SAExploration announces SEC probe, restatement of historical results
SAExploration announced that the SEC is conducting an investigation of the company relating to certain accounting matters that arose in 2015-2016. The company has been cooperating, and will continue to cooperate, in good faith with the SEC and has retained legal counsel and an accounting advisor to assist the company with respect to this matter. The company's board has established a Special Committee of independent directors to oversee the company's own internal investigation and response to the SEC. The company will restate its previously issued financial statements for the fiscal years ended December 31, 2015 - 2018 and for the quarters starting ended June 30, 2015 - March 31, 2019 and, as a result, will delay filing its 10-Q for the quarter ended June 30. As a result, the financial statements for the Non-Reliance Period should no longer be relied upon. The board's decision to restate these financial statements arose from the company's re-evaluation of its relationship with Alaska Seismic Ventures, or ASV. The company has determined that ASV was a variable interest entity and that the company had a controlling financial interest in ASV that required it to consolidate ASV during the Non-Reliance Periods in accordance with accounting principles generally accepted in the United States. As a result of the above, the company has determined that a material weakness exists in the company's internal control over financial reporting and that disclosure controls and procedures were ineffective during the Non-Reliance Periods. Accordingly, the company will amend any disclosures pertaining to its evaluation of such controls and procedures as appropriate in connection with the restated filings. ASV is a data library company and the company performed seismic services for ASV in 2015 and 2016. The need for restatement does not arise from SAE's current operating activities. The company's Audit Committee has discussed the foregoing matters with Pannell Kerr Forster of Texas, P.C., the company's independent registered public accounting firm, who supports the company's determination. In connection with the restatement, the company is in discussions with holders of a majority of its outstanding debt, as to whether or not there are defaults under the debt agreements, with the goal of agreeing to a path forward in a way that is constructive for the company, its shareholders and employees, and the debt holders.