Audiovox 2004 Annual Report Download - page 22

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o industry developments,
o economic and other external factors,
o period−to−period fluctuations in our financial results,
o financial crises in foreign countries,
o general downgrading of our industry sector by securities analysts, and
o delayed filings of financial results.
In addition, the securities markets have experienced significant price and
volume fluctuations over the past several years that have often been unrelated
to the operating performance of particular companies. These market fluctuations
may also have a material adverse effect on the market price of our common stock.
If We Are Unable to Successfully Address the Deficiencies in Our Internal
Controls, Our Ability to Report Our Financial Results on a Timely and Accurate
Basis May be Adversely Affected.
The Company is currently in the process of remediating the material
weaknesses identified in management's report on internal controls (see Item 9A
of this Report). If the Company is not successful in remediating these internal
control issues, our ability to report our financial results on a timely and
accurate basis may be adversely affected.
Our independent registered public accounting firm advised our Audit
Committee that they identified certain deficiencies that constituted material
control weaknesses. We implemented various actions to address the issues
identified in the evaluation of our controls and procedures. If these actions
are not successful in addressing these internal control issues, our ability to
report our financial results on a timely and accurate basis may continue to be
adversely affected.
Our Securities Will Continue to be Listed on the Nasdaq National Market Pursuant
to Exceptions.
Following the Company's hearing with the Nasdaq related to its late filing
of certain annual and quarterly forms with the SEC, the Company was notified
that it must become timely in its filings and continue in the future to be
timely to insure its continued listing on the Nasdaq National Market.
John J. Shalam, Our President and Chief Executive Officer, Owns a Significant
Portion of Our Common Stock and Can Exercise Control over Our Affairs.
Mr. Shalam beneficially owns approximately 53% of the combined voting power
of both classes of common stock. This will allow him to elect our Board of
Directors and, in general, to determine the outcome of any other matter
submitted to the stockholders for approval. Mr. Shalam's voting power may have
the effect of delaying or preventing a change in control of the Company.
We have two classes of common stock: Class A common stock is traded on the
Nasdaq Stock Market under the symbol VOXX and Class B common stock, which is not
publicly traded and substantially all of which is beneficially owned by Mr.
Shalam. Each share of Class A common stock is entitled to one vote per share and
each share of Class B common stock is entitled to ten votes per share. Both
classes vote together as a single class, except in certain circumstances, for
the election and removal of directors and as otherwise may be required by
Delaware law. Since our charter permits shareholder action by written consent,
Mr. Shalam may be able to take significant corporate actions without prior
notice and a shareholder meeting.
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