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): September 2, 1999
WARRANTECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-13084 13-3178732
(State or other juris- (Commission File Number) (IRS Employer
diction of incorporation) 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
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Item 5. Other Events.
Pursuant to a decision by a Nasdaq Listing Qualifications Panel (the
"Panel"), Warrantech Corporation's (the "Registrant") common stock (the "Stock")
was delisted from the Nasdaq Stock Market effective as of the close of business
on September 2, 1999, due to the delay in the filing of the Registrant's Form
10-K for the fiscal year ended March 31, 1999. The Company has filed an appeal
with the Nasdaq Listing and Hearing Review Council (the "Review Council") to
review the Panel's decision. During the review period, the Company's Stock will
be traded over the counter. The Company's day-to-day operations will not be
affected by the delisting.
As previously announced, the Company has not been able to file its
financial statements to the Form 10-K for the fiscal year ended March 31, 1999
(the "Financial Statements to the 1999 10-K") because, shortly before the filing
date, the Company's former independent accountant, Ernst & Young LLP ("Ernst &
Young") had raised an issue concerning the Company's current revenue recognition
policy. The accounting policy that Ernst & Young questioned has been followed by
the Company for the past eight years; additionally, in 1991, the Company had
sought - and received - confirmation from the staff of the Securities and
Exchange Commission (the "SEC") and the Financial Accounting Standards Board
that its accounting policy was correct. Each of the Company's previous
independent accountants have issued unqualified opinions with respect to the
Company's financial statements. The Company's current independent accountant,
which has replaced Ernst & Young, has advised the Company that it firmly
believes that the policy followed by the Company is still correct. The Company
intends to vigorously pursue legal action against Ernst & Young with respect to
Ernst & Young's actions described above.
As a result of these events, the Company has decided, once again, to
confirm its current accounting policy with the SEC. Once the Company receives
the SEC's position on its accounting policy, the Company will shortly thereafter
file the Financial Statements to the 1999 10-K.
If the result of the review by the Review Council is favorable to the
Company, then the Company's Stock will resume trading on the Nasdaq National
Market. If the review is not favorable, then the Company will seek the further
review of the listing issue by the SEC and the courts. The Company firmly
believes that its current accounting policy is the industry standard and
correctly reflects its financial condition. The Company intends to pursue all
legal remedies to assure that its current accounting policy is upheld. If the
SEC determines that the Company must change its current revenue recognition
policy, then the Company will consider restructuring its business model to avoid
the impact on its financial statements.
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Predicated on present circumstances, the Board of Directors of the Company
(the "Board") has given authorization to the Company to repurchase up to $1.5
million of the Company's Stock. The Board is convinced that the Company's core
business is sound and that the current market price of the Company's Stock
resulting from recent events does not reflect the fair value of its Stock.
The Company, through its subsidiaries, administers and markets service
contracts and after-market warranties on automobiles, automotive components,
recreational vehicles, appliances, consumer electronics, computer and computer
peripherals for retailers, distributors and manufacturers. The Company continues
to expand its domestic and global penetration, and now provides its services in
the United States, Canada, Mexico, the United Kingdom, Puerto Rico and Latin
America.
"Safe Harbor" Statements under the Private Securities Litigation Reform Act
of 1995
This Form 8-K contains forward-looking statements that are subject to risks
and uncertainties. While the Company believes that its core operations will not
be affected by the removal of the Stock from the Nasdaq National Market, there
are risks that confidence in the Company by its vendors, business partners or
employees may be negatively affected by the change in the Company's reported
results or the delisting of the Company's Stock, all of which could have an
impact on the Company's operations. Additionally, if the SEC determines that the
Company's current revenue recognition policy must be changed, then it is likely
that the Company's reported net equity will be materially adversely affected
which, in turn, would be a potential further basis for preventing the Company's
Stock from being relisted on the Nasdaq National Market and could also affect
its business relationships. These risks could cause the Company's actual results
for the current fiscal year and beyond to differ materially from those expressed
in any forward-looking statements made by, or on behalf of, the Company.
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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 hereunto duly authorized.
WARRANTECH CORPORATION
Date: September 10, 1999 By:
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Name: Richard F. Gavino
Title: Chief Financial Office
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