Unix vendor The SCO Group has been notified that it could soon be delisted by Nasdaq Stock Market because the company has not yet filed its required Form 10-K annual report for fiscal 2004.
In an announcement Thursday, Lindon, Utah-based SCO said it received a letter from New York-based Nasdaq Wednesday warning of the potential delisting.
SCO spokesman Blake Stowell said the company has until Feb. 25 to complete its 10-K filing without facing delisting.
SCO's 2004 fiscal year ended October 31. Under U.S. Securities and Exchange Commission rules, companies must file their 10-K annual reports with the SEC within 90 days of the end of their fiscal year. For SCO, that means the report should have been filed by the end of January. The 10-K report provides an overview of a company's business and financial condition, including its audited financial statements.
SCO is listed on the Nasdaq SmallCap Market board.
The company said it will request a hearing with the Nasdaq Listing Qualifications Panel to appeal the decision. That appeal would delay a potential delisting until after the hearing was completed.
Stowell said the delay in filing the documents is the result of a disagreement between SCO and its auditing company about how it handles accounting issues related to its employee stock ownership plan.
SCO's auditors believe that the stock ownership plan transactions should be handled one way in the 10-K filing, whereas SCO executives believe that the transactions should be treated differently, Stowell said. SCO has since asked the auditing firm's national office for its interpretation of the issue.
Stowell said the filing delay doesn't have anything to do with irregularities or other problems with SCO's financial results. "Everything else is ready, and we're just working through it with our auditors," he said.
"I think that the company thought we would have this resolved before now," Stowell said. "We still believe it will be resolved very soon. We realize it's in everyone's best interests to get this resolved as quickly as possible, and that's our intention."
Kevin Kornfield, president of Kevin Hart Kornfield & Co., a portfolio management firm, said delisting letters are sent out periodically to companies by the stock exchanges, but they are not everyday events.
"It is like a warning flag," Kornfield said. "In the normal course of things, it is not a good sign."
Nasdaq officials declined to comment on the matter.