Cap Rock Energy Announces Restatement
August 30 2005 - 3:14PM
PR Newswire (US)
MIDLAND, Texas, Aug. 30 /PRNewswire-FirstCall/ -- Cap Rock Energy
Corporation (AMEX:RKE) is filing a Form 8-K with the SEC announcing
that on August 24, 2005, the Audit Committee of Cap Rock Energy
Corporation concluded that the Company would amend and restate its
previously issued financial statements and other financial
information contained in its Form 10-Q for the quarter ended March
31, 2005, and Form 10-K, as amended, for the fiscal year ended
December 31, 2004. As a result, the financial statements contained
in those filings should no longer be relied upon. The Audit
Committee has discussed the matters contained in this Form 8-K with
the Company's independent auditors, KPMG LLP. The Company has
identified a financial statement income tax matter that will result
in additional income tax expense. The tax matter relates to the
income tax treatment for financial reporting purposes regarding the
exempt status of one of the Company's subsidiaries. Under the
accounting rules, such additional expense and disclosures regarding
this treatment must be made to the above mentioned financial
statements. Due to the complex nature of this matter, the Company
is in the process of requesting guidance from the Internal Revenue
Service. The Company believes the effect on the quarter ended March
31, 2005 is an additional income tax expense of approximately
$534,000; and the effect on the fiscal year ended December 31, 2004
is an [additional] income tax expense of approximately $1,907,000.
The final adjustments will be reflected in the restated filings
when filed. Following the completion of these adjustments, the
Company will also file its Form 10-Q for the quarter ended June 30,
2005. The change in income tax expense will not require an
immediate cash outlay since the issue will affect deferred income
taxes payable. The Company had generated NOLs in earlier periods
that would be used to offset the presumed taxable nature of the
subsidiary. The earlier than expected use of the net operating
losses may also result in increased taxes payable and a comparable
decrease in earnings in future periods to the extent of the
unavailable net operating losses. On August 26, 2005, the Company
received notice from the staff of the American Stock Exchange
("AMEX") indicating that the Company is not in compliance with
Sections 134, 1003(d) and 1101 of the AMEX Company Guide as a
result of the Company's failure to timely file its quarterly report
on Form 10-Q for the quarter ended June 30, 2005. The AMEX notice
requires the Company to submit a plan by September 9, 2005,
advising AMEX of any action it has taken, or will take, to file its
Form 10-Q for the quarter ended June 30, 2005, and bring the
Company into compliance with Sections 134, 1003(d) and 1101 of the
AMEX Company Guide by no later than October 6, 2005. The AMEX
notice states that if the Company is not in compliance with
Sections 134, 1003(d) and 1101 by October 6, 2005, AMEX may
initiate delisting proceedings, as appropriate. Further, if the
Company does not submit a plan or if its plan is not accepted by
AMEX, the Company may be subject to delisting proceedings. In
either event, the Company may appeal if the AMEX staff makes a
determination to initiate delisting proceedings in accordance with
applicable AMEX rules. In the letter, AMEX also noted that within
five days of August 26, 2005, the Company will be included in a
list of issuers, which is posted daily on the AMEX website, that
are not in compliance with the continued listing standards and
".LF" will be appended to the Company's ticker symbol whenever the
Company's trading symbol is transmitted with a quotation or trade.
The website posting and indicator will remain in effect until the
Company has regained compliance with all applicable continued
listing standards. The Company intends to file its form 10-Q for
the quarter ended June 30, 2005, and the restated financials
discussed above as soon as possible and prior to October 6, 2005.
Those statements made in this release that are not historical facts
are forward-looking statements intended to be covered by the safe
harbor provisions of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Although the
Company believes that the assumptions underlying these statements
are reasonable, investors are cautioned that such forward-looking
statements are inherently uncertain and necessarily involve risks
that may affect the Company's business prospects and performance
causing actual results to differ from those discussed in the
foregoing release. Such risks and uncertainties include, by way of
example and not limitation, general business and economic
conditions, regulatory uncertainties and the legislative
environment. These and other applicable risks and uncertainties are
more fully explained in the Company's latest filings with the
Securities and Exchange Commission. The Company undertakes no
obligation to update any forward-looking statements in this
release, whether as a result of new information or future events.
DATASOURCE: Cap Rock Energy Corporation CONTACT: Ronnie Lyon of Cap
Rock Energy Corporation, +1-903-813-0377, or
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