Shares of USA Technologies Inc. lost half their value Thursday morning on news that the vending-machine payments provider’s auditor had resigned and that some of the company’s previous financial statements are unreliable.
In a Feb. 1 letter to the audit committee of USAT’s board of directors, Chicago-based auditor RSM US LLP said it could “no longer rely on management representations” regarding a 2017 audit of the company’s internal control over financial reporting and consolidated financial statements. USAT revealed the letter Wednesday in a regulatory filing.
In addition, the board said financial statements for the fiscal year ended June 30, 2017, as well as quarterly statements, press releases, and other disclosures for the periods ending March 31, Sept. 30, and Dec. 31 of 2017 “should no longer be relied upon,” according to the filing.
Malvern, Pa.-based USAT said it plans to hire a new independent auditor “as soon as practicable,” the filing says. A spokesperson tells Digital Transactions News that the company has no comment beyond the public filings.
USAT’s accounting problems first came to light last September when it failed to file its annual report for fiscal 2018 ended June 30 on time. An ensuing internal investigation of its customer contracts and accounting practices found that sales pressure led to the recognition of up to $5.5 million in projected revenues too early.
In response to the new disclosures, Chicago-based investment firm William Blair & Co. temporarily suspended its ratings on USAT. “The development is very disappointing, especially given recent updates by the company,” analyst Robert Napoli said in a report.
USAT’s chief financial officer recently resigned and the company has announced other executive changes. A temporary CFO is on the job while USAT searches for a permanent replacement.
As of late morning Thursday, USAT’s shares were trading at $3.40 on the NASDAQ Global Market, down 51% from Wednesday’s $6.88 close.