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) MAY 5, 2006
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EMRISE CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 001-10346 77-0226211
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
9485 HAVEN AVENUE, SUITE 100, RANCHO CUCAMONGA, CALIFORNIA 91730
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (909) 987-9220
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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 (SEE General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On May 9, 2006, EMRISE Corporation ("Company") issued a press release
announcing it would be filing with the Securities and Exchange Commission
("Commission") amendments to its periodic reports because it has concluded that
the financial statements included in its reports covering the years ended
December 31, 2005 and 2004 and interim periods during 2005 and 2004 should no
longer be relied upon. A copy of the press release is attached as Exhibit 99.1
to this report.
ITEM 4.02. NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
On May 5, 2006, the Company's audit committee concluded that the
Company's financial statements for the years ended December 31, 2005 and 2004
and the interim periods during 2005 and 2004 should no longer be relied upon.
The audit committee reached this conclusion after having discussions with the
Company's former independent registered public accountants and management as
part of an investigation being conducted by the audit committee in response to
an inquiry by the staff of the Commission's Division of Enforcement.
Based upon information gathered to date in the audit committee's
investigation, it appears that during the quarter ended December 31, 2004, the
Company prematurely recognized approximately $224,000 of net sales of
communications test equipment units that were not actually delivered to the
customer during that quarter and thus did not meet all applicable revenue
recognition criteria until after that quarter. These $224,000 of net sales were
included in the Company's $9,768,000 and $29,861,000 of total net sales
previously reported for the quarter and year ended December 31, 2004,
respectively, and it appears, represented approximately $165,000 of the
Company's $883,000 and $1,480,000 of net income previously reported for the
quarter and year ended December 31, 2004, respectively.
To the extent it is finally determined that all applicable revenue
recognition criteria were met for these units during the quarter ended
March 31, 2005, these $224,000 of net sales would be added to the $7,299,000
and $41,046,000 of total net sales previously reported for the quarter ended
March 31, 2005 and year ended December 31, 2005, respectively, and would
decrease the Company's $350,000 net loss previously reported for the quarter
ended March 31, 2005 and increase the Company's $1,288,000 net income
previously reported for the year ended December 31, 2005 by approximately
$165,000.
The audit committee's investigation has revealed that Company
documentation relating to the invoicing and shipment of the above-referenced
units prior to January 2005 is false and/or misleading. Responsibility for the
false and/or misleading documentation and the resulting misstatement in the
Company's financial statements has not been fully ascertained. The audit
committee continues to investigate this situation with the assistance of outside
legal and accounting professionals.
The Company intends to prepare amendments to its periodic reports to
reflect the change in the timing of recognition of the sales. Because the
investigation by the audit committee is ongoing, the information noted above is
subject to change.
The Company is in the process of preparing its Form 10-Q for the
quarter ended March 31, 2006, which quarterly report is due on or before May 15,
2006. However, the Company anticipates delaying the filing of its quarterly
report until the audit committee's investigation is complete and the Company
files its restated financial statements.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Shell Company Transactions.
Not applicable.
(d) Exhibits.
Number Description
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99.1 Press release dated May 9, 2006 relating to
financial statements
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.
Date: May 9, 2006 EMRISE CORPORATION
By: /s/ CARMINE T. OLIVA
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Carmine T. Oliva, Chief Executive Officer
EXHIBITS ATTACHED TO THIS REPORT
Number Description
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99.1 Press release dated May 9, 2006 relating to financial
statements