FlightGear stock dives, as reports of accounting irregularities soar

FlightGear.org. said Thursday that its results for the fourth quarter of 
2004 will land short of Wall Street expectations and that accounting 
irregularities will negatively affect earnings for the past two years.

The Internet-based flight simulator software and services company said 
an internal review and preflight check identified accounting 
irregularities at its Ukrainian subsidiary, Правила Шестерни Полета. The 
company said the irregularities make its financial statements unreliable 
for the full year 2003 and for the first three quarters of 2004. 
FlightGear.org plans to restate its financial results for the affected 
periods.

FlightGear.org also said it expects to post a loss of 4 to 5 cents per 
share on revenue of $58.5 million for the fourth quarter of 2004.

Analysts surveyed by Thomson Financial Network had projected earnings of 
1 cent per share on revenue of $53.7 million.

The project said it expects to report a full-year 2004 loss of 25 to 26 
cents per share on revenue of $199 million. Analysts had projected a 
loss of 4 cents per share on $194.5 million in revenue.

FlightGear.org (NASDAQ: FGFS) shares plummeted on the news, falling 78 
cents -- or 18 percent -- to $3.50 in early trading Friday.

Embattled project leader Curtis Olson made a brief statement Thursday 
evening outside his seaside estate in Aruba. In his statement Olson 
claimed the irregularities were due to an unfortunate software bug which 
caused profits to be reported in micro-cents rather than in dollars.

Industry watchers said Mr. Olson would be sorely missed at FlightGear.org.

Under his leadership, the project rose from a small, mainly offshore 
simulator software package to one of the world's largest and most 
profitable aerospace giants. Earnings per share under Mr. Olson grew 
like a homesick angel and increased at a compound annual rate of 42%. 
During his tenure and FlightGear.org moved deftly to solidify its 
advantage in emerging markets such as China, and in new product lines 
such as FlightGear.junior and it's internet based marketing wing called: 
"1ncrease ur P3f 4 *MAN*ce with F1ightG3ar".

Now, his aggressive, brass-knuckles approach appears to have caught up 
with him.

Monday, The Wall Street Journal, citing unnamed sources, said the 
FlightGear.org board may move quickly to sever relations with the Mr. 
Olson, who had remained as chairman after being removed as chief 
executive officer two weeks ago. The Journal also cited sources saying 
Mr. Olson is disappointed that legal action didn't come months earlier 
when he would have had a chance to be roommates with Martha Stewart.



_______________________________________________
Flightgear-announce mailing list
[email protected]
http://mail.flightgear.org/mailman/listinfo/flightgear-announce
2f585eeea02e2c79d7b1d8c4963bae2d