The SEC has long delayed the implementation of SOX for companies with less than $75 million in market capitalization, thus delaying the costs of implementing and reporting under the regulation. Conservative costs are that first year costs of SOX compliance can be more than $1 million and that on-going costs run just under $.5 million per year. It looks like the delays are over (see report at end of this post). Since RFMI's annual year ends on August 31st, they won't be subject to this new regulation until next year, so we dodged a near term bullet, but we will be faced with this incremental cost next year. It was questionable if small companies like RFMI should even be public, and now with these additional costs being imposed, it might make sense to try to buy out the shareholders and return to a private company where SOX compliance is not required.

This will not only impact RFMI, but any company with market capitalization less than $75 million. This could flush out quite a few of those companies "just hanging on" into going private.

Portion of press release from KForce regarding SOX compliance deadlines:

No More 404(b) Compliance Delays Expected for Non-Accelerated Filers
The Securities and Exchange Commission (SEC) has been sending clear signals in recent months that there will be no further postponements for non-accelerated filers to comply with SOX Section 404(b), which requires an auditor’s attestation on internal controls over financial reporting.



Compliance with 404(b) had been delayed three times for public companies with market caps below $75 million. But all indications are that delays are over and the first attestations will be required with annual reports filed for the fiscal year ending on or after Dec. 15, 2009.