Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer
of Listing.
On May 2, 2019, the Company received a delisting determination letter (the Determination Letter) from the staff of the
Listing Qualifications Department of the Nasdaq Stock Market (Nasdaq) informing the Company that, since the Company will be unable to file its Annual Report on Form
10-K
for the fiscal year ended
December 31, 2018 and its Quarterly Report on Form
10-Q
for the fiscal quarter ended September 30, 2018 (together, the Delayed Reports) by May 8, 2019, the deadline by which the
Company is required to file the Delayed Reports in order to regain compliance with Nasdaq Listing Rule 5250(c)(1) (the Financial Reporting Rule), the Companys common stock is subject to delisting from Nasdaq. The Financial
Reporting Rule requires listed companies to timely file all required periodic financial reports with the Securities Exchange Commission (SEC). The Determination Letter further noted that, unless the Company requests an appeal of the
determination, trading of the Companys common stock on the Nasdaq Capital Market will be suspended at the opening of business on May 13, 2019, and a Form
25-NSE
will be filed with the SEC removing
the Companys securities from listing and registration on Nasdaq.
The Company intends to timely request a hearing before a Nasdaq Hearings Panel
(the Panel) to present its plan to regain compliance with the Financial Reporting Rule, which request will stay the suspension of the Companys securities for a period of 15 days from the date of the request. In connection with its
request for a hearing, the Company also intends to request a stay of the suspension of trading and delisting of the Companys common stock while the appeals process is pending. The Panel will notify the Company of its decision to allow the
Companys common stock to continue to trade on the Nasdaq Capital Market pending the Panels decision no later than 15 days following the deadline to request the hearing. The Panel may, in its discretion, determine to continue the
Companys listing pursuant to an exception to the Financial Reporting Rule for a maximum of 360 calendar days from the due date of the first Delayed Report, which would be through November 4, 2019. There can be no assurance that the Panel
will grant a stay of the suspension of trading and delisting while the appeals process is pending or any exception to the Financial Reporting Rule.
The
Company has been unable to timely file the Delayed Reports due to the previously disclosed, ongoing review by the Companys Audit Committee to assess the accuracy of the Companys previously filed financial statements, the focus of which
is to review the extent to which the Company incorrectly recognized revenue with respect to bill and hold transactions from 2014 until the second quarter of fiscal 2018, and to determine whether the Companys accounting for those transactions
led to material errors in its financial statements. As disclosed in the Companys Form
8-K
filed on the date hereof, the Company has determined to restate its consolidated financial statements as of and
for each of the fiscal years ended December 31, 2014, 2015, 2016 and 2017, as well as each fiscal quarter of the fiscal year ended December 31, 2017 and the first two fiscal quarters of the fiscal year ended December 31, 2018. In
addition, Company is cooperating with an ongoing investigation by the SEC relating to certain revenue recognition practices, including bill and hold transactions that occurred from 2014 through the second quarter of 2018. The Company intends to
continue its efforts to regain compliance with the Financial Reporting Rule as soon as practicable after the Audit Committees investigation is complete, the restated financial statements are completed, and, where applicable, they have been
audited, and the required Delayed Reports have been finalized.