HQNT Annual Shareholder’s Meeting July 12 2004
Question and Answer Session*
*This list does not claim to be an exact word for word transcript – it is based on my notes taken at the meeting. I will do my best to present a factually accurate and unbiased of both the questions and answers. I welcome your input and modifications – especially regarding name misspellings at mhn@bulldogfinancial.com. I think that is best for the purposes of a transcript to minimize all commentary and opinion so that there can be a historical document that is as honest a representation of the truth as possible.
Session was prefaced with Doug Cohn explaining the following items:
1) His interpretation of the laws regarding Inside Information.
2) That although the stock has experienced a significant drop in share price, Blue Chip stocks including IBM and General Electric have lost more than 20% since the beginning of 2004.
3) Direct Quote “(I have) nothing to apologize for on the stock price”
Question: Linda Brown – Who is the competition?
Answer: “There are a number of competitors. We beat out one in a PR that you read about. We will put a list in the Annual Report. The real answer is do we have a single competitor on an item by item basis? No – there is no direct competition item by item”
Question: Larry Stark – Earnings for last year and first quarter 2004?
Answer: “What you’re asking is when you can expect them, and that’s inside information. You can’t do that. I don’t make the rules, I just follow the SEC rules. The acquisition changed the audit, and I decided to concentrate on the business completeing the aquistion. I take responsibility for that decision. I’m not worried about the audit. We announced 13 to 15 cents and I’m amazed we can get that. The first quarter audit will follow shortly after the audit.”
Question: Warren Smith – What direction are you going with Acquisitions?
Answer: “Because we’re a medical software company, we see numerous opportunities for medical products, and the synergies are that we are debt free so we chose to expand into medical products. We currently offer a superb product at a great price, which has the best terms in the industry. Most companies have to offer their products with a monthly fee, where we use our financial position to give the best terms.
Question: Charles Mackeroy – Why did we sell the software?
Answer: “The Healthnostics people used to run H*Quotient and we are very confident and have a great deal of faith in that they bring a lot of expertise. It wasn’t a sale at all, since we could have bought ninety percent of their company and make them a subsidiary – but we chose instead to (let them
Question: Joe Davide – Why no more information about the acquisitions?
Answer: “I know exactly what you are about to ask. I don’t want to put company names in a press release because some people flood these companies with phone calls and destroy the contract. There are two types of investors - Decent people like yourselves and shorters.”
Question: Joe Davide – What information can you give us about Stewart and Shaw and where are they located?
Answer: “We said where they are located, Ajax, Canada. There will be more information coming out. We weren’t going to pay to have someone answer phone calls. Every single time we chose the company fundamentals, not the stock price.”
Question: I believe that the supply of stock has increased because of selling and bad communications are the reason. An example would be the dividends – we were originally going to receive a listed securities, but we ended with HQNT stock, so basically what we were promised never went through.
Answer: “The intent was to go to the American Exchange or buy stock in another company that we were negotiating with at the time. We received calls that requested HQNT stock instead of AMEX stock and that’s what we did. We don’t have a dividend policy.”
Question: John Solhotsky (sp?) – What about the American Exchange?
Answer “We don’t currently meet the requirements of a three dollar stock price and fifty million dollar market capitalization.
Question: John Solhotsky (sp?) – If this is an annual meeting can we get a list of shareholders?
Answer: “It doesn’t’ work that way, we can’t give out a total outstanding until the Annual report is out.”
There was an explanation that the Berlin exchange listing increased short selling) “Being on the Pink Sheets means that Berlin exchange can’t keep the stock on their exchange. The Pink Sheets allow us to give a huge benefit to the shareholders by putting the stock quote on our website. I spoke with the president of the Pink Sheets and I like them and they aren’t arrogant like the other exchanges. I’d rather be on the Pinks until we can get to the Amex or Nasdaq. If we file financial statements, it may mean an automatic listing on the bulletin board and this would be a bad thing.”
Question: We’re all here to find out about the future
Answer: “Sarbanes-Oxley prevents us from talking about the future.”
“LabQuotient will derive revenue from HQuotient advertising since it’s going to be given away for free.
Question: Chris Kelly – Is LabQuotient robust enough to not have to refer a patient to a specialist?
Answer: “No”
Question: Billy Smith – Where is the industry or trade advertising for PhysicianQuotient?
Answer: “PhyscianQuotient has just completed beta testing and is now ready for advertising. We didn’t want to rush it and sell it before it was ready. It will be advertised on a very targeted basis.”
Question: Charles Adams: We’re frustrated by the consistency of the Press Releases. We haven’t heard another word about the company suing Knight trading for instance.
Answer: “That’s an ongoing lawsuit. Ohio lawyers have made a number of allegations and we have appealed the lawsuit. There are no guarantees in a lawsuit, but we will have our day in court.”
Question – Charles Adams – What was the final amount of the announced stock buy back”
Answer: “It’s in the annual report”
Question - Charles Adams – It looks like we sold our best product to an eleven cent company and then the ‘E’ is on and then off and we are now in the Pinks.
Answer: “I won’t apologize for the stock price”
Question: Marc Nathan – How is the search for the CFO coming along?
Answer: “Slow. We have looked at a number of candidates but Sarbanes-Oxley makes it extremely difficult to find a qualified CFO who is willing to sign off on the liability of a public company. (Marc Nathan) – but there are qualified candidates out there? “Yes, but there are two kinds of qualifications, one a CFO who has worked for a public company before and two, a person who has the skills but not the public company experience.” (Marc Nathan) – but there are other companies that have CFO’s so I can’t imagine that there is a critical shortage.” No, but we’re focused on getting the financials out right now.
Discussion between two shareholders: “Earnings are 13 to 15 cents which means that we essentially had a flat fourth quarter” “Not necessarily since there could be a write down for the trailing three quarters last year.
Question: cindy Murphee – Where are the dividends on the shares that are held at the company’s request in certificate form?
Answer: “The dividend is delayed because there is a question between the transfer agent and the Depository Trust Company on the outstanding float.
Question: Chad Widensky – What is our products competitive advantage and what was the purpose of the PR with no names?
Answer: “The intention of the PR was for customers, not shareholders.”
Question: Bob Scarpetti – What about getting a shareholders list for a proxy vote?
Answer: “We need audited financials before we have a vote. After the audited financials there can be a vote on the Board of Directors. (Bob Scarpetti) But we have a shareholders list now don’t we? “Yes, but we’ll need a new one after the financials”
Question: Lisa Schnoor – I think that your PR’s have over promised and under delivered. Audited financials “shortly” didn’t happen and since they were unaudited on June 24th, there was no reason to put them out at the last possible second when they didn’t need a time frame in the first place.
Question: Craig Shlenk – I sold 40,000 shares because I read a PR that took us away from being a software company. Why would we put out news before a deal was complete/
Answer: “Since the other company’s officers, directors family and friends had discussed the stock, we had to put out a release to protect them from inside information problems.
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