RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Jun. 30, 2019

Accounting Changes and Error Corrections [Abstract]

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

A summary of the impact of these matters on income (loss) before taxes is presented below:

($ in thousands)	Increase / (Decrease) Restatement Impact
	Year ended June 30, 2017
Audit Committee Investigation-related Adjustments:
Revenue	$	(2,568	)
Costs of sales	$	(1,163	)
Gross profit	$	(1,405	)
Operating income (loss)	$	(1,405	)
Loss before income taxes	$	(1,405	)
Significant Account and Transaction Review and Other:
Revenue	$	(89	)
Costs of sales	$	91
Gross profit	$	(180	)
Operating income (loss)	$	(2,864	)
Loss before income taxes	$	(4,200	)

A summary of the impact of these matters on the 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 June 30, 2017
Audit Committee Investigation-related Adjustments:
Accounts receivable	$	(284	)
Finance receivables, net	$	(1,267	)
Inventory, net	$	1,106
Prepaid expenses and other current assets	$	25
Other assets	$	88
Accounts payable	$	270
Accrued expenses	$	803
Significant Account and Transaction Review and Other:
Accounts receivable	$	(75	)
Inventory, net	$	(500	)
Prepaid expenses and other current assets	$	(114	)
Other assets	$	(456	)
Property and equipment, net	$	(1,000	)
Accounts payable	$	21
Accrued expenses	$	7,235
Capital lease obligation and current obligations under long-term debt	$	(32	)
Deferred revenue	$	(27	)
Deferred gain from sale-leaseback transactions	$	(239	)
Deferred gain from sale-leaseback transactions, less current portion	$	(100	)

The effect of the restatement on the previously filed consolidated balance sheet as of June 30, 2017 is as follows:

	As of June 30, 2017
($ in thousands, except per share data)	As Previously Reported			Adjustments			As Restated
Assets
Current assets:
Cash and cash equivalents	$	12,745		$	—		$	12,745
Accounts receivable	7,193			(359		)	6,834
Finance receivables, net	11,010			(1,267		)	9,743
Inventory, net	4,586			606			5,192
Prepaid expenses and other current assets	968			(89		)	879
Total current assets	36,502			(1,109		)	35,393
Non-current assets:
Finance receivables due after one year	8,607			—			8,607
Other assets	687			(368		)	319
Property and equipment, net	12,111			(1,000		)	11,111
Deferred income taxes	27,670			(27,670		)	—
Intangibles, net	622			—			622
Goodwill	11,492			—			11,492
Total non-current assets	61,189			(29,038		)	32,151
Total assets	$	97,691		$	(30,147	)	$	67,544
Liabilities, convertible preferred stock and shareholders’ equity
Current liabilities:
Accounts payable	$	16,054		$	291		$	16,345
Accrued expenses	4,130			7,743			11,873
Line of credit, net	7,036			—			7,036
Capital lease obligations and current obligations under long-term debt	3,230			(32		)	3,198
Income taxes payable	10			—			10
Deferred revenue	—			268			268
Deferred gain from sale-leaseback transactions	239			(239		)	—
Total current liabilities	30,699			8,031			38,730
Long-term liabilities:
Deferred income taxes	—			94			94
Capital lease obligations and long-term debt, less current portion	1,061			—			1,061
Accrued expenses, less current portion	53			—			53
Deferred gain from sale-leaseback transactions, less current portion	100			(100		)	—
Total long-term liabilities	1,214			(6		)	1,208
Total liabilities	$	31,913		$	8,025		$	39,938
Commitments and contingencies
Convertible preferred stock:
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $18,775 at June 30, 2017	—			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 $18,775 at June 30, 2017	3,138			(3,138		)	—
Common stock, no par value, 640,000,000 shares authorized, 40,331,645 shares issued and outstanding at June 30, 2017	245,999			—			245,999
Accumulated deficit	(183,359		)	(38,172		)	(221,531		)
Total shareholders’ equity	65,778			(41,310		)	24,468
Total liabilities, convertible preferred stock and shareholders’ equity	$	97,691		$	(30,147	)	$	67,544

The effect of the restatement on the previously filed consolidated statement of operations for the year ended June 30, 2017 is as follows:

	Year ended June 30, 2017
($ in thousands, except per share data)	As Previously Reported			Adjustments			As Restated
Revenue:
License and transaction fees	$	69,142		$	(8	)	$	69,134
Equipment sales	34,951			(2,649		)	32,302
Total revenue	104,093			(2,657		)	101,436
Costs of sales:
Cost of services	47,053			(533		)	46,520
Cost of equipment	30,394			(539		)	29,855
Total costs of sales	77,447			(1,072		)	76,375
Gross profit	26,646			(1,585		)	25,061
Operating expenses:
Selling, general and administrative	25,493			2,684			28,177
Depreciation and amortization	1,018			—			1,018
Total operating expenses	26,511			2,684			29,195
Operating income (loss)	135			(4,269		)	(4,134		)
Other income (expense):
Interest income	482			—			482
Interest expense	(892		)	(1,336		)	(2,228		)
Change in fair value of warrant liabilities	(1,490		)	—			(1,490		)
Total other expense, net	(1,900		)	(1,336		)	(3,236		)
Loss before income taxes	(1,765		)	(5,605		)	(7,370		)
Provision for income taxes	(87		)	(8		)	(95		)
Net loss	(1,852		)	(5,613		)	(7,465		)
Preferred dividends	(668		)	—			(668		)
Net loss applicable to common shares	$	(2,520	)	$	(5,613	)	$	(8,133	)
Net loss per common share
Basic	$	(0.06	)	$	(0.14	)	$	(0.20	)
Diluted	$	(0.06	)	$	(0.14	)	$	(0.20	)
Weighted average number of common shares outstanding
Basic	39,860,335			—			39,860,335
Diluted	39,860,335			—			39,860,335

The effect of the restatement on the previously filed consolidated statement of cash flows for the year ended June 30, 2017 is as follows:

	Year ended June 30, 2017
($ in thousands)	As Previously Reported			Adjustments			As Restated
OPERATING ACTIVITIES:
Net loss	$	(1,852	)	$	(5,613	)	$	(7,465	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash stock-based compensation	1,214			—			1,214
(Gain) loss on disposal of property and equipment	(177		)	—			(177		)
Non-cash interest and amortization of debt discount	113			—			113
Bad debt expense	764			(207		)	557
Provision for inventory reserve	—			877			877
Depreciation and amortization	5,591			365			5,956
Change in fair value of warrant liabilities	1,490			—			1,490
Deferred income taxes, net	54			8			62
Recognition of deferred gain from sale-leaseback transactions	(560		)	560			—
Changes in operating assets and liabilities:
Accounts receivable	(2,988		)	450			(2,538		)
Finance receivables, net	(12,119		)	1,287			(10,832		)
Inventory, net	(2,399		)	(2,064		)	(4,463		)
Prepaid expenses and other current assets	(304		)	457			153
Accounts payable and accrued expenses	4,410			4,464			8,874
Deferred revenue	—			115			115
Income taxes payable	(8		)	—			(8		)
Net cash used in operating activities	(6,771		)	699			(6,072		)
INVESTING ACTIVITIES:
Purchase of property and equipment, including rentals	(4,041		)	254			(3,787		)
Proceeds from sale of property and equipment	348			—			348
Net cash used in investing activities	(3,693		)	254			(3,439		)
FINANCING ACTIVITIES:
Cash used in retirement of common stock	(31		)	—			(31		)
Proceeds from exercise of common stock warrants	6,193			—			6,193
Payment of debt issuance costs	(90		)	—			(90		)
Repayment of line of credit	(106		)	—			(106		)
Repayment of capital lease obligations and long-term debt	(2,029		)	(953		)	(2,982		)
Net cash provided by financing activities	3,937			(953		)	2,984
Net decrease in cash and cash equivalents	(6,527		)	—			(6,527		)
Cash and cash equivalents at beginning of year	19,272			—			19,272
Cash and cash equivalents at end of year	$	12,745		$	—		$	12,745