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CoActive Marketing Group, Inc. (NASDAQ Capital Market: CMKG) announced today that on November 21, 2006 it received a Nasdaq Staff Determination letter stating that CoActive is not in compliance with the requirements for continued listing as set forth in Nasdaq Marketplace Rule 4310(c)(14) because of the Company’s failure to timely file its Quarterly Report on Form 10-Q for the period ended September 30, 2006. Accordingly, the Nasdaq Staff Determination letter indicated that the Company’s securities are subject to delisting from the Nasdaq Capital Market unless the Company requests a hearing before a Nasdaq Listing Qualifications Panel. CoActive intends to timely request a hearing to review the Staff Determination which will automatically stay the delisting and allow CoActive’s common stock to continue trading on Nasdaq pending the hearing and a decision by a Nasdaq Listing Qualifications Panel. There can be no assurance that the Nasdaq Listing Qualifications Panel will grant CoActive’s request for continued listing as a result of the hearing. In connection with the review of CoActive’s financial statements for its third fiscal quarter ended September 30, 2006, CoActive’s recently retained independent registered public accounting firm notified the Company’s Audit Committee and management that it had concerns regarding the Company’s historic financial statements and internal control processes. Following discussions with Company management and the independent registered public accounting firm, the Company’s Audit Committee determined that CoActive’s audited consolidated financial statements as of and for the fiscal year ended March 31, 2006, and unaudited interim consolidated financial statements as of and for the quarterly period ended June 30, 2006, should no longer be relied upon and will need to be restated. In addition, management is currently assessing whether the Company’s consolidated financial statements as of and for its fiscal years ended March 31, 2005 and 2004 will also need to be restated. The areas of concern include the Company’s accounting for state use tax liabilities in various jurisdictions, revenue recognition policies utilized and applied by the Company with respect to particular customer contracts, and material weaknesses in the Company’s internal controls. CoActive believes that any errors in prior financial statements were inadvertent and unintentional, and has commenced the process of implementing procedures to strengthen its internal control processes and prevent a recurrence of future errors. At this point, the Company is unable to determine with specificity the effect on its previously issued financial statements. However, as a general matter, the Company believes that adjustments to those financial statements will result in a decrease in net income from that previously reported for its fiscal year ended March 31, 2006, and an increase in net income for its quarter ended June 30, 2006. In addition, with respect to revenues, the Company believes that any downward adjustment to previously reported revenues will result in a corresponding increase in revenues for subsequent periods. CoActive is currently reviewing its historic financial statement and will need to work with its former independent registered public accounting firm to file amended Forms 10-Q and 10-K before it will be able to file its Quarterly Report on Form 10-Q for its second quarter ended September 30, 2006. CoActive intends to make these filings and become current in its reporting obligations under the Securities Exchange Act of 1934, as amended, as soon as practicable, but can not currently predict when it will be able to do so. Additional information with respect to the matters in this press release is provided in an 8-K filed by the Company with the SEC on November 22, 2006. About CoActive: CoActive Marketing Group, Inc. is an integrated marketing communications agency. The Company’s services include buzz and viral marketing, social media and consumer generated media, relationship marketing, experiential marketing, event marketing, and ethnic marketing. The Company’s programs help its clients profitably connect with consumers and create advocates for client brands. This press release includes statements which constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release are not promises or guarantees and are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. These statements are based on management's current expectations and assumptions and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements. Actual results may vary materially from those expressed or implied by the statements herein. Factors that could cause actual results to differ materially from the Company's expectations are set forth in the Company's Annual Report on Form 10-K/A for the fiscal year ended March 31, 2005 under "Risk Factors," including but not limited to "Unpredictable Revenue Patterns," "Customers," "Competition," "Outstanding Indebtedness; Security Interest," "Need for Additional Funding," "Recent Loss," "Dependence on Key Personnel," "Risks Associated with Acquisitions," "Expansion Risk," and "Control by Executive Officers and Directors" and include the risk that projected business opportunities will fail to materialize or will be delayed.
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The Form 10-K may be obtained by accessing the database maintained by the Securities and Exchange Commission at www.sec.gov.
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