UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): May 18, 2005
ZOLTEK COMPANIES, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-20600 43-1311101
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
3101 MCKELVEY ROAD
ST. LOUIS, MISSOURI 63044
(Address of principal executive offices) (Zip Code)
(314) 291-5110
(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:
[ ] Written communications pursuant to Rule 425 under the Securities Act.
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act.
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act.
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act.
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The information set forth under Item 4.02 is incorporated herein by
reference.
ITEM 3.01 NOTICE OF DELISTING OR FAILURE TO SATISFY A CONTINUED LISTING RULE
OR STANDARD; TRANSFER OF LISTING.
On May 18, 2005, the Zoltek Companies, Inc. (the
"Company") received a notice from The Nasdaq Stock Market ("Nasdaq")
indicating that the Company is not in compliance with the continued listing
requirements under Marketplace Rule 4310(c)(14) due to the Company's
inability to timely file its Form 10-Q for the quarter ended March 31, 2005,
and that the Company's common stock is therefore subject to delisting from
The Nasdaq National Market. In addition, as of today Nasdaq added a fifth
character, "E," to the Company's trading symbol "ZOLT" to denote the filing
delinquency. The Company expects to file the Form 10-Q shortly and believes
that, upon that filing it will be in compliance with all applicable
continued listing requirements. The Company will seek to resolve the Nasdaq
action informally with its staff. If that is unsuccessful, it intends to
submit a timely request for a hearing before a Nasdaq Listing Qualifications
Panel, which request will stay delisting action pending the hearing and a
determination by the Nasdaq Listing Qualifications Panel. However, there can
be no assurance that the Panel will grant the Company's request for
continued listing.
On May 20, 2005, the Company issued a press release announcing the
matters discussed herein. A copy of such press release is included as
Exhibit 99 to this Current Report on Form 8-K.
ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A
RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.
(a) On May 19, 2005, Zoltek Companies, Inc. (the "Company"),
following a review by its Audit Committee and Board of Directors, concluded
that the Company should restate its previously issued financial statements
for the fiscal year ended September 30, 2004 and interim periods ended March
31, June 30, September 30 and December 31, 2004 to reflect additional
non-operating gains and losses related to the classification and accounting
for the conversion feature and the related warrants to purchase the
Company's common stock associated with convertible debt issued by the
Company in January, March and October 2004 and the amortization expense
associated with debt discount. On May 20, 2005, the Company issued a press
release announcing the restatements. A copy of such press release is
included as Exhibit 99 to this Current Report on Form 8-K.
Historically, the Company has classified the value of
warrants to purchase common stock and the beneficial conversion feature when
applicable, as equity as the Company believed these instruments met
exceptions that did not require recording these instruments as derivative
liabilities. The Company recently has determined that these instruments did
not meet these exceptions and should have been classified as derivative
liabilities at the fair value of each instrument, and must be recorded as
such on the balance sheet. In subsequent periods the change in fair value of
these instruments will result in an adjustment to this liability with the
corresponding gain or loss being recorded in the statement of operations. At
the date of respective conversion of the instrument or exercise of the
warrants the corresponding derivative liability will be reclassified to
equity. In addition, the Company recorded individually immaterial
adjustments of $0.1 million in the quarter ended March 31, 2004 and $0.2
million in the quarter ended September 30, 2004.
The impact of the adjustments related to the classification and accounting
for the conversion feature and the related warrants, are summarized below:
For the quarter ended March 31, 2004, the loss on the fair value of
the warrants and conversion feature and increased amortization
expense, increased the net loss by $5.7 million. The Company's
previously reported long-term and total liabilities increased by
$12.0 million with a corresponding decrease in the Company's
equity.
For the quarter ended June 30, 2004, there was a gain on the fair
value of the warrants and conversion feature, partially offset by
the increase in amortization expense, that decreased the previously
reported net loss by $4.3 million. The Company's previously
reported long-term and total liabilities increased by $7.7 million
with a corresponding decrease in the Company's equity.
For the quarter ended September 30, 2004, the loss on the fair
value of the warrants and conversion feature and increased
amortization expense increased the previously reported net loss by
$4.3 million.
For the fiscal year ended September 30, 2004, the loss on the fair
value of warrants and conversion feature and increased amortization
expense increased the previously reported net loss by $5.7 million.
The Company's previously reported long-term and total liabilities
increased by $12.0 million with a corresponding decrease in the
Company's equity.
For the quarter ended December 31, 2004, the loss on the fair value
of warrants and conversion feature and increased amortization
expense, increased the previously reported net loss by $26.4
million. The Company's previously reported long-term and total
liabilities increased by $40.9 million with a corresponding
decrease in the Company's equity.
The foregoing adjustments do not affect previously recorded net
sales, operating loss and cash flow from continuing operations. Furthermore,
these adjustments do not affect previously reported income tax expense as
the Company has recorded a full valuation allowance against all deferred tax
assets. The Company expects to present the restatements described in this
Current Report when it files with the Securities and Exchange Commission
amendments to its Annual Report on Form 10-K for the fiscal year ended
September 30, 2004 and to its Quarterly Reports
on Form 10-Q for the fiscal quarters ended June 30, 2004 and December 31,
2004.
The decision to restate was authorized by the Board of Directors of
the Company, upon the recommendation of management. They concluded that the
Company's previously issued financial statements for the fiscal year ended
September 30, 2004 and for the fiscal quarters ended March 31, 2004, June
30, 2004 and December 31, 2004 should no longer be relied upon, pending
their restatements, because of errors in those financial statements. The
Company's Chief Financial Officer, the Audit Committee and the Board of
Directors of the Company discussed the matters disclosed in this filing with
PricewaterhouseCoopers LLP, the Company's independent registered public
accounting firm.
In light of the evaluation described above, the Company's Chief
Executive Officer and Chief Financial Officer concluded that a material
weakness existed as of March 31, 2005 because the Company did not maintain
effective controls over the accounting for non-routine and complex
transactions. Specifically, the Company did not maintain effective controls
over the accounting for the conversion feature and the related warrants to
purchase the registrant's common stock associated with its convertible debt
issued in January, March and October 2004 and February 2005. As a result of
this material weakness, the registrant's Chief Executive Officer and Chief
Financial Officer concluded that the registrant's disclosure controls and
procedures were not effective as of March 31, 2005. The Company, under the
supervision of its Chief Executive Officer and Chief Financial Officer, is
currently evaluating potential steps that it can take to remediate the
material weakness in its disclosure controls and procedures, including steps
that can be taken in the process of documenting and evaluating the
applicable accounting treatment for non-routine or complex transactions as
they may arise.
This Current Report on Form 8-K contains forward-looking statements
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements speak only as of the date of
this Current Report, and the Company assumes no obligation to update such
forward-looking statements. Investors are cautioned that such
forward-looking statements are subject to many risks and uncertainties, and
may differ materially or adversely from the Company's actual results or
future events. The anticipated effects of the restatement described above
are preliminary and may be subject to change as the Company completes its
analysis.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) The following exhibit is filed as part of this report:
Exhibit Number Description
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99 Press Release issued by the Company
on May 20, 2005.
* * *
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 thereunto duly authorized.
Dated: May 20, 2005
ZOLTEK COMPANIES, INC.
By /s/ KEVIN SCHOTT
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Kevin Schott
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
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99 Press Release, dated May 20, 2005.