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Delaware
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000-20971
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71-0788538
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(State or other jurisdiction of incorporation)
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(Commission File No.)
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(IRS Employer Identification No.)
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200 Harvard Mill Square Suite 210
Wakefield, Massachusetts 01880 |
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Registrant's telephone number, including area code: (781) 246-3343
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________________________________________________________________________________
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Item 8.01. Other Events.
On June 4, 2014, Edgewater Technology, Inc. (the "Company" or "Edgewater") announced that it has reached a settlement with the former stockholders of Fullscope, Inc. ("Fullscope") regarding the reimbursement of certain escrow claims associated with the 2009 acquisition of Fullscope. A copy of the press release issued by the Company concerning the settlement of the escrow claims is filed herewith as Exhibit 99.1 and is incorporated herein by reference in its entirety.
Since fiscal 2010, Edgewater has incurred certain non-routine professional service-related expenses associated with the identification and investigation of embezzlement activities within Fullscope which occurred prior to its acquisition. A majority of the Company's embezzlement-related expenses were in connection with the settlement of sales and use tax liabilities that were created by the methods employed by a former employee of Fullscope to conceal the discovered fraudulent activity.
In April 2014, Edgewater completed the process of making initial payments to settle the identified pre-acquisition embezzlement-related sales and use tax liabilities. Edgewater does not anticipate that it will make any future payments associated with these liabilities; however, all periods covered by the sales and use tax filings are subject to review and audit by the respective state taxation authorities.
Prior to the settlement, existing escrow accounts established in connection with the Fullscope acquisition totaled approximately $4.6 million. As per the terms of the settlement agreement, Edgewater will receive approximately $1.9 million from the escrow accounts to fully satisfy the Company's existing escrow account claims; whereas, the former Fullscope stockholders will receive approximately $2.5 million from the escrow accounts, leaving a balance of $250,000 in the escrow accounts. This balance will remain in the escrow accounts for 12 months and will be utilized to cover any potential future sales and use tax exposure that may arise from subsequent state inquiry or audit. In the event there are no active inquires at the end of the 12-month period, the remaining balance will be distributed to the former Fullscope stockholders.
The $1.9 million will be recorded as a reduction to the Company's operating expenses during the period in which the settlement proceeds are received by the Company.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit Number |
Description of Exhibit |
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99.1 |
Edgewater Technology, Inc. Press Release dated June 4, 2014. |
EXHIBIT 99.1
WAKEFIELD, Mass., June 4, 2014 (GLOBE NEWSWIRE) -- Edgewater Technology, Inc. (Nasdaq:EDGW), a leading consulting firm that brings a blend of classic and product-based consulting services to its clients, has reached a settlement with the former stockholders of Fullscope, Inc. regarding the reimbursement of certain escrow claims associated with the 2009 acquisition of Fullscope.
As per the terms of the settlement agreement, Edgewater will receive approximately $1.9 million from the escrow accounts to fully satisfy the company's existing escrow account claims; whereas, the former Fullscope stockholders will receive approximately $2.5 million from the escrow accounts, leaving a remaining balance of $250,000 in the escrow accounts. This balance will remain in the escrow accounts for 12 months and will be utilized to cover any potential future sales and use tax exposure that may arise from subsequent state inquiry or audit.
"The settlement of these claims has allowed us to protect the interests of our stockholders and finally put these matters behind us," commented Shirley Singleton, Edgewater's chairman, president and CEO. "To be sure, our acquisition of Fullscope has proved very valuable to Edgewater over the years, as it provided a complementary balance to our service offerings while delivering top and bottom line growth. We are very appreciative of the former Fullscope stockholders, who have demonstrated a commendable level of patience and understanding as we worked through the process of identifying and resolving these issues."
About Edgewater
Edgewater Technology, Inc. (Nasdaq:EDGW) is a strategic consulting firm delivering a blend of classic and product-based consulting services. Edgewater addresses the market both vertically by industry and horizontally by product and technology specialty, providing its client base with a wide range of business and technology solutions. As one of the largest IT consulting firms based in New England, the company works with clients to reduce costs, improve processes and increase revenue through the judicious use of technology. Edgewater's brand names include Edgewater Technology, Edgewater Ranzal and Edgewater Fullscope. To learn more, please visit www.edgewater.com.
CONTACT: Company Contact:
Timothy R. Oakes
Chief Financial Officer
1-781-246-3343
Investor Relations:
Liolios Group, Inc.
Cody Slach or Greg Falesnik
1-949-574-3860
EDGW@liolios.com