Avid Receives Notice of Potential Delisting From NASDAQ for Failure to Submit 10-K Filing

Posted by Joe Zaller
Mar 21 2013

Avid said that it received notification from NASDAQ that, due to the delay in the filing of its annual 10-K report, the company no longer complies with NASDAQ Marketplace Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.

Failure to comply with Rule 5250(c)(1) could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

Avid said the notification was expected, and that the notice “has no immediate effect on the listing of its stock” on the NASDAQ market.

In February 2013, Avid announced that it would delay the release of its Q4 and full-year 2012 results in order “to provide additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”  The announcement was made about two weeks after Avid said it had named Louis Hernandez to replace Gary Greenfield as the company’s president and CEO.

The company has now revealed that it has been conducting a forensic accounting process, the primary focus of which has been to determine whether certain software updates that were previously classified as “bug fixes” actually meet the definition of post-contract customer support under the rules of US GAAP.  Avid has not disclosed the size and scope of these charges, but it appears that if the company is successful in its efforts, it will be able to re-classify these costs and any associated revenue as customer support.

Avid says it is “working diligently to complete the review and continues to focus its efforts on completing the Form 10-K filing as soon as possible,” and that it intends to submit a plan to NASDAQ staff as to how it intends to regain compliance with continued listing requirements.

Under NASDAQ’s rules, the company has until May 20, 2013 to submit this plan.  If NASDAQ accepts Avid’s plan, the company expects to have up to 180 calendar days from the initial due date for the Form 10-K, or until September 16, 2013, to regain compliance. If Avid’s plan is not accepted, Avid says it will have the opportunity to appeal that decision to a NASDAQ Hearings Panel.

Avid says that during this evaluation, it “plans to continue to invest in its product innovation and execute on its growth strategy. The company has no debt and ample cash to support it in these efforts and believes it is well positioned to support its customers’ ongoing success.”

Despite its financial woes over the past few years, our research shows that Avid continues to enjoy a strong brand reputation and customer loyalty.  With new management in place and the 2013 NAB Show just around the corner, it will be interesting to see what strategies the company adopts to meet the needs of its customers and return to profitability.

Avid is not the only broadcast technology vendor to have received a notice of potential delisting from NASDAQ. Chyron received a notice of potential delisting from NASDAQ in November 2012 when its closing share price fell below $1.00 for more than 30 days. In that instance, Chyron’s share rose enough to enable the company to regain compliance with NASDAQ’s listing rules, and the company said the matter was closed.  In March 2013 Chyron received another notice of potential delisting from NASDAQ for failure to comply with NASDAQ Listing Rule 5450(b)(1)(A),which requires companies listed on the NASDAQ Global Market to maintain a minimum of $10,000,000 in stockholders’ equity.

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Related Content:

Press Release: Avid Announces Receipt of Anticipated NASDAQ Letter

Avid Delays Release of Q4 and Full Year 2012 Results, Shares Fall

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

Avid SEC Filings Disclose Details of Greenfield’s Separation Agreement and New CEO Contract

Avid Warns of Lower Than Expected Revenue and Profit in Q3 2012

Chyron Receives Another Delisting Notice From NASDAQ

Rising Share Price Helps Chyron Avoid NASDAQ Delisting

Chyron Receives Notice of Potential Delisting From NASDAQ

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