Escala (Nasdaq: ESCL) receives Nasdaq delisiting notice Some of Escala’s Group companies are Greg Manning Auctions, Ivy & Manning Philatelic Auctions, H.R. Harmer, and Nutmeg Stamp Sales, all of North America. Escala received a Nasdaq delisting notice.
Securities and Exchange Commission, including Escala Group's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, prospectuses and other documents that Escala Group has filed with the Commission. In particular, any statement related to Escala Group's expected revenues or earnings or Escala Group's being well positioned for future profitability and growth are forward-looking statements.
In addition, the Company faces substantial uncertainty as a result of recent events surrounding Afinsa. In particular, readers should note the following: (1) Since May 9, 2006, Afinsa and certain of its executives have been the subject of a criminal investigation in Spain. The Company has not been informed by the Spanish authorities as to whether the Company or any of its subsidiaries, including CdC, or any of their respective executives, is a target of the investigation in Spain or will be the subject of any criminal charges in the future. The Company is aware that the Spanish authorities are seeking to obtain information from the SEC that it has regarding the Company (as a result of the SEC’s formal investigation of the Company or otherwise), including copies of certain specified documents (primarily relating to the Company’s transactions with Afinsa) that we have previously provided to the SEC in response to various document requests. (2) In addition to the Audit Committee’s internal review, on or about June 5, 2006, the Company received notification of a formal order of investigation from the SEC. Although the order is not confined to a particular subject matter, the Company believes that the matters being investigated relate primarily to the Company’s transactions with Afinsa. Both the Audit Committee and SEC inquiries are continuing, and the outcome of either cannot be determined at this time. (3) Afinsa is currently involved in insolvency proceedings before a commercial court in Madrid. The court has appointed three trustees to oversee the operations of Afinsa. The Company believes, based on its understanding of Spanish insolvency law, that there are two possible outcomes of Afinsa’s bankruptcy: (a) a settlement with the creditors is reached, which assumes Afinsa can resume operations under a reorganization plan, or (b) all of Afinsa’s assets are liquidated in order to pay off its debts. The effect of Afinsa’s bankruptcy proceedings on the Company, approximately 67% of whose stock is owned collectively by Afinsa and its wholly owned subsidiary, Auctentia, S.L., cannot be determined at this time. (4) As a result of the events of May 9, 2006, Escala and certain of its officers and directors have been named in eight putative class action lawsuits (now consolidated) and two shareholder derivative actions (now consolidated). We do not know what the outcome of these proceedings will be, and if we do not prevail in the class actions, we may be required to pay substantial damages or settlement amounts. Further, regardless of the outcome, we may incur significant defense costs. If we are ultimately required to pay significant defense costs, damages or settlement amounts, such payments could materially and adversely affect our liquidity and
