UNITED STATES
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): July 10, 2008
HALIFAX CORPORATION OF VIRGINIA
(Exact name of registrant as specified in its charter)
1-08964 54-0829246
Virginia
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
5250 Cherokee Avenue, Alexandria, Virginia 22312
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(703) 658-2400
N/A
Former name, former address, and former fiscal year, if changed
since last report
Check the appropriate box below if the Form 8-K filing is intended to
satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] 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))
FORWARD LOOKING STATEMENTS
This document may include a number of "forward-looking statements"
as that term is defined in Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements reflect management's current views with
respect to future events and financial performance and include
statements regarding management's intent, belief or current
expectations, which are based upon assumptions about future conditions
that may prove to be inaccurate. Prospective investors are cautioned
that any such forward-looking statements are not guarantees of future
performance, involve risk and uncertainties, and that as a result,
actual results may differ materially from those contemplated by such
forward-looking statements. Such risks include, among other things,
the concentration of revenues, risks involved in contracting with our
customers, including the difficulty to accurately estimate costs when
bidding on a contract and the occurrence of start-up costs prior to
receiving revenues and contracts with fixed price provisions, potential
conflicts of interest, difficulties we may have in attracting and
retaining management, professional and administrative staff,
fluctuation in quarterly results, our ability to generate new business,
our ability to maintain an effective system of internal controls, risks
related to acquisitions and our acquisition strategy, continued
favorable banking relationships, the availability of capital to finance
operations and planned growth and ability to make payments on
outstanding indebtedness, weakened economic conditions, reduced end-
user purchases relative to expectations, pricing pressures, excess and
obsolete inventory, acts of terrorism, energy prices, risks related to
competition and our ability to continue to perform efficiently on
contracts, and other risks and factors identified from time to time in
the reports we file with the SEC. When considering forward-looking
statements, readers are urged to carefully review and consider the
various disclosures, including risk factors and their cautionary
statements, made by us in this document and in our reports filed with
the Securities and Exchange Commission.
ITEM 4.02(a) Non-Reliance on Previously Issued Financial Statements or
a Related Audit Report or Completed Interim Review.
On July 10, 2008, the Audit Committee of Halifax Corporation of
Virginia (the "Company") determined that a restatement of its annual
report filed on Form 10-K for the years ended March 31, 2007 and 2006
was necessary.
During an interim review of the Company's records, management
determined that a deferred tax liability should have been recorded
related to the amortizable intangibles acquired through stock purchases
of Microserv and AlphaNational during fiscal years ended March 31, 2004
and 2005, respectively.
The deferred tax liability would have approximated $621,000 at
inception. If the deferred tax liability had been recorded, there
would have been a corresponding increase to goodwill for the same
amount. In subsequent years the deferred tax liability would have been
reduced over the same period as the amortization of the related
intangibles, as summarized below:
Fiscal year Tax Remaining
ended Benefit Deferred
March 31, Tax
Liability
(Amounts in thousands)
2004 $ 29 $ 592
2005 88 504
2006 124 380
2007 105 275
In connection with the sale of the Company's SNS business on December
31, 2005, the Company performed a goodwill impairment analysis as of
that date. The goodwill impairment analysis determined the fair value
of goodwill to be $2.9 million, the carrying value of goodwill on that
date. Therefore, any goodwill resulting from the correction of this
error would have been impaired as of December 31, 2005, and has been
reflected as such in the restated numbers.
As a result of correcting this error, net income for fiscal year ended
March 31, 2006 was reduced $497,000, which is comprised of a goodwill
impairment charge of $621,000, offset by a reduction of income tax
expense of $124,000. Fiscal year 2006 net income as reported was $1.5
million and as restated is $1.0 million. Retained earnings as of March
31, 2006 has been decreased by $380,000, which reflects the reduction
of net income in fiscal year 2006 of $497,000, offset by an increase in
retained earnings as of March 31, 2005 of $117,000 as a result of the
correction of this error. The balance sheet as reported as of March
31, 2007 did not change as a result of the correction of this error.
In connection with the preparation of our income tax provision for the
year ended March 31, 2007, we determined that it was not more likely
than not that our deferred tax assets would be recoverable, and as
such, provided for a full valuation allowance. As a result of the
error discussed above, our deferred tax asset was overstated at March
31, 2007 by $380,000. Therefore, the impact of the correction of this
error on the statement of operations for the fiscal year ended March
31, 2007 was a reduction in income tax expense and net loss for the
year of approximately $380,000. After correction of this error, the
reported loss for 2007 was restated from $2.8 million to $2.4 million.
The table below details the impact of the restatement on the Company's
consolidated balance sheet and statement of operations for fiscal 2007.
As As restated Change
reported
Total assets $23,837 $ 23,837 $ -
Stockholders' equity 5,203 5,203 -
Revenue 50,695 50,695 -
Income tax expense
(benefit) 2,149 1,769 380
Net loss $(2,790) $ (2,410) $ 380
Loss per share - basic
and diluted $ (.88) $ (.76) $ (.12)
The Company's audit committee discussed these matters with the
Company's independent Registered Public Accounting Firm. Accordingly,
the Company's consolidated financial statements included in the
Company's annual report on Form 10-K for the year ended March 31, 2006
and 2007(the "Reports") should no longer be relied upon and the
Reports will be restated to reflect the appropriate classification of
the above items. The Company will file the appropriate correction in
its report on Form 10-K for the year ended March 31, 2008 to effect
these restatements on July 15, 2008.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
None
SIGNATURE
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.
HALIFAX CORPORATION OF VIRGINIA
Date: July 15, 2008 By: /s/Joseph Sciacca
Joseph Sciacca
Vice President, Finance & CFO