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The Company said it currently anticipates that it will file amendments to its previously filed Forms 10-Q for the three months ended March 31, and the three and six months ended June 30, to reflect the restatements no later than Oct. 2. The Company said it currently believes that no other periods are affected by these errors.
During the quarter ended March 31, the Company repaid a total of approximately $10 million to its lender in connection with the reduction of its acquisition related debt. Approximately $7 million of the $10 million repayment was related to the term loan portion of the Company's credit facility. In conjunction with the $7 million repayment, the Company did not accelerate a pro-rata portion of the deferred financing costs and debt discount corresponding with the partial repayment of the term loan. Additionally, for the six months ended June 30, the Company incorrectly classified the issuance of a note relating to a purchase price adjustment on a previous acquisition as a cash item in its Condensed Consolidated Statement of Cash Flows rather than a supplemental disclosure item.
The company said it is anticipated that the correction of the first issue will result in a non-cash increase in interest expense of approximately $541,000 for the three months ended March 31, and a corresponding decrease in interest expense of approximately $81,000 for the three months ended June 30, as a result of lower amortization expense going forward. After considering related adjustments to taxes, it is anticipated that net income will decrease by approximately $388,000 to a restated net income of $4,885,000 for the quarter ended March 31. The net loss for the three months ended June 30, is expected to improve by approximately $53,000 to a net loss of $461,000 for the quarter. The corresponding balance sheet accounts and cash flow statements will be adjusted for the respective periods as well.
It is anticipated that the correction of the second issue will result in adjustments to the Company's Condensed Consolidated Statement of Cash Flows for the six months ended June 30. The adjustments are anticipated to include an increase to "net cash provided by investing activities" of approximately $3.3 million, a corresponding decrease to "net cash used in financing activities" for the same amount and a newly added supplemental disclosure of approximately $3.3 million as a non-cash financing activity. These adjustments will have no effect on the "Net increase (decrease) in cash and cash equivalents" nor will they affect the ending "Cash and cash equivalents at the end of the period" for the six months ended June 30.
The Company's management, Audit Committee and independent registered public accounting firm have discussed the matters disclosed in this press release.
Emrise designs, manufactures and markets electronic devices, sub-systems and equipment for aerospace, defense, industrial and communications markets.
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www.emrise.com
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The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
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