Sutron (STRN) Says Prior Financial Statements Should Not be Relied Upon
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Price: $1.34 --0%
Financial Fact:
Cost of sales and revenues: 3.17M
Today's EPS Names:
CP, RUSHA, SEIC, More
Financial Fact:
Cost of sales and revenues: 3.17M
Today's EPS Names:
CP, RUSHA, SEIC, More
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Sutron (NASDAQ: STRN) disclosed the following on Thursday afternoon:
On March 20, 2015, the audit committee of the Company’s board of directors, upon the recommendation of management and after discussion with our independent registered public accounting firm, Yount, Hyde & Barbour, P.C. has concluded that the previously issued interim financial statements contained in our Form 10-Qs for the three months ended March 31, 2014, the six months ended June 30, 2014, and the nine months ended September 30, 2014, should no longer be relied upon because of errors in those financial statements.
The errors were identified by the Company during its annual review process and relates to overstating the costs associated with the Company’s service department. The Company’s service department repairs products either under warranty or for a fee (“costed repairs’). The Company’s accounting system is set up to accumulate service department repair costs in two places, costs of goods sold for costed repair orders and costs accumulated that are recorded when the customer is invoiced for a particular repair order. Historically, to avoid double counting the service department costs, a manual entry has been performed to reverse the costs the system records for costed repair orders. In the 2014 year-end review process, it was discovered that the manual entry to reverse the costs the system records for costed repair orders was not made for the first three quarters of 2014. This overstatement of cost was confined solely to the 2014 quarterly statements. The adjustments to remove these costs from each respective 2014 quarter had no impact on the Company’s liquidity or cash position. The amounts to be restated are as follows:
Quarter Ended | Originally Reported Earnings/(Loss) Before Tax (“EBIT”) | Increase in EBIT | Restated EBIT | Originally Reported Net Income/(Loss) | Increase in Net Income/(Loss) | Restated Net Income/(Loss) | ||||||||||||||||||
March 31, 2014 | $ | (964,131 | ) | $ | 74,247 | $ | (889,884 | ) | $ | (587,476 | ) | $ | 47,258 | $ | (540,218 | ) | ||||||||
June 30, 2014 | $ | 303,242 | $ | 76,422 | $ | 379,664 | $ | 205,765 | $ | 48,429 | $ | 254,194 | ||||||||||||
September 30, 2014 | $ | 196,275 | $ | 50,029 | $ | 246,304 | $ | 117,774 | $ | 32,559 | $ | 150,333 | ||||||||||||
Our management identified the error with respect to the cost calculation in its review of its 2014 records, and our audit committee and management immediately discussed the matter disclosed in this Item 4.02 with our independent registered public accounting firm, Yount, Hyde & Barbour, P.C. at the March 20, 2015 audit committee meeting of the Company’s board of directors.
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