Dismissals Unrelated to Computer Thefts, Firm Says : 17 Leave Xscribe After Drug Inquiry

Fourteen workers have resigned and three have been fired at Xscribe Corp., a Sorrento Valley manufacturer of computer-aided transcription devices, in connection with the company’s investigation into alleged drug use by employees.

The investigation was an outgrowth of the company’s inquiry into alleged thefts of $100,000 worth of Xscribe computer equipment earlier this year, according to published reports quoting Xscribe President Thomas Delahanty. The dismissals last week, however, were not connected with the alleged thefts, Xscribe attorney John Hussey said Tuesday.

Xscribe did not consider the thefts, which were fully covered by insurance, to be material to the company’s financial performance, Hussey said.

Xscribe executives did not return several phone calls to comment on the investigations or how any drug use came to light. Results of the inquiry indicated that employees used drugs off-site but turned up no evidence that drugs were used at the company’s Sorrento Valley plant, Delahanty was quoted as saying.

Word of the dismissals comes at a time when Xscribe is trying to complete its initial public stock offering. In May, Xscribe filed a registration statement with the Securities and Exchange Commission to sell 2 million shares between $10.50 and $12.50 each.

The company has since lowered the offering to 1.75 million shares to be priced between $8.50 and $9.50. Priced accordingly, the offering would raise between $14.9 million and $16.6 million. Hussey said the news of the employee dismissals should not affect the offering.

Although one source close to the stock offering said it was tentatively scheduled to be completed by Friday, Hussey said the “timing of the offering has not been determined yet.”

Xscribe makes systems sold chiefly to court reporters that help automate the production of court and deposition documentation.