Idaho Company in Hot Water for Cooked Books
The SEC filed a Complaint yesterday against Boise-based PCS Edventures!.com, a provider of education-focused software. The crux of the 18-page Complaint is the Commission’s allegation that PCS booked as revenue a $7.15 million deal with the government of Saudi Arabia prematurely, knowing it had no formal contract or reasonable basis for expectation of probable payment, thereby artificially inflating the company’s stock price.
PCS Edventures!.com issued a press release today responding, calling the charges “unfounded” and “one-sided,” and declaring its intention to “vigorously defend” itself against the action. But the Complaint includes what may turn out to be a smoking gun: an email from the company’s Chief Financial Officer, who wrote to its CEO, “I am not comfortable booking this as revenue. … I say no booking of revenue until we have contracts. ” See Item 40, page 8.