Accounting & Tax

SEC Probing Wind Turbine Company

Zoltek Cos. also reports that its audit committee is looking into $250,000 in unauthorized fund transfers.
Stephen TaubMay 22, 2008

The Securities and Exchange Commission is investigating Zoltek Companies, an alternative energy company lacking a permanent CFO that disclosed problems with its financial reports earlier this month.

Zoltek, a supplier of carbon fibers used in wind turbine blades and other equipment, said in a Tuesday 8-K filing that on May 13, it received a letter from the SEC indicating the regulator’s staff was conducting “a non-public, fact-finding investigation” and requested that the company hold on to certain records and to information and documents related to matters disclosed in a May 5 8-K.

In that filing, Zoltek revealed that two fund transfers of $175,000 in September 2007 and $75,000 in January 2008 from a subsidiary of the company “were not properly authorized or reported in the Registrant’s financial records.” The company said in its Tuesday 8-K that its audit committee was investigating the errors.

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The company said it would cooperate fully with its investigation. Zoltek also stated that its stock may be delisted from The Nasdaq Stock Market because it filed its first-quarter 10Q, due in March, late. It plans to request a hearing before a Nasdaq Listing Qualifications Panel in an attempt to avoid a delisting.

On May 5, Zoltek CFO Kevin J. Schott resigned, effective May 2. Zsolt Rumy the company’s chairman and chief executive officer, assumed his finance duties on an interim basis as the company searches for a replacement, who could come from either inside or outside. The company did not directly suggest a connection between Schott’s departure and the problems with the financial reports. Schott has an unlisted number could not be reached for comment.

Under Schott’s resignation agreement with the company, Schott agreed to pay Zoltek $250,000 Zoltek agreed to pay him his salary and routine employee benefits through his resignation date. Zoltek released Schott “from claims arising out of certain payments by a subsidiary of the Registrant aggregating $250,000,” and Schott released the company from claims arising out of his employment.