- Retains Big 4 Accounting Firm to Advise & Assist with Remedial Actions -
EDGEWOOD, N.Y., March 16, 2020 (GLOBE NEWSWIRE) -- CPI Aerostructures, Inc. (CPI Aero®) (NYSE American: CVU) today announced that it has filed a Form 12b-25 Notification of Late Filing with regard to its Annual Report on Form 10-K for the year ended December 31, 2019. The Company requires additional time to complete a review of its procedures for revenue recognition from contracts with customers for 2018 and 2019 following its February 14, 2020 announcement of an error relating to the Company’s recognition of revenue under ASC Topic 606 that will require it to amend its annual report on Form 10-K for the year ended December 31, 2018 and its quarterly reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018, September 30, 2018, March 31, 2019, June 30, 2019, and September 30, 2019 (the “non-reliance periods”), and to remedy a material weakness in its internal controls over financial reporting as of the end of each non-reliance period.
As a result of the pending restatements of its financial statements, and the fact that the audited financial statements for the year ended December 31, 2019 cannot be finalized until the restated financial statements for the non-reliance periods are completed, the Company was unable to complete its financial statements and file its 2019 Form 10-K by the prescribed due date for such filing (March 16, 2020) without unreasonable effort or expense. The Company intends to include in its Annual Report on Form 10-K for the year ended December 31, 2019, restated financial statements and other disclosures for the non-reliance periods as soon as reasonably practical.
In addition, shortly after its February announcement, CPI Aero engaged one of the four largest international accounting and auditing firms to advise and assist management in correcting the material weaknesses and preparing and implementing proper revenue recognition procedures.
Douglas McCrosson, president and CEO of CPI Aero, stated, "We have made good progress towards preparing the required financial statements and remain committed to filing restated financial reports and other disclosures for the periods affected as reasonably practical. To that end, we have completed a review of the major contracts with customers and are in the process of completing detailed revenue recognition rules for each contract. The final step will be to apply these rules to determine the revenue and profit contributions for each contract during each of the financial reporting periods.”
Concluded Mr. McCrosson, “Based on our review to date, I want to reiterate that we do not believe this error will have an impact on the reported operating cash flows of the company during the affected periods or on future cash flows going forward. We continue to execute on our record backlog of orders from our world-class aerospace OEM customers and the U.S. Department of Defense, and no customers have cancelled contracts since the February announcement.”
About CPI Aero
CPI Aero is a U.S. manufacturer of structural assemblies for fixed wing aircraft, helicopters and airborne Intelligence Surveillance and Reconnaissance pod systems in both the commercial aerospace and national security markets. Within the global aerostructure supply chain, CPI Aero is either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. CPI also is a prime contractor to the U.S. Department of Defense, primarily the Air Force. In conjunction with its assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services. CPI Aero is included in the Russell Microcap® Index.
When used in this press release, statements about the Company’s plans to amend its financial statements, the timing of such amendments, and their effect on the financial statements, which may be indicated by the words or phrases “management expects” or “the Company expects,” “is anticipated,” or similar expressions, are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in these statements, including, among others: the timing and nature of the final resolution of the accounting issues discussed in this press release, any delay in the filing of required periodic reports, the timing and results of the Company’s review of the effectiveness of internal control over financial reporting and related disclosure controls and procedures, whether a restatement of financial results will be required for other periods or for other accounting issues, adverse effects on the Company’s business related to the disclosures made in this press release or the reactions of customers or suppliers, any adverse developments in existing legal proceedings or the initiation of new legal proceedings, and volatility of the Company’s stock price. Additional risks are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Because the risks, assumptions, and uncertainties referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements, readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made. The Company has no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof.