Commercial Pressure Washing Services
Commercial pressure washing professionals use a device that directs a stream of water at an extremely high pressure to remove paint, dirt and grimy build up on different types of surfaces. Some of the build up that is most often removed by commercial pressure washing include grime, grease, mud, mold and dirt. These are the main basic targets. There are many instances in which build-up is bad enough that it requires the use of high pressure washers to remove it, such as build up from oil of manufacturing facilities.
There are three components to the device that commercial pressure washing specialists use. There is the motor that works the pump, the high pressure capable hose and then the trigger gun. There are also many different types of nozzles that are used, and which one is chosen for a job will depend on the target surface and the strength of the substance that has accumulated. Some of the nozzles make a triangular plane and others direct a super thin stream of really concentrated water at a specific spot.
The water that is used for commercial pressure washing can be hot or cold, and even steam heated to up to 330 degrees Fahrenheit. The pumps for these machines can be powered by different sources like electric, propane or gas. Electric motors are quiet and also do not produce any exhaust. Commercial pressure washers can pump out water and have it hit a surface at a pressure of 5,000 pounds per square inch, which is more powerful than common or domestic machines.
Some of the uses of pressure washing goes beyond cleanup and instead have to do with pre treating a surface. For example, when a house is going to be painted, it is best to use a pressure washer to pre clean the surface of the house. This eliminates flaws in the surfaces to allow for a better, smoother paint job to be done. Some of the other uses for commercial pressure washers include cleaning at gas stations, high rise buildings, sidewalks and driveways, cleaning decks and porches, awnings, the siding of houses, parking lots, cleaning graffiti from a building, degreasing heavy machinery and more.
For different surfaces, different degrees of pressure are necessary. For concrete surfaces, 4000 PSI is usually used. A lower pressure is going to be used for houses so that it does not threaten the integrity of exteriors like particle board, vinyl and aluminum siding, stucco, brick and cedar. You may be surprised at how well using a commercial pressure washing service can improve the look of your home.
To learn more about commercial pressure washing, please visit http://www.johnlockepainting.com.
5 Tips to Maintain a Strong Stock Price
A few things to think about while reading this article. First, most of these tips are obvious. However, if I had a share of stock for every time I heard an officer or director of a public company express curiosity about their falling stock price and then went to check the company’s compliance with the tips herein and found the last press release from the company issued 1+ years ago and extensions of time filed for the last three periodic reports, I’d have a very large stock portfolio.
Second, none of these tips are meant or should lead to any illegal or “pump and dump” activities or advocate anything but absolute honesty in all filings and posted materials to the public. The goal here is a strong stock price reflective of the company’s operations and its financial position, not some objective “good” stock price that is not an accurate stock price for the company.
Third, there are many more things that will impact your stock price that are out of your control than are within your control. Although difficult, learn to worry about the things you can control and let go of the things you can’t control. The overall market and the performance of your market segment will likely impact your stock price more than your company’s performance.
The Tips:
1. Concentrate on your business. This is crucial. Too many officers of company’s worry about their stock price as much as their core business. Admittedly, it can be difficult to concentrate on business when disgruntled investors are constantly calling regarding a falling stock price.
However, with so many things affecting your stock price that are out of your control, concentrating on growing your business and improving your profitability are things that will eventually have a positive impact on your stock price. If you concentrate on your business and follow the other tips contained herein, the market should eventually notice your company and affect its stock price accordingly.
2. File accurate reports. If you are reading this article your company is a public company and hopefully one that is filing regular reports as either a ’34 Act reporting company or a Pink Sheets current public information company. In either case filing periodic reports (10-Qs and 10-Ks) and current reports (8-Ks) that are accurate is essential. Few things engender less confidence in a company than one that has to restate its final statements and/or file corrective filings. To shareholders and prospective shareholders this portrays a failure by management to properly oversee their company’s filings.
As an aside, if you are non-current public information company trading on the Pink Sheets you need to seriously consider becoming a current public information company under the Pink Sheets or a ’34 Act reporting company. Taking these steps for your company will likely increase your stock price more than any other tip herein.
3. File timely reports. Filing reports timely and not having to file for an extension or get an “E” on a company’s stock symbol shows organization and forethought to properly prepare for upcoming filings and carries a perception of proper management when it comes to the company’s business. However, while this tip is important, it follows “file accurate reports” for a good reason. When given the choice between an accurate report and a timely report, there is no choice.
Companies should always choose to file accurate filings, even if they are filed late, over inaccurate reports filed timely. Any time a company has inaccurate information in its filings, and especially when the company’s management is aware the filings are inaccurate, the company and its officers and directors are at risk for much more serious issues from its shareholders and investors than a falling stock price. For this reason speed should never be chosen over accuracy.
Ideally, a company should have both speed and accuracy, but when that isn’t possible accuracy should trump speed every time. Although this seems obvious I get asked if companies should just file a periodic report management knows is incorrect in order to file it timely more than is comfortable. Obviously, my answer is the same every time – wait and file an accurate report no matter how long it takes.
4. Hire a good, reputable IR/PR firm. The purpose of an investor relations/public relations firm is to accurately relay information about the company to the public and to ensure that information is being disseminated through the proper channels. No IR/PR firm should be hired based on any assurance of what they can do for your stock price. Their job is to properly communicate with your shareholders and potential shareholders and bring attention to your company through accurate, timely disclosure.
5. Communicate with your shareholders regularly. Regardless of whether you hire an IR/PR firm, you need to have regular communications with your shareholders. Above all, these communications need to be accurate. They should also be regular. This isn’t to say the company should create news when there isn’t any, but many companies fail to properly capitalize on good news about new contracts or good financial results.
If nothing else, a company should issue an open letter to shareholders from the company’s management on a regular basis to let the shareholders know how the company is doing and about its future plans. While much of this material should be covered in a company’s annual or quarterly management discussion and analysis (MD&A) section, this information tends to get lost in the filing due to all the other requirements of the filing. A good, well-written, accurate letter to shareholders will many times help shareholders focus on what is being said by the company about its current state and its future plans, than disclosure in a company’s annual or quarterly reports.
All press releases should be reviewed by legal counsel to ensure all legal requirements are met and there isn’t unsubstantiated “fluff” in the press releases.
Craig V. Butler, Esq. is an attorney with The Lebrecht Group, APLC located in Irvine, California (http://www.thelebrechtgroup.com). He can be reached at (949) 635-1240 or via e-mail at [email protected]
5 Ways to Help Maintain ’34 Act Reporting Compliance
Although the economy appears to be starting a slight recovery, times remain tough for many companies. Public and private companies once thought beyond reproach have failed or are failing. When the stalwarts of the American economy are struggling how are smaller reporting companies expected to survive and maintain their public company status?
While there is no magical elixir, there are several things management of smaller reporting companies can do to improve their chances of remaining publicly-traded companies. Some of these suggestions are cost cutting measures and some are strategic alternatives. By following some or all of the suggestions in this guide we believe smaller reporting companies can drastically improve their chances of remaining listed on their current stock exchange.
1) Cut Legal Fees. This may seem like an odd suggestion coming from a law firm, but in our experience many smaller reporting companies are overpaying for their legal expenses related to their public filings – as much as $100,000 per year – and sometimes more. For most smaller reporting companies, total legal fees for a company’s annual report (10-K), quarterly reports (10-Qs), as well as an average number of current reports (Form 8-Ks) should not exceed $35,000 in total. Under The Lebrecht Group’s ’34 Act Maintenance Plan, a smaller reporting company’s total annual legal fees for its 10-K, 10-Qs, up to six 8-Ks, as well as some 144 legal opinions and Section 16 filings (Forms 3 and 4) and some other small filings, is under $30,000, payable monthly over the course of the year.
Another area where a company may wish to review its legal fees relates to its registration statements (primarily S-1s). While legal fees for many registration statements are based on the dollar amount of the shares being registered, the legal fees for all but the largest registration statements should not exceed $50,000 to $60,000. However, at times, legal fees being charged for these registration statements are approaching, or are even over, $200,000. Therefore, searching out additional qualified lawyers to draft and file the company’s registration statement may provide a company with as much as $100,000 to $150,000 in savings.
2) Cut Auditor Fees. Similar to legal fees above, many smaller reporting companies are paying excessive auditor fees. Based on the auditors our firm works with on a regular basis, for the average smaller reporting company, the auditor fees for the annual audit and the review of the three quarterly periods should be anywhere from $50,000 to $100,000. Many smaller reporting companies are paying large accounting firms two to three times this amount for their annual audit and three quarterly reviews. If your company needs a referral to experienced auditing firm with fees in the $50,000 to $100,000 range please feel free to contact an attorney in our office.
3) Seek Money From Investors to Cover Fees Associated with ’34 Act Filings. Obviously raising money for any purpose is a good way to save cash flow from operations. However, for smaller reporting companies that may have difficulty raising money to expand operations, financing may be available to fund reporting obligations, due to the fact that the funding necessary to do this is relatively small (in the range of $150,000 to $200,000 annually if suggestions #1 and #2 above are followed).
Therefore, if a current ’34 Act reporting company has an adequate stock price and volume it may be able to raise $500,000 to $1 million to pay for its reporting obligations for 2-3 years, which would obviously accomplish two goals – keep the company current in its reporting obligations, a huge benefit to both the company and its shareholders, and preserve cash flow for operations. If this is an opportunity your company would like to pursue, please contact an attorney in our office, as we have several funding sources looking to invest money in smaller reporting companies for this purpose.
4) Stock Option Plan/S-8. It may seem counterintuitive to suggest that a company spend money on a stock option plan and an S-8 registration statement as a way to save money, however, this suggestion can be very productive in the long run. For smaller reporting companies that stay current in their reporting obligations, a stock option plan registered on an S-8 registration statement will allow the company to issue registered shares and/or options to qualified employees, consultants and service providers (such as the company’s legal counsel) for a portion of their fees thereby freeing up cash flow for operations and other service providers that cannot accept stock, such as the company’s auditor.
Obviously, this suggestion must be handled appropriately in order to ensure the company maintains its stock price and there is not major dilution to existing stockholders. However, when properly planned and executed a registered stock option plan can cut the cash expenses of a company’s ’34 Act filing obligations as well as free up cash for operations.
5) E-Proxy Rules. Historically, the proxy materials that were sent to a company’s shareholders to inform them of an annual or special meeting of shareholders included a paper copy of a 14-A or a 14-C and a copy of the company’s last annual report. The cost for mailing hundreds of pages of documents to all the company’s shareholders was over $3.00 per shareholder, and thus many times easily exceeded $5,000 when all was said and done, including copy, stuffing and postage charges (and many times much higher).
Under the SEC’s new e-proxy rules, a company is permitted to post its 14-A or 14-C and its annual report, and any other proxy materials, to a website (many times a designated page on the company’s website) and then mail only a one page notification letter to the shareholders informing them where the company’s 14-A or 14-C and annual report can be viewed on the Internet. The company does, however, still have to mail a paper copy of the proxy materials to any shareholder that makes a request for a paper copy.
Additionally, the timelines in terms of when the one page notification must be sent differs from the mailing date for when the proxy materials had to be mailed to shareholders previously so this concept needs to be discussed with the company’s legal counsel before undertaking this procedure. However, if done properly and in compliance with the new e-proxy rules, this procedure can save a company thousands of dollars over the traditional mail method each time the company holds an annual or special meeting of shareholders.
Craig V. Butler, Esq. is an attorney with The Lebrecht Group, APLC, located in Irvine, California (http://www.thelebrechtgroup.com). He can be reached at (949) 635-1240 or via e-mail at [email protected]
Is the PCAOB Unconstitutional?
On May 18, 2009, the United States Supreme Court agreed to hear Free Enterprise Fund v. PCAOB, a case that challenges the structure of the Public Company Accounting Oversight Board as unconstitutional. The PCAOB has been called many things, but is it unconstitutional, and if it is, what then?
PCAOB Structure
Formation of the PCAOB
In 2002, in response to a series of accounting scandals including Enron and WorldCom, Congress hastily passed the Sarbanes-Oxley Act of 2002 (“SarBox”), which created the PCAOB (the “Board”) as a new entity to oversee the audits of public companies. Specifically, the Board’s purpose is “to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports for companies the securities of which are sold to, and held by and for, public investors.”
Appointment and Removal of Board Members is Vested with the SEC
The Board consists of five members who are appointed by the Securities and Exchange Commission (the “SEC”), after consultation with the Chairman of the Board of Governors of the Federal Reserve (currently Ben Bernanke) and the Secretary of the Treasury (currently Tim Geithner). Appointment is by a majority vote of the five SEC Commissioners.
A member of the Board may be removed only upon a finding of good cause by the SEC.
Powers of the Board
Senator Phil Gramm (R-TX) said in July 2002 of the Board,
“This board is going to have massive power, unchecked power, by design…We are setting up a board with massive power that is going to make decisions that affect all accountants and everybody they work for, which directly or indirectly is every breathing person in the country. They are going to have massive unchecked powers.”
The Board can, subject to approval or termination by the SEC:
– impose regulations controlling the auditing of all public companies;
– dictate services that can and cannot be performed by accountants;
– impose a tax in the form of the accounting support fee that it levies;
– inspect, investigate, and punish accounting firms, and individual accountants, for violating its regulations, professional standards, or federal laws;
– fine an accountant up to $100,000, or an accounting firm up to $2 million, for a violation of its rules;
– set the salaries of its own board members.
The Appointments Clause of the Constitution
The Appointments Clause is found in Article II, Section 2, clause 2 of the U.S. Constitution. The Appointments Clause gives the President the power to “nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein provided for. . . but Congress may, by Law, vest the Appointment of such inferior officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.” Thus, an officer of the United States must either be appointed by the President, or, if the officer is an “inferior officer,” by either (1) the President, (2) a Court, or (3) a Head of Department. This is a crucial component of the separation of powers concept in our government.
The Issues Before the United States Supreme Court
Are Members of the Board Officers of the United States?
If the members of the Board are considered officers of the United States, then under the Appointments Clause they come under the power of the President. Principal officers are to be nominated by the President and confirmed by the Senate, while inferior officers are appointed by either the President, a Court, or a Head of Department. Whether or not members of the Board are considered officers of the United States is one of the issues before the Supreme Court.
Are the Five Commissions of the SEC the Head of a Department?
Assuming that members of the Board are officers of the United States, and the extensive powers given to the Board as outlined above indicates that they are, then the next issue (because the Board is not appointed by the President or a Court) is whether the five Commissioners of the SEC are considered the Heads of a Department. The SEC has a Chair, whom most would consider to be its head. But appointment to the Board is by a majority of the Commissioners of the SEC, not by its Chair. What’s more, the Commissioners of the SEC must consult with the Chairman of the Board of Governors of the Federal Reserve and the Secretary of the Treasury.
Is the SEC a Department?
Lawyers arguing against the Board have cited precedent that the term “Departments” in the Appointments Clause refers only to those entities that resemble cabinet departments and are directly accountable to the President, and whose heads are called “cabinet ministers.” Thus, they argue, the SEC is not a Department and its leaders, even if they are considered “heads”, cannot appoint an officer of the United States.
The Court of Appeals Decision
The United States Court of Appeals for the District of Columbia held in favor of the Board. In its decision, which was decided by a 2-1 vote, the Court held that members of the Board are inferior officers of the United States. The Court further held that the SEC was a Department, and that the five Commissioners of the SEC were the Heads of Department and thus under the control of the President. Therefore, the structure of the PCAOB was not in violation of the Appointments Clause and was constitutional.
The lone dissenting judge decided that the members of the Board were principal officers because they are not directed and supervised by the SEC, are not removable at will by the SEC, and the SEC cannot manage Board inspections, investigations or enforcement actions. Thus, as principal officers, the members of the Board must be appointed by the President and confirmed by the Senate. Further, the dissenting judge felt that Congress intended for the members of the Board to be principal officers because of the massive power given to them.
The Effect of a Ruling Against the PCAOB
Corrective Structural Matters
The dissenting judge from the Court of Appeals outlined two relatively simple corrections to the constitutional flaws he found. First, Congress could simply amend the statute to require, for example, that the members of the Board, like the heads of other agencies, be appointed by the President and confirmed by the Senate, and thereafter be removable by the President. Alternatively, Congress could make the Board part of the SEC – directed, supervised, and removable at will by the five Commissioners of the SEC – just like other inferior officers of the SEC.
Historical PCAOB Disciplinary Actions
Some commentators have suggested a much more important effect of a decision against the PCAOB. In two Supreme Court cases, Freytag v. C.I.R (1991) and Ryder v. United States (1995), the Supreme Court affirmed that an individual or firm discliplined by a government agency can challenge that discipline if agency officials were improperly appointed. Thus, an accountant subject to enforcement proceedings by the PCAOB may have standing to challenge the structure of the PCAOB as a defense to any disciplinary action against him. They might also have standing to challenge the underlying policies such as the PCAOB’s broad interpretation of Section 404 of SarBox, the tax levied on public companies by the PCAOB, and other rules used to impose sanctions.
Important Precedent
More important than both of the effects outlined above may be the impact this case has on the separation of powers doctrine under which the Appointments Clause was adopted. On its face, a decision against the PCAOB appears to give power to the President. However, the Obama administration is expected to file a brief in support of the PCAOB, seemingly against its own interests. Why? Because a decision in favor of the PCAOB will support the concept of government agencies created by one branch of government but essentially unchecked by another branch of government. It will undermine the separation of powers and checks-and-balances doctrines put in place by our country’s founders. Given the Obama administration’s tendency to increase the role of government, evidenced by the appointment of over 20 czars as of the date of this article, this case presents a very slippery slope indeed. As a result, this may be one of the most important decisions in the first set of cases heard by Obama appointee Sonia Sotomayor.
Brian A. Lebrecht is an attorney with and the founder of The Lebrecht Group, APLC, located in Irvine, California and Salt Lake City, Utah. http://www.thelebrechtgroup.com.
Section 404 for the Non-Accelerated Filer
After several extensions, the Securities and Exchange Commission (the “SEC”) has finally settled on a compliance date for non-accelerated filers with respect to Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”).
What is Required?
In order to comply with Section 404 there are two reports that are required. One is prepared by management of the company, and the other is prepared by the company’s independent auditor.
Management’s Report on Internal Control over Financial Reporting
A company that is a reporting company under the Securities Exchange Act of 1934 (the “Exchange Act”) is required to include in their Annual Report on Form 10-K or 10-KSB, a report on the effectiveness of the company’s internal control over financial reporting (its “ICFR”). In addition, management is required to evaluate, as of the end of each fiscal quarter, any change in the company’s ICFR that occurred during the period that has materially affected, or is reasonably likely to materially affect (emphasis added), the company’s ICFR. Additional information regarding management’s evaluation obligation is detailed later in this article.
Management’s report is contained in Item 9A and 9A(T) of Form 10-K, and Item 8A and 8A(T) of Form 10-KSB. Item 308 of Regulation S-K provides the instructions.
There are two important considerations with respect to management’s report. First, management’s report included in a non-accelerated filer’s annual report during the filer’s first (emphasis added) year of compliance will be deemed to be “furnished” rather than “filed.” This relieves management of liability under Section 18 of the Exchange Act and is designed to relieve any initial tension between management and the independent auditor should their conclusions differ. If, however, the issuer subsequently incorporates by reference its report into a filing under the Exchange Act of the Securities Act of 1933, it will be deemed to be filed.
Second, if the annual report filed for this first year contains management’s report but does not contain an attestation report by the independent auditor (see Auditor’s Attestation Report on Internal Control over Financial Reporting, below), management’s report must contain a statement in substantially the following form:
This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Auditor’s Attestation Report on Internal Control over Financial Reporting
In addition to management’s report, the company’s independent auditor is required to issue a report attesting to management’s report on the company’s ICFR. The auditors we have talked with have indicated that they will want to review the company’s internal controls, and then review management’s report, before they issue this attestation.
Changes to Certifications
Non-accelerated filers have been allowed to omit the portion of the introductory language in paragraph 4, as well as language in paragraph 4(b) of the certification required by Exchange Act Rules 13a-14(a) and 15d-14(a) that refers to the certifying officers’ responsibility for designing, establishing, and maintaining ICFR for the company. These omissions must be re-inserted when the certifications are filed with an annual report that includes a report by management on the effectiveness of the company’s ICFR.
The language that has been allowed to be omitted is underlined:
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
When is it Required?
Management’s Report
Non-accelerated filers are required to provide management’s report on ICFR in its annual report for its first fiscal year ending on or after December 15, 2007.
Auditor’s Attestation Report
Non-accelerated filers are required to provide the auditor’s attestation report in its annual reports for its first fiscal year ending on or after December 15, 2008.
Changes in Certifications
Non-accelerated filers are allowed to omit the referenced language until it files its first annual report that includes a Management’s Report.
What is Management’s Evaluation Obligation?
Management is responsible for maintaining a system of ICFR that provides reasonable assurance (emphasis added) regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management is further responsible for maintaining evidential matters, including documentation, to provide reasonable support for its assessment.
Exchange Act Section 13(b)(7) defines “reasonable assurance” as “such level of detail and degree of assurance as would satisfy prudent officials in the conduct of their own affairs.”
Although there are numerous ways for management to conduct an evaluation of its ICFR, SEC Release No. 34-55929 establishes an evaluation method that is a safe harbor for management.
One of the key definitions in the Releases is that of “material weakness” as “a deficiency, or a combination of deficiencies, in ICFR such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis.”
Newly Public Companies
It is important to highlight that there is a transition period for newly reporting companies. A company will not become subject to the ICFR requirements until it either (i) had been required to file an annual report for the prior fiscal year with the SEC, or (ii) had filed an annual report with the Commission for the prior fiscal year. However, newly public companies are required to include a statement in its first annual report that the annual report does not include either management’s assessment on the company’s ICFT or the auditor’s attestation report. The extra year of filing a management’s report without an auditor’s attestation does not apply, they must both be filed in the second year.
The Effect of Deficiencies
One of the most common questions we anticipate is “what is effect of having deficiencies in our ICFR?”
None of the NASDAQ exchanges, the American Stock Exchange, nor the Over the Counter Bulletin Board will de-list or negatively identify a company that has reported deficiencies in its ICFR.
On a macro-economic level, the cost of money should be higher for a company that reports deficiencies than for a similar company that does not. Ratings agencies such as Fitch’s and Standard & Poor’s have published guidance as to how they intend to handle the reports. It remains to be seen whether hedge funds and other PIPE-financing funds will increase the cost of money to issuers that report deficiencies.
All of the auditors we have talked to have said that deficiencies in ICFR will increase the cost of an audit because they have to do extra sampling and follow other time-consuming processes.
Brian A. Lebrecht is an attorney with and the founder of The Lebrecht Group, APLC, located in Irvine, California and Salt Lake City, Utah. http://www.thelebrechtgroup.com.