CFO fired and CEO suspended following accounting irregularities

SAExploration has fired CFO Brent Whiteley and suspended CEO Jeff Hastings following an investigation by the Securities and Exchange Commission (SEC) into accounting irregularities. As a result, the Board of SAE has concluded that the financial statements going back to 2015 contain errors and need be restated.

Alaskan Seismic Ventures

SAE is a seismic services company that has its head office in west Houston. The accounting issues pertain to Alaskan Seismic Ventures (‘ASV’). The Board has now decided that ASV is a variable interest entity and that the company had a controlling interest in ASV that required it to consolidate ASV into its financial statements.

There is no mention of Alaskan Seismic Ventures in the annual report for 2017 and 2018. However in the reports for 2015 and 2016, the company disclosed that ASV was a major customer.

Overdue Accounts Receivable

It appears that ASV were receiving state of Alaska exploration tax credits but was unable to pay SAE until it received reimbursement from the state. During 2016, it assigned the credits to the company so that SAE could seek to monetize the tax credits and apply cash received to the overdue accounts receivable.

Because of budget constraints in the state of Alaska, the tax credits will probably not be paid until 2021. The company still has $53 million outstanding from ASV at December 31, 2018. That’s considerably more than the net assets of $15.4 million!

New interim management team

Mr Whiteley joined SAE in March 2010 as CFO & General Counsel. Mr Hastings has been the Chairman since 2013 and CEO since 2016 and has extensive experience in Alaska.

Kevin Hubbard, a partner at Ham, Langston & Brezina (and a former partner at BDO) has been appointed interim CFO,

Michael Faust, current lead independent Director, has been appointed Chairman of the Board, following Mr Hastings’ resignation as Chairman.

[UPDATE 08-22-19 – Mr Faust will be getting a salary of $100,000 a month, and a sign-on bonus of $1 million].

SAE’s shares plunged 32% to $2.22 on the news. Its market capitalization is now $14 million.

SEC Filing – SAExploration


2 thoughts on “CFO fired and CEO suspended following accounting irregularities

    1. Andrew Jowett Post author

      They have not filed any restated financials yet. On January 10, Nasdaq gave them an extension to file the delinquent filings or face delisting. New deadline is February 11, 2020.


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