UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
(X) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
( ) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File Number 0-13084
WARRANTECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3178732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Atlantic Street, Stamford, CT 06901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 975-1100
(Former name,former address and former fiscal year, if changed since last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1999
Common stock, par value $.007 per share 15,222,861 shares
1
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PART I. FINANCIAL INFORMATION
Warrantech Corporation (the "Company") announced on July 15, 1999 that
it is reviewing its accounting policy with respect to revenue recognition. For
the past eight years, the Company has recognized revenue immediately in direct
proportion to costs incurred. The review was undertaken after the Company's
independent auditor, Ernst & Young, raised the issue concerning the Company's
revenue recognition policy shortly before the due date for filing the Company's
Annual Report on Form 10-K for its 1999 fiscal year.
Prior to adopting its revenue recognition policy in 1991, the Company
had its revenue recognition policy reviewed with the Financial Accounting
Standards Board ("FASB") and the Securities and Exchange Commission (the "SEC").
Both FASB and the SEC concurred with the Company's revenue recognition policy
and, as a result of their affirmation, for the past eight years, the Company has
recognized revenue immediately in direct proportion to costs incurred.
Furthermore, the Company has consistently received unqualified opinions from its
independent auditors.
In view of the issues raised by Ernst & Young, the Company will shortly
again request the views of FASB with respect to the revenue recognition issue to
confirm that its current manner of presentation of its results is still in
conformity with generally accepted accounting principles. It should be
emphasized that the issue concerning the Company's revenue recognition policy
does not involve any accounting irregularities; it only involves a disagreement
with the Company's new auditors as to whether an accounting policy which the
Company has been following for the past eight years should continue to be
followed.
Because of the unresolved issues regarding the Company's financial
statements, the Company was unable to file its Annual Report on Form 10-K for
the fiscal year ending March 31, 1999. As a consequence of the Company's
inability to file its Form 10-K, the Company has received notice from Nasdaq
that the Company's common stock is subject to being delisted from the Nasdaq
Stock Market. The Company has informed Nasdaq that it is appealing such
delisting and a formal hearing with respect to such delisting has been scheduled
for August 27, 1999. Pending the outcome of this hearing, the Company's common
stock will continue to trade on the Nasdaq system under the symbol "WTECE". In
light of the Nasdaq action, and the recent weakness in the Company's common
stock, the Company recently filed its Form 10-K, omitting those portions of Part
II thereof relating to its financial statements. The Company is filing this Form
10-Q for the three months ended June 30, 1999 on the same basis. The information
required to be provided in the Form 10-Q with respect to the Company's financial
statements and management's discussion and analysis of results of operations and
financial condition will be promptly filed supplementally following the
resolution of the issue regarding revenue recognition and the completion of the
audit of the Company's financial statements. For a discussion of the revenue
recognition policy issues under review at this time, please see Part II of the
Company's Form 10-K for the year ended March 31, 1999.
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6 (a) Exhibits
(27) Financial Data Schedule*
Item 6 Reports on Form 8-K
Report on Form 8-K reporting item 5 dated July 30, 1999 filed
July 30, 1999
* To be filed as amendment.
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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 thereunto duly authorized.
WARRANTECH CORPORATION
/s/ Joel San Antonio
----------------------------------
Joel San Antonio - Chairman of the Board
(Chief Executive Officer)
Date: August 16, 1999
/s/ Richard F. Gavino
-----------------------------------
Richard F. Gavino - Executive Vice President
and Chief Financial Officer
Date: August 16, 1999
