Proshares Ultrashort Telecommunications (AMEX:TLL)
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From Jul 2019 to Jul 2024
Teletouch Communications, Inc. (AMEX:TLL) announced
today that the Company will restate its financial statements for the
fiscal years ended May 31, 2002 and 2003. The restatement is the
result of previously reported ongoing conversations with SEC staff
concerning the accounting for the Company's financial restructuring
which took place in May 2002 and November 2002. The financial
restructuring had two components: a May 2002 extinguishment of certain
junior debt (the "May 2002 Exchange Transaction"); followed by a
November 2002 exchange of Series C Preferred Stock and redeemable
common stock purchase warrants for its Series A and Series B Preferred
Stock, warrants for the purchase of shares of Series B Preferred
Stock, common stock warrants and shares of its common stock (the
"November 2002 Exchange Transaction").
As a result of the required restatements, the Company has not been
able to file its Annual Report on Form 10-K for the year ended May 31,
2005 (the "10-K") with the SEC in a timely fashion and that filing is
delinquent at this time. It appears at this time that there will be no
impact on the Company's results of operations, financial position or
cash flows for the years ended May 31, 2004 and 2005, respectively.
As soon as possible, the Company intends to issue preliminary,
unaudited summary results of operations for the period covered by the
10-K. All readers of this press release are urged to review such
unaudited results of operations upon their issuance. Then, following
completion of its discussions with the SEC staff the Company intends
to (i) as discussed in greater detail below, file the amended
financial statements with the SEC and (ii) file the 10-K for the year
ended May 31, 2005.
The Exchange Transactions
As previously disclosed, in the May 2002 Exchange Transaction the
Company retired certain junior debt, and later, after receiving
stockholder approval in November 2002 and in conjunction with the
November 2002 Exchange Transaction, issued to the holders of that debt
shares of its Series C Preferred Stock and redeemable stock purchase
warrants in exchange for outstanding shares of its Series A and Series
B Preferred Stock, warrants for the purchase of shares of Series B
Preferred Stock, common stock warrants and shares of its common stock
(the Exchanged Securities). The holders of the Exchanged Securities
included an entity affiliated with the Company's Chairman of the
Board, Robert M. McMurrey. In its accounting for the two transactions,
the Company retained an independent third party, which used a present
value methodology to value the Company's Common Stock (into which the
Series C Preferred Stock was convertible) at $0.04 per share. The
Company used this valuation and apportioned the value of the
securities which it issued between the May 2002 Exchange Transaction
and the November 2002 Exchange Transaction.
During its normal review of the Company's filings, the SEC staff
initiated discussions with the Company about the Company's accounting
for the two Exchange Transactions including discussions regarding the
method used to value the shares of the Series C Preferred Stock issued
and whether or not the Series C Preferred Stock contained a
"beneficial conversion feature" which should be accounted for under
EITF 98-5 and EITF 00-27. The accounting under EITF 98-5 and EITF
00-27 would have required an amount to be recorded as period dividends
on the Series C Preferred Stock.
As a result of these discussions with the SEC staff and the
Company's ongoing analysis of the May 2002 and November 2002 Exchange
Transactions, the Company has preliminarily determined that the shares
of the Series C Preferred Stock issued in the May 2002 and November
2002 Exchange Transactions should have been valued at the market price
of the Company's common stock ($0.33 per share when the Series C
Preferred Stock was issued in November, 2002) rather than the present
value methodology originally used. This change in the valuation of the
shares of the Series C Preferred Stock would:
-- reduce by $5.06 million, to $64.5 million from $69.6
million, the gain on the May 2002 Exchange Transaction
recorded in the year ended May 31, 2002; and
-- reduce, by $7.59 million to $28.8 million from $36.3
million, the gain from the November 2002 Exchange
Transaction that was included in the computation of
earnings per share for the year ended May 31, 2003.
Earnings per share for the relevant quarters and the years ended
May 31, 2002 and 2003 will be impacted. Total stockholders' equity
would not be affected, although there would be some changes in the
components of stockholders' equity. These specific changes are:
-- The reduction in the gain from the May 2002 Exchange
Transaction would increase the Company's accumulated
deficit with an offsetting increase of the amount
recorded for the outstanding Series C preferred Stock.
-- The reduction in the gain from the November 2002
Exchange Transaction would decrease the Company's
additional paid-in capital with an offsetting increase
of the amount recorded for the outstanding Series C
preferred Stock.
In addition, the change in the value assigned to the Series C
Preferred Stock would mean that it does not contain a beneficial
conversion feature as defined in EITF 98-5 and EITF 00-27. It appears
at this time that there will be no impact on the Company's results of
operations, financial position or cash flows for the years ended May
31, 2004 and 2005, respectively.
The Company cautioned that its discussions with the SEC staff are
ongoing, as a result of which there can be no assurance that the
adjustments described above will in fact be the final adjustments that
the Company determines are required.
Until the Company has restated and reissued its results for the
applicable periods, investors and other users of the Company's SEC
filings are cautioned not to rely on the Company's financial
statements for the years ended May 31, 2002 and 2003, to the extent
they are affected by the accounting issues described above.
At the same time as the Company was discussing these issues with
the SEC staff, the Company, under the supervision of its Audit
Committee and with the assistance of an independent accounting expert,
began its inquiry into the circumstances relating to the
above-referenced accounting treatments to assure that there are no
other financial reporting or disclosure control items that may be of
concern. The preliminary results of this inquiry indicate that, apart
from the adjustments discussed in this Current Report, no other
adjustments to the Company's financial statements appear necessary.
The Company intends to file the amended financial statements with
the SEC as soon as possible after the completion of its discussions
with the SEC staff.
About Teletouch
Teletouch Communications, Inc., a proven U.S. leader in wireless
messaging and related network management, provides a complete suite of
mobile asset tracking solutions using sophisticated, yet
cost-effective GPS-based hardware and software products for fleets,
hazardous materials and "worker-down" emergency notification
applications. In addition to its telemetry business, Teletouch offers
two-way radio communications, cellular and wireless messaging services
throughout the United States. Teletouch's common stock is traded on
the American Stock Exchange under stock symbol: TLL. Additional
product, business and financial information for Teletouch is available
at www.Teletouch.com.
This release contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act, as amended, that are based on
management's exercise of business judgment as well as assumptions made
by and information currently available to management. When used in
this document, the words "may", "will", "anticipate", "believe",
"estimate", "expect", "intend", and words of similar import, are
intended to identify any forward-looking statements. You should not
place undue reliance on these forward-looking statements. Negotiations
with respect to the transaction that are the subject of this release
are ongoing and may result in significant modifications to the
transaction. There can be no assurance that the transaction that is
the focus of this release will be concluded, or if concluded that it
will be concluded on terms currently contemplated. These statements
reflect our current view of future events and are subject to certain
risks and uncertainties as noted in our securities and other
regulatory filings. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, our
actual results could differ materially from those anticipated in these
forward-looking statements. We undertake no obligation and do not
intend to update, revise or otherwise publicly release any revisions
to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of any
unanticipated events. Although we believe that our expectations are
based on reasonable assumptions, we can give no assurance that our
expectations will materialize. Many factors could cause actual results
to differ materially from our forward-looking statements.