An Update On OCZ Technology's Issues
OCZ Technology Group on Tuesday announced that that the
Audit Committee's investigation has been completed.
OCZ has been working with Crowe Horwath LLP, the
independent auditors, regarding the restatements of the
results for the first quarter of fiscal 2013, as well as
the results for fiscal 2012. The restatements primarily
relate to the timing and classification of customer
incentive costs between revenue and operating expenses, the
timing of revenue recognition for certain transactions, and
the level of reserves for product returns.
In addition, because of the delayed filing with the SEC of the Form 10-Q for the period ending November 30, 2012 (the "Form 10-Q"), the company, received a letter from The Nasdaq OMX Group indicating that the it is not in compliance with the filing requirements for continued listing under Nasdaq Listing Rule 5250. The Listing Qualifications Staff at Nasdaq, based on OCZ's compliance plan, granted the company an exception until February 28, 2013 to file its Form 10-Q for the period ended August 31, 2012.
This recent Nasdaq letter notes that OCZ is required, by February 1, 2013, to submit an update to this original plan to regain compliance. Nasdaq is permitted to grant an extension of up to 180 days from the initial delinquent filing, or until April 8, 2013, for the Company to regain compliance.
OCZ says that it continues to work diligently to complete the financial audit and quarterly reviews along with any necessary restatements. While this will hopefully be completed in the near future, the company cannot provide an exact dated.
On January 15, 2013 OCZ amended its credit facility agreement with Wells Fargo Capital Finance to, among other things, reduce the maximum loan amount to $20 million from the prior $35 million. At December 31, 2012 the outstanding loan balance was approximately $7 million compared to approximately $15 million at November 30, 2012 and $20 million at August 31, 2012. This amendment specifies certain reporting requirements and liquidity minimums, but also provides OCZ with an operating structure to support its business needs while it is in technical default of certain covenants.
"The independent investigation has been completed and the findings were highly consistent with OCZ's internally identified issues. The company has already eliminated certain customer incentive programs and made people and process changes to improve overall business operations and continue moving the Company in a positive direction," stated Ralph Schmitt, CEO of OCZ Technology. "We continue to focus on making operational improvements and have significantly reduced our channel inventory to less than $50 million. This puts our sales channel in excellent position to properly support our customers while also efficiently managing our total inventory. The company has successfully settled the two previously disclosed product and patent litigation contingencies, removing the potential for significant, unforeseen liabilities to the company."
"The team continues to deliver on its product development efforts, and at this year's CES in Las Vegas, we unveiled and demonstrated the upcoming PCIe based Vector SSD as well as showcased a wide range of client and enterprise solid-state storage solutions," added Schmitt. "We are also pleased with the customer and industry reactions we are receiving for our latest SATA III-based Vector SSD Series, featuring the company's next-generation Indilinx Barefoot 3 controller, and look forward to continue to provide our customers with innovative industry leading storage solutions."
OCZ also today announced the appointment of Wayne B. Eisenberg as Senior Vice President of Global Sales. Eisenberg spent 16 years at SMART Modular Technologies, a developer of memory and solid-state storage subsystems, where he held various sales management positions including 9 years as Vice President of Worldwide Sales and Marketing Communications.
Prior to joining OCZ, Eisenberg served as Vice President of Sales for Leyden Energy Inc, a developer of Lithium-ion-based energy storage solutions. Prior to his employment with SMART Modular, Eisenberg was an Area Sales Manager in the Computer Systems Division at Toshiba America selling portable computing products for the enterprise. He also served as a District Manager for GRID Systems selling industrial portable computing solutions.
In addition, because of the delayed filing with the SEC of the Form 10-Q for the period ending November 30, 2012 (the "Form 10-Q"), the company, received a letter from The Nasdaq OMX Group indicating that the it is not in compliance with the filing requirements for continued listing under Nasdaq Listing Rule 5250. The Listing Qualifications Staff at Nasdaq, based on OCZ's compliance plan, granted the company an exception until February 28, 2013 to file its Form 10-Q for the period ended August 31, 2012.
This recent Nasdaq letter notes that OCZ is required, by February 1, 2013, to submit an update to this original plan to regain compliance. Nasdaq is permitted to grant an extension of up to 180 days from the initial delinquent filing, or until April 8, 2013, for the Company to regain compliance.
OCZ says that it continues to work diligently to complete the financial audit and quarterly reviews along with any necessary restatements. While this will hopefully be completed in the near future, the company cannot provide an exact dated.
On January 15, 2013 OCZ amended its credit facility agreement with Wells Fargo Capital Finance to, among other things, reduce the maximum loan amount to $20 million from the prior $35 million. At December 31, 2012 the outstanding loan balance was approximately $7 million compared to approximately $15 million at November 30, 2012 and $20 million at August 31, 2012. This amendment specifies certain reporting requirements and liquidity minimums, but also provides OCZ with an operating structure to support its business needs while it is in technical default of certain covenants.
"The independent investigation has been completed and the findings were highly consistent with OCZ's internally identified issues. The company has already eliminated certain customer incentive programs and made people and process changes to improve overall business operations and continue moving the Company in a positive direction," stated Ralph Schmitt, CEO of OCZ Technology. "We continue to focus on making operational improvements and have significantly reduced our channel inventory to less than $50 million. This puts our sales channel in excellent position to properly support our customers while also efficiently managing our total inventory. The company has successfully settled the two previously disclosed product and patent litigation contingencies, removing the potential for significant, unforeseen liabilities to the company."
"The team continues to deliver on its product development efforts, and at this year's CES in Las Vegas, we unveiled and demonstrated the upcoming PCIe based Vector SSD as well as showcased a wide range of client and enterprise solid-state storage solutions," added Schmitt. "We are also pleased with the customer and industry reactions we are receiving for our latest SATA III-based Vector SSD Series, featuring the company's next-generation Indilinx Barefoot 3 controller, and look forward to continue to provide our customers with innovative industry leading storage solutions."
OCZ also today announced the appointment of Wayne B. Eisenberg as Senior Vice President of Global Sales. Eisenberg spent 16 years at SMART Modular Technologies, a developer of memory and solid-state storage subsystems, where he held various sales management positions including 9 years as Vice President of Worldwide Sales and Marketing Communications.
Prior to joining OCZ, Eisenberg served as Vice President of Sales for Leyden Energy Inc, a developer of Lithium-ion-based energy storage solutions. Prior to his employment with SMART Modular, Eisenberg was an Area Sales Manager in the Computer Systems Division at Toshiba America selling portable computing products for the enterprise. He also served as a District Manager for GRID Systems selling industrial portable computing solutions.
