UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JULY 28, 2006 (JUNE 6, 2006)
SYSVIEW TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 59-3134518
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
1772 TECHNOLOGY DRIVE
SAN JOSE, CALIFORNIA 95110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)
408-436-9888 EXT. 207
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425).
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a -12).
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d -2(b)).
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e -4(c))
SECTION 4 - MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On July 24, 2006, Sysview Technology, Inc. ("Sysview" or "Company") determined,
as the result of review by the Securities and Exchange Commission ("SEC"), that
its consolidated financial statements for the year ended December 31, 2005 and
for the quarters ended March 31, 2006, September 30, 2005, June 30, 2005 and
March 31, 2005 must be amended.
The Staff of the Commission reviewed the Company's financial statements and
related disclosures contained within Form 10-KSB for the year ended December 31,
2005 and Form 10-QSB for the quarters ended from March 31, 2005 to March 31,
2006 and responded with financial statement guidance and comment in a letter
dated July 18, 2006. The officers of Sysview discussed all issues identified in
the SEC Staff's guidance letter with the Company's independent registered public
accounting firm. Subsequent to such discussions, the Company has agreed with the
SEC Staff's recommend changes in a letter dated July 24, 2006.
The primary changes to be made involve the Company's accounting for its non-cash
stock-based employee compensation. Sysview granted 3,700,000 options during the
year ended December 31, 2005 and 300,000 options during the quarter ended March
31, 2006. Under the guidance of Accounting Principles Board ("APB") 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related interpretations, the
awards resulted in total non-cash stock-based compensation expense of $2,810,000
for the year ended December 31, 2005 and $192,000 for the quarter ended March
31, 2006. The Company expensed the entire intrinsic value of the options granted
on the respective grant date based on the following factors: (1) the options
were issued far below fair market value, resulting in immediate and significant
value to the employee, (2) options were issued to key employees, where the
possibility of the employee leaving the Company was extremely remote, and (3)
one third of the options vested on the grant date and the remaining vesting
period was relatively brief. The Company will amend its financial statements to
expense the two-thirds of stock-based compensation expense, which did not vest
immediately, over the vesting period as opposed to expensing the entire amount
immediately. The net impact of this adjustment is a decrease to expenses and net
loss of $1,235,000 for the year ended December 31, 2005 and an increase to
expenses and net loss of $103,000 during the quarter ended March 31, 2006. The
Company will classify stock-based compensation within the respective line items
of operating expenses to which the compensation cost relates. The Company agreed
to retroactively reclassify all stock-based compensation expense. Such
reclassification has no material impact to the Company's results of operations.
Additionally, our interim financial statements for the periods ended March 31,
2005, June 30, 2005 and September 30, 2005 are being restated to account for the
Company's five percent (5%) Convertible Preferred Stock and related warrants
pursuant to SFAS 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES," ("SFAS 133") and EITF 00-19, "ACCOUNTING FOR DERIVATIVE FINANCIAL
INSTRUMENTS," ("EIFT 00-19"). Originally the 5% Convertible Preferred Stock was
recorded as an equity instrument only. However, under SFAS 133 and EITF 00-19,
the Company's 5% Convertible Preferred Stock and related warrants are deemed
derivative instruments as a result of the embedded conversion feature.
Accordingly, we restated our interim financial statements to record the fair
value of these derivative instruments in the Company's consolidated balance
sheet as a liability with the corresponding amount as a discount to the 5%
Convertible Preferred Stock. The discount is being accreted from the issuance
date, March 15, 2005, through the redemption date, March 15, 2008, adjusted for
conversions. Additionally, the fair value of these derivative instruments is
adjusted quarterly. Our Annual Report on Form 10-KSB for the year ended December
31, 2005 correctly accounted for our 5% Convertible Preferred Stock.
The remaining comments provided by the SEC Staff relate to classification of
certain expenses on the statement of operations and have no material impact on
the Company's results of operations during the re-stated periods.
At this time, the Company's historical results of operations and certain
disclosures will be impacted by the issues raised. The Company believes that
these amendments will satisfy relevant accounting issues which the SEC Staff has
provided to date. All readers of this Current Report are urged to review the
amended financial statements to be filed by the Company.
Until the Company has completed these amendments its results for the applicable
periods, investors and other users of the Registrants SEC filings are cautioned
not to rely on the Company's financial statements for the year ended December
31, 2005 and each of the quarters ended March 31, 2006, September 30, 2005, June
30, 2005 and March 31, 2005 to the extent such financial statements are affected
by the accounting issues described above. The Company intends to promptly file
amendments to each of its Form 10-QSB's filed during the year ended December 31,
2005, its Form 10-KSB for the year ended December 31, 2005 and its Form 10-QSB
for the quarterly period ended March 31, 2006.
The authorized officers of the Registrant have discussed the matters disclosed
in this filing with the Company's independent accountants pursuant to Item
4.02(a) and the Company's board of directors has approved the filing of this
Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Sysview
Imaging, Inc has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSVIEW IMAGING, INC.
Date: July 28, 2006
/S/ DARWIN HU
-------------------
Darwin Hu, Chairman and Chief Executive Officer
Date: July 28, 2006
/S/ WILLIAM HAWKINS
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William Hawkins, Acting Chief Financial Officer
Chief Operating Officer and Secretary