Item 4.02(a) Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On September 28, 2022, the Audit and Executive Oversight Committee (the “Committee”) of the Board of Directors of Radiant Logistics, Inc. (the “Company”), after meeting with management to consider the relevant facts and circumstances underlying the matters covered by Item 4.02 of this Report on Form 8-K, and after consultation with Moss Adams LLP (“Moss Adams”), its current registered independent public accounting firm, and BDO USA, LLP (“BDO”), its predecessor registered independent public accounting firm, concluded that the Company’s previously issued financial statements for the fiscal year ended June 30, 2021 included in its Annual Report on Form 10-K, each of the interim financial statements for the quarterly periods in fiscal 2021 included in its Quarterly Reports on Form 10-Q, and each of the interim financial statements for the quarterly periods in fiscal 2022 included in its Quarterly Reports on Form 10-Q (cumulatively, the “Restatement Periods”) should be restated to correct historical errors related principally to the timing of recognition of the Company’s estimated accrual of in-transit revenues and related costs, and should therefore no longer be relied upon. As a result, investors, analysts and all other persons should not rely on the Company’s previously released financial statements, press releases, earnings releases, investor presentations or other financial information or communications describing the Company’s consolidated financial statements, that cover any periods during the Restatement Periods. The Company is still in the process of completing its analysis of the impact of the errors on the financial statements of the Company for the fiscal year ended June 30, 2020.
The need for the restatement arose out of the results of certain financial analysis the Company performed in the course of preparing its fiscal year-end 2022 financial statements. Principally, in response to its December 2021 cyber event, the Company completed a detailed lookback analysis to compare its estimated accrued in-transit revenues and related costs, primarily, purchased transportation and applicable commission expenses, to its actual customer invoicing, related transportation costs and other costs subsequently recorded. In the course of its analysis of the actual information gathered through the lookback process, the Company detected differences between the estimated accrued amounts and the actual revenues and expenses recorded due primarily to errors in the underlying shipment information that was used to calculate the original estimates of the accrued amounts. Management and the Committee have concluded that, in the ordinary course of closing its financial books and records, the Company previously inadvertently excluded certain in-transit revenues and associated costs from the appropriate periods as required under applicable accounting guidelines. Therefore, the Company misstated gross revenues and associated costs during the Restatement Periods. The Company principally attributes the errors to a material weakness in financial controls over the recording and processing of revenues, which was disclosed in its Annual Report on 10-K for the year-ended June 30, 2021, which the Company is working to remediate in fiscal 2023.
Based on its preliminary findings, the Company determined that the impact of the errors on its previously reported financial statements for the fiscal year ended June 30, 2021, include the following:
•Reported Revenues of $889.1 million were understated by approximately $14.1 million to $17.3 million
•Reported Total Operating Expenses of $863.1 million were understated by approximately $14.7 million to $18.0 million
•Reported Net Income Attributable to Radiant Logistics, Inc. of $22.9 million was overstated by approximately $0.4 million to $0.5 million
•Reported Contract Assets of $27.8 million were understated by approximately $21.7 million to $26.4 million
•Reported Total Liabilities of $195.8 million were understated by approximately $21.5 million to $26.3 million
In addition to the impact on the Company’s financial statements noted above, the Company determined that the errors resulted in the overstatement of its previously reported Adjusted EBITDA, a non-GAAP financial measure, of $48.8 million for the fiscal year ended June 30, 2021, by approximately $0.5 million to $0.7 million.
The Committee and management, following consultation with the Company’s current and predecessor independent registered public accounting firms, concluded that it is appropriate to restate its financial statements to reflect these adjustments in the Restatement Periods in a comprehensive Annual Report on Form 10-K for the fiscal year ended June 30, 2022.
The Company expects to complete this filing within the next thirty (30) days.
Forward-Looking Statements
This Current Report on Form contains “forward-looking statements” within the meaning set forth in United States securities laws and regulations – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “anticipate,” “believe,” “estimates,” “expect,” “future,” “intend,” “may,” “plan,” “see,” “seek,” “strategy,” or “will” or the negative thereof or any variation thereon or similar terminology or expressions. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. We have developed our forward-looking statements based on management’s beliefs and assumptions, which in turn rely upon information available to them at the time such statements were made. Such forward-looking statements reflect our current perspectives on existing information as of the date of this announcement. These include, but are not limited to, the nature and estimated amount of adjustments to our financial statements covering the Restatement Periods as the final adjustments may vary from the amounts estimated in this Report and such variance may be material; the timing for completion of the restated financial statements included within the Restatement Periods and the associated Securities and Exchange Commission filings within which the restated financial statements are to be included; and such other factors that may be identified: (i) in our Form 10-K for the fiscal year ended June 30, 2021, including those set forth under the caption “Risk Factors” in such Form 10-K; and (ii) in such other Securities and Exchange Commission filings and other public announcements, following our Form 10-K for the fiscal year ended June 30, 2021. For the purpose of our forward-looking statements, we assume that we will within the short-term remediate any temporary compliance issues we are presently experiencing with the NYSE as we contemplate being able to regain compliance with all applicable SEC and exchange compliance requirements once we are able to file the delinquent Form 10-K with the SEC. We also assume that we will be able to secure whatever waivers and/or consents as may be necessary, if at all, to maintain compliance under our senior credit facility as a consequence of our inability to timely provide fiscal 2022 year-ending financial statements to our senior lenders, as well as the modifications that may be required of past compliance certifications that we have provided to our senior lenders during the Restatement Periods. Readers are cautioned not to place undue reliance on our forward-looking statements, as they speak only as of the date made. We disclaim any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.