This excerpt taken from the CHRD 8-K filed Dec 6, 2005.
Item 8.01 Other Events
In completing its assessment of the effectiveness of its internal control
over financial reporting, the Company determined that certain material
weaknesses (as defined below) in the Company's internal control over financial
reporting existed as of September 30, 2005. Management determined that the
Company did not maintain effective control over its accounting for its non-cash
stock-based compensation and related financial statement disclosures, since the
method by which the Company originally valued the common stock and amortized
deferred stock-based compensation for such common stock were determined to be
incorrect. In addition, management determined that the Company did not maintain
effective control over the preparation of its Statement of Cash Flows, in
particular, with regard to the classification of cash expenditures for certain
capitalized costs. Management has concluded that each of these matters
constitutes a material weakness in internal control over financial reporting.
Each of these matters is described in more detail in Item 4.02
Item 9.01 Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Chordiant Software, Inc.