Overland Once More in Big Trouble

In a SEC filing dated July 5, 2013, Overland Storage, Inc. said it received "the expected written notification from The Nasdaq Stock Market LLC of the NASDAQ Staff’s decision to delist the company’s securities from The Nasdaq Capital Market as a result of the company’s failure to comply with the minimum market value of listed securities (MVLS) of $35 million requirement set forth in Nasdaq Listing Rule 5550(b)(2)."

To regain compliance with such rule, the MLVS would have had to have been at least $35 million for ten consecutive trading days during the period from January 2, 2013 through July 1, 2013.

On July 5, 2013, Overland requested an appeal to seek continued listing. While the appeal is pending, its common stock will not be delisted. However, there can be no assurance that the panel will grant the company’s request.

At the end of July 5, 2013, its share was trading at only $1,21, market cap of the company being $36.3 million.

Overland has a long and bad history (see below) with Nasdaq following ugly financial results since at least five years.

Also Overland is in financial trouble. For its fiscal 3Q13 ended March 31, 2013, it reported revenue of $11.5 million (-24% compared to 3Q12) and net loss of $5.1 million ($3.8 million in 3Q12). And the first nine months of FY13 were not better: sales of $35.6 million (-20%) for $14.2 million loss ($13.5 million for the same period in 2012). Cash and cash equivalents at March 31, 2013 was $14.1 million.

"Since Eric Kelly became CEO in 2009 the company transitioned from an OEM strategy to a branded products company providing a full suite of storage systems including disk-based NAS, SAN, tape-based back-up and archival solutions as well as data management software," remarked last November Pergament Advisors, LLC, the investment manager of Pergament Multi-Strategy Opportunities, LP that owns a significant economic interest in Overland. But it didn’t work and Pergament requests that Overland immediately explore strategic alternatives to maximize shareholder value including finding a buyer.

Like Imation, Quantum and Tandberg Data, Overland was historically a great player in tape but was not successful in its effort to to transition to disk for backup. Kelly was not able to transform his company continuing to shrink.

      The Plunge of Overland

 * ended June 30
 ** Nine months only

And the CEO has another big problem with a patent infringement lawsuit against BDT in which Overland is in a bad situation as the US International Trade Commission last May decided that BDT’s patents were valid. It’s not sure that the US storage firm will survive if it loses this lawsuit.

Considering the current horrible situation of Overland, you can suppose that Cyrus Capital Partners, owner of $65 million Tandberg, could modify the terms of its recent proposal for a potential business combination between Overland and Tandberg to form a company owned at 50% by the two partners.

Kelly has a long history in the storage industry, being a specialist in acquiring companies for high price and buying them for low price. But the current period is apparently the worst one he never encounters.

Read also:
January 10, 2013 Notice of Delisting From Nasdaq to Overland
For not maintaining minimum market value
November 23, 2010 Once More Overland Not in Compliance With Nasdaq
Could be delisted.
June 16, 2010 Overland Continues to Be Traded on Nasdaq
Following the approval of its transfer of stock listing
December 22, 2009 Overland To Be Delisted From Nasdaq
Market value of the company below $15 million requirement
September 21, 2009 Overland Storage Receives One More Deficiency Letter From Nasdaq
Common stock under the minimum market value of of $15 million
March 23, 2009 Overland in Compliance With Nasdaq
It was in a permitted re-compliance period for the minimum bid price standard at the time those standards were suspended.
February 20, 2009 Overland Receives Another Deficiency Letter From Nasdaq
The company doesn’t comply with the minimum shareholders’ equity requirement of $10 million for continued listing.
October 6, 2008 Overland Receives Nasdaq Staff Deficiency Letter
The beginning of the end?
September 30, 2008 Overland Enables to File Form 10-K
In bad financial shape, the company needs desperately cash, at least $10 million.