The financial status of Pro Elite (EXC)
By Zach Arnold | August 15, 2008 | Print This
Pro Elite stock update today from the SEC: Notification of inability to timely file Form 10-Q or 10-QSB (NT 10-Q, 8/15)
The Company is spending significant time and resources seeking required financing, including significant efforts by the financial and accounting staff, and as a result is unable to complete the consolidated financial reporting needed to file our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008 with the Securities and Exchange Commission by the deadline without unreasonable effort and expense. Such efforts include analysis of impairment of goodwill and acquired intangible assets, as described further below.
Therefore, the Company requests additional time to file its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008. The Company expects to file its Quarterly Report by August 19, 2008.
The Company is actively negotiating to consummate a financing of approximately $3.5 million in secured debt (with a funded amount of $3.0 million after an original issue discount of $0.5 million) and believes a successful closing is reasonably likely, but there is no assurance that it will be successful in doing so at all or on a timely basis. Any such failure to obtain financing in the immediate future would also have a material adverse effect on the Company’s liquidity and capital resources and ability to continue as a going concern.
Even if the Company successfully closes on such financing, it expects to report in its Quarterly Report on Form 10-Q that its capital resources are sufficient only until the end of the year, and only if the Company makes significant reductions in operations and expenditures. The Company is also actively seeking additional financing beyond the $3.0 million to enable the Company to execute its operating plans without significant reductions in operations, but there is no assurance as to whether any such financing will be available on reasonable terms or at all.
The IFL is dead, and both Elite XC & DREAM are heading into dangerous territory. The MMA business at the end of this year may very well look exactly like the professional wrestling business on a worldwide scale — one major company (UFC… like WWE) and everyone else not even close.
When Pro Elite made the move to buy out a lot of B-level MMA companies, I thought it was a volatile and unwise move. How can you possibly manage four or five different MMA organizations by sitting in an office in Los Angeles? Impossible to do. By buying out all of the major B-level promotions (except Strikeforce), Elite XC has basically accomplished what UFC could never have dreamed possible of doing — potentially killing off an entire farm system of promotions for building new MMA fighters. Essentially put, if Pro Elite goes out of business soon then it can be fairly stated that the company negatively impacted the business by paying off so many upstarts and not doing anything with those promoters they paid off. Remember — promoters like Terry Trebilcock signed multi-year deals, so they will be on the sidelines in the foreseeable future if Pro Elite tanks and goes out of business.
There is something curious, however, going on with the Pro Elite stock. It was down to $2.50 USD/share and it jumped up $5.50 USD/share today to reach $8.00 USD/share. Why on earth would this happen, given that Pro Elite filed this new financial report today with the SEC?