TMCnet News
TOROTEL INC FILES (8-K) Disclosing Non-Reliance on Previous Financials, Audits or Interim Review(Edgar Glimpses Via Acquire Media NewsEdge) Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. On July 20, 2011, management of Torotel Inc. ("the Company") and Torotel's Audit Committee of the Board of Directors (the "Audit Committee"), concluded that the Company's condensed consolidated financial statements contained in its Form 10-Q for the quarterly period ended January 31, 2011 should no longer be relied upon following the Company's completion of an evaluation of the costing of its inventory. A new enterprise resource planning system (the "ERP system") was implemented on November 1, 2010. After recognizing irregularities in certain inventory cost calculations connected to the ERP system, management initiated an evaluation of the costing of inventory. As a result, the Company determined that the ERP system incorrectly calculated the average unit cost on several raw material inventory items as of January 31, 2011. In addition, management reviewed revenue and accounts payable and found some irregularities in those areas resulting from the ERP system. Management discussed this matter with the Company's independent registered accounting firm and with the Audit Committee. After careful consideration, management and the Company's independent registered accounting firm are in agreement that the Company's previously issued condensed consolidated financial statements contained in the Company's Form 10-Q for the quarterly period ended January 31, 2011 should be restated to accurately reflect the value of inventory, revenue and accounts payable. This adjustment is anticipated to result in a net $115,000 decrease to the inventory balance and a $27,000 decrease to the accounts payable balance on the condensed consolidated balance sheet for the period ending January 31, 2011; a $10,000 increase in net sales, an $88,000 increase in cost of goods sold, and a $78,000 decrease in net earnings on the consolidated statement of operations for the nine months ended January 31, 2011; and a $10,000 increase in net sales, an $88,000 increase in cost of goods sold, and a $78,000 increase in the net loss on the consolidated statement of operations for the three months ended January 31, 2011. Management will file an amended quarterly report on Form 10-Q/A for the period ended January 31, 2011 with the restated financial statements as soon as reasonably practicable upon completion of final reviews and subsequent to the filing of the Company's annual report on Form 10-K for the year ended April 30, 2011. This Current Report on Form 8-K contains forward-looking statements regarding the Company based on current expectations. Those forward-looking statements include all statements other than those made solely with respect to historical fact. Numerous risks, uncertainties and other factors may cause actual results to differ materially from those expressed in any forward-looking statements. Factors that could affect our forward-looking statements include, among other things: the review of the January 31, 2011 fiscal quarter financial statements, the audit of the April 30, 2011 fiscal year financial statements and our ability to manage our operations during and after the financial statement restatement process. The Company does not undertake any obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. -------------------------------------------------------------------------------- |