Davis biotech company Marrone Bio Innovations Inc., hoping to get past a damaging probe of internal financial irregularities, released revised financial statements Tuesday that showed the young company had overstated its sales results.
In its first financial release in more than a year, Marrone Bio said an internal audit showed that the company had overstated its revenue by $6.7 million in 2013 and the first six months of last year.
The disclosure, filed with the Securities and Exchange Commission, showed Marrone Bio continues to incur heavy losses. A maker of eco-friendly pesticides and other agricultural products, Marrone described itself in its filing as “an early stage company with a limited operating history” that will continue to lose money “for the foreseeable future.” The company issued a brief news release announcing the restatement of earnings and said it wouldn’t comment until Chief Executive Pam Marrone holds a conference call with investors next week.
Marrone’s problems began in September 2014, when it disclosed that it had launched an in-house probe over $870,000 worth of reported sales transactions.
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The news sent its share price spiraling downward and left the company reeling. It repeatedly postponed releasing quarterly financial statements, was forced to impose layoffs and underwent several management changes. The company, which went public in 2013, was in danger of losing its listing on the Nasdaq market because of the delays in releasing earnings.
Other consequences have piled up. Several shareholder lawsuits have been filed. The company disclosed Tuesday that it has spent $4.6 million this year alone on costs relating to the internal audit. An SEC investigation, begun a year ago, could result in penalties estimated at between $1.8 million and $4 million, the company said.
Marrone completed its probe in February. The company revealed that several former employees had quietly given some customers “inventory protection” deals that allowed distributors to return certain unsold products to the company. As a result, revenues had been overstated by $6.7 million during an 18-month period ending in June 2014. Customers returned an additional $2 million worth of products to Marrone in the months since, the company disclosed.
In its new earnings disclosure, Marrone said it lost $51.6 million in 2014 on sales of $9.1 million. That compared with a loss of $31.2 million on sales of $8.4 million the year before.
The company also released results for the first six months of 2015, showing additional losses. Marrone lost $22.9 million on sales of $5.4 million. That compared with a loss of $21 million on sales of $5.8 million for the same period a year earlier.
Marrone shares closed at $2.30, down 31 cents, on the Nasdaq market.