Fusion Connect, Inc. (FSNN) Overstated Earnings

According to the complaint for alleged violations of the Securities Exchange Act of 1934 between May 11, 2018 and April 2, 2019, in May 2018, Fusion Connect, Inc. (FSNN) acquired the cloud and business services company Birch Communications Holdings, Inc. In April 2019, Fusion Connect revealed that its previous financial statements should no longer be relied upon and that it was unable to file its 2018 Form 10K on time due to accounting errors. Specifically, Fusion Connect acknowledged that the process used by certain of Birch's subsidiaries for capitalizing costs associated with the customer on-boarding process and the related judgments and estimates were not designed with sufficient precision. As a result, Fusion Connect overstated its earnings between $1.7 million and $4.1 million. On this news, Fusion Connect shares dropped over 80% to close at $0.22 per share on April 3, 2019. The stock currently trades at just $0.05.