Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
Subsequent to the filing of its Annual Report on Form 10-K for the fiscal year
ended
“Company”) re-evaluated its application of ASC Subtopic 205-40, Presentation of
Financial Statements-Going Concern (“ASC 205-40”) as of
of the Original 10-K. Under ASC 205-40, the Company has the responsibility to
evaluate whether conditions and/or events raise substantial doubt about its
ability to meet its obligations as they become due within one year after the
date that the financial statements are issued. In re-performing this evaluation
as of the date of the Original 10-K, the Company determined the need to take
into account the potential impact of certain true-up guaranties that the Company
had issued in connection with the Revolving Loan Exchange and Prepayment
Agreement, dated
in its assessment. If the Company had taken the true-up guaranties into account
in addition to other existing factors, the Company may not have had sufficient
liquidity under its financial model to fund payment of this true-up obligation
in addition to its other commitments for the twelve months following the date of
the Original 10-K.
Based on this evaluation, management has determined that if that contingent
liability created by the true up guaranty were to settle within one year from
continue as a going concern for the twelve months following the date of the
Original 10-K, which determination should have been disclosed in the Company’s
previously issued audited financial statements included in the Original 10-K
(the “audited financial statements”).
As a result of the foregoing, on
Company’s board of directors concluded, after discussion with the Company’s
management, that the audited financial statements included within the Original
10-K should be restated and should no longer be relied upon. As such, the
Company intends to restate the audited financial statements and related notes in
Amendment No. 2 to the Original 10-K, to be filed with the
to restate management’s conclusion that substantial doubt exists and to include
appropriate related disclosures and to reclassify certain long-term debt from
noncurrent to current, as discussed below (the “Restatement”).
The Amendment includes reissued audit reports from
Company’s independent registered public accounting firm, due to the Restatement
and other limited related changes to Part II, Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations, and Part II, Item
9A. Controls and Procedures. As result of issuance of an amended audit report
including a going concern explanatory paragraph, the Company determined that the
amount owed under a credit facility which is no longer existing as of the date
of this report would become current, and accordingly restated it from noncurrent
to current classification in the restated balance sheet as of
The above changes did not have an effect on retained earnings, or other
components of equity or net assets of the Company and result from management’s
conclusion that substantial doubt exists and the amended audit reports issued by
The Company has discussed with
The Amendment is being filed concurrently with this report.
2
© Edgar Online, source
