January 23, 2018 / 2:54 PM / a year ago

Obalon cancels offering after allegation on accounting practices

Jan 23 (Reuters) - Obalon Therapeutics Inc said on Tuesday it canceled a stock offering after the medical device maker, known for its swallowable balloons that aid in weight loss, was accused of improper accounting practices.

The company said a “purported whistleblower” contacted its auditor KPMG Llp and alleged improper revenue recognition during Obalon’s 2017 fiscal fourth quarter.

The allegations, which were reported to the company on late Monday, will be investigated internally, Obalon said.

On Jan.5, Obalon said its preliminary revenue for fourth quarter ended Dec.31 grew nearly five times from a year earlier to about $3.9 million, lifting its full-year revenue to $10.1 million.

Obalon said at present it does not expect any material changes to the numbers.

The public offering, set to close on Tuesday, was for over 5 million shares of the company’s common stock at $5.50 per share.

Shares of the California-based company were halted before the bell.

Reporting by Tamara Mathias in Bengaluru; Editing by Arun Koyyur

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