This is a call to action for all QDLC shareholders to ignore the company proxy and vote yes on the concerned shareholder group's proxy for all new directors.
First let me make clear if you are on the side of the concerned shareholders it's very important you do not respond to the QDLC company proxy. Do not even vote for their accounting firm proposal. No response at all. The concerned shareholder group has called their special meeting on July 11 under a New York state law that says 10% shareholders can call a special meeting to elect directors if the company has not had an annual meeting in over a year. QDLC has purposely called an annual meeting on July 10 to void the concerned shareholders' meeting. But QDLC's annual meeting will only be valid if they have a quorum, meaning they have to get some sort of voting response from at least 50% of the shares.
Now to back up a little bit. I invite you to read my prior QDLC blog posts for some history:
QDLC de-registered from the SEC in 2004 and last posted a report with the SEC in 2000. They just stopped communicating. In 2012 they posted a report on their website then again we got nothing. On April 21, 2017 they posted financials and a press release. For years the company has said they will be posting reports regularly but not followed through.
I have always found this story interesting; it's one reason I bought in and the main reason I haven't sold as the price recently spiked up. I have asked the company a number of times over the past couple years why they would start posting reports again. It's just so weird that a company would be absolutely dark with zero communication then suddenly change their mind to become transparent once again. The company has always told me they just want to start communicating again but I don't buy it. It just has to be because someone wants to sell their stock.
Now that we see the concerned shareholder group I think we know the answer. I think the April posting of financials and PR are completely from the CEO and this concerned shareholder group. I think the concerned shareholder group told the company of their intentions and the company threw them a bone by releasing some numbers. They are all large shareholders that have been in the stock forever and they want out. They know the company is worth more than the stock price and the only way to get out fairly is increase transparency, communicate with the market, and sell the company.
So now you're asking yourself why the CEO would be proxy fighting his own board?! It's craziness and at first glance I didn't know who to believe. We have the concerned shareholder group saying the company has shirked their responsibility to shareholders by being dark and not holding annual meetings. Then we have the company saying the CEO is part of the problem and he could have resolved this long ago if he really wanted so don't trust that guy. What I think is the CEO has definitely been part of the problem in the past but something changed and he wants out. He got in touch with Peter Fagan (who used to work at QDLC) and the other concerned shareholder group members to start down this road. The current board at QDLC does not want to sell so they are fighting back and here we are.
Onto the transaction. QDLC has 11.4M shares outstanding. The concerned shareholder group holds 3M = 26%. I have talked with Peter Fagan and if you have questions I encourage you to do the same (email: email@example.com and I will give his phone number if you email me). Currently neither side has 50% of the vote so they are both working to get there. Your vote matters.
One interesting thing mentioned in the concerned shareholder group proxy is "significant undisclosed transactions that the current Board has entered into or is considering with foreign business entities". I wonder if this has to do with the recently announced licensing deals in Mexico. The licensing deals look good and I asked the company about them a few months ago. Company told me they are government related and only Mexican companies can bid on the contracts so somehow QDLC worked out a deal with some Mexican contractor. I don't know the details. An astute and curious reader forwarded me this article written in Spanish from August 2016. Google translate shows it says QDLC's Mexican partner, Pounce Consulting, acquired 51% of QDLC. I think something is lost in the translation because we wouldn't have this proxy fight if anyone owned 51% of the company. I wonder if this is really 51% of a JV with Pounce or 51% of revenue coming out of Mexico. Maybe we'll find out more someday.
Below I will post the letters and proxies I've received in chronological order. The concerned shareholder group's proxy is especially must read. Email me if you'd like a copy of the files. As you can see the concerned shareholder group intends to publicize the company and sell as soon as they can. This is the chance for long term shareholders to finally get a return. I don't know what they'll get for the company but I'm sure they are targeting something much higher than the current price of $0.70.
I think if the company wins they will go back to being completely silent. We won't hear from them again until someone gets old and ready to move on. If the concerned shareholders win we will see audits, press releases, financial statements, and a 3rd party valuation. They will attempt to sell and pay out the cash. Shareholders are due
disclosure: long QDLC
Letter from the concerned shareholders group received May 28, 2017:
Letter from the concerned shareholders group dated June 7, 2017:
Proxy from the current QDLC board received June 22, 2017:
Proxy from the concerned shareholders group received June 23, 2017: