Friday, January 6, 2017

Will QDLC Ever Post a Report?

Quadlogic Controls (QDLC) is a dark company I first wrote about a year ago.  They last posted a report in 2012, earning $0.16 for the year.  Stock price is now $0.40 for a PE ratio of 2.5.  The only numbers anyone has seen out of QDLC from 2000 until now is the 2012 report.

Update 1/6/2017: QDLC updated the investor relations page of the website and posted an annual report for 2013!  They did this sometime between last night when I finished typing this post and this morning 2 hours after I published it.  

The company tells me they'll be posting an audited annual report within the next month and a half.  The question is will they follow through...

I suggest you start by reading my original post here: QDLC at 1x earnings*.

QDLC might be the stock I own with the widest immediate value potential because I really have no idea what's going on.  They won't say a thing.  Could be on the brink of bankruptcy.  Could be earning $0.50 per share.  Looking at the long term chart, the stock has been basing around 0.25 for the past few years and in 2008, amidst the darkness, rose all the way up to $1.75.

But this post is not about what the company is worth.  This post is about a dark company continually telling shareholders one thing while doing another.  This post is about a company violating state law by not sharing financial statements with the very shareholders they once used to raise money.  Shareholders have a right to see the numbers behind their company and the board has a fiduciary duty to act in shareholders' best interest.

The weirdest thing about QDLC is how responsive they are despite giving out no numbers.  They have an Investor Relations section of the website with an official investor relations email address.  If you email them you will probably get a prompt response.  If you ask when they might post another report they will probably tell you some variation of "soon."  When "soon" comes and goes they will spit out a different version of "soon."

I am not the only person they've told about mythical reports that never materialize, others have shared their experience with me.  Let's go through a timeline.  I will refer to the other investors I've communicated with as Investor A, B, etc.

  • Mar 2000 QDLC files form 10SB12G with the SEC
  • Sept 2012 QDLC files an annual report with OTC Markets
  • Fall 2012 QDLC tells Investor A they will continue filing an annual report every year
  • Fall 2013 QDLC tells Investor B they will be filing an annual report "next week"
  • Oct 2014 QDLC tells Investor A they will file an annual report for FYE 2/28/14 in Q3 2015 with the annual report for FYE 2/28/15 coming no later than Q1 2016
  • Sept 2015 QDLC tells me they will file an annual report for FYE 2/28/14 "when available" but they cannot estimate when this might occur
    • They also say they expect to continue filing annuals regularly moving forward
  • Dec 2015 QDLC tells Investor C they anticipate filing annual reports but they have no timeline when this will happen
  • Oct 2016 I send a certified letter to QDLC's CEO and controller reminding them of New York’s Business Corporation Law §624. QDLC is incorporated in NY and this state law says they must show financial statements for the preceding fiscal year to any shareholder who asks for them. I formally ask to see the financial statements and provide proof of my holdings but they never respond.  
    • Incidentally they are also required by state law to hold an annual meeting but I have never pushed this as I don't live near NY
  • Nov 2016 I send a complaint to the New York State Division of Corporations saying that QDLC has refused to show me, a shareholder, their financial statements as required by state law.  I am told to pound sand. "The issues raised in your correspondence fall outside the jurisdiction of the Department of State. It is respectfully suggested that you contact an attorney of your choice to assist you in this matter."
  • Nov 2016 after I send an email asking for a response to my letter QDLC tells me they will post an audited annual report for FYE 2/28/2016 on or before 1/1/2017.  
    • QDLC also says they will continue filing annual reports from here on out.  They say they are considering filing quarterlies starting "next year" and are also considering paying the otcmarkets hostage fee to get removed from the Stop Designation List.  
  • Jan 2017 QDLC tells me they will post an audited annual report for FYE 2/28/2016 by mid Feb 2017 at the latest
  • Jan 2017 QDLC tells Investor A they will post an audited annual report for FYE 2/28/2016 by end Feb 2017 and for FYE 2/28/2017 no later than end of June 2017
  • Hopefully the drama ends 

Years of promises to numerous shareholders with no delivery.  A company breaking state law and the Dept of State saying they don't care.  Such is life with dark companies I suppose.

But on the bright side we only have to wait less than two months.  Will they file a report?  Their website is updated regularly with news and products so it seems the business is doing well.  What if they post a profit?  What if it's a big profit?  What if they start officially filing quarterlies with OTC Markets?  

One question I have, if they ever do file a report, is why would they start now?  Why start posting reports again after all these years?  They've told me they're doing it just to get back to filing reports.  Maybe they want to showcase their worth as they prep for a sale...

Or maybe this is all nothing and they'll never file a report again

disclosure: long QDLC


  1. How do they have a PE ratio if you don't know their earnings?

    1. I'm using 2012 reported earnings as that's all I had to go on. question is what do they look like now and will the world ever know

  2. I checked this out and one thing that bothers me is the debt. Their book value as of 2012 was essentially zero.

    1. True. BV in 2012 is much improved over 2011 though and went up again in 2013

  3. I have a proposal...why don't we organize some small scale shareholder activism. This should not be so hard.

    1. I'm not the initial poster, but I am aware that over at the Corner of Berkshire, they are attempting to crowd source some shareholder activism, see Though tbh, I'm not sure what it would entail in a class like this, other than it would probably have to go through some sort of legal venue. I would be interested in seeing more if either of you persue such avenues.

  4. I appreciate all the time you've put into this. There are not many shareholders that are willing to take the steps that you have already taken so far.

    Hopefully the company finally starts treating its shareholders appropriately. Promising to post annual reports and then continually breaking your word just looks bad. Not just to shareholders, but to (potential) customers as well. That has to stop. Now that this is story is in the open and drawing some attention, the company has one more chance to do what is clearly right.

  5. After years of broken promises QDLC has finally released updated numbers! They even put out a press release.

    The numbers aren't so beautiful but the licensing sounds interesting. Next thing to wait for is a full year audited report, hopefully coming soon.

  6. Nice day today. Up over 100%. Not sure if you are associated with SA Advisory, but they seem to have a few picks in common with you. They had a writeup Friday night that seems to have gotten someone excited today. They go over the numbers and what they expect and it is pretty bullish.