Against the odds…

February 5, 2004

Having your auditor issue a “going concern” letter can often be the kiss of death for many companies. Combine that with a formal investigation by the SEC and an investigation by a US Attorney, and you’d think, or at least hope, that all but the most aggressive investors would shy away. But that’s not the case with Measurement Specialties (MSS) which has seen its stock increase nearly 10-fold over the past year, despite all of these long-simmering issues. The company’s accounting firm first issued the going concern letter in the 10-K filed in October 2002 and the company first noted the formal SEC investigation back in June 2002. In the Q filed yesterday, the company said it’s in settlement talks with the SEC and provided $1 million during the quarter toward a potential resolution. But it still noted the going concern issue in the Q and given some of the lawsuits the company is facing, it’s hard to imagine the auditors removing the going concern issue when the K is filed in a few months.

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