Stock O'holics Investing University

[stervc]

About a “Going Concern” Statement…

Most companies that are fully reporting and file on a regular basis have some kind of a ”going concern” warning within their filings. This is nothing more than a safety precaution that companies use as a way to cover them for a “worst case scenario” situation if for some reason their company does not execute their business objectives.

The ”going concern” statements that you see in numerous filings is also a way for a company to remain very conservative to make sure they don’t get into any trouble if for any reason anything within their filings or PRs are considered too forward thinking where shareholders could have felt that they might have been misled by the company.

I was in XCHO last year and it had gone from .035 to .55 per share. Their sister company, NPHC, had gone from .05 to .99 per share a little over a year ago. Both of those companies had ”going concern” statements within their filings along with thousands of other companies. This is why I think it is important to understand the intent behind such conservatism from when these statements are within a company’s filings.

Take for another example what PSTI PR-ed that trades on the NASDAQ as they have been publishing a ”going concern” warning for the past 3 years:
http://www.globes.co.il/serveen/globes/docview.asp?did=1000502736&fid=942

I’m not saying to ignore any “going concern” warnings within any company’s filings, but I am saying that they do not pose a negative threat that some might perceive. Doing your due diligence (DD) and knowing what you hold is the solution to have a better understanding of a company’s ”potential” to be worth taking the risk to invest in or not.

v/r
Sterling