Accounting & Tax

Internet-College Company Roils Investors

Shareholders drop out as reporting lapses over the past year cause to restate.
Stephen TaubAugust 16, 2004

Online-education company frightened its investors last week when it announced that it will need to restate its financial statements and a lowered earnings forecast because of an accounting error in its company stock plan.

In a regulatory filing, the company said that it failed to report non-cash compensation expenses of $374,000 in the fourth quarter of 2003 and $588,000 for the first quarter of 2004. executives added that they have not yet determined whether the adjustments related to 2003 and the first quarter of 2004 will be fully recorded in the second quarter of 2004 or recorded in the prior periods. However, they did note that it will probably restate its statements of operations and cash flows and balance sheets for the full year 2003 and the first quarter of 2004.

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The stock lost about one-quarter of its value on the news.

Dow Jones and AP noted that some education-related companies have suffered from controversies that have included accreditation troubles and alleged manipulation of student enrollment records and other student data.