This class action lawsuit is brought against USA Technologies alleging failure to disclose (1) significant deficiencies in both the design and operating effectiveness of the company’s internal control over financial reporting; and (2) that, as a result of these deficiencies, USA Technologies’ procedures failed to identify a large number of uncollectible small balance accounts.
USA Technologies provides wireless networking, cashless transactions, asset monitoring, and other value-added services principally to the small ticket unattended retail markets in the United States and internationally. USA Technologies’ products include ePort, a device that is used in self-service and/or unattended markets such as vending machines, amusement parks, arcades, car washes, and kiosks to facilitate cashless payments. USA Technologies also manufactures and sells energy management products that reduce the electrical power consumption of equipment such as refrigerated vending machines and glass front coolers.
Who Is Affected?
This federal securities fraud class action is brought on behalf of a class consisting of all persons who purchased or otherwise acquired USA Technologies, Inc. securities between September 29, 2014 and September 29, 2015, both dates inclusive, seeking to pursue remedies under the Exchange Act of 1934. USA Technologies provides wireless networking, cashless transactions, asset monitoring, and other value-added services principally to the small ticket unattended retail markets in the United States and internationally. USA Technologies is incorporated in Delaware with its principal place of business located in Malvern, Pennsylvania. Its shares trade on NASDAQ under the ticker symbol “USAT.”
This class action lawsuit was filed on October 1, 2015 and is captioned Steven P. Messner, et al. v. USA Technologies, Inc., et al. It was filed in the Pennsylvania Eastern District Court and its civil docket number is 2:15-cv-05427-MAK. The class period runs from September 29, 2014 through September 29, 2015, both dates inclusive.
The complaint alleges that throughout the class period there were significant deficiencies in both the design and operating effectiveness of the company’s internal control over financial reporting and that as a result of these deficiencies, the USA Technologies’ procedures failed to identify a large number of uncollectible small balance accounts.
On September 29, 2015, USA Technologies filed a late filing notice with the Securities and Exchange Commission stating as grounds for it being unable to file its annual report for fiscal year ending June 30, 2015 that “management identified deficiencies in both the design and operating effectiveness of the Company’s internal control over financial reporting, which when aggregated represent a material weakness in internal control.” The process over reconcilement, analysis and management oversight of certain customer accounts receivable balances did not identify a large number of small balance accounts that were uncollectible and were not appropriately remediated or written-off. As a result, USA Technologies had to change its June 30, 2015 financial results to increase its bad debt reserve by approximately $450,000 resulting in an after-tax charge of approximately $270,000.
As a result of the above announcement, USA Technologies’ stock fell 10% the following day causing the plaintiff and other class members to suffer significant losses and damages.
This case is in the notice period. When a shareholder brings suit under certain federal securities law, generally that shareholder must give notice via a press release. This notice starts a sixty-day period of time when any shareholder can investigate the underlying claims of the lawsuit and then elect to bring suit as well. At the end of this sixty-day period, the court appoints one shareholder (or a group of shareholders) to prosecute the securities litigation. We will review the docket again in December and update this page as warranted.