Current Report
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
July 6,
2006
Date
of
Report (Date of earliest event reported)
RIM
SEMICONDUCTOR COMPANY
(Exact
name of registrant as specified in its charter)
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Utah
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000-21785
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95-4545704
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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305
NE
102nd Avenue, Suite 105, Portland, Oregon 97220
(Address
of principal executive offices, including zip code)
(503)
257-6700
(Registrant’s
telephone number, including area code)
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:
o
Written
communications pursuant to Rule 425 under the Securities Act
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
o
Pre-Commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act
o
Pre-Commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act
Item 4.02
(a). Non-Reliance
on Previously Issued Financial Statements or a Related Audit Report or Completed
Interim Review.
On
July
6, 2006, the Company’s Board of Directors, after consultations by management and
the Audit Committee with the Company’s independent registered public accounting
firm, concluded that the classification of warrants issued in connection with
the Company's 2005 and 2006 convertible debentures was not in accordance with
interpretations of Emerging Issues Task Force Issue No. 00-19 “Accounting for
Derivative Financial Instruments Indexed To and Potentially Settled In, a
Company’s Own Stock.” Accordingly, the consolidated financial statements
included in the Company’s Annual Report on Form 10-KSB for the fiscal year ended
October 31, 2005 and the condensed consolidated financial statements included
in
the Company's Quarterly Reports on Form 10-QSB for the periods ended July 31,
2005, January 31, 2006 and April 30, 2006 (collectively, the "Original Reports")
are being restated by the Company to correct the accounting for the warrants
as
derivative liabilities. The previously issued consolidated financial
statements included in the Original Reports should not be relied
upon.
The
restatements do not affect the Company's cash position. The treatment of the
non-cash accounting items addressed in the restatements results in increases
in
the Company's net loss and total liabilities as of and for the periods ended
January 31, 2006 and April 30, 2006, and in decreases in the Company's net
loss
and total liabilities as of and for the period ended July 31, 2005 and the
fiscal year ended October 31, 2005. The restatement adjustments also result
in
decreases in the Company's stockholders' equity at July 31, 2005, January 31,
2006 and April 30, 2006, and in an increase in stockholders' equity at October
31, 2005. The following summarizes the impact of the restatements for each
reporting period:
April
30, 2006
As
a
result of the restatement, $10,419,140 should have been recorded as a derivative
liability at April 30, 2006 and the Company should have recorded additional
interest expense of $5,673,953 for the three months and six months ended April
30, 2006. This expense was principally related to the amount ($5,608,156) by
which the fair value on April 30, 2006 of warrants issued to purchasers of
debentures sold by the Company in March 2006 exceeded the debt discount
allocated to such warrants.
In
addition, the Company should have recorded losses of $460,400 and $484,538,
respectively, for the three and six months ended April 30, 2006, on the change
in fair value of derivative liabilities. The treatment of this non-cash
accounting item results in an increase in the Company’s net loss for the three
months and six months ended April 30, 2006 as follows:
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For
the
Three
Months
Ended
April 30, 2006
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For
the
Six
Months
Ended
April 30, 2006
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(As
Reported)
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(As
Restated)
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(As
Reported)
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(As
Restated)
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Net
Loss
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$
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(3,542,493
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$
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(9,676,846
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$
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(4,816,231
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$
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(10,974,722
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)
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Basic
and diluted net loss per share of common stock
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$
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(0.01
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$
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(0.03
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$
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(0.02
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$
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(0.04
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The
correction of the above also results in the following changes to the Company's
stockholders' equity (deficiency) and liabilities at April 30,
2006:
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(As
Reported)
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(As
Restated)
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Total
liabilities
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$
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5,308,577
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$
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14,850,433
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Stockholders’
equity (deficiency)
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$
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6,793,959
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$
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(2,747,897
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)
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January
31, 2006
As
a
result of this restatement, $110,200 included in stockholders' equity at January
31, 2006 should have been recorded as a derivative liability and the Company
should have recorded a loss of $24,138 on the change in fair value of derivative
liabilities for the three months ended January 31, 2006. The treatment of this
non-cash accounting item results in an increase in the Company’s net loss for
the three months ended January 31, 2006 as follows:
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For
the
Three
Months
Ended
January 31, 2006
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(As
Reported)
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(As
Restated)
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Net
Loss
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$
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(1,273,738
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$
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(1,297,876
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)
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Basic
and diluted net loss per
share of common stock
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$
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(0.01
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$
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(0.01
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The
correction of the above also results in the following changes to the Company's
stockholders' equity and liabilities at January 31, 2006:
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(As
Reported)
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(As
Restated)
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Total
liabilities
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$
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3,371,764
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$
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3,481,964
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Stockholders’
equity
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$
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2,846,636
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$
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2,736,436
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October
31, 2005
As
a
result of this restatement, $86,062 included in stockholders' equity at October
31, 2005 should have been recorded as a derivative liability and the Company
should have recorded a gain of $2,233,004 on the change in fair value of
derivative liabilities for the fiscal year ended October 31, 2005. The
treatment of this non-cash accounting item results in a decrease in the
Company’s net loss for the fiscal year ended October 31, 2005 as
follows:
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For
the
Fiscal
Year
Ended
October 31, 2005
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(As
Reported)
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(As
Restated)
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Net
Loss
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$
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(6,923,386
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$
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(4,690,382
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Basic
and diluted net loss per
share of common stock
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$
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(0.06
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$
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(0.04
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The
correction of the above results in the following changes to the Company's
stockholders' equity and liabilities at October 31, 2005:
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(As
Reported)
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(As
Restated)
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Total
liabilities
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$
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4,778,329
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$
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4,864,391
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Stockholders’
equity
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$
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1,726,636
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$
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1,640,574
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July
31, 2005
As
a
result of this restatement, $2,019,963 included in stockholders' equity at
July
31, 2005 should have been recorded as a derivative liability and the Company
should have recorded a gain of $1,799,103 on the change in fair value of
derivative liabilities for the three months and nine months ended July 31,
2005.
The treatment of this non-cash accounting item results in a decrease in the
Company’s net loss for the three months and nine months ended July 31, 2005 as
follows:
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For
the
Three
Months
Ended
July 31, 2005
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For
the
Nine
Months
Ended
July 31, 2005
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(As
Previously Restated)
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(As
Currently Restated)
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Net
Loss
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$
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(2,697,023
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$
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(897,920
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$
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(4,859,592
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$
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(3,060,489
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Basic
and diluted net loss per share of common stock
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$
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(0.02
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$
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(0.01
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$
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(0.05
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$
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(0.03
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The
correction of the above also results in the following changes to the Company's
stockholders' equity and liabilities at July 31, 2005:
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Total
liabilities
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$
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6,449,812
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$
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6,969,775
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Stockholders’
equity
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$
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1,217,635
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$
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697,672
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In
light
of the foregoing, the Board authorized the restatement of the consolidated
financial statements included in the Annual Report on Form 10-KSB/A (Amendment
No. 2) for the fiscal year ended October 31, 2005 and the condensed consolidated
financial statements included in the Quarterly Reports on Form 10-QSB/A for
the
periods ended July 31, 2005, January 31, 2006 and April 30, 2006 that are being
filed by the Company today.
Item
7.01 Regulation FD Disclosure
On
July 11, 2006, Brad Ketch, the President and Chief
Executive Officer of Rim Semiconductor Company (the "Company"), issued a letter
to the Company's shareholders on the Company's website
(www.rimsemi.com).
Item
9.01 Financial Statements and
Exhibits
EXHIBIT
99.1 |
Letter to shareholders, dated July
11,
2006
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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.
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Rim
Semiconductor Company
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Dated:
July 11, 2006
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By:
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/s/
Brad Ketch
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Brad
Ketch
President
and Chief Executive Officer
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EXHIBIT
99.1 |
Letter to shareholders, dated
July 11,
2006
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