Warrantech Corporation to Appeal NASDAQ Delisting
6 September 1999
Warrantech Corporation to Appeal NASDAQ Delisting
STAMFORD, Conn.--Sept. 3, 1999--Warrantech Corporation (OTC Pink Sheets: WTECE) announced today that, due to the delay in filing its Form 10-K for the period ended March 31, 1999, the Company's stock has been delisted from the NASDAQ National Market. The Company intends to immediately appeal the decision of the NASDAQ Listing and Hearing Review Council. During the appeal, the Company's stock will be traded in the pink sheets. The Company's day-to-day operations will not be affected by the delisting.
As previously announced, the Company has not been able to file its Form 10-K because, shortly before the filing date, the Company's former auditors, Ernst & Young, had raised an issue concerning the Company's revenue recognition policy. The policy which Ernst & Young questioned has been followed by the Company for the past eight years; additionally, in 1991, the Company had sought - and received - confirmation from the staff of the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board that its policy was correct. The Company's previous independent accountants had issued unqualified opinions with respect to the Company's financial statements. The Company's current independent auditors, which have replaced Ernst & Young, have advised the Company that they firmly believe that the policy followed by the Company is still correct. The Company intends to vigorously pursue legal action against Ernst & Young as a result of Ernst & Young's actions.
As a result of these events, the Company has decided, once again, to confirm its current policy with the SEC. Once the Company receives the SEC's position on its accounting policy, the Company will move to file its financial statements with its Form 10-K shortly thereafter.
If the Company's appeal from the NASDAQ panel's delisting decision is successful, the Company's stock will resume trading on the NASDAQ National Market. If the appeal is unsuccessful, the Company will appeal the listing issue further to the SEC and the Courts. The Company firmly believes that its accounting policy is the industry standard and correctly reflects its financial condition. The Company intends to pursue all legal remedies to assure that the current policy is upheld. If the SEC determines that the Company must change its revenue recognition policy, the Company will consider restructuring its business model to avoid the impact on its financial statement.
Predicated on present circumstances, the Board of Directors has given authorization to the Company to repurchase up to $1.5 million of the Company's stock. The Board is convinced that the Company's core business is sound and that the current market price of the Company's shares resulting from recent events does not reflect the fair value of its stock.
Warrantech Corporation, through its subsidiaries, administers and markets service contracts and after-market warranties on automobiles, automotive components, recreational vehicles, appliances, consumer electronics, homes, computer and computer peripherals for retailers, distributors and manufacturers. The Company continues to expand its domestic and global penetration, and now provides its services in the United States, Canada, Mexico, the United Kingdom, Puerto Rico and Latin America.
"Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements which are subject to risks and uncertainties. While the Company believes that its core operations will not be affected by the removal of the stock from the NASDAQ National Market, there are risks that confidence in the Company by its vendors, business partners or employees may be negatively affected by the change in the Company's reported results or the delisting of the Company's stock which could have an impact on the Company's operations. Additionally, if the SEC determines that the Company's revenue recognition policy must be changed, it is likely that the Company's reported net equity will be materially adversely affected which, in turn, would be a potential further basis for preventing the Company's stock from being relisted on the NASDAQ National Market and could also affect its business relationships. These risks could cause the Company's actual results for the current fiscal year and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company.
This release and prior releases are available on the KCSA Public Relations Worldwide website at www.kcsa.com.