March 30, 2007

Corp Fin’s Chief Accountant to Leave

As announced yesterday, Corp Fin Chief Accountant Carol Stacey has put in her notice and will join the SEC Institute in a month or so. Quite a healthy choice for Carol, who undoubtedly had many opportunities available to her. The SEC Institute is an executive training organization for financial types and has a very solid reputation. And Carol always has been one of the few highlights at legal conferences with her engaging and straight-forward speaking style. Carol, welcome to the world of working in your pajamas! In New Hampshire, no less!

Late Filings: Use of Rule 12b-25 By Large Accelerated Filers

In our “Rule 12b-25″ Practice Area, we have posted a Glass Lewis report that provides details about how many large accelerated filers failed to timely file their Form 10-Ks so far this year; this category of issuers filed late more than 47% compared to last year. Some of the companies noted in the report have been chronically late, so the newly shortened deadline doesn’t appear to be a factor…

But At Least, My Dog Didn’t Eat It!

As I head off on a spring break vacation (I will be blogging – but not working -next week), I thought it was time for a little humor by looking at this amended Form 10-Q filed by Neptune Industries. Under Item 5, the company discloses:

“On November 20, 2006, the Company filed its Form 10-QSB for the quarter ended September 30, 2006, pursuant to an extension notice on Form 12b-25 filed on November 14, 2006. The extension of the filing date was required because the Company’s accountants, Dohan and Company, CPAs, PA, of Miami, Florida, were unable to complete their review of the Form 10-QSB in a timely manner. The Company had previously complained to Dohan & Company regarding its lack of responsiveness and lack of attention to the Company’s account, which had resulted in previous extensions and late filings by the Company, including the Form 10-KSB for the fiscal year ended June 30, 2006, which was filed on the SEC EDGAR system on October 13, 2006, the extended due date, after the 5:00 PM filing deadline, due solely to additional, non-material changes first requested by Dohan & Company late on the afternoon of October 13, 2006, after previous requests for changes, also received by the Company on October 13, 2006 had been incorporated into the final filing.

The review of the Form 10-KSB and the audit of the Company’s financial statements for the fiscal year had been delayed for nearly six weeks, because the audit partner on the Company’s account had taken extended maternity leave, which was concealed from the Company despite repeated calls and e-mail communications to the audit partner, with no response. Eventually, the Company was advised that the audit partner familiar with the Company account would not be available, that the audit would be managed by a junior accountant with no experience in or knowledge of the Company account, and that an extension of the time to file the 10-KSB would be required. After repeated requests for a status report on the audit and review, the Company finally received its first communication with requested changes to the Form 10-KSB and the financial statements at the end of the first week of October, 2006.

The Company made all of the requested changes and provided all of the additional information promptly, but new and different changes were requested the following week, most of which were non-material changes to grammar, punctuation, style and formatting. On October 13, 2006, the extended due date for the Form 10-KSB, the Company received additional non-material changes, which it made and returned to the auditors with the understanding that the Form 10-KSB was then ready to be filed. The Company completed the EDGAR conversion for filing and was ready to file when Dohan & Company send a new demand for additional non-material changes late on the afternoon of October 13 2006. By the time these changes were incorporated and EDGARized, the Company was unable to file the Form 10-KSB electronically by the 5:00 PM SEC cut-off.

The Form 10-KSB was filed at 5:06 PM on October 13, 2006, but was reported on the SEC EDGAR web site as filed on Monday October 16, 2006, which resulted a notice from the NASD OTC Compliance Unit that the Company was not in compliance with its timely filing obligations. On November 20, 2006, the Company filed its Form 10-QSB on a timely basis, again pursuant to a Form 12b-25 extension request by Dohan and Company, because the auditor again was unable to complete its review on a timely basis. After completing a number of changes requested by the auditors to the Form 10-QSB, and providing extensive information and documentation which had already been reviewed and covered in Dohan and Company’s audit of the June 30, 2006 fiscal year, filed three weeks earlier, the Company on November 20, 2006, the extended due date, received one more set of requested changes, which it made and returned to the auditors for their final review, with the message that the Company intended to file this final reviewed version of the 10-QSB that day on a timely basis, unless there were still more, as yet undisclosed, changes that had not already been communicated on a timely basis.

The Company then filed the Form 10-QSB as indicated on a timely basis on November 20. 2006 after receiving no further comments from the auditors. Later on November 20, 2006, after the Form 10-QSB had been filed and after the EDGAR filing deadline had passed, Dohan and Company sent an e-mail to the Company advising that it might still have further comments. Approximately two weeks later, the Company received additional suggested changes to the Form 10-QSB, none of a material nature and nearly all involving formatting (capitalizing of certain items on the cover page and revising the entries on the Table of Contents), adding of commas to certain parts of the text, suggesting style changes to certain text language, and similar items. The only numerical items involved the change of several entries by a one dollar amount to reflect rounding differences, and the change in the number of shares of common stock outstanding from 11,349,051 to 11,349,269, to reflect the issue of 218 shares as a result of rounding in the reverse split which occurred during the last fiscal year.”

There’s even more about this matter disclosed about this diatribe…but I’ll spare you…