The Securities and Exchange Commission has instituted cease-and-desist proceedings against Cantaloupe, Inc., formerly known as USA Technologies, Inc., for improper revenue recognition. The Commission found that USA Technologies, Inc., a Malvern, Pennsylvania-based manufacturer and distributor of cashless payment devices, filed materially misstated financial statements with the Commission during the period. The misstatements primarily resulted from USAT’s efforts to maximize end-of-quarter revenue and meet internal sales targets, in contravention of its publicly-stated sales and revenue recognition policies and generally accepted accounting principles. USAT entered into purported “bill and hold” sales transactions, which may result in a company recognizing revenue before shipping the product to the customer, without conforming those transactions to GAAP principles. Additionally, USAT inflated its quarterly sales revenue by deliberately shipping devices to customers that customers had not ordered or explicitly told them they did not want.
USA Technologies, a Pennsylvania corporation, has been found to have violated Sections 17(a)(2) and 17(a)(3) of the Securities Act, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 13a-1, 13a-11, 13a-13, and 12b-20 thereunder. USA Technologies misrepresented revenue earned by treating purported sales of its devices as “bill and hold” transactions, allowing the company to recognize revenue from the sale of payment devices before delivering them to customers. The company also misrepresented revenue related to the shipment of wrong inventory, resulting in improper recognition of revenue from incomplete sales. The Commission has accepted USA Technologies’ Offer of Settlement and consents to the entry of this Order Instituting Public Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 221C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order.