How can I reformat a USB
The following page has a lot of explanation on it but I've provided the quick steps below. Side note, try verify and repair and fix permissions in the app first to see if that does it. 

Erase disk via terminal

Start in terminal with this command:
diskutil list

Next verify and repair the usb drive with this command putting the disk name I where it says {volume name} (no brackets):
diskutil verifyVolume /Volumes/{volume name} diskutil repairVolume /Volumes/{volume name}

If good so far, try erasing with this command, replacing disk identifier with the name from the list in the first step (eg disk2):
diskutil eraseDisk JHFS+ Test /dev/{disk identifier}