Investing

What is with QPRC?

I’ve been sitting on this stock forever, well, since some time in 2000. Actually, I had made some money with it in the prior year or so, got out, then started getting back in as it started to climb again. They used to be called Quest Products Corporation. This was back during the Hay Day of the DOT-BOMB fiasco when Pump & Dump and stock Churn scams ran rampant. Day traders were doing more caffeine and spending more time in front of computer monitors than computer programmers. It was nothing to hear about someone who claimed to be a millionaire one week then sleeping on a friend’s couch due to eviction a few weeks later. People were betting wildly with money they didn’t have and when the margin calls came in the house, the car and everything else went.

This was also a time when any moose with ears with something that sounded tech related could get an investment firm to hurl money at them. For those who didn’t live through the time or did live through it but weren’t close to the tech/investment world, there was a point when people with ideas didn’t even have to pitch to investors. If you don’t know what pitching to investors is watch an episode of Shark Tank.

There were numerous stories (possibly urban legends) about people with not even half done code bases or even fully architected designs putting out press releases or having an article written about them that suddenly had investors calling.

You have to understand a bit about the period leading up to this. Y2K was finally acknowledged as a real problem some time in 1998 and companies had IT consultants working massive billable hours cleaning up 30 years worth of shit decisions. People with the skills to be on-line had a lot of money to gamble with and tech stocks “only went up” so there was little in the way of caution being exercised.

Penny stocks have historically been the seedy underbelly of the even seedier Wall Street world forever. If you want to get an idea of just how people were throwing money around and just how seedy things got, rent The Wolf of Wall Street. It’s a good movie and pretty accurate. Having worked in the tech side of stocks for a while around that time, I can honestly tell you the movie toned broker’s behavior down.

Penny stocks have historically been little more than lottery tickets. For every rags to riches story people raved about there were hundreds, perhaps thousands of abject failure stories people kept quiet. IT people were used to this. There used to be a saying in the IT world “A consultant is someone who talks an awful lot about that one hour they were paid $250 for and never mentions all of the years spent at $40/hr or less.”

So it went the logic of people buying penny stocks. I’m not talking about what the trading industry classifies as a penny stock, I’m talking about things trading at 0.04/share or less. The more worthless it was the more you could accumulate and it didn’t have to move much to double your money. If you could find a stock trading for 0.005/share $5000 could get you a million shares. You felt like a major trader. There were countless places people talked about these “investments” singing their praises. If that near worthless paper went to 0.06/share you could pay cash for a new Mercedes.

During that time of senseless money splashing everywhere people seemed to be into skiing. At least it was viewed as something wealthy people did. I don’t ski, but knew people who did. There was always a technical problem with skiing, the sun. Sushing in and out of tree cover could leave a skier blind while traveling at fatal speed. Self adjusting sun glasses of the day failed miserably at cold temperatures. Various schemes to solve this problem came and went.

This is where I first got into the penny stock QPRC. They announced this Rainbow Shades thing which was supposedly a viable solution. The company had weekly updates on their Web site about the “progress” of various projects. One of those projects was a product called PhaseOut which the federal government eventually took issue with.

Another project they announced was Programmable Multiple Company Credit Card System  which seemed to get many people interested. Yes, credit card fraud was a problem back then as was keeping all of that plastic in your wallet. It was nothing for someone to have nearly a dozen credit cards back then. Stupid, but nothing.

Eventually the weekly updates turned into how to make doing absolutely nothing sound like they actually did something. Despite all of the talk about the glasses, they never arrived or at least I never met anyone who was able to actually purchase a pair. Sentiment quickly turned. Vile statements and nicknames were hurled around on-line. The stock started going down or at least I think it did. Long time ago, memory fades.

One thing which hasn’t faded for anyone still holding the stock is the memory of the cruelest joke of all played on shareholders. There was an official press release about $20 million in funding. Great joy rushed through share holders. This ship was _finally_ going to sail into port and everyone would live happily ever after.

Weeks went by. Then months. All with no news about the glasses being shipped for sale or the multiple account system ringing the cash register. Nothing. Finally, after much prodding by share holders there was a quiet announcement on the site that the $20 million in funding never happened.

Years went past with only the occasional poser showing up on one of the penny stock sites trying to drum up interest in this do nothing dog. Most of them quickly learned the token few people still on those sites holding this stock had an endless supply of venom to dispose of. At some point the company changed it’s name but not it’s stock symbol. They are now called Quest Patent Research Corporation. The list of corporate officers seems a lot smaller as well.

While I still have a big bucket full of these shares, I haven’t bothered following the company in years. I doubt anyone has. If you paid cash for it, you learned the accounting term “sunk cost” and moved on. Most people, as they got older, opted to move into dividend paying ETFs (Exchange Traded Funds) because life simply doesn’t allow one the time to sniff out lottery tickets and, more importantly, the days of endless buckets of cash being hurled at IT consultants is behind us. Unless someone needs a loss to write off against a large stock gain, there was simply no reason to sell. Heck, for a while I think this stock was trading for less than a penny per share.

That all makes this past year or so seem odd. An October 28, 2015 8-K filing had the following blurb in it.

(i) Pursuant to a securities purchase agreement between the Company and five of its subsidiaries (Quest Licensing Corporation, Wynn Technologies, Inc., Mariner IC Inc., Semcon IP Inc., and IC Kinetics Inc.), the Company issued to United its 10% promissory note in the principal amount of $1,250,000 due September 30, 2020, for which the Company received $1,250,000. The terms of the Note are described under “Promissory Notes.”

Makes a share holder wonder how a company with this history get that kind of loan? Also makes one wonder why there was no press release about it, just a quiet 8-K filing?

The 10-Q from November 9, 2015 had some odd blurbs in it as well.

? We sold to United 50,000,000 shares of common stock for $250,000.

? We borrowed $1,250,000 from United, for which we issued our 10% promissory notes due September 30, 2010. Of this amount, $1,000,000 was paid directly to Intellectual Ventures as the initial installment of the purchase price of the patents we purchased from Intellectual Ventures, and$250,000 was for working capital, including costs of the financing.

? We granted United an option to purchase a total of 50,000,000 shares of common stock, with exercise prices of $0.01 per share as to 16,666,667 shares, which may be exercised from September 30, 2016 through September 30, 2020, $0.03 per share as to 16,666,667 shares, which may be exercised from September 30, 2017 through September 30, 2020, and $0.05 per share as to 16,666,666 shares, which may be exercised from September 30, 2018 through September 30, 2020.

Then the January 25, 2016 8-K filing came out with a blurb most shareholders probably knew little about. Oh, I’m sure they got some proxy vote thing from their broker, but, given the history of individual share holder voting having no sway in the outcome probably ignored it.

Increase in authorized common stock. The number of authorized shares of common stock was increased from 390,000,000 shares to 1,250,000,000 shares.

Having their 10-K come out on April 1, 2016 probably made more than one share holder laugh. It had an interesting blurb in it as well.

At December 31, 2015, we had current assets of approximately $379,000, current liabilities of approximately $1,500,000. Our current liabilities include $1,000,000 payable to Intellectual Ventures and loans payable of $163,000 and accrued interest of $232,614 due to former directors and minority stockholders. Our agreement with United Wireless requires United Wireless to lend us the funds to make the payments to Intellectual Ventures. As of December 31, 2015, we have an accumulated deficit of approximately $14,425,000 and a negative working capital of approximately $1,100,000. Other than salary to our chief executive officer, we do not contemplate any other material operating expense in the near future other than normal general and administrative expenses, including expenses relating to our status as a public company filing reports with the SEC.

Makes one wonder just how “minor” a stock holder has to be to qualify for a piece of that $232,614? It also makes one wonder why the latest “new” article on qprc.com has a date of 4/30/2013. Personally, I would assume getting a million plus dollar loan would qualify as “news.”

What really has me befuddled is how a company, any company, with the above blurb in their 10-K could get a loan in excess of one million dollars? What is in the wind? What could possibly be coming down the pipe which isn’t “news” that makes some company cough up north of one million dollars in this economy?