Motorcar Parts of America (MPA) received a notice from the NASDAQ Stock Market on Nov. 15 indicating that the company is not in compliance with NASDAQ listing rules because its Form 10-Q for its fiscal 2019 second quarter ended Sept. 30, 2018 was not filed in a timely manner.
The notice, which the company expected, was issued in accordance with standard NASDAQ procedures as a result of the delayed filing. Timely filing of periodic reports is a requirement for continued listing under NASDAQ Marketplace Rule 5250(c)(1).
According to MPA, the delay in filing was due to the company’s inability to timely process the financial information for its fiscal 2019 second quarter, which is primarily related to a review of accounting practices associated with the timing of recognizing certain expenses incurred in connection with new business. These expenses are primarily allowances for core inventory purchase obligations at the start of a new business relationship.
The company does not believe this review of the accounting for new business contracts will affect its liquidity, operations or strong growth momentum.
MPA says it continues to focus significant efforts on completing the processing of this information and expects to file its Form 10-Q for the fiscal 2019 second quarter ended Sept. 30, 2018 as soon as practicable. Upon completion of these filings, Motorcar Parts of America will be current in its financial reporting.
The NASDAQ notice directs the company to submit a plan by Jan. 14, 2019, and MPA expects to address the notice by filing its Form 10-Q and submitting a required updated compliance plan within this timeframe.
MPA received the same type of notice from the NASDAQ in 2012, following its acquisition of Fenwick Automotive Products (Fenco). Fenco’s accounting policies did not reflect net-of-core accounting in recording sales and cost of goods sold, as utilized by Motorcar Parts of America and in accordance with U.S. generally accepted accounting principles.
