OCZ Issues Update on Various Matters

OCZ Technology Group, Inc. announced that the Audit Committee’s investigation has been completed.

As noted in the company’s December 17th press release, OCZ is 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. The restatement of prior periods will be provided as soon as practical.

In addition, because of the delayed filing with the SEC of the Form 10-Q for the period ending November 30, 2012, the company, as anticipated, received a letter from The Nasdaq OMX Group indicating that the company is not in compliance with the filing requirements for continued listing under Nasdaq Listing Rule 5250(c). As previously announced, the Listing Qualifications Staff at Nasdaq, based on the company’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 the company 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.

As previously stated, the company 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 exact date cannot currently be estimated.

On January 15, 2013 the company 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 the company with an operating structure to support its business needs while the company is in technical default of certain covenants. A summary of the material terms of the amendment will be filed today in a Form 8-K.

"The independent investigation has been completed and the findings were highly consistent with the company’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."

Read also:
OCZ Receives Extension to Regain Compliance With Nasdaq
And continues to be listed, at least until February 28, 2013.
OCZ Said Investigation Substantially Complete
Plans restatement of financial statements.
SEC Conducts Investigation on OCZ
Related to financial reporting