The lawsuit arises from the restatement of the Company's financial statements as of and for the periods ended September 30, 2009 and December 31, 2009. Under the proposed settlement, for which the SEC staff is seeking approval by the Court, the Company and Mr. Bordynuik would consent to the entry of orders enjoining them from future violations of certain provisions of the federal securities laws (including the antifraud, reporting and books and records provisions), and requiring the Company and Mr. Bordynuik to pay civil penalties of $150,000 and $110,000, respectively. The contemplated settlement does not require payment of "disgorgement" or other amounts. The proposed order against Mr. Bordynuik would include a five-year officer/director bar. Mr. Bordynuik stepped down from his officer and director positions with the Company in May 2012 and currently serves as its Chief of Technology, a non-officer position.
The Company notes that the Court has discretion regarding whether, and when, the proposed settlement will be approved and final judgments issued. The proposed settlement, if approved by the Court, would fully resolve the dispute with the SEC evidenced by the lawsuit filed in January 2012.
The Company's CEO, Kevin Rauber, stated: "This is a very positive development in the life of our company, and we are pleased that this matter has been resolved."