I'm shocked (shocked!) to hear that Law Enforcement Associates (AMEX:AID) will have to delay its annual filing and restate earnings. Oh, and losses, too.

OK, I'm not shocked. This is the kind of thing I've come to expect from penny-stock superstars that are long on dreams but shorter on execution. Ever since this company burst onto the public stage with promises of a stun gun to rival that of TASER International (NASDAQ:TASR), I've been pretty skeptical about its claims. I wasn't the only one, of course. The New YorkPost's Chris Byron wrote about the tangle of shell companies and stock promoters that intersected at LEA. After peaking at eight bucks a share back in January of 2005 -- when insiders started cashing out, curiously enough -- it has now cratered to $1.60 a share.

The company declined to describe the financial extent of the restatement, but, timewise, it goes back through the fiscal year that ended in December 2004, and management mentioned that it has something to do with its costs and revenue recognition.

But hey, let's try and be positive! This restatement could be minor, and I'll give the firm a straight-up, hearty golf clap for not using the word impact as a verb. Instead they say that "the adjustments will have a negative impact on previously reported revenues, net earnings and losses, and balance sheets."

But even if this is just a minor blip, a trip to the (now-defunct) sheets suggests that there's little here worth the price. I mean, the fall 10-Q reports $14,000 cash on the balance sheet. I like a lean cash position, but come on! Accounts receivable increased by a million bucks over the nine-month period. Free cash flow? Grab a flashlight and try to find it. This was already ugly. I hate to see what worse will look like.

I have a feeling I know. That's because it doesn't look like the story is going to pan out as hoped. As of December, LEA's much-vaunted stun gun had yet to even enter production. And to judge by the slim top-line action at TASER, this type of product isn't as easy to move as everyone originally wanted us to believe.

Furthermore, as of Jan. 9, LEA was continuing to compensate outfits like "homelanddefensestocks.com" to promote it. Just so you know what that firm is all about, here's a few snippets from the disclosure statements of InvestorIdeas, its parent site:

  • "InvestorIdeas.com and or staff may hold positions in stocks from time to time separate from compensation."
  • "Out [sic.] site is an advertising and online marketing portal only, that is industry specific and targeted. Our content, articles, conferences, and blogs create visibility for our clients."

Well, LEA has some real press visibility today, thanks to the restatement. Maybe this is the kind of "visibility" investors ought to view more closely.

TASER International is a Motley Fool Rule Breakers recommendation.

At the time of publication, Seth Jayson had no positions in any company mentioned here. View his stock holdings and Fool profile here. Fool rules are here.

Please join us tomorrow at Fool.com for an important announcement.