QSGI, Inc.(fka QSGI)

[sid1959]

Spymaster, you previously valued QSGIQ at .34, why the back-paddle now?


Spymaster3





Friday, December 31, 2010 11:22:40 AM

Re: None


Post # of 29023






I’ll cover a number of points here.

1 – Valuation

One the upside, this is neither a RM or Q play as all the material facts are known. A buyer here is buying KruseCom under the scenario of 235 O/S shares, revenue for last 14 months of $3.5 million, current annual revenue run rate of $4 million, 2011 forecasted revenue of $8 million and forecasted pre-tax 2011 cash flow of about $700,000 and pre-tax margins of 9%. So you model that and get a reasonable valuation.

Revenue model – pick your period and your P/S ratio. I’ll use 2 times current revenue run rate.

$4 million X 2 = $8 million. Divide by 235 million shares = $0.34 per share

Pre-tax cash flow model - pick your period and your P/CF ratio. I’ll use 10.

$700,000 X 10 = $7 million. Divide by 235 million shares = $0.030 per share.