Ebix Inc. has received a notice from US-based stock exchange NASDAQ about the company’s failure to file its Annual Report for on Form 10K for 2020. Ebix is a software company that supplies insurance, financial, health and e-learning business with software and e-commerce services. The stock exchange has told the company that it has 45 days, until April 16, to submit a plan to meet regulatory compliance. Ebix said it intends to file the plan by the given deadline.
Ebix said that the resignation of its public auditor RSM last month made it “impossible” for the company to file its annual report on time. Now, the company has retained KG Somani & Co. as its independent registered public acounting form to audit its 2020 statements. Ebix said it will work with the firm to complete its SEC filings as soon as “reasonably practical” and is targeting submission of this filing by April 20.
RSM had resigned in February as a “result of being unable, despite repeated inquiries, to obtain sufficient appropriate audit evidence that would allow it to evaluate the business purpose of significant unusual transactions [in Ebix’s gift cards business] that occurred in the fourth quarter of 2020”. The accounting firm had also identified a “material weakness” related to Ebix’s failure to design and implement controls “over the gift or prepaid card revenue transaction cycle sufficient to prevent or detect a material misstatement”. The company and the auditor also disagreed over the accounting treatment of $30 million that had been transferred to a trust account of Ebix’s outside counsel in December 2020.
The gift cards business of EbixCash has been a huge growth driver for Ebix, showing a 95% quarterly growth in Q3FY21.
In February, the company had said it is targeting an IPO for its India subsidiary EbixCash towards the end of 2021. In June 2020,Yatra terminated a pending merger agreement with the company and filed a suit seeking “substantial damages” for Ebix’s alleged breach of deal terms.
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