Business Context and Reporting Period
Company: Akers Biosciences, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: June 19, 2018 (Event Date: June 18, 2018)
Context: The Company is an emerging growth company reporting a material accounting issue requiring the non-reliance on previously issued financial statements.
Key Financial Metrics
This filing does not contain specific revenue, profit, cash flow, margin, debt, or liquidity figures. The document serves as a notification that previously reported financial data is unreliable and requires restatement.
Material Changes and Accounting Issues
- Non-Reliance Notice: The Audit Committee was advised by independent auditors (Morison Cogen LLP) that specific financial statements should not be relied upon.
- Affected Reports:
- Form 10-K for the fiscal year ended December 31, 2017 (filed April 3, 2018).
- Form 10-Q for the quarter ended September 30, 2017 (filed November 14, 2017).
- Form 10-Q for the quarter ended June 30, 2017 (filed August 14, 2017).
- Root Cause: Certain 2017 revenue transactions were identified as not qualifying for revenue recognition under Generally Accepted Accounting Principles (GAAP).
- Investigation: The Audit Committee is overseeing an investigation with assistance from outside counsel and forensic accountants.
Outlook, Risks, and Management Commentary
- Restatement Plan: The Company intends to file amendments to the affected reports as soon as practicable, including restated consolidated financial statements.
- Forward-Looking Risks: Actual results of the pending restatement, including the timing and specific amounts to be deferred or recognized, may differ significantly from current expectations.
- Auditor Status: Morison Cogen LLP has provided a letter to the SEC regarding the non-reliance statement (Exhibit 7.1).
Investor Verification Checklist
- Verify the specific dollar amounts of revenue to be restated once the amended 10-K and 10-Q filings are released.
- Monitor the timeline for the completion of the forensic accounting investigation.
- Review the amended financial statements for impacts on cash flow, working capital, and compliance with debt covenants.
- Assess the potential for regulatory penalties or shareholder litigation stemming from the revenue recognition error.