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First China Pharmaceutical Group is one of a few pharmaceutical distribution companies in Yunnan Province to be granted a "License of Internet Pharmacy Information Service" allowing online marketing and order processing.
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Disclosure Controls and Procedures

 As adopted  on October 15, 2010

Introduction

The purpose of these Disclosure Controls and Procedures is to ensure that First China Pharmaceutical Group, Inc.  (the “Company”) records, processes, summarizes, and reports in its public disclosures, including Securities and Exchange Commission (the “SEC”) reports, all information: (a) required to be disclosed, (b) within the time periods specified, and (c) pursuant to processes that enable the Company’s principal executive and financial officers to make timely decisions regarding disclosure.

The Company is required to disclose any information that would be expected to affect the invest­ment decision of a reasonable investor or to alter the market price of the Company’s securities. The determination that information is required to be disclosed is a complex legal and business judgment, dependent on the potential financial, operational and overall impact of the information on the Company.

These Disclosure Controls and Procedures have been designed specifically to comply with the provi­sions of Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the “Act”), and the corresponding SEC rules implementing Section 302 of the Act.  The Company anticipates establishing a separate Audit Committee that will adopt an Audit Committee Charter.   

This document provides an overview of the Disclosure Controls and Procedures employed by the Company in the preparation of its various SEC reports, including Forms 10-K, 10-Q and 8-K (collectively, the “SEC Reports”).  This document also summarizes:

  1. Certain steps that various individuals and departments at the Company take to ensure that all appropriate and material information is disclosed on a timely basis;
  2. The respective roles and duties of the Company’s Review Group and Disclosure Committee;
  3. The process whereby the Company evaluates the effectiveness of these Disclosure Controls and Procedures; and
  4. The process that the Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”) take when certifying various SEC Reports.

 

I. Forms 10-Q/10-K Procedure

A. Disclosure Procedures

The procedure for gathering, communicating and disclosing the necessary information for the Company’s annual and quarterly reports to the SEC consists of several separate processes that are designed to inform those individuals directly responsible for the preparation of the Company’s Forms 10-Q and 10-K.  These internal procedures consist primarily of the following:

  • Quarterly and annual operations reviews by management;
  • Quarterly Controller / CFO meetings;
  • Periodic meetings of the CEO and the Controller with management;
  • Preparation of the Company’s SEC Reports by the parties identified in Exhibit AForm 10-K Preparation Responsibility Chart and Exhibit BForm 10-Q Preparation Responsibility Chart;
  • Review of Company’s SEC Reports by the Company’s Review Group (as detailed in “III.  Review Group/Disclosure Committee” below);
  • An internal audit procedure to be performed by the Company’s Controller (as detailed in “IV.  Evaluation of Effectiveness of Disclosure Controls and Procedures” below);
  • An Internal Audit Report to be issued by the Controller (as detailed in “IV.  Evaluation of Effectiveness of Disclosure Controls and Procedures” below);
  • A specific reference in the Company’s Code of Ethics (the “Code”) that states that all Company personnel should report violations (or concerns about possible violations) of law or of the Code as well as any concern about the accuracy or completeness of the Company’s public financial reports or about the accuracy of its internal books and records, the adequacy of its internal controls or any auditing matters, and compliance with Section 406 of the Sarbanes-Oxley Act that, among other things, will require financial management of the Company to promote full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to, the SEC and in other public communications made by the Company.  The Code permits personnel to report any concerns to the Chairman of the Board or External Legal Counsel on an anonymous basis and separately prohibits retaliation against those who raise concerns in good faith;


B. Form Preparation Responsibility

The Company maintains and distributes to the appropriate individuals detailed responsibility charts summarizing the preparation and review process for each of the Company’s Forms 10-K and 10-Q, including the parties responsible for the preparation and review of each item.  Copies of the responsibility charts for the preparation of the Form 10-K and the Form 10-Q are attached hereto as Exhibit A and Exhibit B, respectively.


C. Preparation Timeline for Forms 10-Q/10-K

The Company also maintains and distributes to the appropriate individuals a detailed timeline setting forth the significant deadlines for the preparation of the Company’s Forms 10-Q and 10-K, including the parties responsible for the meeting of each deadline.  A copy of this timeline is attached hereto as Exhibit C.

D.        Periodic Reporting Deadlines

Quarterly reports are due 45 days after the end of each quarter, except for the 4th quarter, for which an annual report is due within 90 days after the end of such 4th quarter.   


II. Form 8-K Procedure

A. Disclosure Procedures

The process of preparing and filing a Current Report on Form 8-K is instituted by the Company’s Chief Executive Officer.  The Chief Executive Officer often becomes aware of reportable events or occurrences through his/her own work on behalf of and position with the Company.  However, certain members of the Review Group (as listed in “III. Review Group/Disclosure Committee” below) also report to the Chief Executive Officer certain events or occurrences that may require the filing of a Form 8-K.

B. Current Form 8-K Filing Requirements

Currently, the Company must report on a Form 8-K the occurrence of any of the following events (the current timing for the disclosure of each such event follows that event in parentheses):

Section 1 –      The Company’s Business and Operations (4 business days)

Item 1.01         Entry into a Material Definitive Agreement

Item 1.02         Termination of a Material Definitive Agreement

Item 1.03         Bankruptcy or Receivership

Section 2 –      Financial Information (4 business days)

Item 2.01         Completion of Acquisition or Disposition of Assets

Item 2.02         Results of Operations and Financial Condition

Item 2.03         Creation of a Direct Financial Obligation or an Obligation under an Off-

                        Balance Sheet Arrangement of a Company

Item 2.04         Triggering Events That Accelerate or Increase a Direct Financial

                        Obligation or an Obligation under an Off-Balance Sheet Arrangement

Item 2.05         Costs Associated with Exit or Disposal Activities

Item 2.06         Material Impairments

Section 3 –      Securities and Trading Markets (4 business days)

Item 3.01         Notice of Delisting or Failure to Satisfy a Continued Listing Rule or

                        Standard; Transfer of Listing

Item 3.02         Unregistered Sales of Equity Securities

Item 3.03         Material Modification to Rights of Security Holders

Section 4 –      Matters Related to Accountants and Financial Statements

                        (4 business days)

Item 4.01         Changes in the Company’s Certifying Accountant

Item 4.02         Non-Reliance on Previously Issued Financial Statements or a Related

                        Audit Report or Completed Interim Review

Section 5 –      Corporate Governance and Management (4 business days)

Item 5.01         Changes in Control of the Company

Item 5.02         Departure of Directors or Certain Officers; Election of Directors;

Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Item 5.03         Amendments to Articles of Incorporation or Bylaws; Change in Fiscal

                        Year

Item 5.04         Temporary Suspension of Trading Under the Company’s Employee

                        Benefit Plans

Item 5.05         Amendments to the Company’s Code of Ethics, or Waiver of a Provision of the Code of Ethics

Item 5.06         Change in Shell Company Status

Item 5.07         Submission of Matters to a Vote of Security Holders

Section 6 –      Asset-Backed Securities (4 business days)

Item 6.01         ABS Informational and Computational Materials

Item 6.02         Change of Servicer or Trustee

Item 6.03         Change in Credit Enhancement or Other External Support

Item 6.04         Failure to Make a Required Distribution

Item 6.05         Securities Act Updating Disclosure

Section 7 –      Regulation FD (simultaneous disclosure in the case of intentional

                        disclosures, or, in the case of non-intentional disclosures, promptly[1] after

                        the Company knows (or is reckless in not knowing) that the information

                        selectively disclosed was both material and nonpublic)

Item 7.01         Regulation FD Disclosure

Section 8 –      Other Events (see Section 7)

Item 8.01         Other Events (The Company may use this Item to report events that are

                        not specifically called for by the Form 8-K, that the Company considers

                        to be of importance to security holders)

Section 9 –      Financial Statements and Exhibits (4 business days)

Item 9.01         Financial Statements and Exhibits

 

C.  Applicability and Responsibility

The Chief Executive Officer regularly provides certain members of the Review Group with the lists of the reportable events set forth in paragraph B and helps those individuals to understand the nature of each item included in the lists.  Further, the Chief Executive Officer periodically emphasizes to certain members of the Review Group the importance of reporting the actual or likely occurrence of a reportable event to the Chief Executive Officer as soon as they learn of the actual or likely occurrence of such an event.

 

III. Review Group/Disclosure Committee

A. Review Group

The Company has an established Review Group that reviews near final drafts of all SEC Reports.  The members of the Review Group review the SEC Reports and submit their comments to the Controller under the reporting timeline communicated at the beginning of each SEC Report preparation period.  The Controller will address all Review Group comments and discuss such comments with the applicable Review Group member.  As noted below, any unresolved comments or issues will be referred to the Disclosure Committee (or selected members thereof).  Any member or members of the Review Group may periodically request and review supporting data or back-up material for selected information contained in the Company’s SEC Reports.  All such requests should be submitted to the Chief Executive Officer.

B.  Disclosure Committee

The Company has not established a Disclosure Committee separate from the current Board of Directors.  The Board of Directors currently acts as the Disclosure Committee.  Along with reviewing near final drafts of all SEC Reports, the Disclosure Committee (or selected members thereof) is responsible for the following:

  • Determining what information is significant or material enough to warrant disclosure in the SEC Reports;
  • Reconciling all inconsistent or conflicting comments provided by the Review Group;
  • Reviewing the Company’s registration statements and annual proxy statement;
  • Reviewing all press releases providing financial information or guidance, information about material acquisitions or dispositions or other events that are material to the Company;
  • Reviewing significant messages or changes in guidance disseminated to shareholders, investor conferences or analysts;
  • Reviewing all presentations to rating agencies and lenders relating to significant business developments;
  • Reviewing the disclosure policies for information included on the Company’s corporate/investor relations websites;
  • Reviewing these Disclosure Controls and Procedures on a quarterly basis to ensure that they are effective and current; and
  • Identifying areas of particular risk and sensitivity that require special treatment in SEC Reports.

 

C.        Members of the Review Group/Disclosure Committee

Following is a list of the members of the Review Group and their respective responsibilities with regard to preparation and review of the Company’s SEC Reports (those members whose position is followed by an asterisk (“*”) will also be members of the Disclosure Committee once formed):

 

Position

Name

Responsibility

Chief Executive Officer *

Mr. Zhen Jiang Wang

  • Take steps identified in Section V hereof before filing of all SEC Reports.
  • Certification required for all SEC Reports.
  • Read each SEC Report for clarity and consistency with the messages provided to analysts and stockholders.

Chief Financial Officer *

Ms. Yi Jia Li

  • Take steps identified in Section V hereof before filing of all SEC Reports.
  • Signature required on SEC filings.
  • Certification required for all SEC Reports.

Controller

Duties to be performed by CFO unless otherwise determined by the Company’s Board of Directors

  • Primary responsibility for financial information contained in all SEC Reports.
  • Review all SEC Reports and certify as to accuracy and completeness of selected sections of each report.
  • Read liquidity section and debt footnotes for accuracy.
  • Obtain necessary signatures and certifications.

External Legal Counsel

Greenberg Traurig LLP

(Mark C. Lee)  (subject to change by the Company’s Board of Directors)

  • Read each SEC Report for clarity and compliance with SEC rules and completeness and accuracy of financial information contained in all SEC Reports and file with the SEC via EDGAR.
  • Primary responsibility for MD&A and final sign-off on entire SEC Report.

External Auditors

Parker Randall CF (H.K.) CPA Limited (subject to change by the Company’s Board of Directors and/or Audit Committee)

  • Read each SEC Report for clarity, completeness and accuracy of financial information.

 

IV. Evaluation of Effectiveness of Disclosure Controls and Procedures


A. Evaluation by Chief Financial Officer

Under the direction of the Company’s Audit Committee and CEO, the Company’s CFO has responsibility for:

  1. Evaluating, on a quarterly basis, whether the design of these Disclosure Controls and Procedures is appropriate and effective, taking into account any changes since the most recent evaluation in the Company’s organization or business, such as new personnel or significant acquisitions or dispositions, regulatory developments and changing industry practices, as well as areas of weakness or continuing concern or other aspects of disclosure controls and procedures that merit attention; and
  2. Evaluating, on a quarterly basis, whether these Disclosure Controls and Procedures are operating properly.

The steps that the CFO may in his/her discretion take to accomplish these processes include:

  1. Interviewing the individuals who are working on the preparation of all SEC Reports;
  2. Discussing internal controls with the External Auditors;
  3. Meeting with the CEO to discuss his/her conclusions and concerns about disclosure controls, internal controls and general corporate compliance with rules, to the extent each is subject to internal audit oversight;
  4. Asking selected individuals not directly involved in the SEC Report preparation process to review relevant disclosures and confirm that the information contained therein is consistent with their understanding of the facts disclosed; and
  5. Periodically requesting and reviewing supporting data or back-up material for selected information contained in the Company’s SEC Reports.

B. Evaluation Report

The CFO is also responsible for preparing a report that details the results of his/her evaluation and deliver that report to the Company’s Audit Committee and CEO for their review in connection with the CEO’s and CFO’s Section 302 certifications of the Company’s SEC Reports.

V. Certification of SEC Reports by the Company’s CEO and CFO

A.   Form 10-Q/10-K Certification Requirements

1.   Section 302 of the Sarbanes-Oxley Act

Section 302 of the Sarbanes-Oxley Act requires that the CEOs and CFOs of public companies file a certification with each annual and quarterly SEC Report (including all amendments).  Exchange Act Rules 13a-14 and 15d-14 require an issuer’s principal executive officer or officers and the principal financial officer or officers, or persons performing similar functions, certify in each quarterly and annual report, including transition reports, filed or submitted by the issuer under Section 13(a) or 15(d) of the Exchange Act that:

  1. He or she has reviewed the report;
  2. Based on his or her knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report;
  3. Based on his or her knowledge, the financial statements, and other financial information included in the report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in the report;
  4. He or she and the other certifying officers:
    • Are responsible for establishing and maintaining “disclosure controls and procedures” for the issuer;
    • Have designed such disclosure controls and procedures to ensure that material information is made known to them, particularly during the period in which the periodic report is being prepared;
    • Have evaluated the effectiveness of the issuer’s disclosure controls and procedures as of a date within 90 days prior to the filing date of the report; and
    • Have presented in the report their conclusions about the effectiveness of the disclosure controls and procedures based on the required evaluation as of that date;
  5. He or she and the other certifying officers have disclosed to the issuer’s auditors and to the audit committee of the board of directors (or persons fulfilling the equivalent function):
    • All significant deficiencies in the design or operation of internal controls which could adversely affect the issuer’s ability to record, process, summarize and report financial data and have identified for the issuer’s auditors any material weaknesses in internal controls; and
    • Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal controls over financial reporting; and
    • He or she and the other certifying officers have indicated in the report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

2. Section 906 of the Sarbanes-Oxley Act

Section 906 of the Sarbanes-Oxley Act requires each periodic report filed under Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that contains financial statements to “be accompanied by” a written statement of the CEO and CFO (or equivalent thereof) which certifies that the report:

  1. Fully complies with the requirements of Section 13(a) or 15(d) of the 1934 Act, and
  2. Fairly presents, in all material respects, the financial condition and results of operations of the company.

Section 906 also includes criminal penalties.  If whoever certifies a statement concerning the foregoing knowing that the periodic report accompanying such statement does not comport with all the requirements set forth in Section 906, they shall be fined up to $1,000,000 or imprisoned for up to 10 years, or both; or if such certification is willful, may be fined up to $5,000,000 or imprisoned up to 20 years, or both.

B. Steps to Certify

Below are the review steps that the Company’s CEO and CFO take before their certification of each SEC Report filed by the Company:

  1. Read carefully each SEC Report covered by the certification.
  2. Review the adequacy of the Company’s internal procedures with the Controller to ensure that material information is brought to the attention of management and Company personnel responsible for compiling SEC Reports and that such information is properly processed.
  3. Review the quarterly report prepared by the Company’s Controller documenting the results of his/her evaluation as to whether the design of these Disclosure Controls and Procedures are appropriate and effective.
  4. Ask the principal officers of the Company involved in the preparation of the SEC Reports to identify any difficult disclosure issues raised by the reports and obtain a representation from them that they have (a) followed the Company’s procedures, (b) are not aware of any material misstatements or omissions in the reports and (c) provided all material information necessary for inclusion in the reports with respect to the business or segments over which they have responsibility.
  5. Discuss with the officers identified in paragraph 3 above, External Auditor, External Legal Counsel and other employees, as appropriate (depending upon the issue involved), any concerns about the accuracy of any information included in any report.
  6. Discuss the results of the Controller’s quarterly review of these Disclosure Controls and Procedures with the Company’s Audit Committee and the External Auditor as it relates to any significant deficiencies in the Company’s Disclosure Controls and Procedures which could adversely affect the Company’s ability to record, process, summarize and report financial data.
  7. Discuss with the Company’s Audit Committee and the External Auditor any fraud, whether or not material, that involves any employee who has a significant role in the Company’s internal control process.
  8. Discuss with the CFO, the Controller, External Auditor and Audit Committee (a) the principal risks to which the Company is subject and any known trends, demands, commitments or uncertainties that are reasonably likely to affect the Company’s financial position or performance in any way, and (b) the appropriateness of, methodology used in determining and assumptions underlying any critical accounting estimates and judgments made in connection with the preparation of the financial statements included in the covered reports and any change in accounting policies or new accounting policies adopted in the current and preceding fiscal year.
  9. Review the content of the sworn statements with the Company’s Audit Committee before such statements are filed with the SEC.
  10. Document that the above steps have been taken.

 


 

Exhibit A

 

Form 10-K Preparation Responsibility Chart 

 

 

Section of Form 10-K

Regulation S-K Reference

Responsible Party

Cover Page

 

Legal

Part I, Item 1 – Business

Item 101

Management

  • Cautionary Note on Forward Looking Statements (Should conform with Safe Harbor Statement)

--

Management; Legal

Item 1A – Risk Factors

Item 503(c)

Management; Legal

Item 2 –Properties

Item 102

Management; Legal

Item 3 – Legal Proceedings

Item 103

Legal

Item 4 – (Removed and Reserved)

--

Legal

Part II.  Item 5 – Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 201

Item 701(f)

Item 703

Management; Legal

Item 6 – Selected Financial Data

Item 301

Accounting; Management

Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 303

Management; Legal

  • Results of Operations

Item 303(a)(3)

Accounting; Management

  • Liquidity and Capital Resources

Item 303(a)(1)-(2)

Accounting; Legal

  • Off Balance Sheet Arrangements

Item 303(a)(4)

Accounting; External Auditor; Legal

  • Tabular Disclosure of Contractual Obligations

Item 303(a)(5)

Accounting; Management

  • Critical Accounting Policies

--

Accounting; External Auditor

  • Recent Accounting Pronouncements

--

Accounting; External Auditor

  • Legal and Environmental Matters

--

Legal

  • International Operations

--

Management; Legal 

  • Forward Looking Statements/Safe Harbor

Item 303(c)

Management; Legal

Item 7A – Quantitative and Qualitative Disclosures About Market Risk

Item 305

Management; Legal

Item 8 – Financial Statements and Supplementary Data

 

--

Accounting; External Auditor

Item 9 – Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 304(b)

Accounting; External Auditor; Legal

Item 9A – Controls and Procedures

Item 307

Item 308

Accounting; External Auditor; Legal

Item 9B – Other Information

--

Accounting; Management; Legal

Part III, Item 10 – Directors, Executive Officers and Corporate Governance

Item 401

Item 405

Item 406

Item 407(c)(3), (d)(4), (d)(5)

Management; Accounting; Legal

Item 11 – Executive Compensation

Item 402

Item 407(e)(4), (e)(5)

Management; Accounting; Legal

Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 201(d)

Item 403

Management; Accounting; Legal

Item 13 – Certain Relationships and Related Transactions, and Director Independence

Item 404

Item 407(a)

Legal; Accounting

Item 14 – Principal Accounting Fees & Services

Item 9(e) of Schedule 14A--

Accounting; Legal

Part IV, Item 15 – Exhibits, Financial Statement Schedules

Item 601

Legal (for Exhibits and Forms 8-K); Accounting (for Financial Schedules)

Signatures

--

Legal

Auditor Attestation Report

--

External Auditor

Exhibit Index and Exhibits

--

Legal; Management

Exhibit 23 – Consent of Experts and Counsel

Item 601(b)(23)

Accounting; External Auditor

Exhibit 31.1 – Rule 13a-14(a)/15d-14(a) Certification of PEO

Item 601(b)(31)

Legal

Exhibit 31.2 – Rule 13a-14(d)/15d-14(d) Certification of PFO

Item 601(b)(31)

Legal

Exhibit 32 – Section 1350 Certification of PEO and PFO

Item 601(b)(32)

Legal

 

†          Certain of these items are also included in (and may be incorporated by reference to) the Company’s Annual Proxy Statement, if any.

 

 

 

Exhibit B

 

Form 10-Q Preparation Responsibility Chart

 

 

Section of Form 10-Q

Regulation S-K Reference

Responsible Party*

Cover Page

 

Legal

Part I, Item 1 – Financial Statements

 

--

Accounting; External Auditor

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 303

Management; Legal

  • Results of Operations

Item 303(a)(3)

Accounting; Management

  • Liquidity and Capital Resources

Item 303(a)(1)-(2)

Accounting; Legal

  • Off Balance Sheet Arrangements

Item 303(a)(4)

Accounting; External Auditor; Legal

  • Tabular Disclosure of Contractual Obligations

Item 303(a)(5)

Accounting; Management

  • Critical Accounting Policies

--

Accounting; External Auditor

  • Recent Accounting Pronouncements

--

Accounting; External Auditor

  • Legal and Environmental Matters

--

Legal

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Item 305

Management; Legal

Item 4 – Controls and Procedures

Item 307

Item 308(c)

Accounting; Legal; External Auditor

Part II, Item 1 – Legal Proceedings

Item 103

Legal

Item 1A – Risk Factors

--

Management; Legal

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

Item 701

Item 703

Legal; Management

Item 3 – Defaults Upon Senior Securities

--

Accounting; Legal

Item 4 – (Removed and Reserved)

--

Management; Legal

Item 5 – Other Information

8-K items not reported ,Item 407(c)

Legal; Management

Item 6 – Exhibits

Item 601

Legal

Signatures

--

Legal

Exhibit Index and Exhibits

--

Legal

Exhibit 23 – Consent of Experts and Counsel

Item 601(b)(23)

Accounting; External Auditor

Exhibit 31.1 – Rule 13a-14(a)/15d-14(a) Certification of PEO

Item 601(b)(31)

Legal

Exhibit 31.2 – Rule 13a-14(d)/15d-14(d) Certification of PFO

Item 601(b)(31)

Legal

Exhibit 32 – Section 1350 Certification of PEO and PFO

Item 601(b)(32)

Legal

 


Exhibit C

 

Preparation Timeline for Forms 10-Q/10-K 

 

Roles

Timing 

Responsible Party

Circulate detailed responsibility chart and timeline

10 days after quarter end

Accounting

Review of SEC Forms, Rules and Interpretive Releases to determine whether any relevant changes have occurred

10 days after quarter end 

Legal

Evaluate the effectiveness of the Company’s disclosure controls and procedures and any changes in the Company’s risk profile.  (See “IV.  Evaluation of Effectiveness of Disclosure Controls and Procedures”)

Within 90 days prior to the filing of the report 

Management; Legal; Accounting

Determine whether or not there were significant changes in internal controls (or in other factors affecting internal controls) after the internal controls were evaluated, including any corrective actions taken with regard to significant deficiencies or material weaknesses.  (See Item 307 of Regulation S-K) (See “IV.  Evaluation of Effectiveness of Disclosure Controls and Procedures”)

10 days after quarter end

Management; Legal; Accounting

Word process drafts for all SEC periodic filings and sends final versions to External Legal Counsel for Edgar filing.

Continue to process document until provided to External Legal Counsel

Accounting

Controller / CFO Meeting 

Held once a quarter

Controller; CFO

Distribute final draft of financials only to the Review Group for the quarterly earnings release.  (See “III.  Review Group/Disclosure Committee”) (as applicable)

3 business days prior to earnings release

Accounting

Provide the Audit Committee with a nearly final draft of the earnings press release. (as applicable)

3 business days prior to earnings release

Management; Investor Relations; Audit Committee

Conference call to discuss what is in the press release and what the Company is going to say on the earnings call about the Company’s results, prospects and other relevant topics. (as applicable)

2 business days prior to earnings release

Management; Investor Relations; Audit Committee

Telephonic Board of Directors Meeting where the Company’s CEO details what he intends to say on the earnings call and responds to questions from the Board. (as applicable)

1 business days prior to earnings release

Board of Directors; CEO

Earnings Release and Earnings Call (as applicable)

Approximately 30 days after quarter ends

CEO, CFO, Investor Relations

Analyst Day (as applicable)

Approximately 3 days after Third Quarter Earnings Call

CEO, CFO, Investor Relations

Prepare and review draft financial statements, footnotes and financial schedules to be included in Forms 10-Q/10-K and 8-K (if financial information is provided).

1st drafts to be distributed with MD&A by 30 days after quarter end

Accounting

Review all drafts of Forms 10-Q/10-K.

1st drafts to be distributed 30 days after quarter end

Management; Legal

Draft the legal footnote and provide to Accounting.

30 days after quarter end

Legal

Prepare draft MD&A section of Forms 10-Q/10-K.

30 days after quarter end

Management; Legal

Review draft MD&A to ensure accuracy and consistency with financial statements and footnotes.

30 days after quarter end

Accounting; Legal

Draft exhibit index.

35 days after quarter end

Legal

Distribute final draft of Forms 10-Q/10-K to the Review Group for the 10-Q/10-K filings.

35 days after quarter end

Accounting

Obtain Review Group comments and resolve all comments with Management.  (See “III.  Review Group/Disclosure Committee.”  Review Group should resolve comments from others.) 

40 days after quarter end

Accounting

Review and resolve all Review Group comments with Accounting.  (See “V.  Certifications of SEC Reports by the Company’s CEO and CFO”)

40 days after quarter end

Management

Obtain required approvals, signatures and certifications.

40 days after quarter end

Legal

Final review completed and obtain sign-off from all parties of the Review Group

42 days after quarter end

Accounting

Final review of Form 10-Q by the Audit Committee (or the full Board of Directors in the case of the Form 10-K)

At regular quarterly meeting

Audit Committee

Obtain any required External Auditor consents (if applicable).

42 days after quarter end

Accounting

Authorize Management for filing

44 days after quarter end

Accounting

Authorize External Legal Counsel for filing.

44 days after quarter end

Management

External Legal Counsel to file report via EDGAR.

44 days after quarter end

Legal

‡          The timing above is geared towards the Form 10-Q process, but the same timeline should be applicable to the preparation of the Form 10-K to increase the Company’s ability to file more quickly if the need arises to register securities with the SEC.  Otherwise, the timeline for the Form 10-K will most likely trail the Form 10-Q timeline by seven to ten days in order to ready for printing for shareholder distribution.

 


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