Quarterhill Inc T.QTRH

Book Value Per Share

[v_guerriero]

Shareholder equity:

Q3 2020:  295M

Q3 2021:  252M
 

Fully diluted BVPS

Q3 2020: 2.50
Q3 2021: 2.13
Q4 2021E: 1.69-1.85 (my estimate - see below)

The only rational explanation (outside of fraud or personal enrichment that led to abrupt firing of CEO and CFO) for the delay in financial statements is taking a significant charge.  

With the debenture financing and payments to Paul and John.  Then there is the corporate restructuring announcement that is essentially notice to employees that they could be severed.  With an $11M annual run rate corporate cost, it typically is $1-$1.5 charge for every run rate savings.  So I estimate at least a one time charge of $20 million for the "restructuring" plus other q4 fees.  

On top of that there could be impairment to the IRD Ukraine system as well as the write down of patent assets to reflect the lower value in the marketplace.

Total charge of anywhere between $30-$50 million.  

This gives you shareholder equity of $200-220 million or $1.69-1.85.

There are strict rules around what can be included in a charge and what qualifies as "notice" and that perhaps is what makes the auditors uncomfortable.  Quarterhill will want that "below the line"... auditors probably want that above the line.... leading to a disagreement and a delay

The stock usually trades to BVPS so it will be important to see the extent of the charge.

[OutOfOptions]

The most blatant FUD i've ever seen. Completely baseless claim of taking a significant charge. It was literally stated in their press release why there was a delay.  EY WOULD NOT ALLOW THAT TO BE WRITTEN UNDER ANY CIRCUMSTANCES IF THERE WAS EVEN A MINUTE POSSIBILITY OF IT BEING UNTRUE.  Do you have any idea how bad this looks on the auditors?

[v_guerriero]

Show me one other E&Y client that had the same issue.  Cannot find one news release of any Canadian firm that delayed quarterly release blamed E&Y auditor capacity.   Not one.  Show us even just one example.

[OutOfOptions]

I work in the public accounting industry, albeit in the private sector.  I had never seen this happen...until this year.  Staffing is at an all-time low, juniors are leading major clients, and even my staff has been taken from me and reallocated to public clients.  This does not surprise me in the slightest. Do I have an example of it happening to a listed company? No, but

[mrmoribund]

Also, for all we know, some of the E&Y QTRH audit team may have come down with covid in the past two weeks. It could be all sorts of things.