E-learning company SkillSoft has told the US stock exchange watchdog, the Securities and Exchange Commission (SEC), that it will not include its audited financial statements in its Form 10K annual results filing that is due today. It attributed the delay to alleged dodgy accounting and falsely booked sales revenues at SmartForce, the Irish e-learning firm it acquired last year.
Earlier this week the company said: “The delay in filing the audited financial statements comes about as a result of the company’s decision to further review accounting matters related to the former SmartForce, the predecessor entity for accounting purposes in the merger between SmartForce and SkillSoft Corporation. The company expects to file the Form 12b-25 indicating the delay later today or tomorrow, along with the balance of its annual report on Form 10-K, containing the items the company is able to complete and file in a timely manner.”
The recent legal actions that SkillSoft became embroiled in have been taken by at least three US law firms that have filed class-action law suits against SmartForce and two of its executives, Greg Priest and William McCabe, on behalf of investors who lost money on shares they acquired between 19 October 1999 and 22 November 2002.
The three firms allege that SmartForce’s failure to supply investors with correct financial details over the previous three-year period was fraudulent, insofar as they allege that untrue statements about the company’s finances were made in order to induce the plaintiffs to buy SmartForce shares.
As a result of the legal difficulties and the subsequent impact of the issue on the company’s financial performance, SkillSoft faces a formal investigation by the SEC which could result in severe penalty costs for the firm as well as forcing the firm to de-list from the Nasdaq exchange. It is estimated that the legal action alone has cost SkillSoft an estimated US$5.2m so far in legal fees.
By John Kennedy