Current Report Filing (8-k)
October 21 2019 - 04:31PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): October
21, 2019
PARETEUM CORPORATION
(Exact name of registrant as specified in
its charter)
Delaware
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001-35360
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95-4557538
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(State or other jurisdiction of
incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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1185 Avenue of the Americas, 37th Floor
New York, NY 10036
(Address of principal executive offices)
(Zip Code)
(212) 984-1096
(Registrant's telephone number, including
area code)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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TEUM
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NASDAQ
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Item
4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On October
21, 2019, the board of directors of Pareteum Corporation (the “Company”) determined that the Company’s financial
statements which were included in its annual report for the year ended December 31, 2018 and quarterly reports for the quarters
ended March 31, 2019 and June 30, 2019 (collectively, the “Non-Reliance Periods”) should no longer be relied upon.
Similarly, related press releases, earnings releases, and investor communications describing the Company’s financial statements
for the Non-Reliance Periods should no longer be relied upon. The Company will restate financial statements for the Non-Reliance
Periods in advance of filing the Company’s Quarterly Report on Form 10-Q for the three months ended September 30, 2019.
The
decision to restate these financial statements is based on the Company’s conclusion that certain revenues recognized during
2018 and 2019 should not have been recorded, during that period. For certain customer transactions, the company may have prematurely
or inaccurately recognized revenue. These restatements should not impact historical cash or cash equivalents based upon the current
review. At the present time, the restatements are expected to impact Revenue, Cost of Service, Operating Income, Net Loss, Accounts
Receivable and other Balance Sheet line items. While the Company’s analysis is still underway, the Company currently estimates
the revenue impact for the full year 2018 to be a reduction of approximately $9 million. For the first half of 2019, the Company
currently estimates the revenue impact to be a reduction of approximately $24 million.
At
this time, the Company has not fully completed its review and the expected financial impact of the restatement described above
is preliminary and subject to change. The Company cannot predict the aggregate amount of revenue that will ultimately be restated,
whether additional periods beyond those referenced above will be affected, and the final outcome or timing of the Company's filing
of restated financial statements for the affected annual and quarterly periods. Until the full magnitude of these transactions
is analyzed and understood, the company cannot provide forward guidance, and we expect the second half and full year 2019 will
be materially below current analysts’ estimates.
The
Company cannot at this time estimate when the restatement will be completed and filed on Form 10-K/A for the year ended December
31, 2018 and the interim periods cited above. The Company will continue to diligently pursue completion of the restatement and
intends to make upcoming quarterly filings as soon as reasonably practical.
Because
the Company has not yet fully completed its review, the expected financial impact of the restatement described above is preliminary
and subject to change. There can be no assurance that the final reported adjustments will not differ materially from the estimated
amounts discussed in this current report, or that additional adjustments will not be identified.
The
audit committee has discussed the matters disclosed pursuant to this Item 4.02 with Squar Milner LLP, the Company’s independent
accountant.
Item
8.01 Other Events
On
October 21, 2019, the Company issued a press release announcing the restatement of the financial statements. The full text of the
press release is attached hereto as Exhibit 99.1.
Item
9.01 Financial Statements and Exhibits
(d) Exhibits
Forward-Looking Statements
This report contains forward-looking statements,
and any statements other than statements of historical fact could be deemed to be forward-looking statements. Such statements may
include, without limitation, statements with respect to the Company’s plans and objectives, projections, expectations and
intentions. These forward-looking statements are based on current expectations, estimates and projections about the Company’s
industry, management’s beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking
statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult
to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ
materially from the results expressed or implied by such forward-looking statements. These risks include, among other things (1)
the ability to complete the restatement of the affected financial statements and address any material weaknesses, the timing of
the completion of necessary restatements, interim reviews and audits by the Company’s independent
registered public accounting firm, (2) risks relating to the substantial costs and diversion of personnel’s attention and
resources deployed to address the restatement of the affected financial statements and internal control matters, (3) the risk of
litigation or regulatory action arising from the restatement of the affected financial statements, (4) the timing of the review
by, and the conclusions of, the Company’s independent auditor regarding the restatement, (5) the ability of the Company to
remediate any material weaknesses in internal control over financial reporting, (6) potential reputational damage that the Company
may suffer as a result of the restatement of the affected financial statements, (7) the impact of the restatement of the affected
financial statements on the value of the Company’s common stock, and (8) the risk that the filing of the restatement of the
affected financial statements will take longer than anticipated. Given these risks and uncertainties, readers are cautioned
not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any
obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking
statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ
materially from those projected or suggested in the Company’s filings with the Securities and Exchange Commission (the “SEC”),
copies of which are available from the SEC or may be obtained upon request from the Company.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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PARETEUM CORPORATION
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Dated: October 21, 2019
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By:
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/s/ Edward O'Donnell
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Name: Edward O’Donnell
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Title: Chief Financial Officer
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