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