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Star Scientific Announces Retention of Cherry, Bekaert as Independent Public Accounting Firm and Receipt of Notice of Deficiency and Subsequent Compliance from NASDAQ Staff
PETERSBURG, Va.-(Business Wire)-April 18, 2008 - Star Scientific, Inc. (NASDAQ:STSI) announced that Aidman, Piser & Company, P.A., its independent registered public accounting firm, has entered into an agreement with Cherry, Bekaert & Holland, LLP under which Aidman Piser contemplates merging its operations into Cherry, Bekaert. Accordingly, on April 14, 2008, Aidman Piser resigned as the company's independent registered public accounting firm and concurrently, Star Scientific's Audit Committee engaged Cherry, Bekaert as the company's independent registered public accountant.
The company also announced that it received a letter today from Nasdaq Staff noting the company's prior lack of compliance with Marketplace Rule 4350(d)(2)(A) and its subsequent compliance with the rule through remediation by the company. As the company disclosed in Item 9A of its Annual Report for 2007 on Form 10-K (which was filed on March 17, 2008), a series of additional fees for services as a director totaling $26,000 were paid to Dr. Christopher Chapman in April - June, 2007, beyond those paid for attendance at meetings. Dr. Chapman is a member of Star Scientific's Board of Directors and Audit Committee. Dr. Chapman offered and agreed to offset those additional fees against customary board fees earned in 2008. On April 17, through both those offsets and a payment of $500, the additional fees for 2007 were fully repaid.
Today's letter from Nasdaq Staff stated that prior to the full repayment the company had not been in compliance with Marketplace Rule 4350(d)(2)(A), which requires that audit committee members are barred from accepting any consulting, advisory or other compensatory fee from an issuer or any of the issuer's subsidiaries, other than in their capacity as a committee and/or board member. Absent the remediation of the deficiency, Dr. Chapman would not have been eligible to continue to serve on the company's Audit Committee. The Nasdaq letter stated further that as a result of the repayment, the company is in compliance with the rule, and the matter now is closed.
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company has tried, whenever possible, to identify these forward-looking statements using words such as "anticipates", "believes", "estimates", "expects", "plans", "intends" and similar expressions. These statements reflect the Company's current beliefs and are based upon information currently available to it. Accordingly, such forward-looking statements involve known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance or achievements to differ materially from those expressed in, or implied by, such statements. These risks, uncertainties and contingencies include, without limitation, the challenges inherent in new product development initiatives, particularly in the smokeless tobacco area, the uncertainties inherent in the progress of scientific research, the Company's ability to raise additional capital in the future necessary to maintain its business, potential disputes concerning the Company's intellectual property, risks associated with litigation regarding such intellectual property, potential delays in obtaining any necessary government approvals of the Company's low-TSNA tobacco products, market acceptance of the Company's new smokeless tobacco products, competition from companies with greater resources than the Company, the Company's decision not to join the Master Settlement Agreement ("MSA"), the effect of state statutes adopted under the MSA, and the Company's dependence on key employees and on its strategic relationships with Brown & Williamson Tobacco Corporation in light of its combination with RJ Reynolds Tobacco Company, Inc. The impact of potential litigation, if initiated against or by individual states that have adopted the MSA, could be materially adverse to the Company.
See additional discussion under "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the SEC on March 17, 2008, and other factors detailed from time to time in the Company's other filings with the SEC, available at www.sec.gov. The Company undertakes no obligation to update or advise upon any such forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
About Star Scientific
Star Scientific is a technology-oriented tobacco company with a toxin reduction mission. It is engaged in the development of dissolvable smokeless tobacco products that deliver fewer carcinogenic toxins (principally tobacco specific nitrosamines, or TSNAs), through the utilization of the innovative StarCured(R) tobacco curing technology, and in sublicensing that technology to others. Star Scientific has a Corporate and Sales Office in Petersburg, VA, an Executive, Scientific & Regulatory Affairs office in Bethesda, MD, and manufacturing and tobacco processing facilities in Chase City, VA and in Petersburg, VA.
See Star's website at: http://www.starscientific.com
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