CALGARY, ALBERTA -- (Marketwire) -- 02/14/13 -- Poseidon Concepts Corp. ("Poseidon" or the "Company") (TSX: PSN) provides the following update with respect to the review and assessment being conducted by the Company's Special Committee of the Board of Directors ("Special Committee") and its business and operations.
Special Committee Review and Assessment
As previously announced on December 27, 2012, the Company established the Special Committee to, among other things, review and address various issues arising from the Company's write-off of certain of the Company's accounts receivable and the evolving business plan of the Company. In order to assist the Special Committee in its review, the Special Committee retained the services of Norton Rose Canada LLP as its legal counsel, who in turn has retained Ernst & Young Inc. Based on the recommendation of the Special Committee and the interim report of its advisors, the Board of Directors has determined, on a preliminary basis, that primarily related to long term take-or-pay arrangements:
-- approximately $95 million to $106 million (subject to detailed quantification by the Company) of the Company's $148.1 million in revenue for the 9 months ended September 30, 2012 should not have been recorded as revenue in the Company's financial statements; and-- as a result of recording the foregoing revenues, approximately $94 million to $102 million (subject to detailed quantification by the Company) of the Company's $125.5 million accounts receivable as at September 30, 2012 should not have been recorded in the Company's financial statements as accounts receivable.
As a result of the foregoing, the first, second and third quarter 2012 financial statements (the "Financial Statements") will be restated and the Company advises investors that they should no longer rely on the Financial Statements as well as the corresponding Management's Discussion & Analysis. Further, the Company advises that all previous guidance with respect to the Company's business should no longer be relied upon. The Board of Directors, the Audit Committee and the Special Committee are working with their advisors, the Company's auditors and management to more specifically quantify the extent and scope of the restatements required in the Financial Statements to ensure that revenue is recognized in accordance with the Company's accounting policies and International Financial Reporting Standards. Upon completion of these efforts, the Company will re-file the Financial Statements and accompanying Management's Discussion & Analysis.
The Special Committee (along with its advisors) will continue with its ongoing review and assessment.
As of February 13, 2013, Poseidon had 96 fluid tanks under rental agreements in the North American well completions market and 7 tank heaters. These rentals are primarily short-term "live-tank" rentals - a rental category in which the Company has not historically experienced material collection or revenue recognition issues. The Company is also focused on implementing plans to reduce operating costs through continued improvements to its setup and tear-down processes.