Avid Bioservices to delay 10-Q filing, must restate Q3 financials

The company stated: “As previously reported in a Current Report on Form 8-K, filed by Avid Bioservices, Inc. with the Securities and Exchange Commission on March 6, 2024, on February 29, 2024, the Company received an acceleration notice from a holder of its 1.250% Exchangeable Senior Notes due 2026. The Acceleration Notice stipulated, among other things, that (i) the Company did not remove the restrictive legend on the 2026 Notes by March 17, 2022 as required under the indenture governing the 2026 Notes , (ii) due to such failure, additional interest has accrued thereafter at a rate of 0.50% per annum, (iii) such Additional Interest had not been paid by the Company as of the date of the Acceleration Notice, which constitutes an event of default under the 2026 Notes Indenture, and (iv) such holder is the beneficial owner of at least 25% in aggregate principal amount of the outstanding 2026 Notes and therefore has the right to accelerate all of the 2026 Notes. As a result of the Event of Default, such holder declared 100% of the principal of, and accrued and unpaid interest on, the 2026 Notes to be due and payable immediately. The Company did not receive any notices and was not otherwise made aware of the Event of Default prior to receipt of the Acceleration Notice, and did not have an opportunity to cure the Event of Default at the time of receipt of the Acceleration Notice. In connection with the Event of Default, the Company undertook an evaluation as to whether certain of the financial statements included in the Company’s Quarterly Reports on Form 10-Q for the quarterly fiscal periods ended October 31, 2022, January 31, 2023, July 31, 2023 and October 31, 2023, and in its Annual Report on Form 10-K for the fiscal year ended April 30, 2023 (the “FY 2023 10-K” and collectively with the foregoing Form 10-Qs, the “Relevant Reports” and the periods covered by the Relevant Reports, the “Relevant Periods”) should no longer be relied upon as a result of: the classification of the 2026 Notes as long-term liabilities on the applicable balance sheets within the Relevant Reports following the Event of Default; and the failure to reflect the Additional Interest in such financial statements. On March 11, 2024, the Audit Committee of the Company’s Board of Directors determined, based on management’s recommendation and after consultation with Ernst & Young LLP, the Company’s independent registered public accounting firm, that as a result of the classification of the 2026 Notes as long-term liabilities, the consolidated financial statements included in the Relevant Reports should no longer be relied upon. In light of the foregoing, the Company must restate the impacted financial statements and file such restated financial statements with the SEC before it can file its Quarterly Report on Form 10-Q for the quarterly fiscal period ended January 31, 2024.”