Merge Technologies, Milwaukee, faces delisting from the Nasdaq Global Market because it did not file in a timely fashion its quarterly report for the quarter ended June 30, 2007, the company announced. The medical imaging software provider missed its filing because it needs to correct an error in how it has recognized revenue from software and maintenance contracts over the past several years.
Merge said today in a news release that it will be required to restate its audited financial statements for 2004, 2005 and 2006, as well as other financial information included in the annual report for year-end 2006, and the unaudited financial statements included in its quarterly report for the quarter ended March 31. Merge is working with an independent public accounting firm and other advisers to make the corrections and file amendments.
In announcing the need for a closer look on Aug. 10, Merge said that it needed to review whether the company should have recognized the entire value of the bundled contract as revenue over the period for which maintenance and support may be provided to the customer. Instead, it used its historical practice of recognizing the fair value of the software principally in the initial year of the contract and the fair value of the maintenance over the maintenance period.
"This issue relates to a very complex technical interpretation of the accounting rules and our software and maintenance contracts with our customers," said Ken Rardin, chief executive officer, in a news release. "The restatement is not the result of improprieties by any of our personnel."
Merge will request a hearing before a Nasdaq panel to review the delisting determination. Until the panel makes a ruling, shares of Merge common stock cannot be issued for exchangeable shares of Merge-Cedara ExchangeCo, a unit of Merge.