05 Jul No word on NASDAQ extension for Merge
West Allis, Wis. – During a conference call with investors, the new executive team at Merge Healthcare said the company has received no signal from the NASDAQ Stock Market on its request for an extension on the July 7 deadline to file annual reports.
Chairman Michael Dunham, joined by interim co-CEOs Brian Pedlar and Robert White, said the company has been in contact with the NASDAQ since the completion of a financial audit, but he made no prediction on the outcome.
“I cannot and we cannot handicap that decision,” he said.
Merge has said it will not be able to file its annual report for the year that ended Dec. 31, 2005, or a restatement for the quarter that ended March 31, 2006, by the July 7 deadline. If not granted an extension by the NASDAQ Listing Qualifications Panel, its stock will be traded on “Pink Sheets” beginning July 10.
Merge was granted a one-month extension on June 7.
The conference call was arranged three days after the company announced the resignations of three executives and the discovery of material errors in past financial statements, and two days after the value of its stock fell by 41 percent.
Merge has accepted the resignation of its founder and interim chief executive officer William Mortimore, who also served as CEO from 1987 to 2000, plus chief financial officer Scott Veech and senior vice president of strategic business development David Noshay.
The changes follow the completion of an investigation that uncovered improper accounting and financial reporting practices at Merge, a developer of medical imaging and patient management software, dating back to 2002.
In May, CEO Richard Linden left the company after the filing of seven class action lawsuits by people who bought shares of Merge between August 2, 2005 and March 16, 2006. The lawsuits claim the company issued false statements in its purchase of Cedara Software, which Merge acquired in June 2005 for $325 million.
The conference call was scheduled to provide insight into Merge’s strategic direction and its new executive structure. While the company searches for a permanent CEO, it will be managed by Dunham, former CEO of Effective Management Systems, and the presidents of two subsidiaries – Pedlar, president of Cedara Software, and White, president of Merge eMed. Both have been assigned to focus on customer and employee relations, while Dunham will focus on the shareholder constituency.
Dunham would not get into many financial details, but promised a new era in the history of the company, and assured investors that Merge was moving forward with its strategic plan. He also said that neither employees nor customers were bailing on Merge despite the dark cloud that hangs over the company.
“Certainly, it’s had an impact on our business, and the competition has been sticking it in our face,” Dunham said, but he quickly added that the company continues to sign new customers.
The management team cited several examples, including Cedara Software’s selection as the exclusive partner for electronic patient records by GIP CPage, a 250-hospital association in France. The association will deploy Cedara’s aXigate technology, a clinical hospital information software product, to complement its existing administrative hospital information system.
“I think it shows the ability of our business to expand worldwide,” Pedlar said.
Dunham characterized the recent bad news as “non-cash-effecting” items and said the company has sufficient liquidity with $60 million in cash on hand.
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