Unattended payments provider USA Technologies Inc. lost a third of its value Tuesday morning on news it would delay filing its annual report while its board of directors investigates customer contracts and how business was booked.
The company had until Sept. 13 to file its annual report with the Securities and Exchange Commission for fiscal 2018 ended June 30, but now it will ask for a 15-day extension, Malvern, Pa.-based USAT said in a news release.
The delay stems from what USAT said is “an internal investigation of current and prior period matters relating to certain of the company’s contractual arrangements, including the accounting treatment, financial reporting, and internal controls related to such arrangements.” The Audit Committee of USAT’s board is conducting the investigation, along with independent legal and forensic-accounting advisors.
The announcement gave no further details about the problems with the contracts, and a spokesperson did not respond to a Digital Transactions News request for comment. USAT chief executive Stephen Herbert, however, shed slightly more light on the probe in a call with stock analysts. “It’s a small handful of accounts, and it deals with how contracts are booked,” says Gary Prestopino, a managing director at Chicago-based Barrington Research Associates Inc. who follows USAT. He added that USAT indicated any problems with the contracts found in the investigation probably would not require restatement of financial data.
Another investment firm, Chicago-based William Blair & Co., said in a report that the investigation does not involve USAT’s $85 million acquisition last November of vending-industry software provider Cantaloupe Systems Inc.
USAT’s stock has enjoyed a strong run over the past year—more than tripling in value by mid-August—in the wake of the Cantaloupe acquisition and other business wins. But shortly after 11:00 a.m. Eastern Tuesday, its shares were trading at $10.31, down $4.99 or 33% from Monday’s $15.30 close. “The valuation on this was so high that any whiff of bad news, the shorts [short sellers] are going to kill it,” says Prestopino.