Merisel filed an 8-K today, disclosing that its shares will be delisted from Nasdaq effective at the end of trading today. The company also announced that its auditors, Deloitte & Touche LLP, had resigned. Deloitte has requested that Merisel investigate and report on the alleged fraud of Tim Jensen, the company's ex-CEO. The 8-K also disclosed that Deloitte has informed the company that it is unwilling to rely on the representations of its new CEO, Donald R. Uzzi.
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Item 3.01 Notice of Delisting or Failure to Satisfy A Continued Listing Rule Or Standard; Transfer of Listing.
On December 20, 2004, Merisel, Inc. (the "Company") received a notice
from the staff of the Nasdaq Stock Market (the "Staff") that the Nasdaq Listing
Qualifications Panel (the "Panel") has denied the Company's appeal of the
Staff's October 1, 2004 decision to delist the common stock of the Company.
Accordingly, the Company's common stock will be delisted effective with the open
of business on December 22, 2004.
The Panel gave the following reasons for denying the Company's appeal.
First, as announced by the Company on December 3, 2004, the Panel was concerned
about the Company's failure to file a timely Form 10-Q for the quarterly period
ended September 30, 2004 as required by Nasdaq Marketplace Rule 4310(c)(14).
Marketplace Rule 4310(c)(14) requires the Company to file copies of any report
required by the Securities and Exchange Commission (SEC) on or prior to the date
set by the SEC. The Panel acknowledged the Company's position that the delay in
filing was caused by the Company's internal investigation of its former
President and CEO, but nonetheless concluded that an exception could not be made
to the Nasdaq rules because the Company had not presented a plan of compliance
or provided a date by which it anticipated filing the delinquent report.
Second, as previously announced by the Company on October 4, 2004, the
Staff's original decision to delist the Company was based on the Staff's
conclusion that the Company is not currently engaged in active business
operations. The Panel acknowledged the Company's continuing efforts to acquire
the assets of an operating business, but did not consider the plan to be
sufficiently definite to merit an exception to the Staff's decision to delist a
company that currently is a public shell.
The Company has not yet determined whether to take action in response
to this notice.
Item 4.01 Changes in Registrant's Certifying Accountant
On December 15, 2004, Deloitte & Touche LLP ("Deloitte") orally informed
the chair of the Company's Audit Committee that it was resigning effective
immediately. On December 16, 2004, Deloitte sent the Company a letter dated
the 15th confirming Deloitte's resignation effective on December 15, 2004.
Deloitte's decision to resign was neither recommended nor approved by the
Company's Audit Committee or its Board of Directors.
Deloitte's report on the Company's consolidated financial statements
for each of the past two years did not contain any adverse opinion or disclaimer
of opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles. There have been no disagreements between the Company and
Deloitte for the past two years or the subsequent interim period preceding the
date of Deloitte's resignation on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure. Deloitte has informed the Company of the following reasons for its resignation. First, since the Company's sale of various assets and liabilities
to D&H Services LLC in August 2004, the Company has had no on-going operations
or revenues, other than interest income - although it continues to pursue
opportunities to acquire a new operating business. Second, Deloitte has
expressed concern regarding the Company's investigation of the alleged fraud by
the Company's former President and CEO, Timothy Jenson, in connection with the
D&H Services transaction. In particular, Deloitte had asked that the Company
investigate whether Mr. Jenson had access to the Company's financial reporting
system and asked that the Company investigate other transactions in which Mr.
Jenson may have been involved. The Company continues to investigate these issues
and has informed Deloitte of this fact, but due to a preplanned move of the
Company's offices, the Company's computer system was unavailable for such
investigation until December 17, 2004. The move was completed on December 17,
2004, and the Company's computer systems were once again operational as of
December 21, 2004. The Company intends to complete the investigation requested
by Deloitte. Finally, Deloitte advised the Company on December 15, 2004 that it
was unwilling to rely upon the representations of the Company's current CEO.
This decision was based on a judgment issued on January 27, 2003 in SEC v.
Dunlap, et al, U.S.D.C. S.D. Fla., Case No. 01-8437-Civ., which set forth the
terms of a civil settlement between the Company's current CEO and the SEC
relating to the current CEO's employment in the mid-1990s at Sunbeam Corporation
("the Settlement Order"). Prior to hiring the current CEO, however, the Board of
Directors of the Company carefully reviewed the Settlement Order and related
materials and determined that the current CEO did not admit liability in the
Settlement Order and that the terms of the Settlement Order did not present a
legal obstacle to hiring the current CEO. The Board of Directors further
determined that the Company's current CEO was otherwise fit for office. The
latter two reasons given for Deloitte's resignation constitute the only
reportable events under (a)(1)(v) of Item 304 of Regulation S-K for the past two
years or the subsequent interim period preceding the date of Deloitte's
resignation.
The Company's Audit Committee and Board of Directors have discussed
these matters with Deloitte. The Company has not yet retained a successor
accountant but will actively search for a new auditor. The Company has
authorized Deloitte to respond fully to any inquiries of the successor
accountant, once retained, regarding these matters.
The Company has provided Deloitte with a copy of the foregoing disclosures,
and requested a response to the disclosures. The Company promptly will file
another 8-K when it receives a response from Deloitte. |
