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  5. QST: I never sold my position of Questor Technology (I guess I have a problem parting with my losers! [Questor Technology Inc.]
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Investment Q&A

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Q: I never sold my position of Questor Technology (I guess I have a problem parting with my losers!!) It had a 20 percent bump in one day last month. There is chatter on stockhouse about maybe someone is accumulating to take this 'dog of a stock" private. Can you confirm how much cash is still on Questors balance sheet? My understanding is that the cash almost covers the current market cap. If so then a take private with a premium would still be cheap for the acquirer. How much per quarter would it cost questor to be listed on the venture exchange? Could taking this 'dog of a stock" private be viable if they could clean up a lot of S & G costs? Also if QST was taken private they could take the axe to upper management and also save some expenses. Right? So it could be a viable enterprise to a larger acquirer, right? I just can't see why this company can't get any traction in sales of equipment or contracts for rentals of their equipment. Apparently there is huge concern for the gases that are released with flaring of excess natural gas and, if you believe QST, they have a good solution to this problem. So why can't they get any sustainable contracts/sales? Is the concern over flaring gases just a lot of "hot air" talk and the truth is no one is going to do much to lower it? Or is Questor's solution really not that great or competitors have better options to solve this problem?Perhaps someone in the oil and gas industry who reads this question can comment since I don't really expect 5i research to have any intel on this problem.
Asked by Paul on July 08, 2024
5i Research Answer:

Listing costs can vary, but being public also has other costs besides just paying the exchange (regulatory, accounting, share holder communications). We would estimate total costs in the $300,000 annually range all in. At March 31 QST had $11.1M net cash (market cap now $16.4M). But it did have slightly negative cash flow. Typically a privatization would include management, but anything is possible. BUT.....axing management would have severance costs, and this could change the return dynamics for any buyer. Its small size is likely a big factor in its struggles. Few companies will want to sign a long term contract with a company that may or may not be around in five years. We do think it would be better off privately, or as a division of another company, but we would be very cautious on making any assumptions on such an event.