Smart-lock startup Latch is preparing to be delisted from the Nasdaq stock exchange.
The company announced Wednesday that it had informed Nasdaq it didn’t expect to come back into compliance regarding its financial statements by a Friday deadline, citing “unexpected delays in the ongoing restatement of its historical financial statements.” As a result, Latch expects Nasdaq to delist the company from its stock exchange.
Reporting inaccuracies have been a known problem for Latch for years. The company initially disclosed concerns surrounding the reliability of results from 2021 and early 2022. Those concerns were also tied to reports produced in 2019 and 2020.
A company board investigation found errors with how Latch recognized revenue, including how management didn’t assess if sales were collectible and how employees didn’t disclose “relevant terms” negotiated with customers.
At the time, Latch said it would file amended financial statements as soon as it could. Interim CEO Jason Keyes echoed that sentiment in a statement this week.
Nasdaq sent out a notice of non-compliance — the latest in a string of warnings — in May. Latch declared an intention to regain compliance by the Aug. 4 deadline.
The company has $192 million in cash, cash equivalents and securities, though that number hasn’t been audited. Liabilities include $22 million in promissory notes due in 2025 that accrue interest and could be accelerated upon being delisted.
Should Latch be delisted, it expects its securities to shift to the OTC Expert Market, reserved for stocks with low levels of disclosure, where only qualified investors can trade.
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Latch is in the process of laying off 59 percent of its staff in a round of cuts expected to be completed by November. Former Ring CEO Jamie Simonoff is still expected to be appointed as Latch’s CEO by the end of the year.
The startup was founded in 2014, selling products that allowed multifamily tenants to use an app to access their homes, before shifting towards office clients.
Latch went public in 2021, merging into TS Innovation Acquisitions Corp., a special purpose acquisition company founded by Rob Speyer. Latch said it raised $453 million in the initial public offering and was valued at $1.5 billion; the stock closed at $1.68 on Tuesday, down 83 percent all-time, though it’s up from the $0.75 mark from the year’s start.