March 29, 2006
I support the proposed Committee recommendations. As a microcap company, Embrex has invested heavily to become SOX-compliant. In 2004, this cost our shareholders approximately $1.5 million or 3% of revenue and 33% of 2004 pre-tax income. We have no intention in disassembling our internal control investment, since we remain liable for certifiying our financial statements. However, eliminating the requirement to pay third parties to assist in management testing of internal controls and then incurring additional fees for our independent auditors to test internal controls would alleviate us of at least $1.0 million of annual expense that could be reinvested on behalf of our shareholders.
I believe your recommendations are worth implementing. At worst, these could be withdrawn if public companies fail to take advantage of this reprieve through self-enforcement. In addition, current SEC enforcement regulations remain a potent and effective deterent against management and boards who fail to execute their corporate governance responsibilities.
Thanks for giving us the opportunity to comment and for taking this bold initiative.