(Bloomberg) — Dye & Durham’s shares plunged after the legal software provider said it will miss the deadline for submitting its annual report, adding another hurdle for a company that has already faced pressure from an activist shareholder this year. 

The stock dropped as much as 22% on Tuesday, the deepest intraday decline since its public listing in 2020. That briefly brought its share price down to a low of C$8.10 ($5.89).

“The filing delay will add to the issues that have been weighing on the stock, which have included its financial leverage, a challenging macro backdrop, competitive concerns and management turnover,” BMO Capital Markets analyst Thanos Moschopoulos said. 

The move comes after Dye & Durham launched a strategic review in late July — including a potential sale — following a truce with one of its major shareholders, Plantro Ltd. The investment firm controlled by former Dye & Durham Chief Executive Officer Matt Proud agreed to withdraw its demand for a special shareholder meeting in exchange for putting veteran accountant David Danzinger on the board to oversee the review.

The company, which sells software solutions to legal and business professionals, after the close on Monday said it would be unable to file its financial statements for the fiscal year ending in June by the Sept. 29 deadline.

Management said the issue was related to a review letter by the Ontario Securities Commission sent in July that raised concerns about how Dye & Durham tests for goodwill impairments and discloses certain purchases in its financial statements. Dye & Durham said it is working with advisers and the regulator to confirm the impacts on its finances.

The firm said it doesn’t expect any impact to previously reported results. 

“While this development might weigh on the stock in the near-term, we’re not expecting this development to impact our forecasts,” BMO’s Moschopoulos wrote in a client note. 

The delay would put Dye & Durham into technical default under its existing senior debt obligations, giving the company 30 days to rectify the issue, Moschopoulos said.

Monday’s news wasn’t “unexpected” since interim Chief Financial Officer Sandra Bell is new to the company, said Raymond James analyst Stephen Boland.

“On the matter of possible impairments, this is also not a new issue,” Boland said, adding that it was mentioned on past conference calls. “Additionally, the company has publicly stated it is repricing its customer contracts, which can give rise to impairments.”

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