Posts Tagged ‘Nasdaq’

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
May 23 2013

Avid Technology, which has been conducting an internal investigation into its current and historical accounting treatment related to software updates, has concluded that its “unaudited interim consolidated financial statements for the quarterly periods ended (i) September 30, 2012 and 2011, (ii) June 30, 2012 and 2011, and (iii) March 31, 2012 and 2011, as well as its audited consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 should no longer be relied upon because of errors in the application of US GAAP.”

The company had previously disclosed that it has been unable to submit Form 10-K and Form 10-Q filings to the SEC because of its investigation the accounting treatment related to bug fixes, upgrades, enhancements and compatibility extensions.

As a result of these delayed filings with regulators, Avid has been notified by the NASDAQ stock exchange that the company does not comply with NASDAQ Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC.

Failure to regain compliance could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

The company said it has undertaken and initial review of “whether software updates previously made available by the company to certain of its customers at no-charge included upgrades, enhancements or compatibility extensions and if so, whether such upgrades, enhancements or compatibility extensions met the definition of post-contract customer support (PCS) under U.S. Generally Accepted Accounting Principles (“GAAP”).”

Avid says that “during the course of this initial review, the company concluded that certain of these no-charge software updates should have been accounted for as implied PCS when recognizing revenue for the original sale of the related product.”

On May 20, 2013, after evaluating management’s initial assessment of the potential magnitude of the incorrect application of GAAP with respect to certain Software Updates, the Audit Committee of the Company’s Board of Directors concluded, after discussions with the Company’s management that the Company’s unaudited interim consolidated financial statements for the quarterly periods ended (i) September 30, 2012 and 2011, (ii) June 30, 2012 and 2011, and (iii) March 31, 2012 and 2011, as well as its audited consolidated financial statements for the years ended December 31, 2011, 2010 and 2009 should no longer be relied upon because of these errors in the application of GAAP. The Company’s Audit Committee discussed this matter with the Company’s independent registered public accounting firm, Ernst & Young LLP. In addition, any previously issued press release or other publicly issued statement by the Company containing financial information for such periods should not be relied upon.

The company said in a regulatory filing that it intends to correct the errors it has discovered through the filing of its Form 10-K for the year ended December 31, 2012. However, it cautioned that the company “is not currently able to predict when it will file its Form 10-K for the year ended December 31, 2012.”

Avid says it expects that the timing of revenue recognition for the impacted customer arrangements will change from the historical presentation in the company’s financial statements pursuant to which revenue was recognized up front, generally to being recognized ratably over the estimated implied PCS service period. In addition, the timing of recognition of certain costs related to these customer arrangements may also be impacted, along with the timing of related income taxes. The company cannot at this time estimate the full impact of the adjustments of revenue and costs, and the related impact on income taxes, on any previously issued financial statements for any individual reporting period, although it may be significant. However, while the restatement adjustments will impact previously reported revenue and operating results for prior periods, the restatement adjustments are not expected to affect the amount of total revenue ultimately to be earned, or the amount or timing of cash received or to be received, from the sales transactions or the company’s liquidity or cash flow for any prior period.

Avid said it is also reassessing its accounting for certain restructuring expenses related to lease obligations and other exit activities in the quarters ended June 30, 2012 and September 30, 2012. While Avid continues to analyze the accounting treatment of these restructuring expenses, it has concluded that it has improperly accounted for such restructuring expenses and currently estimates that the restructuring expenses may have been cumulatively overstated by approximately $3.5 million on a pre-tax basis at September 30, 2012.

Avid’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that the company’s disclosure controls and procedures and internal controls over financial reporting were not effective as of December 31, 2012 or March 31, 2013 because of the material weaknesses in the company’s internal controls over financial reporting relating to the matters disclosed in the Company’s Form 10-Q for the quarterly periods ended September 30, 2012, June 30, 2012 and March 31, 2012, and for the treatment of software updates described previously.

Avid said its evaluation of current and historical accounting treatment related to software updates is ongoing, and that it may identify additional issues that could require further adjustments to the company’s prior financial statements for one or more prior fiscal years or periods.

Avid says it is working diligently to complete the review and continues to focus its efforts on completing and filing the delayed periodic reports, including restatements, as soon as possible. During this evaluation, the company plans to continue to invest in its product innovation and execute on its growth strategy.

 

The company also said it “believes it is well positioned to support its customers’ ongoing success.”

Ordinarily, this kind of statement sounds like typical PR spin, but in the case of Avid, our research shows that this is indeed the case.  Despite its widely-reported problems of late, the company continues to enjoy strong loyalty from its broadcast industry customer base.  However, if the market begins to perceive that there is a cloud of uncertainty over Avid’s future, things could deteriorate in the future. Thus far, Avid has done a good job of communicating with the market during its accounting review process. Now the company must resolve its issues, and get back to focusing 100 percent on meeting the needs of its customer base.

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Related Content:

Avid Receives Another Notice of Potential NASDAQ Delisting, Submits Plan to Regain Compliance

Press Release: Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial Determinations of its Accounting Evaluation

Avid 8-K Filing:

Greenfield Resigns from Avid Board of Directors

Avid Replaces Chief Financial Officer

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

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

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Avid Receives Another Notice of Potential NASDAQ Delisting, Submits Plan to Regain Compliance

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
May 22 2013

Avid been notified by NASDAQ that, due to the company’s delay in submitting various regulatory filings, it remains non-compliant with NASDAQ’s Listing Rules.

Failure to regain compliance could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

The company said the latest notification was expected, as it was issued in accordance standard NASDAQ procedures, and that it has no immediate effect on the listing of Avid’s common stock on the NASDAQ Global Market.

Avid’s issues with NASDAQ, which have been going on for several months, stem from an internal investigation into how it historically recognized certain types of service revenues.

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.”

In March 2013, Avid delayed the filing of its annual Form 10-K with regulators.  The company also subsequently delayed its annual shareholder meeting.

On May 172013, the company received  notification from NASDAQ that it remains non-compliant with NASDAQ Listing Rule 5250(c)(1) due to Avid’s delay in filing its Form 10-Q for the first quarter ended March 31, 2013.  This requires timely filing of periodic reports with the SEC as a condition of being listed on the NASDAQ Market.

Avid has now submitted to NASDAQ explaining how it expects to regain compliance with NASDAQ’s continued listing requirements.

If the plan is accepted, Avid 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 the plan is not accepted, Avid will have the opportunity to appeal that decision to a NASDAQ Hearings Panel.

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Related Content:

Press Release: Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial Determinations of its Accounting Evaluation

Greenfield Resigns from Avid Board of Directors

Avid Replaces Chief Financial Officer

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

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

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Greenfield Resigns from Avid Board of Directors

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
May 20 2013

Former Avid CEO Gary Greenfield has resigned from the company’s board of directors.

Greenfield, who was replaced as CEO and president of Avid by Louis Hernandez in February 2013 remained a board member of the company after stepping down from his executive role.

According to a regulatory filing, Greenfield’s term as director was scheduled to expire at the company’s 2013 annual meeting of stockholders.

However, 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.”

Avid subsequently postponed its 2013 annual meeting of shareholders.

Avid said that because its annual meeting has been delayed, Greenfield decided to resign from his position as director of the Company so that he could attend to other commitments.  Greenfield submitted his resignation as a director on May 15, 2013, effective immediately.

Avid said that Greenfield’s decision to resign was mutually agreeable and amicable and not a result of any disagreement or dispute with the company or its management.

Greenfield’s departure as CEO was followed in April 2013 by the departure of Ken Sexton, who had served as CFO under Greenfield. At that time, Avid said Sexton would continue on in a consulting capacity, for an initial period ending September 30, 2013, and work closely with Frederick in order to ensure a smooth transition.

Sexton was replaced as CFO by John Frederick, who joined the company in February 2013 as Chief of Staff.  Prior to joining Avid, Frederick was the Corporate EVP and CFO at Open Solutions, where Hernandez was previously CEO.

In addition to postponing its annual shareholder meeting due to its accounting review, Avid also delayed the filing its annual 10-K with securities regulators. As a result, Avid was notified by NASDAQ in March 2013 that 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 this rule could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

At that time, Avid said it was “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.

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Related Content:

Avid 8-K Filing: Greenfield Resigns From Avid Board

Avid Replaces Chief Financial Officer

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

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

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Avid Replaces Chief Financial Officer

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Apr 25 2013

Avid announced that John Frederick, who joined the company in February 2013 as Chief of Staff, has assumed the role of CFO.  Prior to joining Avid, Frederick was the Corporate EVP and CFO at Open Solutions.

Frederick replaces Ken Sexton, who has been Avid’s CFO since 2008 under previous CEO Gary Greenfield.  Avid says that Sexton, who, earned $2.4m in 2011 according to Bloomberg Business Week, will continue on in a consulting capacity and work closely with Frederick in order to ensure a smooth transition.

New Avid president and CEO Louis Hernandez, who previously worked with Frederick at Open Solutions said: “John is a seasoned financial executive with extensive experience directing the strategic performance of high-growth technology companies. I previously worked with John at Open Solutions, and John’s leadership and financial acumen were instrumental in our successful sale to Fiserv. I am thrilled to have him be part of the team at Avid, as we take the company into its next phase of growth.”

Hernandez added, “On behalf of the Avid community, I also would like to thank Ken Sexton for his guidance, leadership, and years of service to Avid. We are fortunate to be able to retain him in a consulting capacity, and to insure a smooth transition of his responsibilities.”

While it’s not unusual for a new CEO to bring in a CFO with whom he’s worked with previously, Frederick’s appointment may draw extra attention because Avid is in the middle of a major review of its previous accounting practices.

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.”

Because of this review, Avid also delayed the filing its annual 10-K with securities regulators. As a result, Avid was notified by NASDAQ in March 2013 that 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 this rule could result in the delisting of Avid’s shares from the NASDAQ Global Select Market.

At that time, Avid said it was “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.

 

According to Avid, the company has signed a five year employment agreement with Frederick that provides for (i) an annual base salary of $425,000, (ii) a signing and a relocation bonus totaling $200,000, (iii) an annual incentive bonus target equal to 100% of annual base salary (up to a maximum of 135% of annual base salary), (iv) an annual travel and housing allowance of approximately $134,000 subject to normal tax withholding and (v) a long term equity award consisting of time vesting stock options and restricted stock unit awards and performance vesting options (which vest upon attainment of specified targets relating to the Company’s return on equity).  Frederick also received 65,000 time vesting options and 65,000 time vesting restricted stock unit awards, as well as 400,000 performance vesting options. Frederick must repay the signing bonus of $150,000 to the Company in full if he is terminated for cause or resigns without good reason prior to February 11, 2014.

The company also said that it has entered into an agreement with former CFO Sexton to provide consulting services for an initial period ending September 30, 2013. According to the agreement Sexton will be paid $15,000 per month and commit 45% of his time to assisting the company with the ongoing accounting evaluation, and other matters relating to the transition of duties to Frederick, and other projects specified by the company.

The company also said that as part of his separation from the company, Sexton will receive (i) payment of his accrued and unpaid salary and benefits, (ii) salary continuation for twelve months in the aggregate amount of $433,000, (iii) remaining eligible for a prorated annual incentive bonus for the fiscal years 2012 and 2013 if the company pays bonuses on account of such years to executives who remain employed with the Company, (iv) payment in respect of COBRA premiums, (v) outplacement services and (vi) thirteen months additional vesting on his time-vesting equity awards which are unvested as of the Transition Date.

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Related Content:

Press Release: Avid Announces New Chief Financial Officer

Bloomberg Business Week Profile of Ken Sexton

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

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

Greenfield Out as Avid CEO, Replaced by Louis Hernandez

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

Broadcast technology vendor financials, SEC Filings | 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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Chyron Receives Another Delisting Notice From NASDAQ

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Mar 17 2013

Chyron said it received a letter from The NASDAQ Stock Market notifying the company that it is no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the NASDAQ Global Market (the “Notice”).

This is the second time in the past few months that Chyron has received a notice of potential delisting from NASDAQ.  The company previously 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, the company’s share rose enough to enable the company to regain compliance with NASDAQ’s listing rules, and the company said the matter was closed

The latest notice of potential delisting is for a different reason.  This time, the company is not in compliance 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. As disclosed in the company’s 10-K for the fiscal year ended December 31, 2012, Chyron did not meet this requirement.

Chyron pointed out that this latest notice of potential delisting does not result in the immediate delisting of its common stock from NASDAQ, and that in accordance with NASDAQ Listing Rules, the company has 45 calendar days from the date of the Notice, or until April 26, 2013, to submit to NASDAQ a plan to regain compliance with this continued listing requirement.

If the plan is accepted, NASDAQ may grant the Company an extension of up to 180 calendar days from the date of the Notice for the Company to provide evidence of compliance.

If NASDAQ does not accept the company’s plan, Chyron may apply to transfer the listing of its common stock to the NASDAQ Capital Market (which has a lower stockholders’ equity requirement for continued listing) if it satisfies all of the criteria for initial listing on the NASDAQ Capital Market. If the company does not transfer its common stock to the NASDAQ Capital Market, NASDAQ will notify Chyron that its common stock is subject to delisting. At that time, the company may appeal the delisting determination to a NASDAQ Hearings Panel.

Chyron says it does intend to submit a plan to NASDAQ to regain compliance with the NASDAQ Listing Rules, but there can be no assurance NASDAQ will accept the plan.

A primary element of Chyron’s plan will be to note the potential for a positive impact of the company’s recently announced merger with Hego, which is expected to close in the second quarter of 2013.

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Related Content:

 

Chyron SEC Filing – Delisting Notice From NASDAQ for Failure to maintain a minimum of $10,000,000 in stockholders’ equity

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Rising Share Price Helps Chyron Avoid NASDAQ Delisting

Chyron Receives Notice of Potential Delisting From NASDAQ

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Rising Share Price Helps Chyron Avoid NASDAQ Delisting

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Jan 29 2013

Graphics specialist Chyron announced that it has regained compliance with the NASDAQ Stock Market’s “Minimum Bid Price Rule” and is therefore no longer under threat of delisting from public markets.

Chyron received a notice of potential delisting from the NASDAQ stock exchange in November 2012 after the bid price of the company’s common stock closed below $1.00 per share for the 30 consecutive business days.

From the time it received the notice of potential delisting from NASDAQ in November 2012, Chyron had an initial grace period of 180 days, or until May 6, 2013, to regain compliance with the Minimum Bid Price Rule. At that time, the company said it intended “to monitor the bid price for its common stock between now and May 6, 2013 and will consider various options available to the Company if its common stock does not trade at a level that is likely to regain compliance.”

After falling to $0.50 on this news, the company’s shares have more than doubled, and are trading at $1.06 as of today, and have traded above the $1.00 mark since January 10, 2013.

According to Chyron, the company received a letter from NASDAQ on January 25, 2013 that informed it that because its shares have closed at or above $1.00 for 10 consecutive business days (from January 10, 2013 to January 24, 2013), it has now has regained compliance with the Minimum Bid Price Rule. The company says that the matter is now closed.

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Related Content:

Press Release: Chyron Corporation Regains Compliance With NASDAQ Listing Requirements

Chyron Receives Notice of Potential Delisting From NASDAQ

Chyron 8-K Filing: Notice of Potential Delisting From Nasdaq

Chyron Cuts Expenses as Revenue Declines 3% in Q3 2012

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© Devoncroft Partners. All Rights Reserved.

KIT Digital Delisted by NASDAQ, Will Not Appeal

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Dec 19 2012

KIT Digital said in a regulatory filing that it received notification NASDAQ OMX that its common stock would be delisted from The NASDAQ Stock Market effective at the opening of business on December 21, 2012.

The company said it “does not intend to request an appeal hearing regarding NASDAQ’s delisting determination.”

The delisting of KIT Digital’s common stock is being precipitated by the Company’s failure to make timely payment of certain listing fees, as required by NASDAQ Listing Rules 5250(f) and 5910(b)(1).

KIT said it made the determination not to pay the fee “based on its current circumstances and outlook, which include: (1) the previously disclosed listing violation, (2) likely delisting in early 2013 due to its failure to hold a 2012 annual meeting, and (3) the possible failure to become compliant in SEC reporting in sufficient time to avoid delisting.”

The company says it intends to submit an application in order its common stock to be listed on the OTC Pink Sheets/OTC Pink Marketplace, including submission of a Financial Industry Regulatory Authority (“FINRA”) Form 211.

KIT said its common stock would begin trading on the OTC Pink Sheets/OTC Pink Marketplace following approval by FINRA’s OTC Compliance Unit of the Company’s Form 211 and at least one market maker deciding to quote the Company’s common stock.

 

Dismissal of Accounting Firm

KIT also disclosed that on December 17, 2012, it dismissed Grant Thornton LLP as the company’s independent registered public accounting firm.

KIT said that the previously issued report of Grant Thornton on KIT Digital’s financial statements for each of the years ended December 31, 2011 and December 31, 2010, respectively, did not contain an adverse opinion or a disclaimer of opinion and neither was qualified or modified as to uncertainty, audit scope or accounting principles.

KIT said in November that “because of errors and irregularities identified in certain of its historical financial statements, the financial statements for the years ended December 31, 2009, 2010 and 2011 will be restated and should no longer be relied upon.”

 

The text of the filing is shown below:

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standards; Transfer of Listings.

On December 12, 2012, KIT digital, Inc. (the “Company”) received a notification letter from the Listing Qualifications Department of The NASDAQ OMX Group (“NASDAQ”) stating that the Company’s common stock would be delisted from The NASDAQ Stock Market effective at the opening of business on December 21, 2012 upon NASDAQ filing a Form 25-NSE Notification of Delisting with the Securities and Exchange Commission (“SEC”).  Trading of the Company’s common stock is currently subject to a trading halt, which the Company does not expect to be lifted prior to the delisting of the common stock.

The delisting of the Company’s common stock is being precipitated by the Company’s failure to make timely payment of certain listing fees, as required by NASDAQ Listing Rules 5250(f) and 5910(b)(1).  The Company made the determination not to pay the fee based on its current circumstances and outlook, which include: (1) the previously disclosed listing violation (described below), (2) likely delisting in early 2013 due to its failure to hold a 2012 annual meeting, and (3) the possible failure to become compliant in SEC reporting in sufficient time to avoid delisting.  The Company does not intend to request an appeal hearing regarding NASDAQ’s delisting determination.

As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on December 10, 2012, the Company received a deficiency notice from NASDAQ informing the Company that it was no longer in compliance with NASDAQ Listing Rule 5250(c)(1) due to the Company’s inability to timely file its Form 10-Q for the period ended September 30, 2012 (the “3rd Quarter Form 10-Q”). The Company’s inability to file the 3rd Quarter Form 10-Q within the prescribed time period was because of the Company’s previously announced restatement of certain historical financial statements.

The Company previously disclosed that it intended to submit a plan to regain compliance with NASDAQ’s requirements for continued listing. In light of the delisting notification and the Company’s decision not to appeal the delisting, the Company will not submit a plan of compliance to the NASDAQ.

The Company currently intends to submit an application in order for the Company’s common stock to be listed on the OTC Pink Sheets/OTC Pink Marketplace, including submission of a Financial Industry Regulatory Authority (“FINRA”) Form 211. The Company’s common stock would begin trading on the OTC Pink Sheets/OTC Pink Marketplace following approval by FINRA’s OTC Compliance Unit of the Company’s Form 211 and at least one market maker deciding to quote the Company¹s common stock.  The OTC Pink Sheets/OTC Pink Marketplace is a market tier operated by the OTC Market Group Inc. for over-the-counter traded companies.  The delisting and transition to the OTC Pink Sheets/OTC Pink Marketplace does not change the Company’s obligations to file periodic and other reports with the SEC under applicable federal securities laws.  There is no assurance that the OTC Compliance Unit will approve the Company’s Form 211 in view of the pending restatement of the Company’s financial statements or that any market maker will decide to quote the Company’s common stock following delisting by NASDAQ or at all, and thus there is no assurance that the Company’s common stock will become eligible to trade on the OTC Pink Sheets/OTC Pink Marketplace.

 

 Item 4.01 Changes in Registrant’s Certifying Accountants.

On December 17, 2012, the Audit Committee dismissed Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm.

The previously issued report of Grant Thornton on the Company’s financial statements for each of the years ended December 31, 2011 and December 31, 2010, respectively, did not contain an adverse opinion or a disclaimer of opinion and neither was qualified or modified as to uncertainty, audit scope or accounting principles.

As previously reported in the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2012, the Audit Committee concluded that, because of errors and irregularities identified in certain of its historical financial statements, the financial statements for the years ended December 31, 2009, 2010 and 2011 will be restated and should no longer be relied upon.

During the fiscal years ended December 31, 2011 and December 31, 2010, and during the period from January 1, 2012 through the date of this report, the Company had: (i) no disagreements with Grant Thornton within the meaning of Item 304(a)(1)(iv) of Regulation S-K on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, any of which that, if not resolved to Grant Thornton’s satisfaction, would have caused it to make reference to the subject matter of any such disagreement in connection with its reports for such years and interim periods; and (ii) except as disclosed herein, no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K.

As disclosed in the report of Grant Thornton for the fiscal year ended December 31, 2011, the Company has not maintained effective internal control over financial reporting as of December 31, 2011 due to a material weakness in its internal control over financial reporting related to the lack of finance personnel with understanding of US GAAP to ensure that all transactions were reported in accordance with US GAAP on a timely basis.  The material weakness was disclosed in Items 8 and 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and in Item 4 of the Quarterly Reports on Form 10- Q for the quarters ended March 31, 2012 and June 30, 2012 and is disclosed therein. As of December 17, 2012, the Company’s remediation efforts with respect to this material weakness were not complete. The Company has authorized Grant Thornton to respond fully to inquiries from successor accountants concerning these matters.

The Company has provided Grant Thornton with a copy of the above disclosures, and, as required by the SEC’s rules, the Company has requested that Grant Thornton furnish the Company with a letter addressed to the SEC stating whether or not it agrees with the statements made above.

 

Item 7.01 Regulation FD Disclosure.

As previously reported, the Audit Committee initiated an investigation of certain transactions that gave rise to impairments taken by the Company during the quarter ended June 30, 2012. The investigation, conducted by independent legal and professional advisors under the direction of the Audit Committee, and in consultation with Grant Thornton, identified certain errors and irregularities in the Company’s historical financial statements. The Audit Committee’s investigation with respect to these matters has concluded; however, the Company continues to review these matters in connection with the previously announced financial statement restatement.

The accounting errors and irregularities identified during the Audit Committee investigation relate primarily to recognition of revenue related to certain perpetual software license agreements entered into by prior management in 2010 and 2011. The investigation concluded that the Company improperly recognized revenue in 2010 and 2011 for perpetual software licenses where delivery of software and/or required software customization was not completed prior to recognition of revenue; license payments had not been made on several of the licenses; and/or the companies involved in the transactions and the circumstances of certain payments made by these companies were questionable. The timing and circumstances of these transactions also raised questions as to whether certain of the transactions were designed to assist the Company in reporting earnings consistent with analysts’ expectations.

The Audit Committee also concluded that certain transactions entered into by the Company during fiscal years ended December 31, 2008 through December 31, 2011, were related party transactions. With respect to the related party issues, the Audit Committee concluded that the Company’s investments with at least three entities – Enable Invest Ltd., Maiden Capital LLC, and MNA Partners Ltd. – should have been disclosed as related party transactions at the time the investments were made. The Company recognized a loss on the impairment of the Enable investment of $2.1 million for the year ended December 31, 2011 and recorded a $1.2 million charge related to the investment in Maiden Capital. The Company intends to review these transactions in more detail in connection with the restatement.

The Company is engaged in an ongoing review of the transactions that were the subject of the Audit Committee investigation as well as other similar transactions. It is possible that the Company may conclude that additional revenue in prior periods was not recognized appropriately, including with respect to the identified related party transactions. The Audit Committee’s conclusions relate to prior historical financial statements and are not related to any actions taken by current directors or current officers of the Company.

 

Important Caution Regarding Forward-Looking Statements

This report contains certain “forward-looking statements.” These statements can be identified by the use of words or phrases such as “believes,” “estimates,” “expects,” “intends,” “anticipates,” “projects,” “plans” and variations of these words or similar words. Important risks, uncertainties and other important factors that could cause actual results to differ materially include, among others: the risk that additional information may become available in preparing and auditing the financial statements that would require the Company to make additional corrections, the time and effort required to complete the restatement of the financial statements, the ramifications of the Company’s potential inability to timely file periodic and other reports with the SEC, risk that the Company’s common stock will not be eligible to trade on the OTC Pink Sheets/OTC Pink Marketplace or that the Company determines not to seek to make the shares of common stock eligible to trade on the OTC Pink Sheets/OTC Pink Marketplace, the risk of engaging a new audit firm and the terms thereof, and the risk of litigation or governmental investigations or proceedings relating to these matters. Certain risks and uncertainties related to the Company’s business are or will be described in greater detail in the Company’s filings with the SEC. Except as required by applicable law, the Company is not under obligation to (and expressly disclaims any such obligation to) update its forward-looking statements whether as a result of new information, future events or otherwise.

 

 

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.

 KIT DIGITAL, INC.  

 

By: /s/ Fabrice Hamaide

Fabrice Hamaide

Chief Financial Officer and Secretary

Date: December 18, 2012

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Related Content:

KIT Digital 8-K Filing with SEC

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© Devoncroft Partners. All Rights Reserved.

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Chyron Receives Notice of Potential Delisting From NASDAQ

Broadcast technology vendor financials, SEC Filings | Posted by Joe Zaller
Nov 13 2012

Broadcast graphics specialist Chyron reported that it has received notification of potential delisting from the Nasdaq Stock Market because it no longer complies with NASDAQ Listing Rule 5450(a)(1) (the “Minimum Bid Price Rule”), as the bid price of the Company’s common stock closed below the minimum $1.00 per share for the 30 consecutive business days.

Chyron has an initial grace period of 180 days, or until May 6, 2013, to regain compliance with the Minimum Bid Price Rule. If it is not able to do this, NASDAQ will provide written notification to Chyron that its common stock will be delisted.

In order for Chyron to regain compliance, the company’s common stock must close at or above $1.00 per share for a minimum of 10 consecutive business days at any time before May 6, 2013.

Chyron says it “intends to monitor the bid price for its common stock between now and May 6, 2013 and will consider various options available to the Company if its common stock does not trade at a level that is likely to regain compliance.” The company said that it may appeal NASDAQ’s delisting determination, and that it may also be eligible for an additional grace period of 180 days if it satisfies all of the requirements of NASDAQ Listing Rule 5505, other than the minimum bid price requirement.

Chyron’s shares fell more than 10% to $0.50 on the news.  The company’s stock price has been below $1 since October 1, 2012, and is currently at the lowest level in the company’s history according to this chart.

Last week on its Q3 2012 earnings call, Chyron Michael Wellesley-Wesley was asked about the potential for the company’s shares to be delisted.  Wellesley-Wesley responded by saying that one NASDAQ’s listing requirements “is that the bid price shouldn’t drop below $1 for more than 30 days and we’re now at around that point. The next step would be to receive some notification from NASDAQ that is the case and that is of concern to them. And then there is a long process of discussion with NASDAQ, who I don’t think are keen to delist any companies and there are certainly many strategies and ways that we could avoid that happening and it is a three to six months process and so nothing is going to happen quickly.”

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Related Content:

Chyron 8-K Filing: Notice of Potential Delisting From Nasdaq

Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

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