Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. VASO Corp (839087) 10-Q published on Jun 04, 2021 at 3:17 pm
Reporting Period: Mar 30, 2021
Prior Periods’ Financial Statement Revisions
As disclosed in our 2020 Annual Report, we identified certain misstatements in our previously issued financial statements. The misstatements included misappropriation of funds by a mid-level management employee and partially recording certain regulatory fees billed to our customers as revenue. We assessed the materiality of the misstatements on prior periods’ financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) Topic 1.M, Materiality, codified in Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections, (“ASC 250”) and concluded that the misstatements were not material to the prior annual or interim periods. However, in our 2020 Annual Report, we revised our previously issued 2019 consolidated financial statements to correct for these misstatements.
In connection with the filing of this Quarterly Report, we have revised the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), Cash Flows, and Changes in Stockholders’ Equity for the three months ended March 31, 2020, and the related notes to revise for those misstatements that impacted such period. We will revise the remaining previously issued 2020 quarterly financial statements in connection with corresponding 2021 quarterly filings on Form 10-Q in the future.
NetWolves maintains a $4.0 million line of credit with a lending institution. In March 2021, the line’s expiration date was extended to June 30, 2022 provided $825,000 was paid prior to April 1, 2021, and $50,000 is paid quarterly beginning June 30, 2021. Advances under the line are secured by substantially all of the assets of NetWolves Network Services, LLC and guaranteed by Vaso Corporation. During the quarter ended March 31, 2021, $850,000 in draw was repaid. At March 31, 2021, the Company had drawn approximately $2.8 million against the line, of which amount $200,000 is included in notes payable – current portion in the Company’s condensed consolidated balance sheet at March 31, 2021. No additional borrowing is permitted under the line. The credit agreement includes certain financial covenants. The Company was in compliance with such covenants at March 31, 2021.
Operating loss for the three months ended March 31, 2021 and 2020 was $539,000 and $1,360,000, respectively, representing an improvement of $821,000, or 60%, as operating costs (below) decreased much more than gross profit did, year-over-year. On a segment basis, IT segment recorded operating income of $69,000 in the first quarter of 2021 as opposed to an operating loss of $593,000 in the same period of 2020; equipment segment recorded operating income of $13,000 in the first quarter of 2020 as opposed to an operating loss of $48,000 in the same period of 2021; and operating loss in the professional sales service segment decreased by $98,000, from $433,000 in the first quarter of 2020 to $335,000 in the same period of 2021.
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s senior management, including the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures to provide reasonable assurance of achieving the desired objectives of the disclosure controls and procedures. In light of the material weaknesses noted in our Annual Report on Form 10-K for our fiscal year ended December 31, 2020, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2021, our disclosure controls and procedures were not effective.