UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| 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)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Item 4.02(a) | Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Report. |
On February 22, 2020, the audit committee (the “Audit Committee”) of the board of directors (the “Board”) of Ring Energy, Inc. (the “Company”) and senior management of the Company concluded that the unaudited condensed financial statements included in the Company’s Quarterly Reports on Form 10-Q for the periods ended March 31, 2019, June 30, 2019, and September 30, 2019 contained an error, which was non-cash in nature, in the disclosed provision for/benefit from income taxes included in the Company’s unaudited condensed financial statements for such periods. This error resulted in adjustments to (i) the amount of deferred tax asset/liability; and (ii) provision for/benefit from income tax.
The Company expects that the errors in the accounting for the Company’s quarterly income tax provision/benefit will:
| · | have no effect on the cash flows of the Company for any period; |
| · | have no effect on previously reported (loss) earnings before tax for any period; |
| · | have no effect on the Company’s previously reported EBITDA for any period; |
| · | have no effect on the Company’s liquidity position; and |
| · | have no effect on the Company’s future operations. |
The Company intends to restate the financial results for the periods listed above periods in its Form 10-K for the year ended December 31, 2019. The tables below present the impacts to the Company’s condensed balance sheets (unaudited):
| Three Months Ended | ||||||||||||
| March 31, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Deferred Income Taxes | $ | 9,741,903 | $ | (6,820,183 | ) | $ | 2,921,720 | |||||
| Total Assets | 925,196,640 | (6,820,183 | ) | 918,376,457 | ||||||||
| Accumulated (deficit) | (21,266,450 | ) | (6,820,183 | ) | (28,086,633 | ) | ||||||
| Total Stockholders' Equity | 474,523,338 | (6,820,183 | ) | 467,703,155 | ||||||||
| Total Liabilities and Stockholders' Equity | 925,196,640 | (6,820,183 | ) | 918,376,457 | ||||||||
| Six Months Ended | ||||||||||||
| June 30, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Deferred Income Taxes | $ | 7,209,160 | $ | (7,209,160 | ) | $ | - | |||||
| Total Assets | 961,266,874 | (7,209,160 | ) | 954,057,714 | ||||||||
| Deferred income taxes | - | 643,680 | 643,680 | |||||||||
| Total Liabilities | 445,203,152 | 643,680 | 445,846,832 | |||||||||
| Accumulated (deficit) | (8,891,196 | ) | (7,852,840 | ) | (16,744,036 | ) | ||||||
| Total Stockholders' Equity | 516,063,722 | (7,852,840 | ) | 508,210,882 | ||||||||
| Total Liabilities and Stockholders' Equity | 961,266,874 | (7,852,840 | ) | 954,057,714 | ||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Deferred Income Taxes | $ | 5,434,238 | $ | (5,434,238 | ) | $ | - | |||||
| Total Assets | 962,791,654 | (5,434,238 | ) | 957,357,416 | ||||||||
| Deferred income taxes | - | 3,448,958 | 3,448,958 | |||||||||
| Total Liabilities | 436,046,740 | 3,448,958 | 439,495,698 | |||||||||
| Accumulated earnings (deficit) | 997,160 | (8,883,196 | ) | (7,886,036 | ) | |||||||
| Total Stockholders' Equity | 526,744,914 | (8,883,196 | ) | 517,861,718 | ||||||||
| Total Liabilities and Stockholders' Equity | 962,791,654 | (8,883,196 | ) | 957,357,416 | ||||||||
The tables below present the anticipated impacts to the Company’s condensed statements of operations (unaudited):
| Three Months Ended | ||||||||||||
| March 31, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Benefit from (Provision for) Income Taxes | $ | 1,955,424 | $ | (6,820,183 | ) | $ | (4,864,759 | ) | ||||
| Net Income | 11,089,443 | (6,820,183 | ) | 4,269,260 | ||||||||
| Basic Income per Share | 0.18 | (0.11 | ) | 0.07 | ||||||||
| Diluted Income per Share | 0.17 | (0.10 | ) | 0.07 | ||||||||
| Six Months Ended | ||||||||||||
| June 30, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| (Provision for) Income Taxes | $ | (577,319 | ) | $ | (7,852,840 | ) | $ | (8,430,159 | ) | |||
| Net Income | 23,464,697 | (7,852,840 | ) | 15,611,857 | ||||||||
| Basic Income per Share | 0.36 | (0.12 | ) | 0.24 | ||||||||
| Diluted Income per Share | 0.36 | (0.12 | ) | 0.24 | ||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| (Provision for) Income Taxes | $ | (2,352,241 | ) | $ | (8,883,196 | ) | $ | (11,235,437 | ) | |||
| Net Income | 33,353,055 | (8,883,196 | ) | 24,469,857 | ||||||||
| Basic Income per Share | 0.50 | (0.13 | ) | 0.37 | ||||||||
| Diluted Income per Share | 0.50 | (0.13 | ) | 0.37 | ||||||||
The tables below present the anticipated impacts to the condensed statements of stockholders’ equity (unaudited):
| Total Stockholders’ Equity | ||||||||||||
| For the Nine Months Ended September 30, 2019 | As Reported | Correction | As Restated | |||||||||
| Net Income (Retained Earnings and Total Stockholders’ Equity) | $ | 11,089,443 | $ | (6,820,183 | ) | $ | 4,269,260 | |||||
| Balance March 31, 2019 | 474,523,338 | (6,820,183 | ) | 467,703,155 | ||||||||
| Net Income (Retained Earnings and Total Stockholders’ Equity) | $ | 12,375,254 | $ | (1,032,657 | ) | $ | 11,342,597 | |||||
| Balance June 30, 2019 | 516,063,722 | (7,852,840 | ) | 508,210,882 | ||||||||
| Net Income (Retained Earnings and Total Stockholders’ Equity) | $ | 9,888,356 | $ | (1,030,356 | ) | $ | 8,858,000 | |||||
| Balance September 30, 2019 | 526,744,914 | (8,883,196 | ) | 517,861,718 | ||||||||
The tables below present the anticipated impacts to the condensed statements of cash flows (unaudited):
| Three Months Ended | ||||||||||||
| March 31, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Net Income | $ | 11,089,443 | $ | (6,820,183 | ) | $ | 4,269,260 | |||||
| Excess tax deficiency related to share-based compensation | (3,873,568 | ) | 6,820,183 | 2,946,615 | ||||||||
| Six Months Ended | ||||||||||||
| June 30, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Net Income | $ | 23,464,697 | $ | (7,852,840 | ) | $ | 15,611,857 | |||||
| Excess tax deficiency related to share-based compensation | (4,471,900 | ) | 7,852,840 | 3,380,940 | ||||||||
| Nine Months Ended | ||||||||||||
| September 30, 2019 | ||||||||||||
| As Reported | Correction | As Restated | ||||||||||
| Net Income | $ | 33,353,053 | $ | (8,883,196 | ) | $ | 24,469,857 | |||||
| Excess tax deficiency related to share-based compensation | (5,145,871 | ) | 8,883,196 | 3,737,325 | ||||||||
The Company is assessing potential remedial actions relating to the Company’s accounting controls and staffing, as well as additional procedures and process improvements, and plans to implement such remedial actions as soon as practicable.
The chairman of the Audit Committee of the Board has discussed the foregoing matters with the Company’s independent registered public accounting firm, Eide Bailly LLP, and with the remaining members of the Audit Committee.
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.
| Ring Energy, Inc. | |||
| Date: February 27, 2020 | By: | /s/ William R. Broaddrick | |
| William R. Broaddrick | |||
| Chief Financial Officer | |||