12/12/2005Red Light Camera Company Nestor Sees More Red Ink
Securities and Exchange Commission officials question accounting practices of red light camera vendor Nestor, Inc.
Rhode Island red light camera vendor Nestor, Inc. has found itself in hot water with the Securities and Exchange Commission over accounting practices designed to make the troubled company look more solvent on paper. After SEC staff identified a number of questionable procedures, the company retracted statements issued to investors between 2003 and 2005 in a filing last week.
"Investing in our common stock involves a high degree of risk," Nestor admitted in its filing. The company is currently $59.1 million in debt.
Among the problems identified was a method of recording of product sales that resulted in a $1.24 million overstatement of revenue. Another problem was noted in contracts where cities paid the vendor on a per-ticket basis. The company recorded revenue based on the numbers of citations issued, rather than upon the actual, collected tickets. This change resulted in an overstatement of revenue of $243,000 over three years, and an understatement of $59,000 in 2004.
Nestor stock had plunged on the announcement and is currently off 20 percent from its peak in late November.