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RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 9 Months Ended
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Sep. 30, 2013
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS |
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | NOTE 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Background on the Restatement On January 31, 2014, the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that the previously issued financial statements contained in the Company’s quarterly reports on Form 10-Q for the periods ended March 31, 2013, June 30, 2013 and September 30, 2013 should no longer be relied upon because of errors in those financial statements. In addition to the financial statements for these periods, related press releases furnished on Current Reports on Form 8-K and reports and stockholder communications describing its financial statements for these periods should no longer be relied upon. The errors relate to the overstatement of cost of sales in the total amount of approximately $938 during the nine months ended September 30, 2013. The overstatement arose in, and was included in the results of, the Company’s Towers and Weldments segment. The Audit Committee completed an independent investigation into the identified errors, which determined that accounting personnel in the Towers and Weldments segment intentionally created reserves in the aforementioned quarters in a manner inconsistent with generally accepted accounting principles and the Company’s own accounting policies and procedures. Coincident with restating its financial statements due to the above mentioned error, the Company also adjusted the financial statements to address unrecorded adjustments which were previously deemed insignificant. The restatement adjustments did not impact the Company’s previously reported tax provision or benefit in any of the affected periods, as the Company has recorded full valuation allowances against net deferred tax assets and loss carryforwards. Restatement Adjustments - Three Months Ended September 30, 2013 Adjustments Related to Towers and Weldments Overstatement of Cost of Sales The Towers and Weldments cost of sales was originally overstated by $244 during the quarter ended September 30, 2013. The restated results reflect an increase in gross profit and a decrease in accounts payable of $244 for the quarter. Other Operating Statement Adjustments Other adjustments were made to correct items previously identified but deemed immaterial to the Company’s financial statements, the principal changes are described as follows. Towers and Weldments revenue was decreased by $1,574 and related cost of sales decreased by $1,169 to correct revenue recognition timing errors related to certain tower transactions. Gearing cost of sales was decreased by a $278 charge to inventory reserves to adjust the inventory to its lower of cost or market value. The impact of other miscellaneous adjustments resulted in an increase to cost of sales of $55 and a decrease to selling, general, and administrative expenses of $31. Restatement Adjustments — Nine Months Ended September 30, 2013 Adjustments Related to Towers and Weldments Understatement of Cost of Sales During the nine months ended September 30, 2013, the Towers and Weldments cost of sales was originally overstated by $938. The restated results reflect an increase in gross profit and a decrease in accounts payable of $938. Other Adjustments Other adjustments were made to correct items previously identified but deemed immaterial to the Company’s financial statements, the principal changes are described as follows. Towers and Weldments revenue was decreased by $150 and related cost of sales decreased by $162 to correct revenue recognition timing errors related to certain tower transactions. Gearing cost of sales was decreased by a $68 adjustment to inventory reserves to adjust the inventory to its lower of cost or market value. The impact of other miscellaneous adjustments resulted in an increase to cost of sales of $135 and a decrease to selling, general, and administrative expenses of $67. Balance Sheet Adjustments The primary impact to the balance sheet were changes to the accounts receivable, inventory, accounts payable and accumulated deficit accounts related to items described in the above sections. Statement of Cash Flow Adjustments In addition to the effect of the above transactions, purchases of property and equipment and principal payments on capital leases were adjusted by $1,610 to properly present a capital lease transaction as non-cash. The unaudited restated condensed consolidated balance sheet as of September 30, 2013 is presented below (in thousands, except per share data):
|  | September 30, 2013 |
|  | As Previously Reported |  | Restatement Adjustments |  | Restated |
ASSETS |  |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 22,826 |  | $ | — |  | $ | 22,826 |
Short-term investments |  | 867 |  | — |  | 867 |
Restricted cash |  | 331 |  | — |  | 331 |
Accounts receivable, net of allowance for doubtful accounts of $179 and $453 as of September 30, 2013 and December 31, 2012, respectively |  | 21,927 |  | (150 | ) | 21,777 |
Inventories, net |  | 32,625 |  | 231 |  | 32,856 |
Prepaid expenses and other current assets |  | 2,532 |  | — |  | 2,532 |
Assets held for sale |  | 2,152 |  | — |  | 2,152 |
Total current assets |  | 83,260 |  | 81 |  | 83,341 |
Property and equipment, net |  | 72,761 |  | — |  | 72,761 |
Intangible assets, net |  | 6,014 |  | — |  | 6,014 |
Other assets |  | 2,194 |  | — |  | 2,194 |
TOTAL ASSETS |  | $ | 164,229 |  | $ | 81 |  | $ | 164,310 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |
Lines of credit and notes payable |  | $ | — |  | $ | — |  | $ | — |
Current maturities of long-term debt |  | 342 |  | — |  | 342 |
Current portions of capital lease obligations |  | 1,308 |  | — |  | 1,308 |
Accounts payable |  | 29,063 |  | (938 | ) | 28,125 |
Accrued liabilities |  | 6,961 |  | 69 |  | 7,030 |
Customer deposits |  | 21,482 |  | — |  | 21,482 |
Liabilities held for sale |  | — |  | — |  | — |
Total current liabilities |  | 59,156 |  | (869 | ) | 58,287 |
LONG-TERM LIABILITIES: |  |  |  |  |  |  |
Long-term debt, net of current maturities |  | 2,757 |  | — |  | 2,757 |
Long-term capital lease obligations, net of current portions |  | 1,431 |  | — |  | 1,431 |
Other |  | 3,342 |  | — |  | 3,342 |
Total long-term liabilities |  | 7,530 |  | — |  | 7,530 |
COMMITMENTS AND CONTINGENCIES |  |  |  |  |  |  |
STOCKHOLDERS’ EQUITY: |  |  |  |  |  |  |
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding |  | — |  | — |  | — |
Common stock, $0.001 par value; 30,000,000 shares authorized; 14,563,228 and 14,197,792 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively |  | 15 |  | — |  | 15 |
Additional paid-in capital |  | 375,542 |  | — |  | 375,542 |
Accumulated deficit |  | (278,014 | ) | 950 |  | (277,064 | )
Total stockholders’ equity |  | 97,543 |  | 950 |  | 98,493 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |  | $ | 164,229 |  | $ | 81 |  | $ | 164,310 |
The unaudited restated condensed quarterly consolidated statement of operations for the three months ended September 30, 2013 is presented below (in thousands, except per share data):
|  | Three Months Ended September 30, |
|  | As Previously Reported |  | Restatement Adjustments |  | Restated |
Revenues |  | $ | 62,436 |  | $ | (1,574 | ) | $ | 60,862 |
Cost of sales |  | 56,783 |  | (1,636 | ) | 55,147 |
Restructuring |  | 1,097 |  | — |  | 1,097 |
Gross profit |  | 4,556 |  | 62 |  | 4,618 |
OPERATING EXPENSES: |  |  |  |  |  |  |
Selling, general and administrative |  | 5,247 |  | (31 | ) | 5,216 |
Intangible amortization |  | 111 |  | — |  | 111 |
Regulatory settlement |  | 1,500 |  | — |  | 1,500 |
Restructuring |  | 79 |  | — |  | 79 |
Total operating expenses |  | 6,937 |  | (31 | ) | 6,906 |
Operating loss |  | (2,381 | ) | 93 |  | (2,288 | )
OTHER INCOME (EXPENSE) , net: |  |  |  |  |  |  |
Interest expense, net |  | (177 | ) | — |  | (177 | )
Other, net |  | (4 | ) | — |  | (4 | )
(Loss) gain on sale of assets and restructuring |  | (1 | ) | — |  | (1 | )
Total other income (expense), net |  | (182 | ) | — |  | (182 | )
Net loss from continuing operations before provision for income taxes |  | (2,563 | ) | 93 |  | (2,470 | )
Provision (benefit) for income taxes |  | 28 |  | — |  | 28 |
LOSS FROM CONTINUING OPERATIONS |  | (2,591 | ) | 93 |  | (2,498 | )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX |  | 100 |  | — |  | 100 |
NET LOSS |  | $ | (2,491 | ) | $ | 93 |  | $ | (2,398 | )
NET LOSS PER COMMON SHARE - BASIC AND DILUTED: |  |  |  |  |  |  |
Loss from continuing operations |  | $ | (0.18 | ) | $ | (0.00 | ) | $ | (0.18 | )
Loss from discontinued operations |  | 0.01 |  | — |  | 0.01 |
Net loss |  | $ | (0.17 | ) | $ | (0.00 | ) | $ | (0.17 | )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted |  | 14,525 |  |  |  | 14,525 |
The unaudited restated condensed quarterly consolidated statement of operations for the nine months ended September 30, 2013 is presented below (in thousands, except per share data):
|  | Nine Months Ended September 30, 2013 |
|  | As Previously Reported |  | Restatement Adjustments |  | Restated |
Revenues |  | $ | 159,463 |  | $ | (150 | ) | $ | 159,313 |
Cost of sales |  | 147,399 |  | (1,033 | ) | 146,366 |
Restructuring |  | 2,758 |  | — |  | 2,758 |
Gross profit |  | 9,306 |  | 883 |  | 10,189 |
OPERATING EXPENSES: |  |  |  |  |  |  |
Selling, general and administrative |  | 15,788 |  | (67 | ) | 15,721 |
Intangible amortization |  | 1,441 |  | — |  | 1,441 |
Regulatory settlement |  | 1,500 |  | — |  | 1,500 |
Restructuring |  | 787 |  | — |  | 787 |
Total operating expenses |  | 19,516 |  | (67 | ) | 19,449 |
Operating loss |  | (10,210 | ) | 950 |  | (9,260 | )
OTHER INCOME (EXPENSE) , net: |  |  |  |  |  |  |
Interest expense, net |  | (795 | ) | — |  | (795 | )
Other, net |  | 511 |  | — |  | 511 |
(Loss) gain on sale of assets and restructuring |  | 2,965 |  | — |  | 2,965 |
Total other income (expense), net |  | 2,681 |  | — |  | 2,681 |
Net loss from continuing operations before provision for income taxes |  | (7,529 | ) | 950 |  | (6,579 | )
Provision (benefit) for income taxes |  | 64 |  | — |  | 64 |
LOSS FROM CONTINUING OPERATIONS |  | (7,593 | ) | 950 |  | (6,643 | )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX |  | (110 | ) | — |  | (110 | )
NET LOSS |  | $ | (7,703 | ) | $ | 950 |  | $ | (6,753 | )
NET LOSS PER COMMON SHARE - BASIC AND DILUTED: |  |  |  |  |  |  |
Loss from continuing operations |  | $ | (0.53 | ) | $ | 0.07 |  | $ | (0.46 | )
Loss from discontinued operations |  | (0.01 | ) | — |  | (0.01 | )
Net loss |  | $ | (0.53 | ) | $ | 0.07 |  | $ | (0.47 | )
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - Basic and diluted |  | 14,405 |  | — |  | 14,405 |
The unaudited restated condensed consolidated statement of cash flows for the nine months ended September 30, 2013 is presented below (in thousands):
|  | Nine Months Ended September 30, 2013 |
|  | As Previously Reported |  | Restatement Adjustments |  | Restated |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |
Net loss |  | $ | (7,703 | ) | $ | 950 |  | $ | (6,753 | )
Adjustments to reconcile net cash used in operating activities: |  |  |  |  |  |  |
Depreciation and amortization expense |  | 11,412 |  | — |  | 11,412 |
Impairment charges |  | 288 |  | — |  | 288 |
Stock-based compensation |  | 1,438 |  | — |  | 1,438 |
Allowance for doubtful accounts |  | (274 | ) | — |  | (274 | )
Common stock issued under defined contribution 401(k) plan |  | 499 |  | — |  | 499 |
(Gain) loss on disposal of assets |  | (3,576 | ) | — |  | (3,576 | )
Changes in operating assets and liabilities: |  |  |  | — |  |  |
Accounts receivable |  | (1,613 | ) | 150 |  | (1,463 | )
Inventories |  | (10,637 | ) | (231 | ) | (10,868 | )
Prepaid expenses and other current assets |  | 1,228 |  | — |  | 1,228 |
Accounts payable |  | 12,337 |  | (938 | ) | 11,399 |
Accrued liabilities |  | 1,054 |  | 69 |  | 1,123 |
Customer deposits |  | 17,419 |  | — |  | 17,419 |
Other non-current assets and liabilities |  | (365 | ) | — |  | (365 | )
Net cash provided by (used in) operating activities |  | 21,507 |  | — |  | 21,507 |
CASH FLOWS FROM INVESTING ACTIVITIES: |  |  |  |  |  |  |
Proceeds from sale of logistics business and related note receivable |  | 250 |  | — |  | 250 |
Purchases of available for sale securities |  | (867 | ) | — |  | (867 | )
Purchases of property and equipment |  | (5,967 | ) | 1,610 |  | (4,357 | )
Proceeds from disposals of property and equipment |  | 12,533 |  | — |  | 12,533 |
(Increase) decrease in restricted cash |  | (1 | ) | — |  | (1 | )
Net cash provided by (used in) investing activities |  | 5,948 |  |  |  | 7,558 |
CASH FLOWS FROM FINANCING ACTIVITIES: |  |  |  |  |  |  |
Payments on lines of credit and notes payable |  | (80,233 | ) | — |  | (80,233 | )
Proceeds from lines of credit and notes payable |  | 75,208 |  | — |  | 75,208 |
Proceeds from sale-leaseback transactions |  | — |  | — |  | — |
Payments for debt issuance costs |  | — |  | — |  | — |
Principal payments on capital leases |  | (120 | ) | (1,610 | ) | (1,730 | )
Net cash (used in) provided by financing activities |  | (5,145 | ) |  |  | (6,755 | )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |  | 22,310 |  | — |  | 22,310 |
CASH AND CASH EQUIVALENTS, beginning of the period |  | 516 |  | — |  | 516 |
CASH AND CASH EQUIVALENTS, end of the period |  | $ | 22,826 |  | $ | — |  | $ | 22,826 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22644-107794 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 45 -Paragraph 23 -URI http://asc.fasb.org/extlink&oid=6368906&loc=d3e21914-107793 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22595-107794 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6801783&loc=d3e22499-107794 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 1.N.Q3) -URI http://asc.fasb.org/extlink&oid=6369664&loc=d3e30840-122693 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 1 -Section N Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 154 -Paragraph 17, 22, 25, 26 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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