. In this scenario, there are 31 million shares. So, 390k divided by 31 million yields a value of $0.0126 per share. That would be best case. Even under a best case scenario the stock is trading 9 times higher than its actual value.

You guys can pump this thing to your hearts content over on QSGIQ and tell everyone it is headed for $2.75 per share, I simply could care less. Just don't do it in here. Don't leave a big steaming pile in my yard and I won't come over to yours.