Financial trouble in fintech paradise

Financial trouble in fintech paradise

Instead of reporting its second-quarter earnings, Digiliti Money plans to file for an extension with the US Securities and Exchange Commission (SEC) after its accounting firm flagged problems with its previous financial reports, writes Banking Technology‘s sister publication Paybefore.

The Minneapolis-based mobile app technology firm says it has initiated an internal investigation into “very recently discovered information indicating we may need to restate our previously reported financial results”.

The news follows an earlier announcement that the company was undergoing management changes (as its founder and CEO quit), pursuing cost-cutting measures and seeking funding amid declining revenue.

Digiliti Money doesn’t expect to disclose further developments until the investigation is concluded.

The information that led to the investigation came to light from the company’s independent registered public accounting firm. The firm says reliance should not be placed on previous financial reports for 2016 and the first quarter of 2017.

“The company believed it had the opportunity to obtain financing to fund its immediate cash needs; however, after disclosing the situation to the potential funder, we believe the financing is no longer certain,” Digiliti Money says.

“As such, we are actively reviewing strategic options to restructure the company, including the potential sale of the company or potentially filing for Chapter 11 bankruptcy.”

The company went public in March this year as Cachet Financial Solutions and rebranded as Digiliti Money in April.