TMCnet News
Obalon's Audit Committee Investigation of Whistleblower Allegation Finds Complaint MeritlessSAN DIEGO, Feb. 20, 2018 (GLOBE NEWSWIRE) -- Obalon Therapeutics, Inc. (NASDAQ:OBLN) today announced the Audit Committee has completed its investigation into a purported whistleblower complaint and concluded that the allegations in the complaint are without merit. On January 23, 2018, Obalon issued a press release announcing the termination of its previously announced offering of common stock and the underwriting agreement related to the offering. The Company reported it terminated the offering and initiated an investigation after its auditors, KPMG LLP, advised the Company of a complaint filed by a purported whistleblower. The complaint related to a sales promotion during the Company’s fourth fiscal quarter of 2017 and alleged that revenue related to that promotion was recognized improperly. The investigation was presided over by the Audit Committee of Obalon’s Board of Directors, which comprises four independent directors. Latham & Watkins LLP led the investigation with forensic accounting assistance from Ankura Consulting Group LLP. Les Howe, Chair of Obalon’s Audit Committee, stated, “We took the whistleblower complaint very seriously and conducted a thorough investigation. The investigators found no merit to any of the whistleblower allegations, determined that preliminary revenues were not misrepresented and that management did nothing to mislead investors.” Bill Plovanic, Obalon’s CFO, stated, “Prior to our U.S. launch in January 2017, we worked closely with our audit committee to develop a robust procedure for appropriately recognizing revenue. We hired a dedicated revenue recognition specialist who carefully analyzes our programs, develops a formal position on revenue recognition and presents that analysis to the Company’s auditors prior to implementing any accounting treatments. “We have run marketing promotions in every quarter since launch in January 2017. We have followed our revenue recognition process every quarter, including the fourth quarter of 2017. We look forward to continuing our intense focus on building a sustainable franchise that addresses a very significant and important need for weight loss.” On January 5, 2018, Obalon released preliminary and unaudited revenue for the fourth quarter and all of 2017. As previously stated at the time of that announcement, preliminary, unaudited results are always subject to audit by our independent auditors, and the final results may differ from the preliminary results as a result of those processes. The egularly scheduled annual audit of Obalon’s 2017 financial results is continuing. Although the audit is not yet complete, the Company estimates at this time that the previously released preliminary, unaudited revenues could change between 5% - 7% of Q4-17 revenues and 2% - 3% of full year 2017 revenues. The Company intends to record any revenue-related adjustment, even if it is deemed financially immaterial. At this time, the Company does not expect to restate any of its previously reported financial results for prior periods. Conference Call Details About Obalon Therapeutics, Inc. Cautionary Statement Regarding Forward Looking Statements For Obalon Therapeutics, Inc. Media: |