USA Technologies gets dumped by auditor, loses half its value today #USAT

Tom Paine

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USA Technologies (NASDAQ: USAT) lost half its value today when its external audit firm, RSM US LLP, informed its board's audit committee that it was resigning from the account:

"RSM indicated in its letter to the audit committee that, based on the totality of the information, it had concluded in its professional judgment that it can no longer rely on management representations in connection with the audit of the Company’s 2017 internal control over financial reporting and consolidated financial statements," USAT said in an SEC filing .

"The Company anticipates that it will file the restated financial statements for the affected fiscal periods as soon as practicable. The Company is also working diligently to complete and file the Annual Report on Form 10-K for the fiscal year ended June 30, 2018 and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2018 as soon as practicable."

USAT shares, which had already been knocked down by news of the accounting issues, fell another 50% today, leaving the company with a market cap of $204 million.

The board claims that RSM had not previously notified the audit committee of its concerns:

"During the last two fiscal years of the Company, and the subsequent period through February 1, 2019, and except as stated in the letter from RSM to the Audit Committee, there were no disagreements with RSM on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of RSM, would have caused RSM to make reference to the subject matter of the disagreements in their reports."

Leading area tech firm EPAM joins up with Ben Franklin on new regional investment fund

Tom Paine

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This morning, Ben Franklin Technology Partners (BFTP) of Southeastern Pennsylvania announced it has formed a regional venture fund that allows private investors to invest in a broad variety of early-stage technology-focused enterprises located in the Greater Philadelphia region.

The Global Opportunity Philadelphia Fund's (GO Philly Fund) first investor is Newtown-based EPAM Systems (NYSE: EPAM), a global supplier of IT services to enterprises. EPAM has raised $15 million in its first close and seeks to provide up to $50 million of capital alongside Ben Franklin’s investments. The GO Philly Fund will primarily operate as a co-investment fund with Ben Franklin. It will invest alongside Ben Franklin in early-stage investments that complete and satisfy Ben Franklin’s due diligence process. The fund will seek to make initial investments of between $50,000 and $500,000, and follow-on investments up to $3 million, well beyond BFTP's usual range.

Other accredited investors have already committed to participation in the fund including Provco Group, Fulton Bank, and SRI Capital. KPMG, Bridge Bank and Securitize will support the fund’s operations, while Pepper Hamilton and White and Williams will provide legal support.

Following its initial close, the GO Philly Fund will seek to leverage blockchain technology as part of its fund raising and capital management strategy, with a goal being to facilitate investment from others spread around the globe.

EPAM has been a remarkable success story. Co-founded by one-time SAP employee Arkadiy Dobkin in Princeton (his apartment) and Minsk, EPAM has grown to have revenue of more than $1.8 billion, a market cap of almost $8 billion, and over 25,000 employees. Traditionally, the bulk of its developers are based in eastern Europe. While most of the Asian systems integrators have hit a growth wall, EPAM has moved ahead with consistent growth by generally developing higher value-added enterprise relationships.

“For over 25 years, EPAM has helped established, technology-driven enterprises and startups build software products and platforms, including many which have become globally recognized leaders in their respective markets. With our participation in the GO Philly Fund, we hope to reach regional startups in their earliest stages, working together with Ben Franklin to help them become the next wave of innovators and disruptors,” explained Arkadiy Dobkin, CEO at EPAM, in a release.

This is a great move by EPAM and BFTP for the region.