Basin Water Reports Restated Results for All of 2006 and 2007 and the First Quarter of 2008
February 11 2009 - 5:00PM
Business Wire
Basin Water Inc. (NASDAQ: BWTR) today announced the conclusion
of an eight-month review of prior financial statements conducted by
the Audit Committee of the board of directors assisted by
independent legal counsel, independent forensic accountants and
senior management.
As a result of this review, the Company yesterday filed with the
Securities and Exchange Commission its restated Annual Report on
Form 10-K/A that restates the financial statements for the fiscal
years 2006 and 2007, and its restated financial statements for the
first quarter of 2008 on Form 10-Q/A.
As more fully explained in the Form 10-K/A filed by the Company
on February 10, 2009, the Company has amended and restated its
consolidated financial statements and related financial information
for the years ended December 31, 2007 and 2006, including the
financial results in each of the quarterly periods in 2007 and 2006
to correct for certain errors, specifically (1) the failure to
apply Financial Accounting Standards Board Interpretation No. 46,
Consolidation of Variable Interest Entities � Deferral for Certain
Interests, Revised December 2003 (FIN 46(R)) for certain specific
transactions in 2007, (2) revenue recognition issues related to
certain specific transactions in 2006 and 2007, including improper
recognition of revenues and incorrect timing of recognition of
revenues, (3) the accounting for warrant expense related to
warrants issued by the Company to Aqua America, Inc. in February
2006, (4) the accounting for the December 2007 sale to Empire Water
Corporation of the right to purchase certain water rights and
related assets, (5) an adjustment to the contract loss reserve in
the third quarter of 2007 (6) a balance sheet reclassification for
purchase accounting related to the Company's acquisition of Mobile
Process Technology Co. (MPT) and (7) various other adjustments and
reclassifications for 2006 and 2007.
On February 10, 2009, the Company also separately filed its
Quarterly Reports on Form 10-Q for the second and third quarters of
2008. As previously announced, those filings had been delayed
pending completion of the accounting review and restatement of
prior period financial statements.
The cumulative effects of the restatements of the full years
2006 and 2007, and the first quarter of 2008, are a reduction in
revenues totaling $12.5 million for the restated financial periods.
The Company�s cumulative loss for the period covered by the
restatements increased by $5.4 million and reduced shareholder
equity as of March 30, 2008 by $5.5 million. Cash and cash
equivalents available to the Company were unaffected by the
accounting adjustments.
For all of 2006, restated revenues were $13.9 million, a
reduction of $3.2 million from the previously reported $17.1
million. The Company�s restated net loss for 2006 was $13.5
million, an increase of $2.3 million compared with the previously
reported net loss of $11.2 million.
For all of 2007, the Company reported restated revenues of $9.7
million, a reduction of $9.1 million from the previously reported
$18.8 million. The Company�s restated net loss for 2007 was $18.3
million, an increase of $3.0 million compared with the previously
reported net loss of $15.3 million.
For the first quarter of 2008, restated revenues were $2.8
million, compared with restated revenues of $1.8 million in the
prior year first quarter. The Company�s restated net loss for the
first quarter of 2008 was $5.2 million, versus a restated $2.3
million net loss in the prior year period.
Basin Water�s filings include disclosure of material weaknesses
in its internal control over financial reporting and its plans to
remediate such weaknesses.
About Basin Water
Basin Water, Inc. designs, builds and implements systems for the
treatment of contaminated groundwater, industrial process water and
air streams from municipal and industrial sources. It provides
reliable sources of drinking water for many communities, and the
ability to comply with environmental standards and recover valuable
resources from process and wastewater streams. Basin Water has
developed proprietary, scalable ion-exchange, biological and other
treatment systems that effectively process contaminated water and
air in an efficient, flexible and cost effective manner. Additional
information may be found on the Company's web site:
www.basinwater.com.
Forward Looking Statements
This press release contains forward-looking statements made in
reliance on the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements may
be identified by their use of words, such as �estimate,� �expect,�
�intend,� �anticipate� and other words and terms of similar
meaning, in connection with any discussion of the Company�s
financial statements, business, financial condition, results of
operations or liquidity. Actual results may differ materially from
these expectations due to various risks and uncertainties,
including: negative reactions from the Company�s stockholders,
creditors or customers to the Company�s restatement of its
financial statements, the existence of other errors that may
require further adjustment of the Company�s financial statements,
the impact and result of any litigation, investigation or other
action by The Nasdaq Stock Market, the SEC, any other governmental
agency or other parties related to the Company�s restatement of its
financial statements, the Company�s ability to manage its capital
to meet future liquidity needs and continue operations, the
effectiveness of any cost-saving measures by the Company, the
Company�s limited operating history, significant operating losses
associated with certain of the Company�s contracts, significant
fluctuations in its revenues from period to period, the success of
the Company�s strategic partners, its long sales cycles, market
acceptance of its technology, the geographic concentration of its
operations and customers, its ability to meet customer demands and
compete technologically, the Company�s ability to enter into
service and maintenance contracts with system sales, the Company's
ability to renegotiate loss contracts with its customers, the
Company�s ability to protect its intellectual property, regulatory
approvals of the Company�s systems, changes in governmental
regulation that may affect the water industry, particularly with
respect to environmental laws, the Company�s ability to attract and
retain qualified personnel and management members, and changes in
the board of directors and management members. More detailed
information about these risks and uncertainties are contained in
the Company�s filings with the Securities and Exchange Commission,
including the company�s Annual Report on Form 10-K/A for the year
ended December 31, 2007 and subsequent Quarterly Reports on Form
10-Q, as amended. The Company cautions readers not to place undue
reliance on any forward-looking statements, which speak only as of
the date on which they are made. The Company assumes no obligation
to update these forward-looking statements to reflect any change in
future events.
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