The Lindon, Utah-based Unix vendor revealed in a filing with the Securities and Exchange Commission that it had issued more shares under its 2000 Employee Stock Purchase Plan than had been previously registered for issuance.
The issue arose after SCO moved from the Nasdaq National Market to the Nasdaq Smallcap market in February 2003, and therefore was no longer exempted from state registration or qualification requirements.
The company is offering to rescind a total of 312,806 shares of common stock offered to current or former employees resident in California, Connecticut, Illinois, New Jersey, Utah, Texas or Washington. SCO noted that since it had uncovered the error it had qualified the offer and sale of shares in Utah, and is in the process of applying to do the same in California.
It added, however, that it had also granted options under its 1999 Omnibus Stock Incentive Plan and 2002 Omnibus Stock Incentive Plan without complying with the registration or qualification requirements under the securities laws of California, Georgia and possibly other states.
It’s not the first time that SCO’s compensation plans have caused the company problems. In March the company announced that it was to restate 233,000 of stock-based compensation expense that was previously recorded in the second quarter but was incurred in the first quarter.
The company also announced that it was to reclassify $272,000 in the first quarter, $231,000 in the second quarter, and $557,000 in the third quarter, related to certain shares of common stock that the company may have used under its equity compensation plans without complying with the registration requirements of federal and applicable state securities laws from permanent equity to temporary equity.
SCO’s independent accounting firm, KPMG LLP, resigned in June and was replaced by Tanner LC. At the time SCO maintained that it had had no disagreements with KPMG, and specifically that there were no disagreements over accounting practices with reference to its previous restatement.
