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RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (Tables)
9 Months Ended
Mar. 31, 2019
Accounting Changes and Error Corrections [Abstract]  
Effect of Restatements on Previously Filed Statements
A summary of the impact of these matters on the condensed consolidated balance sheet is presented below, excluding any tax effect from the restatement adjustments in the aggregate:
($ in thousands)
Increase / (Decrease) Restatement Impact
 
As of March 31, 2018
Audit Committee Investigation-related Adjustments:
 
Accounts receivable
$
(1,954
)
Finance receivables, net
$
(1,666
)
Inventory, net
$
2,459

Prepaid expenses and other current assets
$
25

Other assets
$
69

Property and equipment, net
$
(146
)
Accounts payable
$
99

Accrued expenses
$
341

 
 
Acquisition and Financial Integration-related Adjustments:
 
Cash and cash equivalents
$
(52
)
Accounts receivable
$
(1,974
)
Finance receivables, net
$
(32
)
Inventory, net
$
(500
)
Prepaid expenses and other current assets
$
(44
)
Other assets
$
(175
)
Finance receivables due after one year, net
$
190

Property and equipment, net
$
826

Goodwill
$
4,121

Accrued expenses
$
883

Deferred revenue
$
(153
)
Common stock
$
3,469

 
 
Significant Account and Transaction Review and Other:
 
Accounts receivable
$
127

Finance receivables, net
$
28

Inventory, net
$
(1,067
)
Prepaid expenses and other current assets
$
(173
)
Other assets
$
(693
)
Property and equipment, net
$
(635
)
Accounts payable
$
29

Accrued expenses
$
9,877

Capital lease obligation and current obligations under long-term debt
$
(5
)
Deferred revenue
$
(27
)
Deferred gain from sale-leaseback transactions
$
(198
)
Common stock
$
(582
)
A summary of the impact of these matters on income (loss) before taxes is presented below:
($ in thousands)
Increase / (Decrease) Restatement Impact
 
Three months ended March 31, 2018
Audit Committee Investigation-related Adjustments:
 
Revenue
$
(768
)
Costs of sales
$
(293
)
Gross profit
$
(475
)
Operating loss
$
(9
)
Loss before income taxes
$
(29
)
 
 
Acquisition and Financial Integration-related Adjustments:
 
Revenue
$
(1,546
)
Costs of sales
$
(79
)
Gross profit
$
(1,467
)
Operating loss
$
(1,594
)
Loss before income taxes
$
(1,499
)
 
 
Significant Account and Transaction Review and Other:
 
Revenue
$
75

Costs of sales
$
231

Gross profit
$
(156
)
Operating loss
$
(461
)
Loss before income taxes
$
(696
)
($ in thousands)
Increase / (Decrease) Restatement Impact
 
Nine months ended March 31, 2018
Audit Committee Investigation-related Adjustments:
 
Revenue
$
(2,045
)
Costs of sales
$
(1,353
)
Gross profit
$
(692
)
Operating loss
$
(226
)
Loss before income taxes
$
(248
)
 
 
Acquisition and Financial Integration-related Adjustments:
 
Revenue
$
(1,606
)
Costs of sales
$
(112
)
Gross profit
$
(1,494
)
Operating loss
$
(1,882
)
Loss before income taxes
$
(1,722
)
 
 
Significant Account and Transaction Review and Other:
 
Revenue
$
81

Costs of sales
$
1,041

Gross profit
$
(960
)
Operating loss
$
(1,858
)
Loss before income taxes
$
(2,623
)
The effect of the restatement on the previously filed condensed consolidated balance sheet as of March 31, 2018 is as follows:
 
As of March 31, 2018
($ in thousands)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
17,107

 
$
(52
)
 
$
17,055

Accounts receivable
23,166

 
(3,723
)
 
19,443

Finance receivables, net
3,904

 
(1,670
)
 
2,234

Inventory, net
11,030

 
893

 
11,923

Prepaid expenses and other current assets
1,869

 
(591
)
 
1,278

Total current assets
57,076

 
(5,143
)
 
51,933

 
 
 
 
 
 
Non-current assets:
 
 
 
 
 
Finance receivables due after one year, net
9,679

 
191

 
9,870

Other assets
1,214

 
(800
)
 
414

Property and equipment, net
12,198

 
45

 
12,243

Deferred income taxes
16,911

 
(16,911
)
 

Intangibles, net
30,119

 

 
30,119

Goodwill
64,196

 
(47
)
 
64,149

Total non-current assets
134,317

 
(17,522
)
 
116,795

 
 
 
 
 
 
Total assets
$
191,393

 
$
(22,665
)
 
$
168,728

 
 
 
 
 
 
Liabilities, convertible preferred stock and shareholders’ equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
29,446

 
$
128

 
$
29,574

Accrued expenses
7,961

 
10,547

 
18,508

Capital lease obligations and current obligations under long-term debt
4,475

 
(5
)
 
4,470

Income taxes payable

 

 

Deferred revenue
441

 
70

 
511

Deferred gain from sale-leaseback transactions
198

 
(198
)
 

Total current liabilities
42,521

 
10,542

 
53,063

 
 
 
 
 
 
Long-term liabilities:
 
 
 
 
 
Revolving credit facility
10,000

 

 
10,000

Deferred income taxes

 
96

 
96

Capital lease obligations and long-term debt, less current portion
22,895

 

 
22,895

Accrued expenses, less current portion
66

 

 
66

Total long-term liabilities
32,961

 
96

 
33,057

 
 
 
 
 
 
Total liabilities
$
75,482

 
$
10,638

 
$
86,120

Commitments and contingencies


 


 


Convertible preferred stock:
 
 
 
 
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $19,443 at March 31, 2018

 
3,138

 
3,138

Shareholders’ equity:
 
 
 
 
 
Preferred stock, no par value, 1,800,000 shares authorized, no shares issued

 

 

Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $19,443 at March 31, 2018
3,138

 
(3,138
)
 

Common stock, no par value, 640,000,000 shares authorized, 53,666,718 shares issued and outstanding at March 31, 2018
307,634

 
2,888

 
310,522

Accumulated deficit
(194,861
)
 
(36,191
)
 
(231,052
)
Total shareholders’ equity
115,911

 
(36,441
)
 
79,470

Total liabilities, convertible preferred stock and shareholders’ equity
$
191,393

 
$
(22,665
)
 
$
168,728

The effect of the restatement on the previously filed condensed consolidated statement of operations for the three and nine months ended March 31, 2018 is as follows:
 
Three months ended March 31, 2018
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
Revenue:
 
 
 
 
 
License and transaction fees
$
27,020

 
$
(1,639
)
 
$
25,381

Equipment sales
8,812

 
(601
)
 
8,211

Total revenue
35,832

 
(2,240
)
 
33,592

 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
Cost of services
16,012

 
25

 
16,037

Cost of equipment
7,876

 
(166
)
 
7,710

Total costs of sales
23,888

 
(141
)
 
23,747

Gross profit
11,944

 
(2,099
)
 
9,845

 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Selling, general and administrative
9,572

 
57

 
9,629

Integration and acquisition costs
1,747

 
(70
)
 
1,677

Depreciation and amortization
1,125

 
(20
)
 
1,105

Total operating expenses
12,444

 
(33
)
 
12,411

Operating loss
(500
)
 
(2,066
)
 
(2,566
)
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
Interest income
134

 
92

 
226

Interest expense
(612
)
 
(251
)
 
(863
)
Total other expense, net
(478
)
 
(159
)
 
(637
)
 
 
 
 
 
 
Loss before income taxes
(978
)
 
(2,225
)
 
(3,203
)
Benefit (provision) for income taxes
2,138

 
(2,158
)
 
(20
)
 
 
 
 
 
 
Net income (loss)
1,160

 
(4,383
)
 
(3,223
)
Preferred dividends
(334
)
 

 
(334
)
Net income (loss) applicable to common shares
$
826

 
$
(4,383
)
 
$
(3,557
)
Net income (loss) per common share
 
 
 
 
 
Basic
$
0.02

 
$
(0.09
)
 
$
(0.07
)
Diluted
$
0.02

 
$
(0.09
)
 
$
(0.07
)
Weighted average number of common shares outstanding
 
 
 
 
 
Basic
53,637,085

 

 
53,637,085

Diluted
54,234,566

 
(597,481
)
 
53,637,085

 
Nine months ended March 31, 2018
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
Revenue:
 
 
 
 
 
License and transaction fees
$
69,817

 
$
(1,525
)
 
$
68,292

Equipment sales
24,138

 
(2,047
)
 
22,091

Total revenue
93,955

 
(3,572
)
 
90,383

 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
Cost of services
43,700

 
(60
)
 
43,640

Cost of equipment
21,909

 
(364
)
 
21,545

Total costs of sales
65,609

 
(424
)
 
65,185

Gross profit
28,346

 
(3,148
)
 
25,198

 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Selling, general and administrative
24,647

 
911

 
25,558

Integration and acquisition costs
5,844

 
(70
)
 
5,774

Depreciation and amortization
2,107

 
(20
)
 
2,087

Total operating expenses
32,598

 
821

 
33,419

Operating loss
(4,252
)
 
(3,969
)
 
(8,221
)
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
Interest income
465

 
165

 
630

Interest expense
(1,315
)
 
(791
)
 
(2,106
)
Total other expense, net
(850
)
 
(626
)
 
(1,476
)
 
 
 
 
 
 
Loss before income taxes
(5,102
)
 
(4,595
)
 
(9,697
)
(Provision) benefit for income taxes
(6,467
)
 
6,576

 
109

 
 
 
 
 
 
Net loss
(11,569
)
 
1,981

 
(9,588
)
Preferred dividends
(668
)
 

 
(668
)
Net loss applicable to common shares
$
(12,237
)
 
$
1,981

 
$
(10,256
)
Net loss per common share
 
 
 
 
 
Basic
$
(0.24
)
 
$
0.04

 
$
(0.20
)
Diluted
$
(0.24
)
 
$
0.04

 
$
(0.20
)
Weighted average number of common shares outstanding
 
 
 
 
 
Basic
51,101,813

 

 
51,101,813

Diluted
51,101,813

 

 
51,101,813


The effect of the restatement on the previously filed condensed consolidated statement of cash flows for the nine months ended March 31, 2018 is as follows:
 
Nine months ended March 31, 2018
($ in thousands)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
Net loss
$
(11,569
)
 
$
1,981

 
$
(9,588
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
 
Non-cash stock-based compensation
2,005

 
(581
)
 
1,424

(Gain) loss on disposal of property and equipment
(112
)
 
13

 
(99
)
Non-cash interest and amortization of debt discount
100

 
18

 
118

Bad debt expense
506

 
4

 
510

Provision for inventory reserve

 
1,361

 
1,361

Depreciation and amortization
5,858

 
(272
)
 
5,586

Excess tax benefits
67

 

 
67

Deferred income taxes
6,400

 
(6,554
)
 
(154
)
Recognition of deferred gain from sale-leaseback transactions
(143
)
 
143

 

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(12,972
)
 
3,008

 
(9,964
)
Finance receivables, net
11,114

 
(2,912
)
 
8,202

Sale of finance receivables

 
2,051

 
2,051

Inventory, net
(5,624
)
 
(2,153
)
 
(7,777
)
Prepaid expenses and other current assets
(564
)
 
919

 
355

Accounts payable and accrued expenses
13,808

 
1,447

 
15,255

Deferred revenue
(185
)
 
536

 
351

Income taxes payable

 
(30
)
 
(30
)
Net cash provided by operating activities
8,689

 
(1,021
)
 
7,668

 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
 
Purchase of property and equipment, including rentals
(3,005
)
 
(133
)
 
(3,138
)
Proceeds from sale of property and equipment, including rentals
252

 

 
252

Cash paid for acquisitions, net of cash acquired
(65,181
)
 

 
(65,181
)
Net cash used in investing activities
(67,934
)
 
(133
)
 
(68,067
)
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from collateralized borrowing from the transfer of finance receivables

 
1,075

 
1,075

Proceeds from exercise of common stock options
109

 

 
109

Payment of debt issuance costs
(445
)
 

 
(445
)
Proceeds from issuance of long-term debt
25,100

 

 
25,100

Proceeds from revolving credit facility
12,500

 

 
12,500

Repayment of revolving credit facility
(2,500
)
 

 
(2,500
)
Issuance of common stock in public offering, net
39,888

 

 
39,888

Repayment of line of credit
(7,111
)
 

 
(7,111
)
Repayment of capital lease obligations and long-term debt
(3,778
)
 
27

 
(3,751
)
Cash used in retirement of common stock
(156
)
 

 
(156
)
Net cash provided by financing activities
63,607

 
1,102

 
64,709

 
 
 
 
 
 
Net increase in cash and cash equivalents
4,362

 
(52
)
 
4,310

Cash and cash equivalents at beginning of year
12,745

 

 
12,745

Cash and cash equivalents at end of period
$
17,107

 
$
(52
)
 
$
17,055