The SCO Group is in danger of losing its Nasdaq listing for failing to file its 2004 annual report on time.
SCO plans to request a hearing on the matter, which will delay its removal from the exchange, but beginning Friday the company will trade under a modified ticker symbol - from SCOX to SCOXE - to indicate its delinquent filing status.
SCO said Nasdaq notified it Wednesday of the potential delisting. The company has not filed its 10K annual report on the fiscal year ended October 31, 2004, within the 90-day time frame mandated by the US Securities and Exchange Commission (SEC). SCO attributed its delay to an examination of stock grants related to the company's compensation plans.
Stock purchase pain
SCO warned in an SEC filing two weeks ago that it would be late filing its report because its auditor, KPMG, has requested additional documentation from SCO and was unable to complete its audit by the SEC's filing deadline. SCO spokesman Blake Stowell said Thursday that SCO and KPMG are discussing SCO's accounting treatment of its employee stock purchase plan. KPMG has been SCO's auditor for several years; Stowell was unsure why the purchase plan accounting was raising flags now when it hadn't before.
"Our plan is still to get this resolved in short order," Stowell said. "Everything with our 10K is ready except for this accounting treatment."
SCO's sinking feeling?
While SCO did not file its annual report with the SEC, it did put out a press release in December summarizing its results for the year. Its revenue dropped 46 per cent, to $42.8 million, while its 2003 profit turned into a $23.4 million net loss in 2004.
SCO spent nearly $20 million during the year on legal fees related to its legal battle with IBM Corp. and others about Linux-related intellectual property claims.
Is it $20 million wasted? The judge in the IBM trial certainly implied it was. Last week, US district court Judge Dale Kimball denied SCO's motion to dismiss a key counterclaim by IBM - and called SCO's failure to provide evidence against IBM, "amazing".
"Viewed against the backdrop of SCO's plethora of public statements concerning IBM's and others' infringement of SCO's purported copyrights to the Unix software, it is astonishing that SCO has not offered any competent evidence to create a disputed fact regarding whether IBM has infringed SCO's alleged copyrights through IBM's Linux activities," he said.
Motley Fool describes events as "SCO's slow death spiral".