Avid Technology said it is unlikely that the company will be able to regain compliance with its SEC filing requirements for continued listing of its common stock on the NASDAQ Stock Market by the March 14, 2014 deadline set by the NASDAQ Listing Qualifications Panel.
Avid has been conducting an internal investigation into its current and historical accounting treatment related to software updates since February 2013.
Last year, the company said that, as a result of this review, it had determined that its financial statements from 2009 – 2011 are no longer reliable, and must be restated “because of errors in the application of US GAAP.”
Avid now says that, given the scope of the review, it will be unlikely to achieve these objectives prior to the March 14, 2014 deadline.
The company says it has made significant progress toward completion of the restatement, including evaluating transactions over an eight-and-a-half year period, encompassing a review of approximately 5 million transaction lines and 700 software releases.
“Since I assumed the Chief Financial Officer role in April 2013, the team, with the assistance of numerous outside resources, has made significant progress in our efforts to become current with our filings,” said John Frederick, Chief Financial Officer, Avid. “While the scope of the project is more involved than the Company first expected, I believe that we have comprehensively assessed the revenue restatement and have a clear view to complete that work. We look forward to working with our new audit team to deliver the audited financial statements to be included in our next annual report on Form 10-K, which will reflect the effects of the previously announced restatement, as expeditiously as possible. We do not, however, believe we will be able to achieve the March 14, 2014 deadline established by NASDAQ. In the near future, Louis Hernandez Jr., our Chief Executive Officer and I plan to update the investor community on our strategic direction and business and once we are current with our filings, we look forward to providing further details on this as well as our financial performance.”
As a result of this updated timing, the Company’s shares of common stock may be suspended from trading and delisted from the NASDAQ Stock Market.
Following a possible suspension of trading in Avid’s common stock on NASDAQ, the company expects that its shares would trade on the OTC Markets while it works to finalize the restatement.
Avid says it intends to complete the restatement and regain compliance with its SEC filing requirements as soon as practicable, and if its shares do become delisted, it will “apply for prompt relisting on the NASDAQ Stock Market so that it can trade on that market as early as possible after regaining compliance with the listing requirements.”
As a result of the ongoing restatement, Avid did not hold an annual meeting of shareholders during the year ended December 31, 2013 and, on January 3, 2014, the company received a letter from the Listing Qualifications Staff of NASDAQ indicating that the Avid’s failure to hold an annual meeting of shareholders and to solicit proxies by December 31, 2013 as required by NASDAQ Listing Rules 5620(a) and 5620(b), may serve as an additional basis for delisting the Company’s common stock from NASDAQ .
Avid has been provided with the opportunity to present its plan to evidence compliance with those requirements for the NASDAQ Listing Qualifications Panel’s review. The company says it intends to hold an annual meeting of shareholders promptly after it has completed the restatement and regained compliance with its SEC filing requirements.
Avid’s cash balance on December 31, 2013 was approximately $48 million and it had no debt or draw on the available line of credit with Wells Fargo. The company expects that cash expenditures in 2014 related to the ongoing accounting evaluation through completion of the evaluation will amount to approximately $25 million to $34 million.
Avid also said it has appointed Deloitte & Touche LLP as its new auditor firm to succeed Ernst & Young LLP. According to the company “the decision to change auditors was not the result of any disagreement between the Company and Ernst & Young LLP on any matter of accounting principle or practice, financial statement disclosures, or auditing scope or procedure.”
Press Release: Avid Announces Appointment of Deloitte & Touche as New Audit Firm
© Devoncroft Partners 2009 – 2014. All Rights Reserved.