Business Context and Reporting Period
This Form 8-K is a current report filed by Novume Solutions, Inc. (not Rekor Systems, Inc.) on January 19, 2018. The filing addresses a material accounting error identified by the Board of Directors on January 23, 2018, requiring the restatement of previously issued financial statements for the fiscal year 2017 through September 30, 2017.
Key Financial Metrics and Adjustments
The filing discloses a correction regarding the accounting treatment of accretion to redemption value on Series A Preferred Stock. The error resulted in an understatement of expenses and an overstatement of equity and earnings per share (EPS) in prior filings.
- Accretion Adjustment (Nine Months Ended Sept 30, 2017): $400,616
- Accretion Adjustment (Six Months Ended June 30, 2017): $255,699
- Accretion Adjustment (Three Months Ended March 31, 2017): $115,731
- Cash Flow Impact: None. The adjustment is non-cash.
- Balance Sheet Impact (Sept 30, 2017): Total Stockholders' Equity decreased by $400,616 from $6,731,826 to $6,331,210.
Material Changes Versus Prior Period
The primary material change is the restatement of Earnings (Loss) Per Share (EPS) due to the accretion error. The filing provides the following comparison of previously reported versus restated EPS:
| Period | Previously Reported EPS | Adjustment | Restated EPS |
|---|---|---|---|
| Three Months Ended Sept 30, 2017 | $(0.07) | $(0.02) | $(0.09) |
| Six Months Ended June 30, 2017 | $(0.22) | $(0.05) | $(0.27) |
| Three Months Ended March 31, 2017 | $(0.12) | $(0.02) | $(0.14) |
| Nine Months Ended Sept 30, 2017 | $(0.20) | $(0.03) | $(0.23) |
Guidance, Outlook, and Risks
The filing does not provide forward-looking guidance, revenue outlook, or management commentary on future operations. The primary risk disclosed is the reliability of previously issued financial statements, specifically:
- Form 10-Q for the three and nine months ended September 30, 2017.
- Form 8-K/A filings dated November 21, 2017, and November 28, 2017, regarding acquisitions and a merger agreement.
The Company is concurrently filing amendments to these documents to reflect the restated figures.
Investor Verification Checklist
- Verify the restated Form 10-Q for the period ended September 30, 2017, once filed.
- Review the amended Form 8-K/A filings regarding the Global Technical Services and NeoSystems Corp. transactions to ensure pro forma figures reflect the accretion adjustment.
- Confirm the updated carrying value of Series A Cumulative Convertible Redeemable Preferred Stock on the balance sheet.
- Note that the filing text does not provide current revenue, profit, or liquidity metrics beyond the specific equity and EPS adjustments.