Able fails to file Form 10Q and its auditors resign.

Yesterday, in two unannounced filings, Able Telcom Holdings Corp. (NASDAQ: ABTE) (Price: $5.8125) disclosed that it could not file its Form 10Q for the quarter ended July 31, 1998. Able also disclosed that Ernst & Young LLP, its most recent auditors, resigned effective September 7, 1998. Ernst & Young was Able’s sixth auditor in the last ten years. Able failed to notify its shareholders of its auditors’ resignation for seven days. These two announcements were included in SEC filings. Able has yet to directly inform its shareholders of these adverse developments.

In an obvious case of selective disclosure, on September 11th Able issued a press release that did not mention that its auditors had resigned or its inability to file the Form 10Q. Instead, Able announced it had concluded its financing terms with WorldCom, Inc. (NASDAQ: WCOM). Even in disclosing financing terms, Able failed to provide material, adverse information. Able failed to disclose the conditions of the new loan, the amount of receivables it had collected and paid to WCOM, and the amount of NT’s losses used to reduce the purchase price.

Able has also not disclosed the circumstances of its $10 million, 12% Senior Subordinated Notes (“Note”). First, it failed to disclose that the WCOM debt violated the Note’s convenants and required a default waiver, which led to Able’s obligation to repay the Notes in full on August 31, 1998. Now Able has failed to disclose whether it made the Note payment or defaulted.

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