February 15, 2008
AXM Pharma Settles Improper Revenue Recognition Charges
The SEC imposed a Cease-and-Desist Order against AXM Pharma, Inc. (AXM). The Order finds that AXM fraudulently recognized approximately $2.8 million in revenues on a series of sales to a distributor in Asia for the quarter ended June 30, 2005, although the sales failed to meet several of the fundamental criteria for revenue recognition under Generally Accepted Accounting Principles. As a result, AXM reported revenues of over $3.2 million for the quarter, overstating its revenue by over 970 percent, and reported net income for the quarter of approximately $179,000, instead of a net loss of approximately $1.46 million.
AXM Pharma consented to the issuance of the Order without admitting or denying the Commission's findings.
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