Saturday, June 15, 2019 3:25:23 PM
The bad news here is the "going concern" language will return to the auditor's report. Every investor had better pay attention to these auditor's warnings, and I certainly do. Many groups will automatically divest, and we saw some of that on Friday. Elite operated as a going concern for the entire time I built my position, so I'm not going to automatically dump just based on this language. It definitely causes some concern, especially since the auditors and accountants don't seem to be on the same page. What gives me the most pause is the cancelled conference call. It was already scheduled. It would have been very easy to have an "All is well" call, if in fact, all is well. All Nasrat would have had to do is pick up the phone and say Here's What Happened with the internal controls and Here's Why there will be going concern language. We will have another call next week when we file our report thanks bye. It took more effort to cancel the call than it would have taken to do it. I will not buy any shares until Nasrat puts himself out there with an explanation.
The company was previously able to clear this going concern language from their reports, mainly by getting current on bonds and improving cash flow. An important consideration was establishing access to capital through the LPC agreement. With the share price consistently depressed below the ten cent threshold, Nasrat cannot trade shares for cash. It was no accident that there was no dilution in the latest quarter. The company currently has no access to LPC cash, and it has been without access to capital for a long time now. We have never been cash flow positive, and the company has had to sell assets to make ends meet, such as the recent half million dollar ANDA deal with Epic. Going concern for an auditor simply means they don't know how the company will pay the bills and keep the lights on for the next year based on the past year. It makes sense to me that an auditor would add going concern language just based on what is publicly known now. If that's what this is all about, then belly up to the trough and enjoy the good tidings. But until we get confirmation one way or another that there is not something more we don't know, then I would advise caution. Nasrat could have done a lot by picking up the phone on Monday and having the conference call as scheduled.
Call on God but row away from the rocks.
-Hunter S. Thompson
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