Nasdaq Sends EFI Warning on Failure to File Quarterly Report
On August 24th, Electronics For Imaging (EFI) reported that it had received a notification letter from the Nasdaq stock exchanging stating that EFI hadn’t complied with the Nasdaq listing rule 5250(c)(1), which requires timely filing of reports with the U.S. Securities and Exchange Commission.
EFI says the August 18, 2017 Nasdaq letter was sent as a result of EFI’s delay in filing its quarterly report for its quarter that ended on June 30, 2017, and which was due on August 9, 2017, as previously reported in EFI’s Form 12b-25 filed with the SEC on August 10, 2017.
EFI says the Nasdaq notice has “no immediate effect on the listing or trading of the Company’s common stock on the Nasdaq Global Select Market.” Under the Nasdaq rules, EFI says it has 60 days from the date of the notice either to file its quarterly report, or to submit a plan to Nasdaq to regain compliance with Nasdaq’s listing rules. If EFI submits a plan and Nasdaq accepts it, EFI could be granted up to 180 days from report’s due date to regain compliance.
EFI also stated that its “assessment and review of certain accounting-related matters, which was previously announced on August 3, 2017, has progressed significantly.” After completing its review and assessment, it plans to file its report “promptly.”
Shareholder Class Action Lawsuit
Earlier this month, we reported that a shareholder class-action lawsuit was filed in New Jersey federal court last week against EFI claiming that EFI “deceived investors by failing to inform them of faulty accounting practices.”
Anthony Pipitone, an EFI shareholder, alleges that EFI and its CEO and financial officers, Guy Gecht and Marc Olin, respectively, “deceived investors by not disclosing problems with EFI’s tally of certain large-printer sales, leading to a 45-percent drop in the company’s share price after news of the internal investigation became public.”
The complaint states that EFI company and its executives allegedly misled investors about how “(1) the company was improperly recognizing revenue; (2) the company’s disclosure controls and procedures were not effective; (3) the company’s internal control over financial reporting were not effective; and (4) as a result, the company’s public statements were materially false and misleading at all relevant time.”.
The complaint cites allegedly misleading statements in a Form 10-K filed in February and Form 10-Q filed in May that said EFI’s internal financial reporting controls were adequate. However, the complaint states that those statements were contradicted by EFI’s August 3rd press release delaying an earnings call for the second quarter in which the company said it would need to assess its financial reporting concerning certain sales categories, the shareholders allege.
“The assessment is related to certain transactions where a customer signed a sales contract for one or more large format printers and was invoiced, and the printer(s) were stored at a third-party in-transit warehouse prior to delivery to the end-user,” the EFI press release stated.
August 2017: Shareholder Class-Action Lawsuit Filed Against EFI