Log on America Inc., the embattled provider of business-communication technologies, is expected to announce its fourth-quarter and 2001 financial results this week – six weeks behind schedule.
A recent press release from Log on America said the delay in filing its earnings “has been the result of administrative changes.” The same release, dated April 22, said the earnings announcement was scheduled for May 1, but it has since been pushed back to May 14.
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On April 1, Log on America filed a “notification of late filing” with the U.S. Securities and Exchange Commission. The filing said that the company’s 10-K, its annual report, could not be submitted on time because of “temporary shortages in the (the company’s) staff responsible for the preparation of financial information.”
The SEC gives late-filing companies 15 calendar days from the notification of late filing to submit the required report, which means Log on America would have had until April 15 to file its annual report.
That document still did not appear on the SEC’s Web site as of May 8, though it could not be determined whether it had been submitted.
An employee who answered the phone at Log on America’s Providence headquarters last week said company officials “have no comment” on further details as to why filing of the company’s 10-K report had been delayed.
David Paolo, Log on America’s founder, president and chief executive officer, did not return calls from the Providence Business News.
The company’s few remaining large shareholders have been able to get little information recently about the company’s financial health.
“Clearly they’re in a communication void right now,” said Brian Hathaway, vice president of Connecticut-based Hathaway & Associates, now Log on America’s largest institutional shareholder, with 65,900 shares. “We haven’t heard from them for months as it relates to their year-end auditing.”
Not that the investment firm had been eagerly awaiting the release of the annual report. Hathaway concedes that the investment firm’s holdings in Log on America essentially slipped through the cracks of its portfolio, which has roughly $300 million invested in about 150 companies, he said.
It doesn’t make sense to sell its Log on America stock now, Hathaway said, because the firm’s 65,900 remaining shares – once worth between $1 million and $2 million – now have a value of around $10,000. He said he would rather wait to see if the stock makes a small comeback.
“If this stock price were at 20 bucks, (the delay in filing) would be something to worry about and stay on top of,” Hathaway said. “But quite frankly, with the stock where it is, we’re not too concerned about it.”
Most other institutional investors in Log on America, including Fleet Investment Advisors, Deutsche Asset Management and Northern Trust Co., dumped their remaining shares toward the end of last year, according to SEC filings.
After plunging to a low of 4 cents a share earlier this year – following its November delisting from the Nasdaq stock exchange – Log on America’s stock made a brief comeback to the 50-cent mark after news this spring that it sold its residential Internet dial-up business to Earthlink for $3.8 million.
But the stock has come under pressure again in recent weeks, and stood at 17 cents as of last week, when Log on America’s market capitalization totaled about $1.4 million.
In its most recent quarterly filing, on Nov. 20, Log on America reported that it had $2 million in cash, but it had accumulated $28 million in losses during the year. The company stated in the report that “the inability to obtain additional financing or funding, when needed, would have a negative effect on us, including possibly requiring us to curtail or cease operations.”
Last week, Log on America announced that it had obtained $1 million in financing from Silicon Valley Bank, and said the proceeds would be used to retire capital lease obligations.
