Bankrupt and Distressed (BAD) Research and Due Diligence

[Madclown]

The attorney (Kaufman) is supposedly taking 1.42% of the new company stock in payment for his services. The QSGIQ faithful have held this up as a positive event. But let’s look further at what that means for the implied value of the stock. The attorney (Kaufman) has an administrative claim of $25,000. This can be found on page 2 of docket# 332-3. If his $25,000 administrative claim is supposed to be worth 1.42% of the company’s equity, then we would divide $25,000 by .0142 to arrive at a total equity value of $1.76 million. If GSGIQ holders are to be receiving 13% of the new company equity then we multiply .13 or (13%) times $1.76 million to arrive at a value of $228,873 attributable to current QSGIQ holders. If we divide the 31 million “outstanding” QSGIQ shares into the $228,873 aggregate value then we arrive at a per share value of $0.0074 for QSGIQ.

The exchange of a claim for an equity interest is contemplated here by a “willing buyer and a willing seller”. It should yield an approximate value for the consideration exchanged. I used this calculation because it gives some idea of what QSGIQ is worth. The holders of QSGIQ are going to be given 13% of the new company equity. The implied value of the new company equity is $1.76 million as outlined above. If one were to buy all 31 million shares of QSGIQ on the open market they could convert them into 13% of $1.76 million, which is roughly $229,000. In order to find out what the per-share value is for the 31 million shares you bought you divide it into the value received. That comes to $0.0074. I don’t know how to state it any other way.

GLTA