CVU($6.48) clown-car back under the bigtop...today's 8-K reveals this:
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On February 7, 2019, the Audit Committee of the Board of Directors (the “Audit Committee”) of CPI Aerostructures, Inc. (the “Company”), determined based on the recommendation of management and in consultation with CohnReznick LLP (“CohnReznick”), the Company’s independent registered public accounting firm, that the Company’s previously issued financial statements as of and for the three and nine months ended September 30, 2018 included in its Form 10-Q as filed with the Securities and Exchange Commission on November 13, 2018, should no longer be relied upon due to an error in the financial statements that was identified by management.
This error occurred in the Company’s billing process and resulted in the overstatement of revenue for the three and nine months ended September 30, 2018. The identification of the error was made by management during the Company’s review of the billing process for the year ended December 31, 2018 in connection with the preparation of the Company’s 2018 financial statements. Management’s preliminary conclusion is that the error was limited to one instance and that the effect of correcting the foregoing error in the Company’s financial statements for the three and nine months ended September 30, 2018 is (i) a reduction of revenue and income before provision for income taxes of approximately $900,000 to $950,000, (ii) a reduction of net income of approximately $725,000 to $775,000 and (iii) a reduction of fully diluted earnings per share of approximately $ 0.09, for each such period. The error is not expected to have a material impact on the Company’s balance sheet as of September 30, 2018 or the statement of cashflows for the three and nine months ended September 30, 2018.
The Company has reviewed its financial closing process and believes it has identified the corrective action to remediate the cause of the error. The Company expects to file an amended Quarterly Report on Form 10-Q/A for the periods ended September 30, 2018 to restate the financial statements and other disclosures contained therein for the error noted above as soon as practical.
In connection with the restatement noted above, management has determined that a material weakness existed in the Company’s internal control over financial reporting as of September 30, 2018. As a result, the Company’s chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures were not effective at the reasonable assurance level as of September 30, 2018. A discussion of the Company’s plan to remediate the material weakness will be contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which the Company expects to file with Securities and Exchange Commission on or before its filing deadline.
The Company’s Audit Committee and members of the Company’s management have discussed the matters disclosed in this Item 4.02 with CohnReznick
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