TORONTO - Shares of Redline Communications Inc. (TSX:RDL) plummeted 36 per cent on Monday morning after the company said it would likely miss the deadline for its quarterly and full-year financial statements as it reviews its revenue recognition accounting policies.
The Toronto-area wireless equipment provider said it has launched a special committee to further review its finances - and could be required to restate some of its past financial statements - after an earlier internal review showed it may have not properly recognized revenue.
Redline shares were off 17 cents to 30.5 cents on the Toronto Stock Exchange in the morning.
The review will examine Redline's current internal controls under the advisement of lawyers at Grant Thornton LLP.
"While it is too early to determine the precise amounts or effect of the issues that have been identified, the preliminary review indicates that they are material," the company said in a release.
Redline said it expects it will be unable to finalize the results for both the fourth quarter ended Dec. 31, and the full-year financial statements, by the required March 31 deadline.
"The company and its advisers intend to work expeditiously to conclude the review, determine the scope and nature of any issues, and finalize any outstanding financial statements and related disclosure as soon as possible, although at this stage it is uncertain as to when this will occur," it added.
In January, the company - which designs, manufactures and sells broadband wireless products that connect individuals and businesses to the Internet and transport network traffic - slashed its workforce by 10 per cent after revising its revenue targets.