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Digiliti's shares plummet after company issues going concern warning

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Digiliti's shares plummet after company issues going concern warning

Digiliti Money Group Inc. saw its share price crash in morning trading after the company raised doubts about its ability to run its operations following a "unilateral noncontractual termination" by a customer.

The company is currently investigating its rights with respect to those customer contracts. The company also expects a $1.8 million accounts receivable reserve charge due to the contract fallout.

Digiliti Money also expects to seek financing to support its operations going forward. If the company is not able to achieve a combination of financing and sufficient positive cash flow from operations soon, it may not be able to continue as a going concern, it said.

CFO Bryan Meier wrote in a statement that despite the setback, the company expects revenue to ramp up over time as the company signed 27 new customers, sold 53 new products and brought 45 products live during the quarter.

Meier added that the Digiliti Money is in the process of cutting costs by $3 million, expected to be fully implemented in November.

It expects revenue for the second quarter to be between $1.1 million and $1.3 million, compared with $2 million in the second quarter of 2016. The company will report its results Aug. 14.

The company's share price was down nearly 63% to 69 cents as of 12:43 p.m.