Amendment #2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-QSB/A

AMENDMENT No. 2

 

 

x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2003

 

or

 

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from              to             

 

Commission File No: 000-23712

 

 

ASCONI CORPORATION

(Exact name of Small Business Issuer as Specified in Its Charter)

 

 

Nevada   91-1395124

(State or Other Jurisdiction of

Incorporation or Organization)

  

(I.R.S. Employer

Identification No.)

 

1211 Semoran Boulevard, Suite 141

Casselberry, Florida 32707

(Address of Principal Executive Offices)

 

(407) 679-9463

(Issuer’s Telephone Number)

 

 

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No   x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class

  

Outstanding as of May 14, 2003

Common Stock, $.001 par value   14,586,689

 

Transitional Small Business Disclosure Format (check one):    ¨  Yes    x  No

 

EXPLANATORY NOTE

 

Asconi Corporation is filing this Amendment No. 2 to the Quarterly Report on Form 10-QSB for the period ended March 31, 2003 (the “Form 10-QSB”), as previously amended by the Amended Quarterly Report on Form 10-QSB/A (Amendment No. 1). This Amendment No. 2 is being filed to amend Part I, Item 3, “Controls and Procedures.” All other statements and provisions in the Form 10-QSB Amendment No. 1 have not been updated and remain unchanged.

ITEM 3. CONTROLS AND PROCEDURES

 

In connection with the preparation and filing of the original Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003, we, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined under Rules l3a-l5(e) and 15d-l5(e) promulgated under the Exchange Act) as those controls existed as of March 31, 2003. Based on this evaluation, the principal executive and principal financial officers at that time concluded that our disclosure controls and procedures were effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act and the rules and regulations thereunder. No significant changes were made in our internal controls or in other factors that could significantly affect these controls subsequent to the date of this evaluation.

 

However, as a result of the events discussed in the following two paragraphs, in connection with the preparation and filing of this amended Quarterly Report on Form 10-QSB/A for the quarter ended March 31, 2003, we, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, reevaluated the conclusions reached as the result of original evaluation of the effectiveness of our disclosure controls and procedures as those controls existed as of March 31, 2003. As a result of that reevaluation, the principal executive and principal financial officers have concluded that the conclusion reached at the time of the filing of the original Quarterly Report on Form 10-QSB for the quarter ended March 31, 2003 was incorrect, and that our disclosure controls and procedures were not effective, as more fully described below, to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act and the rules and regulations thereunder.

 

On March 23, 2004, we issued a public announcement that our periodic public reports for the fiscal quarters ended June 30, 2003 and September 30, 2003 will be restated. We cautioned the marketplace not to rely upon our financial statements for the stated periods or any earnings guidance we had previously released with respect to fiscal 2003 until we published the restated financial statements. Under the supervision of our audit committee, we inquired into the concerns raised by the SEC staff in its correspondence to us. We noted that the restatements would change, among other things, the accounting for our issuance of ten million shares issued during fiscal 2003 to Constantin Jitaru and Anatolie Sirbu, our named executive officers. The issuance of those shares was disclosed in our December 4, 2003 proxy statement and was ratified by our shareholders at our December, 2003 shareholders’ meeting.

 

Our March 23, 2004 announcement followed our receipt on March 5, 2004, of a letter from the staff of the SEC containing the SEC Division of Corporation Finance staff’s comments relating to our financial and non-financial disclosures contained in our Registration Statement on Form S-3 filed with the SEC on February 6, 2004, our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002 and our proxy statement (Schedule l4A) filed December 4, 2003. The SEC staff inquired, among other things, into our accounting treatment of the ten million share issuance. The March 5, 2004 SEC staff letter followed an informal inquiry from the SEC’s Denver regional office requesting voluntary production of documents relating to our accounting and financial policies, practices and procedures in fiscal 2001, 2002 and 2003, including accounting treatment of certain related-party transactions. An informal SEC inquiry is ongoing.

 

The reevaluation of the results of our evaluation of our disclosure controls and procedures carried out by our management considered whether weaknesses in our disclosure controls and procedures were a cause of the errors for which our fiscal 2002 and interim 2003 financial statements had to be restated. We concluded that our disclosure controls and procedures were not effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act and the rules and regulations thereunder due to the following reasons:

 

  • we lacked a chief accounting officer having the necessary level of experience with U.S. generally accepted accounting principles (US GAAP) and SEC reporting;

 

  • we lacked controls to insure that agreements, contracts and other documents relating to debt and equity transactions, and investments in subsidiaries or investees, including transactions such as those discussed above, were provided to and reviewed by accounting and financial reporting personnel on a timely basis to insure that the financial reporting and disclosure implications of such transactions could be considered and reflected in the financial statements in the proper periods;

  • we lacked controls to insure that actions taken by our board of directors were documented in their minutes on a timely basis to insure that the financial reporting and disclosure implications of such actions could be considered and reflected in the financial statements in the proper periods; and

 

  • our audit committee was not adequately manned, or sufficiently active in accordance with its charter, including its duties to discuss, with management and our independent auditors, prior to the release of each periods’ financial statements, the financial statements themselves, significant accounting policies and estimates, our internal controls, and the scope and findings of the work performed by our independent auditor in its audit or review of the financial statements.

 

As a result of these findings, we have determined to take the following steps to improve our disclosure controls and procedures:

 

  • we will create the position of chief accounting officer who will report both to the chief executive officer and the audit committee, and hire for that position a person having adequate experience in the application of US GAAP and SEC reporting;

 

  • we will require that all contracts, agreements and other documents relating to debt or equity transactions, acquisition of assets or securities and investments in subsidiaries or investees, including transactions such as those discussed above, be reviewed and approved by the chief accounting officer prior to their execution;

 

  • we will require that all other material contracts or agreements be (1) in writing, (2) executed only by the chief executive officer or chief financial officer, (3) if not in English, translated into English as soon as practicable after execution, and (4) immediately forwarded to the chief accounting officer and our outside legal counsel;

 

  • we will require that the chief accounting officer attend all of the meetings of our board of directors to be aware of actions taken by the board of directors that have accounting or disclosure implications, and that the chief accounting officer act as the secretary for the board of director meetings and be responsible for the timely preparation of minutes of those meetings;

 

  • we will reconstitute our audit committee to, in accordance with its charter, be made up of independent directors who are financially literate, and to contain at least one member who is a “financial expert” as that term is defined in the SEC’s rules; and

 

  • we will require our audit committee to meet at least once every quarter, prior to the release of that periods’ financial statements, to, among other things, discuss, with management and our independent auditors, prior to the release of each periods’ financial statements, the financial statements themselves, significant accounting policies and estimates, our internal controls, and the scope and findings of the work performed by our independent auditor in its audit or review of the financial statements.

 

As of July 31, 2004 we have instituted the requirement that our audit committee meet at least once each quarter prior to the release of that periods’ financial statements, to, among other things, discuss, with management and our independent auditors, prior to the release of each periods’ financial statements, the financial statements themselves, significant accounting policies and estimates, our internal controls, and the scope and findings of the work performed by our independent auditor in its audit or review of the financial statements. We have also instituted the requirement that all material contracts or agreements be (1) in writing, (2) executed only by the chief executive officer or chief financial officer, (3) if not in English, translated into English as soon as practicable after execution, and (4) immediately forwarded to our outside legal counsel.

 

We had originally anticipated that the remaining steps, which involved the hiring of a chief accounting officer and the reconstituting of our audit committee to include at least one “financial expert”, would be completed by July 31, 2004. However, in part as the result of the stockholder litigation against us and the SEC inquiry, we have to date been unable to attract and retain an acceptable candidate for either position. We will continue to diligently seek out a chief accounting officer and new members for our audit committee.

In the interim, our current accounting and financial reporting personnel are performing the duties to be performed by the new chief accounting officer, and are consulting regularly with our auditors, and our audit committee has engaged outside counsel which attends each audit committee meeting.

 

We believe that the completion of these steps will allow us to conclude that our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Exchange Act and the rules and regulations thereunder.

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

    ASCONI CORPORATION

Date: October 29, 2004

  

/s/ Constantin Jitaru,

   

Constantin Jitaru,

   

President and Chief Executive Officer

EXHIBIT INDEX

 

Exhibit
   

Description of Exhibit

31.1    Rule 13(a)-14(a) Certification of Chief Executive Officer.
31.2    Rule 13(a)-14(a) Certification of Chief Financial Officer.
32.1    Certification by Constantin Jitaru, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2    Certification by Anatolie Sirbu, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.