Shareholder Investigation of Fusion Connect
Fusion Connect, Inc. (FSNN) Overstated Earnings
According to the complaint for alleged violations of the Securities Exchange Act of 1934 between August 14, 2018 and April 2, 2019, in May 2018, Fusion Connect, Inc. (FSNN) acquired the cloud and business services business of Birch Communications Holdings, Inc. For accounting purpose, the merger was treated as a “reverse acquisition” under generally accepted accounting principles and Birch was treated as the accounting acquirer. Accordingly, Birch’s historical results of operations replaced Fusion’s for all periods prior to the merger. However, Fusion Connect later revealed the process used by certain of its Birch subsidiaries for capitalizing costs associated with the customer on-boarding process and the related judgments and estimates were not designed with sufficient precision, leading to an overstatement of its earnings of between $1.7 million and $4.1 million. The truth was revealed in April 2019 when Fusion Connect revealed that its previous financial statements should not be relied upon and that it was unable to file its 2018 Form 10K on time due to the accounting errors. On this news, Fusion Connect shares dropped over 80% to close at $0.22 per share on April 3, 2019.
Fusion Connect, Inc. (FSNN) Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can please send us a message via the Shareholder Information form below.