OmniElite Holdings, LLC Transforming Start Scientific Inc (OTCMKTS:STSC)

Start Scientific Inc (OTCMKTS:STSC) has spiked to 52-week record highs in a span of just five months after the company finally commenced to file its due financial statements and hired a new auditor.Our readers should be remembering well that we predicted the positive move two months ago in our article "Start Scientific Inc. (OTCMKTS:STSC) Is Today’s Penny Stock Focus." OmniElite Holdings, LLC, had acquired a large stake in STSC. Thus, we, like other market participants, were expecting a reverse merger.While the company did not release any official press release indicating a transaction, new shreds of evidence are now showing that this hypothesis could be right: iHub Forum - Start Scientific Inc OTCMKTS:STSCIn March, from the $.0011 mark, the stock spiked up touching the $.0035 mark before retracing back to $.0018. While the pullback was very significant, the upside is still large. This stock was worth $0.75 in 2014. On the downside, if longs lose control of the stock, the price could go down to the $.0001 mark. Taking into account the strong trading volume at those low price levels, a downside move is unlikely, but remember that anything can happen in the microcap space.Check the price action in the stock chart below: 1-year chart for STSCBefore we proceed further, let's revise the background of STSC so that we don't lose anybody here. Start Scientific Inc. was formed in Utah on February 4, 2004. The company has been public since March 1, 2007, when its shares were spun-off and commenced trading on the OTC Electronic Bulletin Board.The company's main activities include the resale of computer and technology hardware to business and other organizations in North America and Europe. In addition, STSC is intended to be diversifying its operational risks by entering the oil and gas business acquiring interests in North America, or overseas. We reviewed the business objectives of Omnielite Holdings, LLC, in our previous article. Those believing that the reverse merger will occur should check the activities of this other company. In our view, if the merger goes ahead, STSC will most likely operate with the business model of Omnielite Holdings, LLC. Thus, it is worth studying them.Memorize the number of shares outstandingIn line with the previous rationale, if Omnielite Holdings, LLC, is preparing a reverse merger, the first step will be to increase the number of authorized and outstanding shares. This will permit the owners to increase their stake in the company and will make the merger easier. We will need to stay tuned for announcements regarding these matters.While little information is given about the number of authorized shares, but it is good to note it here: Share Structure - Start Scientific Inc OTCMKTS:STSCNew Auditor to file the new financial accounts?On February 23, 2018, STSC dismissed its previous accountant and engaged Heaton & Company, PLLC, dba Pinnacle Accountancy Group of Utah, as its new independent registered accounting firm. While, for some in the market, this announcement does not mean anything, in our view, it is another good move of STSC towards becoming compliant with the market regulations. Additionally, as the company has a new parent company, OmniElite Holdings, the announcement could mean that OmniElite is already making changes inside STSC.Please note, because it is very important, that there were no disagreements between STSC and its previous auditor:

"Since PSH’s appointment as our independent registered accounting firm on April 1, 2014 and through February 23, 2018, which included its audits of our financial statements for the years ended December 31, 2015 and 2014, there were (i) no disagreements between the Company and PSH on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of PSH, would have caused PSH to make reference thereto in their reports on the financial statements for such years, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K." Source

The new financial accountsWhile the new auditor has already a lot of work to do, it was quite positive that a new annual report and a quarterly report were recently released. It included the financial statements: Balance Sheet - Start Scientific Inc OTCMKTS:STSC Income Statement - Start Scientific Inc OTCMKTS:STSCAlthough the market sentiments around STSC are high, in our view, the company still needs to file a lot of financial statements to be compliant with the regulatory framework. Stock returns have been incredible, but, honestly, market participants should know that the risk is quite high on this name since we don't know yet what contains the balance sheet of the consolidated statements of STSC and Omnielite Holdings, LLC. Now that OmniElite controls STSC, the consolidated statement of the two businesses is what we need.Till the Beware symbol is not removed, we cannot touch the sharesIn addition, since the company has still a lot of financial statements to submit, the OTC Markets has not removed the skull and crossbones icon next to the stock symbol. As we noted in our previous piece, waiting until the exchange removes the bad note is mandatory before touching the shares. Usually, there will be individuals making massive returns on this name, but they should understand that the financial risk is quite elevated. Buyer beware!ConclusionCurrently trading with a market cap of $0.9 million, STSC is an interesting story among small caps. With a debt ratio under one, the real deal will come when the company releases a new recapitalization plan. This is what the market is waiting. In our view, it will be a game changer for the business and shareholders. With OmniElite helping STSC, we believe that the likelihood of an equity transaction of this type is large, thus we will stay tuned.Disclosure: We have no position in STSC and have not been compensated for this article.Image courtesy of Hamza Butt via Flickr.