Form 8-K for PDG Environmental, Inc.
The Company has determined that it will not be able to file its Quarterly Report on Form 10-Q for the quarter ended October 31, 2006 by the extension due date of December 20, 2006. Having completed the investigation into employee fraud in its Seattle office, the company has determined the aggregate financial impact to be $1.4 million, which is within the range of $1.0 million to $1.5 million estimated by management in a press release dated November 2. However, with respect to the financial impact of the employee fraud, the company requires additional time to determine the appropriate accounting treatment to give effect to the impact of the employee fraud and the allocation of the financial impact among current and prior reporting periods.
As previously disclosed in the Form 8-K filed on December 14, the company will restate its financial statements for the fiscal quarters ended April 30, 2006 and July 31, 2006. In addition, the company has now been advised that it will also need to restate its financial statements for fourth quarter and fiscal year ended January 31, 2006.
The company has determined that the employee fraud resulted in the recording of excess contract revenue of $0.3 million in the three months ended January 31, 2006, $0.4 million in the three months ended April 30, 2006 and $0.3 million in the three months ended July 31, 2006, and that net income was overstated by $0.18 million in the three months ended January 31, 2006, by $0.24 million in the three months ended April 30, 2006 and by $0.25 million in the three months ended July 31, 2006. These amounts do not include potential recoveries from insurance or other sources.
Management is endeavoring to complete the review in an expeditious manner. As soon as practicable, management will notify the Commission and investors when it plans to file the Quarterly Report on Form 10-Q for the quarter ended October 31, 2006 and the restatement of financial statements for the fiscal quarters ended April 30, 2006 and July 31, 2006, and the fiscal quarter and year ended January 31, 2006.
Item 8.01 Other Events
The Company is unable to file its quarterly report on Form 10-Q for the quarter ended October 31, 2006 by the extension due date of December 20, 2006 because the Company is in the process of completing the restatement of the financial statements for the fiscal quarter and year ended January 31, 2006 and fiscal quarters ended April 30, 2006 and July 31, 2006.
