CQA shareholders should look at Priority One's accounts for the...

CQA shareholders should look at Priority One's accounts for the year 2013-2014, They make sobering reading, So take a happy pill before looking at

http://tinyurl.com/kd5zq9v

A critical question is whether the company is a going concern? Talk about a qualified auditor's report! William Buck the auditor states:

"As a result of our inability to obtain sufficient appropriate audit evidence in relation to the matters, we have therefore been unable to obtain sufficient appropriate audit evidence to determine whether a material uncertainty exists and accordingly whether the Company's [sic] has the ability to continue as a going concern for a period of at least 12 months from the date of the audit report."

On page 14 the P1 directors address this question of being a going concern. Worryingly  they identify the (subsequently collapsed) agreement with CQA as the first of some key factors that they consider make P1 a going concern.

What do the auditors think of Priority One's other key factors  that the directors
claim should stop them from going insolvent? In the next to last page of their report the auditors unambiguously show that they are not impressed.

What's left now to point to Priority One being a going concern? Nothing that I can see in the company's accounts, unless the auditor's warnings are groundless.

And this profile is for a company that reported zero revenue, total current assets of $16,767 (including $215 cash), and overwhelming total current liabilities of $648,715.

One thing that IMO is might strange. How could CQA's due diligence expenditure of $500,000 not find that Priority One would be a millstone around CQA's neck.

The agreements with other companies, to which Priority One has issued shares and from which might come revenue, cannot earn Priority One anything until Priority One's shares are listed on the ASX (see page 6). Also stated is "the value attributed to those shares which were issued was $nil, based upon the fact that the Company is yet to complete any formal seed capital raising of shares."

Priority One's curiously stated principal activity won't dig them out of financial trouble, I guess. The principal activity "during the course of the year was to establish a delivery platform that enables the provision of holistic service to merchants and consumers."

If matters were not so serious you would have to laugh at this parody of management-speak,

Will ASIC and ASX think Priority One is a company fit for listing in its current state? I would have thought that there is some doubt.

So in my opinion, CQA is well rid of Priority One.