UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: May 31, 2008
[ ]_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 000-32475
ASTRATA GROUP INCORPORATED
(Name of small business issuer in its charter)
| NEVADA | | 84-1408762 |
| (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | | |
950 South Coast Dr., Suite 265, Costa Mesa, California940 SOUTH COAST DRIVE, SUITE 215, COSTA MESA, CALIFORNIA | | 92626 |
| (Address of principal executive offices) | | (Zip Code) |
Issuer’s telephone number (714) 641-1512
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.0001
(Title of class)
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 [X] No [ ][_]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ][_] No [X]
State the number of shares outstanding of each of the issuer's classes of common equity, as of June 30, 2008: 28,524,244
Transitional Small Business Disclosure Format (Check One): Yes [ ][_] No [X]
Item 3: Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of May 31, 2008, Company management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded that as of May 31, 2008, the Company's disclosure controls and procedures are not effective for the purposes of recording, processing, summarizing and timely reporting of material information relating to the Company and required to be included in its periodic reports.
For the reasons discussed in “Management’s Report on Internal Control over Financial Reporting” below, Company management, including the Chief Executive Officer and Chief Financial Officer concluded that, as of May 31, 2008, the Company’s internal control over financial reporting was not effective due to material weaknesses in internal control over financial reporting. Notwithstanding the identified control deficiencies, management has concluded that the condensed consolidated financial statements included in this quarterly report present fairly, in all material respects, the Company’s financial position, results of operations, and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
Management’s Report on Internal Control over Financial Reporting
Management used its knowledge and understanding of the Company’s organization, operations, and processes to determine, in its judgment, the sources and potential likelihood of misstatements in financial reporting. Management also considered in its assessment the Company’s size and complexity.
Specifically, Company management identified certain matters involving internal control and the Company’s operations that it considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board (“PCAOB”). These material weaknesses involved:
| · | Ineffective controls over the period-end closing and financial reporting processes. This is caused by the weakness of controls over the closing protocols for the Company and its subsidiaries as well as the consolidation of all subsidiaries. |
| · | Lack of uniform internal controls and procedures designed to formalize documentation of its accounting and operational policies and procedures. |
| · | Inadequate financial reporting systems without standardization of the processes for the Company and its subsidiaries. This is caused by the lack of formal policies and procedures to address financial functions and disciplines. |
| · | Ineffective controls to provide the necessary documentation and procedures to assure that employee information, benefits and policies are accurate and timely administered. |
Company management is taking steps to remediate these weaknesses in the Company’s internal control environment, including:
| · | Establishing effective controls over the period-end closing and financial reporting processes. This will require enhancement of closing protocols for both the Company and its subsidiaries, as well as, the consolidation of all subsidiaries. |
| · | Establishing formal policies and procedures to address all material financial functions and disciplines. Management’s implementation of these policies and procedures will include appropriate staff enhancement and training to ensure financial reporting competencies are strengthened. |
| · | Implementing a new accounting software package to standardize the financial reporting process for the Company and its subsidiaries as well as automating the consolidation of all subsidiaries. |
| · | Enhancing Human Resource functions to provide the necessary documentation and procedures to assure that employee information, benefits and policies are accurate and timely administered. |
| · | Retaining the services of a third-party consulting firm to assist Company management with on-going compliance with Section 404 of the Sarbanes-Oxley Act of 2002 (SOX). |
| · | Developing and implementing a formal, top-down, risk-based approach to the evaluation of the Company’s internal control over financial reporting, in accordance with recent interpretative guidance from the SEC. Management is further utilizing a risk-based approach to remediate the control weaknesses identified as part of its assessment of the Company’s internal control environment. |
Management has evaluated the impact of these gaps on the Company’s internal control over financial reporting (ICFR) and is now utilizing its risk-based approach to designing controls to remediate these gaps as part of its implementation of the Company’s SOX Compliance Plan, during fiscal year 2009.
Company management will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional improvements, as necessary and as funds allow.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ASTRATA GROUP INCORPORATED
By: | /s/ THOMAS A. WAGNER | | Date: November 21, 2008 |
| Thomas A. Wagner
Chief Financial Officer
| | |