Davis, California, USA
May 18, 2015
Marrone Bio Innovations, Inc. (the "Company")(NASDAQ:MBII) today announced that, as anticipated, on May 15, 2015, it received a letter from the Listing Qualifications Staff (the "Staff") of The NASDAQ Stock Market LLC ("NASDAQ") notifying the Company of its noncompliance with NASDAQ Listing Rule 5250(c)(1) as a result of the Company's failure to timely file its Quarterly Report on Form 10-Q for the three months ended March 31, 2015 (the "Form 10-Q") on May 15, 2015.
As previously reported, on May 6, 2015, the Company was notified by the Staff that the Company's securities were subject to delisting as a result of the Company's noncompliance with NASDAQ Listing Rule 5250(c)(1). On May 13, 2015, the Company timely submitted a request for the hearing before the NASDAQ Listing Qualifications Panel (the "Panel") and a stay of the delisting. The Staff has confirmed that a hearing has been set for June 18, 2015, at which hearing the Company will present its plan to evidence compliance with NASDAQ's filing requirement and request an extension within which to do so. In addition, the Staff has confirmed that the delisting action has been stayed for 15 calendar days, or until May 28, 2015, at which the Company's shares will be suspended from trading unless the Panel grants an extension of the stay pending the hearing. In accordance with the NASDAQ Listing Rules, the Panel has the authority to continue the Company's listing on NASDAQ pursuant to an exception to the filing requirement through as late as November 2, 2015. The Company's common stock will continue to trade on The NASDAQ Global Market under the symbol "MBII" pending the completion of the hearing process and the expiration of any extension period granted by the Panel.
As previously reported, the Audit Committee (the "Committee") of the Company in September 2014 commenced an internal investigation regarding certain accounting matters, and announced that it had concluded, after consultation with management, that the Company's previously reported financial statements as of December 31, 2013 and for the fiscal year ended December 31, 2013, the related report of the independent auditors on those 2013 financial statements dated March 25, 2014, and the unaudited interim financial statements as of and for the three months and the three and six months ended March 31, 2014 and June 30, 2014, respectively, should no longer be relied upon. Following the February 2015 completion of the internal investigation, in April 2015, the Company announced that the Committee concluded, after consultation with management, that in addition, the Company's previously reported unaudited interim financial statements as of and for the three months, the three and six months and the three and nine months ended March 31, 2013, June 30, 2013 and September 30, 2013, respectively, should no longer be relied upon.
Management of the Company has been evaluating the necessity, nature and scope of any restatements to any of its previously filed financial statements based on the findings and conclusions of the Committee's internal investigation. Principally, the Committee determined that as a result of the failure of certain employees to share with the Company's finance department or the external auditors important transaction terms with distributors, including "inventory protection" arrangements that would permit the distributors to return to the Company certain unsold products, the Company inappropriately recognized revenue for certain historical sales transactions with these distributors prior to satisfying the criteria for revenue recognition required under U.S. Generally Accepted Accounting Principles ("GAAP").
Accordingly, the Company's management has been evaluating all distributor sales transactions during the periods referenced above on a customer-by-customer and transaction-by-transaction basis, including relevant documents and seeking any details of any other undocumented arrangements or commitments. With respect to each individual transaction, the Company's management is evaluating relevant facts and circumstances to apply its revenue recognition policy. With respect to many transactions, to permit the Company to determine both (i) the appropriate methodology for accounting for those transactions and (ii) the appropriate timing and quantification of any product revenues arising from those transactions, the Company has sought to obtain additional information from certain of its distributors - including information regarding the distributors' sales to end users of the products the Company shipped to the distributor.
In light of the nature and complexity of this ongoing process, while the Company anticipates that it will determine to restate certain of its financial statements, the Company has not yet made any definitive conclusions regarding the nature, scope and specific financial impacts of such restatements, and cannot at this time provide an estimate of extent or effect of such restatements, or the timing of the announcement of financial results or any such restatements.
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