Tag-It Pacific reaffirms its financial statements

04 Apr '06

3 min read

California based fashion apparel retailer Tag-It Pacific Inc, owner of Talon zippers and a full service trim management supplier for manufacturers of fashion apparel announced that it intends to restate its financial statements for the second and third quarters of 2005.

The Audit Committee of the Board of Directors concluded, in consultation with management, that Tag-It's financial statements for the second and third quarters of 2005 should no longer be relied upon. Tag-It intends to restate its financial statements for the above listed periods to correct an error in the application of generally accepted accounting principles that was identified in the Company's revenue recognition on selected transactions occurring during these periods.

The restatement will correct the recording of revenues and corresponding net loss figures for the second and third quarters of 2005 as a result of a sale and inventory storage agreement that was effective in the second quarter. Management discovered the error during the preparation of its fiscal year 2005 results and has concluded that the revenue from this transaction should not have been recognized at the time of the agreement, but rather will be recognized as the inventory is delivered to the customer, its designee, or is destroyed at the direction of the customer.

Tag-It currently expects that the restatement will result in:

-- A reduction of revenues for the three and six-months ended June 30, 2005 of $2.8 million;

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