NEW YORK, Aug. 6 /PRNewswire-FirstCall/ -- Pink OTC Markets Inc. (OTCQX: PINK) announced today that the Company has determined that previously issued financial statements as of and for the years ended December 31, 2006 and 2007 for Pink Sheets LLC, and 2009 for Pink OTC Markets Inc., the balance sheet for the year ended December 31, 2008, the statements of income, changes in shareholders' equity, and cash flows for the nine months ended December 31, 2008 as to Pink OTC Markets Inc. and the three months ended March 31, 2008 as to Pink Sheets LLC, and the interim financial statements for the quarters ended March 31, 2008, March 31, 2009, June 30, 2009, September 30, 2009 and March 31, 2010, should no longer be relied upon due to errors in the financial statements related to the validity of certain of its accounts receivable. As a result, the Company will restate the affected financial statements to make corrections to prior-period retained earnings for the year ended December 31, 2006 as well as to operating results for all subsequent reporting periods.
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The decision to restate the Company's financial statements was made by management and the Audit Committee of the Board of Directors, following consultation with Pustorino, Puglisi & Co., LLP, the Company's independent auditing firm, on August 5, 2010.
The Company has determined that approximately $1.3 million in accounts receivable from the Company's Market Data Licensing line of business may be uncollectible primarily due to errors in collection procedures for market data sales reported by third-party vendors during the period from 2003 through 2008. It is estimated that the after-tax effect on operating results for the years 2003 through 2008 will be a net reduction of a total of approximately $800,000. The Company concluded that proper control procedures were not followed due to the lack of segregation of duties within its Accounting department.
The errors in collection procedures took place for market data sales prior to 2009. In late 2008, the Company retained a third party reporting service through which market data vendors report usage, and in early 2009 the Company upgraded its billing and accounting system and revised its collection procedures.
The Company has subsequently upgraded the personnel in its accounting department, hiring Todd A. Graber as Chief Financial Officer in May of 2010 and Mary Phelan as Corporate Controller in July of 2010. Mr. Graber and Ms. Phelan, both Certified Public Accountants, each have extensive experience in leadership roles with public company accounting departments including the proper establishment and oversight of control procedures.
The Company also plans to undertake remedial action, including: -- Making outstanding accounts receivable and aging reports accessible and transparent to senior management; -- Establishing policies regarding accounts receivable collection, and eliminating service to customers not in compliance with Company policy; and -- Providing a comprehensive accounts receivable report to senior management on a weekly basis, and to the Board of Directors on a quarterly basis.
The Company does not anticipate that the restatement will delay the publication of earnings for the second quarter of 2010. Subsequently, the Company expects to present the restated results for the years ending December 31, 2007 and December 31, 2009, as well as the balance sheet for the year ended December 31, 2008, the statements of income, changes in shareholders' equity and cash flows for nine months ended December 31, 2008 as to Pink OTC Markets Inc. and the three months ending March 31, 2008 as to Pink Sheets LLC, in an audited annual report, and present the restated results for the quarterly periods ended March 31, 2009, June 30, 2009, September 30, 2009 and March 31, 2010 in restated quarterly reports, as well as provide pro-forma summary numbers for the year ended December 31, 2006.
About Pink OTC Markets Inc.
Pink OTC Markets Inc. (OTCQX: PINK) operates the leading electronic interdealer quotation and trading system for over 9,000 securities not listed on a U.S. stock exchange. Pink OTC Markets segments these securities into three tiers: the quality-controlled OTCQX marketplace, the U.S. registered and reporting OTCQB marketplace, and the speculative trading Pink Sheets marketplace. These three tiers constitute the third largest U.S. liquidity pool for trading public company shares, after The NASDAQ Stock Market, Inc. and The New York Stock Exchange. Our products and services promote market transparency, improve price discovery, facilitate regulatory compliance, and increase the quality of issuer disclosure, to the benefit of all OTC market participants. To learn more about how Pink OTC Markets' products and services make OTC markets more transparent, informed, and efficient, please visit our websites at http://www.otcmarkets.com/, http://www.pinkotc.com/ and http://www.otcqx.com/ or contact us at info@pinkotc.com.
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Pink OTC Markets Inc.
CONTACT: Todd Graber, +1-212-896-4446, todd@pinkotc.com
Web Site: http://www.otcmarkets.com/
http://www.pinkotc.com/
http://www.otcqx.com/
