Avid 2014 Annual Report Download - page 27

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consuming and expensive, and may distract management from the conduct of our business. Any such litigation or action could
have a material adverse effect on our business, financial condition, and results of operations, and may expose us to costly
indemnification obligations to current or former officers, directors, or other personnel, regardless of the outcome of such matter.
Following our disclosure of the accounting issues giving rise to our restatement we became subject to inquiries from the
SEC and the Department of Justice. These government inquiries or any future inquiries to which we may become subject
could result in penalties and/or other remedies that could have a material adverse effect on our financial condition and
results of operation.
Following our disclosure of the accounting matters giving rise to the restatement we became subject to inquiries from the SEC
and the Department of Justice. We have fully cooperated, and intend to continue to fully cooperate, if called upon to do so, with
the SEC and the DOJ regarding this matter. We have not received any inquiries from either agency in the past 12 months but have
no assurance that one or both will not further pursue the matter.
We cannot predict the outcome of any of the foregoing unresolved proceedings or whether we will face additional government
inquiries, investigations, or other actions related to these or other matters. An adverse ruling in any SEC enforcement action or
other regulatory proceeding could impose upon us fines, penalties, or other remedies, which could have a material adverse effect
on our results of operations and financial condition. Even if we are successful in defending against an SEC enforcement action or
other regulatory proceeding, if any, such an action or proceeding may be time consuming, expensive, and distracting from the
conduct of our business and could have a material adverse effect on our business, financial condition, and results of operations. In
the event of any such action or proceeding, we may also become subject to costly indemnification obligations to current or former
officers, directors, or employees, who may not be covered by insurance.
We may not have sufficient insurance to cover our liability in any current or future litigation claims either due to coverage
limits or as a result of insurance carriers seeking to deny coverage of such claims.
We face a variety of litigation-related liability risks, including liability for indemnification of (and advancement of expenses to)
current and former directors, officers, and employees under certain circumstances, pursuant to our certificate of incorporation,
bylaws, other applicable agreements, and/or Delaware law.
Our directors and officers were included in a director and officer liability insurance policy, which covers all our directors and
officers. Our insurance coverage under our policies may not be adequate to cover any indemnification or other claims against us.
In addition, the underwriters of our present coverage may seek to avoid coverage in certain circumstances based upon the terms of
the respective policies, in which case we would have to self-fund any indemnification amounts owed to our directors and officers
and bear any other uninsured liabilities.
If we do not have sufficient directors and officers insurance coverage under our present or historical insurance policies, or if our
insurance underwriters are successful in avoiding coverage, our results of operations and financial condition could be materially
adversely affected.
The previous delay in completing our financial statements, and any future failure to timely file required periodic reports
with the SEC, may adversely affect our ability to raise, and the cost of raising, future capital.
Until we filed our quarterly report on Form 10-Q for the quarter ended September 30, 2014, which was filed on November 13,
2014, we were delinquent in our financial reporting obligations. Although we are current in our reporting obligations as of the
date of filing of this annual report on Form 10-K, we will remain ineligible to use Form S-3 to register securities until we have
timely filed all required periodic reports under the Exchange Act for at least twelve calendar months. During this time, we would
need to use Form S-1 to register securities with the SEC (whether for capital raising transactions by us or to permit the resale of
our securities by security holders), or issue such securities in private placements. Either of these alternatives entails greater costs,
and may require more time to effect, than registering securities on Form S-3. As a result, our ability to raise capital, and the cost
of raising future capital, could be adversely affected.
Risks Related to Our Stock
The market price of our common stock has been and may continue to be volatile.