Microcap Alliance- The Stocks to Watch Newsletter
12-12-99
By Dave Reiner
An Internet Microcap with Staying Power
As 1999 comes to an end, it's important to take inventory of all the "me
too" IPOs that flooded the market in the second half of the year so we can
filter out the ones who lack staying power. The Internet companies that I
believe will be the most promising, will be those who provide the software
infrastructure that's helping to build the Internet and make it perform
better. One of the very few microcaps lucky enough to be in this sector
is Q-Seven Systems, Inc. (OTC:BB:QSSY). Q-Seven's User Management
Software ensures that online businesses run their best by providing users
with a system for backend administration and security.
Q-Seven Systems is in a large, fast-growing market - a very important
prerequisite for any Internet play. The bigger the market, the better
potential ROI. Because Q-Seven's User Management Software is flexible and
scalable, it smartly cuts across ALL E-Commerce businesses. This is the
software's greatest advantage and it allows new services and technologies
such as online brokerages, gaming, sportsbooks, shopping, payment systems,
flash animation, video streams, and interactive movies to be integrated
with little effort into existing sites. Security of the software includes:
data encryption prior to being sent over the Internet via secure-Http;
database 128 bit DES encryption; log-file records of all transactions;
fraud prevention by session tracking; and firewall support.
The Numbers:
Q-Seven reported revenues in its third quarter ended September 30,
1999 of $314,970 as compared to $124,934 in the corresponding period in
1998, an increase of 152%. Revenue reported for the nine months ending
September 30 were $749,887, up from $300,773 in the first nine months of
1998.
Profits for the quarter decreased to $2,743 compared to $33,599 for
the same quarter of the comparative quarter for the previous year.
This decrease in earnings was attributed to increased general and
administrative costs and trade show expenses. Philipp Kriependorf,
President of Q-Seven, indicated that he expects profits to increase
for the next (fourth) quarter of the current year, as initial revenues
from sales of Q-Seven's gaming software will be reported.
Analyst Recommedations:
Last week, William W. Davison, PhD, issued a buy rating on QSSY with a
12-month target of $7 based on the company's demonstrated ability to grow
its revenue stream.
The Bottom Line:
We're nearing the end of the fourth quarter for QSSY and we already
know from Kriependorf's comments that earnings will be expected to
increase. The question is how much? On Friday, the stock gapped up
nicely to 2 1/16 +7/16, or +26.92% on 128,900 shares traded, indicating we
could be in for a big week. I would definitely keep a close eye on the
stock this week.
(rest of report on other stocks is omitted here)
Have a profitable week! Dave Reiner
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