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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>UNITED STATES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">WASHINGTON, D.C. 20549</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>FORM 8-K</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>CURRENT REPORT</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>March 27, 2012</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Date of Report (date of Earliest Event Reported)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>TELETOUCH COMMUNICATIONS, INC.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Exact Name of Company as Specified in its
Charter)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<TABLE ALIGN="CENTER" CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border-collapse: collapse; font: 10pt Times New Roman, Times, Serif">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 34%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">DELAWARE</TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">001-13436</TD>
    <TD STYLE="width: 33%; padding-right: 5.4pt; padding-left: 5.4pt; font-weight: bold; text-align: center">75-2556090</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(State or Other Jurisdiction of Incorporation or Organization)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(Commission File No.)</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: center">(I.R.S. Employer Identification No.)</TD></TR>
</TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>5718 Airport Freeway, Fort Worth, Texas
76117</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">(Address of principal
executive offices and zip code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>(800) 232-3888</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">(Company&rsquo;s telephone
number, including area code)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>Not applicable</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">(Former name or former address, if changed
from last report)</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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
(see General Instruction A.2. below):</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings; color: black">&uml;</FONT></TD><TD>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</TD></TR>                                                                                                                                                                                                                          <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings; color: black">&uml;</FONT></TD><TD>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD></TR>                                                                                                                                                                                                                           <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings; color: black">&uml;</FONT></TD><TD>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD></TR>                                                                                                                                                                                                                                           <TR STYLE="vertical-align: top">
<TD>&nbsp;</TD><TD>&nbsp;</TD></TR>
</TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.5in"><FONT STYLE="font-family: Wingdings; color: black">&uml;</FONT></TD><TD>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.5in; text-align: justify; text-indent: -1in"><B>Item 8.01&#9;Other
Events</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><B>&nbsp;</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As previously reported
in its public filings, since October 2010, Teletouch Communications, Inc.&rsquo;s wholly owned subsidiary, Progressive Concepts,
Inc., a Texas corporation (&ldquo;PCI&rdquo;) (together, the &ldquo;Company&rdquo;), has been undergoing a sales and use tax audit
by the State of Texas (the &ldquo;State&rdquo;) covering the periods from January 2006 to October 2009. During the second fiscal
quarter of 2011, while undergoing standard preparations for the tax audit, the Company identified that there could be certain issues
in connection with the prior application and interpretation of sales tax rates assessed on various services and products billed
and received by PCI. However, multiple prior sales tax audits of PCI conducted by the State did not identify or determine that
there were any such issues, even though PCI&rsquo;s methodology for computing sales taxes was virtually identical during the
prior periods. As a result, prior to receiving a final determination from the State on these sales tax matters, the Company could
not accurately predict the probable outcome of this audit or any related material liability to the State. Therefore, the Company
reported an estimated range for this potential liability of between $22,000 and $2.4 million. The lower end of the range was based
on the actual results of PCI&rsquo;s prior State tax audits, with the higher end of the range based on the Company&rsquo;s internal
review and most conservative analysis, which indicated a potential estimated liability of up to $1.9 million, plus an additional
estimated potential liability of up to $0.5 million for related penalties and interest on the Company&rsquo;s highest possible
estimated amount.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Throughout the audit
process, the Company, using an outside tax consulting firm, has provided the State auditor with numerous customer billing statements
and other financial records, including invoices for products and services received from various third-party suppliers, for audit
testing. As previously reported and in the Company&rsquo;s most recent quarterly report on Form 10-Q, the Company had received
a number of preliminary audit results indicating that certain errors had been identified in PCI&rsquo;s application of sales taxes
on customer billings, as well as on the computation and remittance of use taxes on certain purchases of products and services from
the Company&rsquo;s suppliers. The process of reviewing each of the numerous individual items selected for testing by the State
auditor has been ongoing over the prior several quarters.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 27, 2012,
the Company received a summary of the errors identified by the State auditor on selected billing statements and invoices, which
further included computations of these errors extrapolated over the respective total billings and purchases for the audit period.
Based on this recently provided information from the State, the Company hereby updates and revises the previously and preliminarily
estimated range of its tax liability and estimates its tax liability for this audit, to now be a total of approximately $1.85 million,
including approximately $0.44 million in penalties and interest that are expected to be assessed by the State. While the audit
is not completely finished at this time, as it must go through a final review process by the State, the Company has been provided
guidance that a final assessment for the outstanding tax liability is anticipated on or around, May 20, 2012. Although there is
general agreement on the tax errors identified between the Company and the State auditor at this point, other items may still be
identified or challenged by the State during the final review process. The Company cannot anticipate any additional items that
might be further challenged during the review process, and is therefore unable to estimate any potential added liability that could
arise prior to the completion of this audit and receipt by the Company of the State&rsquo;s final assessment. The Company cautions
that the final results of the tax audit may differ materially from the calculation it recently received from the State auditor
and any estimates made by the Company to date.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has
been advised by counsel that it can seek recovery of taxes that were not billed or collected from its customers and suppliers
beginning in January 2006, and intends to make every reasonable effort to pursue the collection of such taxes after the final
assessment has been received from the State. The underlying unbilled and uncollected sales tax due and legally recoverable
from all of PCI&rsquo;s customers and suppliers is approximately $1.27 million. Based on a detailed review of all currently
available cellular billings from August 2006 through October 2009, and a review of certain equipment sales invoices from
January 2006 through October 2009, the Company has determined that its top 50 customers comprise approximately $0.45 million
of the unbilled sales taxes that the Company will pursue for recovery. There can be no assurance that the Company&rsquo;s
recovery efforts will or will not be successful, nor can the Company estimate an amount of recovery expected from such
efforts at this time.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The State
periodically provides, and the Company therefore intends to seek, an installment payment plan for the final tax liability and
a waiver of penalties and interest from the State. Payment plan terms that the State has historically provided range from 3
&ndash; 5 years. Provided that the Company is approved for a five year payment plan, and is also provided a waiver for the
related penalties and interest, the monthly payment for this tax liability is estimated to be approximately $23,400. This
tax liability is primarily the result of long standing sales tax application and computation issues that have existed
in PCI&rsquo;s billing systems for many years and had not been identified in prior sales and use tax audits by the
State. Because the
Company promptly modified its billing applications and corrected such issues as soon as these systemic issues were
identified, the Company&rsquo;s counsel believes the State will consider both of these requests for relief. The Company
cautions that if the State does not provide the installment payment plan relief requested, the Company may be unable to pay
this obligation when it becomes due, without securing additional debt financing or equity contributions, neither of which can
be assured.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As prior reported in
the Company&rsquo;s public filings, starting November 2010, and in accordance with Accounting Standard Codification 450, <I>Contingencies</I>
(&ldquo;ASC 450&rdquo;), the Company determined that the potential outcome of the ongoing sales tax audit represented a loss contingency,
as the Company believed that at the conclusion of the sales tax audit, PCI would likely be assessed additional taxes for the audit
period.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the guidance
of ASC 450, an estimated loss from a loss contingency shall be accrued by a charge to income if <U>both the following conditions
are met:</U> (i) information is available before the next most current financial statements are issued or are available to be issued
indicates that it is probable that an asset had been impaired or a liability had been incurred as of the date of the financial
statements, and (ii) the amount of such loss can be reasonably estimated.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From November
2010, through the receipt of the recent tax audit computations from the State, the Company had estimated and reported its
potential liability to be between $22,000 and $2.4 million. Since the actual outcome of the audit could not previously be
determined, nor could a reasonably accurate estimate of the actual loss be determined, the Company disclosed this range of
potential loss in accordance with ASC 450. Since the Company has now received such actual additional sales and use tax due
computations from the State, the Company can now more reasonably and accurately estimate its loss or tax liability and will
record an accrual for $1.85 million, including $0.44 million in penalties and interest, in its financial statements to be
included in its Form 10-Q for the quarter ended February 29, 2012, expected to be filed on or before April 16, 2012.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on the results of the current sales tax audit, the Company also now believes that it may have additional
financial exposure for certain periods following October 2009, the last month covered under the current sales tax audit, in the
event that PCI is audited again by the State. Similar tax computations were applied to the Company&rsquo;s cellular billings through
November 2010, the point at which PCI made substantial system and process changes to correct these tax computations. Other sales
and use tax issues identified during the course of the sales tax audit were corrected at various dates thereafter. The Company
is in the process of estimating its potential sales and use tax exposure for the periods following the current sales tax audit
through the date that each identified issue was corrected by the Company. These computations are complex and have not been completed
as of the date of this Report. The Company expects to be able to estimate a range of additional sales and use tax exposure for
these periods by the time the Company files its fiscal third quarter financials in its Form 10-Q in mid-April 2012. The proper
accounting treatment for such amount is currently being evaluated by the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Finally, and as previously
reported, following the Company&rsquo;s discovery of the systemic tax computation issues, and upon the Company&rsquo;s certifying
officers&rsquo; review and evaluation of the Company&rsquo;s disclosure controls and procedures and internal control of financial
reporting in fiscal year 2011, the Company determined the foregoing issues rose to the level of a material weakness. During the
quarter ended November 30, 2010, the Company began a systems control remediation process and made certain ongoing modifications
to PCI&rsquo;s cellular and related billing systems, as discussed in detail in each of the Company&rsquo;s reports since that time.
As of the fiscal quarter ended November 30, 2011, the Company reported that it had completed all of the planned remediation steps,
with the exception of implementing a third party sales tax processing system. After further internal testing of the steps identified,
the Company has now determined that certain steps have not been executed completely and therefore the Company continues to have
certain limited control deficiencies. The Company is currently working on processes and procedures to fully and finally implement
all of the remediation steps that have been identified, and continues to focus on identifying if any additional remediation steps
are required, in an effort to resolve this certain material weakness in the Company&rsquo;s internal controls over financial reporting.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1.25in; text-indent: -1.25in"><B>Item 9.01 &#9;Financial
Statements and Exhibits </B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>&nbsp;</B></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 45.35pt"></TD><TD STYLE="width: 45.35pt"><B>(c)</B></TD><TD><B>Exhibits.</B></TD></TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 45.8pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">None.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><B>SIGNATURES</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD>Date: March 30, 2012&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid">/s/ Douglas E. Sloan&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Name: Douglas E. Sloan&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 3%">&nbsp;</TD>
    <TD STYLE="width: 35%">Title: &nbsp;&nbsp;Chief
Financial Officer&nbsp;</TD>
    <TD STYLE="width: 12%">&nbsp;</TD></TR>
</TABLE>


<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></P>



<P STYLE="margin: 0"></P>

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{"company-data": {"conformed-name": "TELETOUCH COMMUNICATIONS INC", "cik": "0000928659", "assigned-sic": "4812", "irs-number": "752556090", "state-of-incorporation": "DE", "fiscal-year-end": "0531"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-13436", "film-number": "12730206"}, "business-address": {"street1": "1913 DEERBROOK", "city": "TYLER", "state": "TX", "zip": "75703", "phone": "9035958800"}, "mail-address": {"street1": "1913 DEERBROOK", "city": "TYLER", "state": "TX", "zip": "75703"}}
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
March 27, 2012
Date of Report (date of Earliest Event Reported)
TELETOUCH COMMUNICATIONS, INC.
(Exact Name of Company as Specified in its
Charter)
DELAWARE
001-13436
75-2556090
(State or Other Jurisdiction of Incorporation or Organization)
(Commission File No.)
(I.R.S. Employer Identification No.)
5718 Airport Freeway, Fort Worth, Texas
76117
(Address of principal
executive offices and zip code)
(800) 232-3888
(Company's telephone
number, including area code)
Not applicable
(Former name or former address, if changed
from last report)
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
(see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01	Other
Events
As previously reported
in its public filings, since October 2010, Teletouch Communications, Inc.'s wholly owned subsidiary, Progressive Concepts,
Inc., a Texas corporation ("PCI") (together, the "Company"), has been undergoing a sales and use tax audit
by the State of Texas (the "State") covering the periods from January 2006 to October 2009. During the second fiscal
quarter of 2011, while undergoing standard preparations for the tax audit, the Company identified that there could be certain issues
in connection with the prior application and interpretation of sales tax rates assessed on various services and products billed
and received by PCI. However, multiple prior sales tax audits of PCI conducted by the State did not identify or determine that
there were any such issues, even though PCI's methodology for computing sales taxes was virtually identical during the
prior periods. As a result, prior to receiving a final determination from the State on these sales tax matters, the Company could
not accurately predict the probable outcome of this audit or any related material liability to the State. Therefore, the Company
reported an estimated range for this potential liability of between $22,000 and $2.4 million. The lower end of the range was based
on the actual results of PCI's prior State tax audits, with the higher end of the range based on the Company's internal
review and most conservative analysis, which indicated a potential estimated liability of up to $1.9 million, plus an additional
estimated potential liability of up to $0.5 million for related penalties and interest on the Company's highest possible
estimated amount.
Throughout the audit
process, the Company, using an outside tax consulting firm, has provided the State auditor with numerous customer billing statements
and other financial records, including invoices for products and services received from various third-party suppliers, for audit
testing. As previously reported and in the Company's most recent quarterly report on Form 10-Q, the Company had received
a number of preliminary audit results indicating that certain errors had been identified in PCI's application of sales taxes
on customer billings, as well as on the computation and remittance of use taxes on certain purchases of products and services from
the Company's suppliers. The process of reviewing each of the numerous individual items selected for testing by the State
auditor has been ongoing over the prior several quarters.
On March 27, 2012,
the Company received a summary of the errors identified by the State auditor on selected billing statements and invoices, which
further included computations of these errors extrapolated over the respective total billings and purchases for the audit period.
Based on this recently provided information from the State, the Company hereby updates and revises the previously and preliminarily
estimated range of its tax liability and estimates its tax liability for this audit, to now be a total of approximately $1.85 million,
including approximately $0.44 million in penalties and interest that are expected to be assessed by the State. While the audit
is not completely finished at this time, as it must go through a final review process by the State, the Company has been provided
guidance that a final assessment for the outstanding tax liability is anticipated on or around, May 20, 2012. Although there is
general agreement on the tax errors identified between the Company and the State auditor at this point, other items may still be
identified or challenged by the State during the final review process. The Company cannot anticipate any additional items that
might be further challenged during the review process, and is therefore unable to estimate any potential added liability that could
arise prior to the completion of this audit and receipt by the Company of the State's final assessment. The Company cautions
that the final results of the tax audit may differ materially from the calculation it recently received from the State auditor
and any estimates made by the Company to date.
The Company has
been advised by counsel that it can seek recovery of taxes that were not billed or collected from its customers and suppliers
beginning in January 2006, and intends to make every reasonable effort to pursue the collection of such taxes after the final
assessment has been received from the State. The underlying unbilled and uncollected sales tax due and legally recoverable
from all of PCI's customers and suppliers is approximately $1.27 million. Based on a detailed review of all currently
available cellular billings from August 2006 through October 2009, and a review of certain equipment sales invoices from
January 2006 through October 2009, the Company has determined that its top 50 customers comprise approximately $0.45 million
of the unbilled sales taxes that the Company will pursue for recovery. There can be no assurance that the Company's
recovery efforts will or will not be successful, nor can the Company estimate an amount of recovery expected from such
efforts at this time.
The State
periodically provides, and the Company therefore intends to seek, an installment payment plan for the final tax liability and
a waiver of penalties and interest from the State. Payment plan terms that the State has historically provided range from 3
– 5 years. Provided that the Company is approved for a five year payment plan, and is also provided a waiver for the
related penalties and interest, the monthly payment for this tax liability is estimated to be approximately $23,400. This
tax liability is primarily the result of long standing sales tax application and computation issues that have existed
in PCI's billing systems for many years and had not been identified in prior sales and use tax audits by the
State. Because the
Company promptly modified its billing applications and corrected such issues as soon as these systemic issues were
identified, the Company's counsel believes the State will consider both of these requests for relief. The Company
cautions that if the State does not provide the installment payment plan relief requested, the Company may be unable to pay
this obligation when it becomes due, without securing additional debt financing or equity contributions, neither of which can
be assured.
As prior reported in
the Company's public filings, starting November 2010, and in accordance with Accounting Standard Codification 450,
Contingencies
("ASC 450"), the Company determined that the potential outcome of the ongoing sales tax audit represented a loss contingency,
as the Company believed that at the conclusion of the sales tax audit, PCI would likely be assessed additional taxes for the audit
period.
Under the guidance
of ASC 450, an estimated loss from a loss contingency shall be accrued by a charge to income if
both the following conditions
are met:
(i) information is available before the next most current financial statements are issued or are available to be issued
indicates that it is probable that an asset had been impaired or a liability had been incurred as of the date of the financial
statements, and (ii) the amount of such loss can be reasonably estimated.
From November
2010, through the receipt of the recent tax audit computations from the State, the Company had estimated and reported its
potential liability to be between $22,000 and $2.4 million. Since the actual outcome of the audit could not previously be
determined, nor could a reasonably accurate estimate of the actual loss be determined, the Company disclosed this range of
potential loss in accordance with ASC 450. Since the Company has now received such actual additional sales and use tax due
computations from the State, the Company can now more reasonably and accurately estimate its loss or tax liability and will
record an accrual for $1.85 million, including $0.44 million in penalties and interest, in its financial statements to be
included in its Form 10-Q for the quarter ended February 29, 2012, expected to be filed on or before April 16, 2012.
Based on the results of the current sales tax audit, the Company also now believes that it may have additional
financial exposure for certain periods following October 2009, the last month covered under the current sales tax audit, in the
event that PCI is audited again by the State. Similar tax computations were applied to the Company's cellular billings through
November 2010, the point at which PCI made substantial system and process changes to correct these tax computations. Other sales
and use tax issues identified during the course of the sales tax audit were corrected at various dates thereafter. The Company
is in the process of estimating its potential sales and use tax exposure for the periods following the current sales tax audit
through the date that each identified issue was corrected by the Company. These computations are complex and have not been completed
as of the date of this Report. The Company expects to be able to estimate a range of additional sales and use tax exposure for
these periods by the time the Company files its fiscal third quarter financials in its Form 10-Q in mid-April 2012. The proper
accounting treatment for such amount is currently being evaluated by the Company.
Finally, and as previously
reported, following the Company's discovery of the systemic tax computation issues, and upon the Company's certifying
officers' review and evaluation of the Company's disclosure controls and procedures and internal control of financial
reporting in fiscal year 2011, the Company determined the foregoing issues rose to the level of a material weakness. During the
quarter ended November 30, 2010, the Company began a systems control remediation process and made certain ongoing modifications
to PCI's cellular and related billing systems, as discussed in detail in each of the Company's reports since that time.
As of the fiscal quarter ended November 30, 2011, the Company reported that it had completed all of the planned remediation steps,
with the exception of implementing a third party sales tax processing system. After further internal testing of the steps identified,
the Company has now determined that certain steps have not been executed completely and therefore the Company continues to have
certain limited control deficiencies. The Company is currently working on processes and procedures to fully and finally implement
all of the remediation steps that have been identified, and continues to focus on identifying if any additional remediation steps
are required, in an effort to resolve this certain material weakness in the Company's internal controls over financial reporting.
Item 9.01 	Financial
Statements and Exhibits
(c)
Exhibits.
None.
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,
hereunto duly authorized.
Date: March 30, 2012
By:
/s/ Douglas E. Sloan
Name: Douglas E. Sloan
Title:   Chief
Financial Officer