FORT LAUDERDALE, Fla.–(BUSINESS WIRE)–Jan. 30, 2002–CyberGuard Corporation (OTC:CYBG) announced that it has reached a settlement with the Securities and Exchange Commission (“SEC”) that resolves the SEC’s investigation of the company’s revenue recognition practices between the end of the 1996 fiscal year through the third quarter of fiscal year 1998.
“The company is pleased with a settlement that closes the chapter on the SEC’s three-year investigation and that recognizes CyberGuard’s cooperation with the regulators and the remedial steps it took,” said Scott Hammack, chairman and chief executive officer of CyberGuard. The investigation was announced in the fall of 1998.
CyberGuard entered into the settlement with the SEC without admitting or denying any of the SEC’s findings. The settlement resulted in the issuance of an administrative order by the SEC finding that CyberGuard violated books and records provisions of the Securities Exchange Act of 1934.
The SEC alleged that CyberGuard had improperly written off certain capitalized software costs relating to its Firewall Version 2 software at the end of its 1996 fiscal year. Also, the SEC alleged that CyberGuard engaged in improper recognition of revenue during all of 1997 through the third quarter of fiscal year 1998 ending March 31, 1998.
The order does not make any finding of fraudulent conduct by CyberGuard.
The administrative order requires that CyberGuard cease and desist from committing or causing any future violations of the books and records provisions of the Exchange Act. No monetary penalty or other sanctions were imposed on CyberGuard.
“We are pleased to put this chapter behind us and to move forward in the months ahead by devoting our attention to growing our business and providing quality service to our customers and value to our shareholders,” said Mr. Hammack.
About CyberGuard Corporation
CyberGuard Corporation, the technology leader in network security, provides enterprise and electronic commerce security solutions to Fortune 1000 companies and governments worldwide. CyberGuard’s award winning, industrial-strength firewall products and services protect the integrity of data and applications from unauthorized access. CyberGuard’s appliances are the world’s first to receive Common Criteria EAL4 certification, the most prestigious and rigorous IT security evaluation available. The company has world headquarters in Ft. Lauderdale, Florida, and branch offices worldwide. More information on CyberGuard Corporation can be found at http://www.cyberguard.com.
Statements regarding estimates, expectations and future prospects contained in this press release are forward-looking statements. These statements are based upon assumptions and analyses made by the Company in light of current conditions, future developments, and other factors the Company believes are appropriate in the circumstances, or information obtained from third parties, and are subject to a number of assumptions, risks and uncertainties. Readers are cautioned that forward-looking statements are not guarantees and that actual results might differ materially from those suggested in the forward-looking statements. Some of the factors that might cause future actual events to differ from those predicted or assumed include: future advances in technologies and computer security; the Company’s history of losses; the Company’s ability to execute on its business plans; the Company’s dependence on outside parties such as its key customers and alliance partners; competition from major computer hardware, software, and networking companies; uncertainties in availability of expansion capital in the future and other risks associated with capital markets; overall network security spending; global economic conditions; the outcome of purported class action lawsuits against the Company and the SEC investigation; and recent changes in management. For a more complete discussion regarding forward-looking statements, the reader is referred to the Company’s periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, including the Form 10-K for the fiscal year ended June 30, 2001, and other information filed with the Commission.