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Microcap & Penny Stocks : QDRX
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To: Jim Mills who wrote (2230)7/28/1997 8:15:00 AM
From: Glenn Olsen   of 3977
 
Jim
Palermo's salary is a problem when the company cannot generate the revenue to cover it. The last batch of funding produced shares that were issued at $.40 per. Take Palermo's salary and divide it by that number and we find that 625,000 new shares of QDRX were issued through this funding just to cover his salary. Remember when they did the financing the stock was trading about $1.03. If he had paid himself in stock it would have cost the company 240,000 shares. Quite a difference depending on whether he gets paid in stock or cash. A company starved for capital should not have to pay the executives with much cash. If they don't believe they can come out well with a stock payment, why should the investors?

The company never really figured out what restructuring meant. They kept the overhead of the defense contractor days and thought they could just focus on replacing the revenue. Wrong view and out of sync with the whole movement in the 90's. Ugly as it was the slash operating costs mentality of the early 90's did lead to much more efficient operations. Excess in slashing could easily be corrected. Errors in retaining the overhead were deadly. Unless QDRX is doing some serious paring of the overhead at Victor so that revenue will cover QDRX's personnel, the gain in revenue will not be enough to correct past mistakes.
Maybe in the 70's and 80's you could get away with a 5 year plan to turn around a business. 90's people aren't nearly so generous. Palermo must start breaking even on an operating basis by the end of this year with what they have. No "ifs, ands, or buts".

Glenn
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