July 3, 2006—Three senior staff members have handed in their resignations at Merge Technologies (Milwaukee, Wis) following an examination of the company’s accounting practices.
At a board meeting on July 2, Merge accepted the resignations of William C. Mortimore, who had been serving as interim CEO; Scott T. Veech, CFO, treasurer and secretary; and David M. Noshay, Senior Vice President of Strategic Business Development. Mortimore will be succeeded on an interim basis by Michael D. Dunham, Chairman of Merge’s board of directors. Joining Dunham as co-presidents will be Brian E. Pedlar, who has been serving as president of Cedara Software, and Robert J. White, who has been acting as senior vice president of Merge and president of Merge eMed.
Merge’s Audit Committee of its Board of Directors has been conducting the investigation in cooperation with Sidley Austin LLP, an independent national law firm, and Alvarez & Marsal, a forensic accounting firm; on June 29 Sidley Austin reported its findings to the Audit Committee, and on June 30 the Committee’s recommendations were announced.
The Audit Committee also announced that the company’s financial records from 2002 to 2005 should no longer be relied upon owing to improper accounting and financial reporting practices. Although the NASDAQ Listing Qualifications Panel approved the continued listing of Merge’s stock pending 10-K and 10-Q filings, the company will be unable to meet the July 7, 2006 deadline, and has applied for an extension until Sept. 30.
Dunham remained optimistic about the company’s prospects. “With approximately $60 million in cash and cash equivalents on hand as of June 30, 2006, the company is confident that it has sufficient liquidity for the foreseeable future,” he said.
The investigations began when the company received a series of anonymous letters alleging improper financial practices.