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RESTATEMENT AND REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS (Tables)
3 Months Ended
Sep. 30, 2019
Accounting Changes and Error Corrections [Abstract]  
Schedule of Error Corrections and Prior Period Adjustments
The effect of the restatement on the previously filed condensed consolidated balance sheet as of September 30, 2019 is as follows:
 
As of September 30, 2019
($ in thousands)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
25,540

 
$

 
$
25,540

Accounts receivable, less allowance of $4,972
17,120

 
1,608

 
18,728

Finance receivables, net
7,216

 
229

 
7,445

Inventory, net
9,344

 
125

 
9,469

Prepaid expenses and other current assets
1,808

 

 
1,808

Total current assets
61,028

 
1,962

 
62,990

 
 
 
 
 
 
Non-current assets:
 
 
 
 
 
Finance receivables due after one year, net
12,710

 
(331
)
 
12,379

Other assets
1,811

 
204

 
2,015

Property and equipment, net
7,697

 
1,425

 
9,122

Operating lease right-of-use assets
6,514

 

 
6,514

Intangibles, net
25,387

 

 
25,387

Goodwill
64,149

 
(204
)
 
63,945

Total non-current assets
118,268

 
1,094

 
119,362

 
 
 
 
 
 
Total assets
$
179,296

 
$
3,056

 
$
182,352

 
 
 
 
 
 
Liabilities, convertible preferred stock and shareholders’ equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
27,453

 
1,102

 
$
28,555

Accrued expenses
29,245

 
(105
)
 
29,140

Capital lease obligations and current obligations under long-term debt
10,826

 

 
10,826

Income taxes payable
252

 

 
252

Deferred revenue
2,949

 
(1,300
)
 
1,649

Total current liabilities
70,725

 
(303
)
 
70,422

 
 
 
 
 
 
Long-term liabilities:
 
 
 
 
 
Deferred income taxes
76

 

 
76

Capital lease obligations and long-term debt, less current portion
184

 

 
184

Operating lease liabilities, non-current
5,327

 

 
5,327

Total long-term liabilities
5,587

 

 
5,587

 
 
 
 
 
 
Total liabilities
$
76,312

 
$
(303
)
 
$
76,009

Commitments and contingencies
 
 
 
 
 
Convertible preferred stock:
 
 
 
 
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $20,444
3,138

 

 
3,138

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

 

 

Common stock, no par value, 640,000,000 shares authorized, 60,008,481 shares issued and outstanding
377,143

 

 
377,143

Accumulated deficit
(277,297
)
 
3,359

 
(273,938
)
Total shareholders’ equity
99,846

 
3,359

 
103,205

Total liabilities, convertible preferred stock and shareholders’ equity
$
179,296

 
$
3,056

 
$
182,352

The effect of the restatement on the previously filed condensed consolidated statement of operations for the three months ended September 30, 2019 is as follows:
 
Three months ended September 30, 2019
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
Revenue:
 
 
 
 
 
License and transaction fees
$
33,833

 
$
776

 
$
34,609

Equipment sales
8,313

 
437

 
8,750

Total revenue
42,146

 
1,213

 
43,359

 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
Cost of services
21,646

 
443

 
22,089

Cost of equipment
10,448

 
(594
)
 
9,854

Total costs of sales
32,094

 
(151
)
 
31,943

Gross profit
10,052

 
1,364

 
11,416

 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Selling, general and administrative
18,171

 
(64
)
 
18,107

Investigation and restatement expenses
3,699

 
(134
)
 
3,565

Depreciation and amortization
1,022

 

 
1,022

Total operating expenses
22,892

 
(198
)
 
22,694

Operating income (loss)
(12,840
)
 
1,562

 
(11,278
)
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
Interest income
467

 
(173
)
 
294

Interest expense
(465
)
 

 
(465
)
Total other income (expense), net
2

 
(173
)
 
(171
)
 
 
 
 
 
 
Loss before income taxes
(12,838
)
 
1,389

 
(11,449
)
Provision for income taxes
(59
)
 

 
(59
)
 
 
 
 
 
 
Net loss
(12,897
)
 
1,389

 
(11,508
)
Preferred dividends
(334
)
 

 
(334
)
Net loss applicable to common shares
$
(13,231
)
 
$
1,389

 
$
(11,842
)
Net loss per common share
 
 
 
 
 
Basic
$
(0.22
)
 
$
0.02

 
$
(0.20
)
Diluted
$
(0.22
)
 
$
0.02

 
$
(0.20
)
Weighted average number of common shares outstanding
 
 
 
 
 
Basic
60,096,852

 

 
60,096,852

Diluted
60,096,852

 

 
60,096,852


The effect of the restatement on the previously filed condensed consolidated statement of cash flows for the three months ended September 30, 2019 is as follows:
 
Three months ended September 30, 2019
($ in thousands)
As Previously Reported
 
Adjustments
 
As Restated
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
Net loss
$
(12,897
)
 
$
1,389

 
$
(11,508
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
 
 
 
 
 
Non-cash stock based compensation
290

 

 
290

Gain on disposal of property and equipment
(15
)
 

 
(15
)
Non-cash interest and amortization of debt discount
338

 

 
338

Bad debt expense
(110
)
 

 
(110
)
Provision for inventory reserve
574

 

 
574

Depreciation and amortization
1,213

 
443

 
1,656

Non-cash lease expense
491

 

 
491

Deferred income taxes
5

 

 
5

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
4,677

 
(1,391
)
 
3,286

Finance receivables, net
(384
)
 
(70
)
 
(454
)
Inventory, net
992

 
240

 
1,232

Prepaid expenses and other current assets
(412
)
 

 
(412
)
Accounts payable and accrued expenses
4,459

 
831

 
5,290

Operating lease liabilities
(399
)
 

 
(399
)
Deferred revenue
1,409

 
(1,442
)
 
(33
)
Income taxes payable
(2
)
 

 
(2
)
Net cash provided by operating activities
229

 

 
229

 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
 
Purchase of property and equipment, including rentals
(420
)
 

 
(420
)
Proceeds from sale of property and equipment, including rentals
30

 

 
30

Net cash used in investing activities
(390
)
 

 
(390
)
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
 
Repayment of capital lease obligations and long-term debt
(1,763
)
 

 
(1,763
)
Net cash used in financing activities
(1,763
)
 

 
(1,763
)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(1,924
)
 

 
(1,924
)
Cash and cash equivalents at beginning of year
27,464

 

 
27,464

Cash and cash equivalents at end of period
$
25,540

 
$

 
$
25,540

Revision
In addition, the Company analyzed the impact of the aforementioned adjustments on the financial statements for the interim and annual periods prior to fiscal year 2020 and concluded a correction of the errors would not be material to any individual period prior to fiscal year 2020, taking into account the requirements of ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 270 Interim Financial Reporting, ASC Topic 250-S99-1, Assessing Materiality, and ASC Topic 250-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. In accordance with the authoritative guidance, management evaluated the materiality of the adjustments from a quantitative and qualitative perspective. Based on such evaluation, the Company concluded that the effects of these adjustments and other accumulated misstatements were not material individually or in the aggregate to any interim or annual period prior to fiscal year 2020. However, correcting the cumulative impact of the misstatements would be material to our results of operations for the three months ended December 31, 2019 and fiscal year 2020. Accordingly, in this filing, the Company has revised the prior period interim and annual financial information for fiscal year 2019 to reflect the correction of these adjustments and other accumulated misstatements.
The effect of the revision on the previously filed consolidated balance sheet as of June 30, 2019 is as follows:
 
As of June 30, 2019
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
27,464

 
$

 
$
27,464

Accounts receivable, less allowance of $4,866
21,712

 
194

 
21,906

Finance receivables, net
6,260

 
467

 
6,727

Inventory, net
10,908

 
365

 
11,273

Prepaid expenses and other current assets
1,558

 

 
1,558

Total current assets
67,902

 
1,026

 
68,928

 
 
 
 
 
 
Non-current assets:
 
 
 
 
 
Finance receivables due after one year, net
11,596

 
1,046

 
12,642

Other assets
2,099

 

 
2,099

Property and equipment, net
9,180

 
410

 
9,590

Intangibles, net
26,171

 

 
26,171

Goodwill
64,149

 
(204
)
 
63,945

Total non-current assets
113,195

 
1,252

 
114,447

 
 
 
 
 
 
Total assets
$
181,097

 
$
2,278

 
$
183,375

 
 
 
 
 
 
Liabilities, convertible preferred stock and shareholders’ equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
27,511

 
73

 
$
27,584

Accrued expenses
23,258

 
93

 
23,351

Capital lease obligations and current obligations under long-term debt
12,497

 

 
12,497

Income taxes payable
254

 

 
254

Deferred revenue
1,539

 
142

 
1,681

Total current liabilities
65,059

 
308

 
65,367

 
 
 
 
 
 
Long-term liabilities:
 
 
 
 
 
Deferred income taxes
71

 

 
71

Capital lease obligations and long-term debt, less current portion
276

 

 
276

Accrued expenses, less current portion
100

 

 
100

Total long-term liabilities
447

 

 
447

 
 
 
 
 
 
Total liabilities
$
65,506

 
$
308

 
$
65,814

Commitments and contingencies
 
 
 
 
 
Convertible preferred stock:
 
 
 
 
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $20,111
3,138

 

 
3,138

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

 

 

Common stock, no par value, 640,000,000 shares authorized, 60,008,481 shares issued and outstanding
376,853

 

 
376,853

Accumulated deficit
(264,400
)
 
1,970

 
(262,430
)
Total shareholders’ equity
112,453

 
1,970

 
114,423

Total liabilities, convertible preferred stock and shareholders’ equity
$
181,097

 
$
2,278

 
$
183,375


The effect of the revision on the previously filed consolidated statements of operations for the three and twelve months ended June 30, 2019 is as follows:
 
Three months ended June 30, 2019
 
Year ended June 30, 2019
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Revised
 
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
License and transaction fees
$
33,116

 
$
(127
)
 
$
32,989

 
$
123,554

 
$
(646
)
 
$
122,908

Equipment sales
5,109

 
410

 
5,519

 
20,245

 
1,313

 
21,558

Total revenue
38,225

 
283

 
38,508

 
143,799

 
667

 
144,466

 
 
 
 
 
 
 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
 
 
 
 
 
 
Cost of services
21,943

 
(104
)
 
21,839

 
80,485

 
(505
)
 
79,980

Cost of equipment
7,295

 
(365
)
 
6,930

 
25,195

 
(894
)
 
24,301

Total costs of sales
29,238

 
(469
)
 
28,769

 
105,680

 
(1,399
)
 
104,281

Gross profit
8,987

 
752

 
9,739

 
38,119

 
2,066

 
40,185

 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
15,531

 
(41
)
 
15,490

 
47,068

 
(41
)
 
47,027

Investigation and restatement expenses
2,317

 
134

 
2,451

 
15,439

 
134

 
15,573

Integration and acquisition costs
211

 

 
211

 
1,338

 

 
1,338

Depreciation and amortization
1,071

 

 
1,071

 
4,430

 

 
4,430

Total operating expenses
19,130

 
93

 
19,223

 
68,275

 
93

 
68,368

Operating loss
(10,143
)
 
659

 
(9,484
)
 
(30,156
)
 
1,973

 
(28,183
)
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
278

 
32

 
310

 
1,382

 
173

 
1,555

Interest expense
(474
)
 

 
(474
)
 
(2,992
)
 

 
(2,992
)
Total other expense, net
(196
)
 
32

 
(164
)
 
(1,610
)
 
173

 
(1,437
)
 
 
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
(10,339
)
 
691

 
(9,648
)
 
(31,766
)
 
2,146

 
(29,620
)
Provision for income taxes
(202
)
 

 
(202
)
 
(262
)
 

 
(262
)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
(10,541
)
 
691

 
(9,850
)
 
(32,028
)
 
2,146

 
(29,882
)
Preferred dividends

 

 

 
(668
)
 

 
(668
)
Net loss applicable to common shares
$
(10,541
)
 
$
691

 
$
(9,850
)
 
$
(32,696
)
 
$
2,146

 
$
(30,550
)
Net loss per common share
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.18
)
 
$
0.02

 
$
(0.16
)
 
$
(0.54
)
 
$
0.03

 
$
(0.51
)
Diluted
$
(0.18
)
 
$
0.02

 
$
(0.16
)
 
$
(0.54
)
 
$
0.03

 
$
(0.51
)
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
Basic
60,065,978

 

 
60,065,978

 
60,061,243

 

 
60,061,243

Diluted
60,065,978

 

 
60,065,978

 
60,061,243

 

 
60,061,243


The effect of the revision on the previously filed consolidated statement of cash flows for the year ended June 30, 2019 is as follows:
 
Year ended June 30, 2019
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
Net loss
$
(32,028
)
 
$
2,146

 
$
(29,882
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Non-cash stock based compensation
1,750

 

 
1,750

Loss on disposal of property and equipment
672

 

 
672

Non-cash interest and amortization of debt discount
301

 

 
301

Bad debt expense
2,534

 

 
2,534

Provision for inventory reserve
3,172

 

 
3,172

Depreciation and amortization
8,009

 
(505
)
 
7,504

Deferred income taxes
(7
)
 

 
(7
)
Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(8,488
)
 
(218
)
 
(8,706
)
Finance receivables, net
(8
)
 
(661
)
 
(669
)
Inventory, net
(5,242
)
 
(365
)
 
(5,607
)
Prepaid expenses and other current assets
(395
)
 

 
(395
)
Accounts payable and accrued expenses
873

 
166

 
1,039

Deferred revenue
(98
)
 
(34
)
 
(132
)
Income taxes payable
254

 

 
254

Net cash used in operating activities
(28,701
)
 
529

 
(28,172
)
 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
 
Purchase of property and equipment, including rentals
(4,346
)
 
(529
)
 
(4,875
)
Proceeds from sale of property and equipment, including rentals
116

 

 
116

Net cash used in investing activities
(4,230
)
 
(529
)
 
(4,759
)
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from exercise of common stock options
42

 

 
42

Cash used for repurchase of common stock awards
(120
)
 

 
(120
)
Cash used in retirement of common stock
(81
)
 

 
(81
)
Payment of debt issuance costs
(156
)
 

 
(156
)
Repayment of capital lease obligations and long-term debt
(23,254
)
 

 
(23,254
)
Net cash used in financing activities
(23,569
)
 

 
(23,569
)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(56,500
)
 

 
(56,500
)
Cash and cash equivalents at beginning of year
83,964

 

 
83,964

Cash and cash equivalents at end of year
$
27,464

 
$

 
$
27,464

The effect of the revision on the previously filed condensed consolidated balance sheet as of March 31, 2019 is as follows:
 
As of March 31, 2019
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
32,788

 
$

 
$
32,788

Accounts receivable, less allowance of $3,714
20,492

 
(19
)
 
20,473

Finance receivables, net
6,119

 
422

 
6,541

Inventory, net
11,488

 

 
11,488

Prepaid expenses and other current assets
2,878

 

 
2,878

Total current assets
73,765

 
403

 
74,168

 
 
 
 
 
 
Non-current assets:
 
 
 
 
 
Finance receivables due after one year, net
11,362

 
980

 
12,342

Other assets
1,922

 

 
1,922

Property and equipment, net
9,116

 
306

 
9,422

Intangibles, net
26,956

 

 
26,956

Goodwill
64,149

 
(204
)
 
63,945

Total non-current assets
113,505

 
1,082

 
114,587

 
 
 
 
 
 
Total assets
$
187,270

 
$
1,485

 
$
188,755

 
 
 
 
 
 
Liabilities, convertible preferred stock and shareholders’ equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
26,058

 
30

 
$
26,088

Accrued expenses
19,974

 

 
19,974

Capital lease obligations and current obligations under long-term debt
13,202

 

 
13,202

Income taxes payable
42

 

 
42

Deferred revenue
1,322

 
176

 
1,498

Total current liabilities
60,598

 
206

 
60,804

 
 
 
 
 
 
Long-term liabilities:
 
 
 
 
 
Deferred income taxes
81

 

 
81

Capital lease obligations and long-term debt, less current portion
512

 

 
512

Accrued expenses, less current portion
100

 

 
100

Total long-term liabilities
693

 

 
693

 
 
 
 
 
 
Total liabilities
$
61,291

 
$
206

 
$
61,497

Commitments and contingencies
 
 
 
 
 
Convertible preferred stock:
 
 
 
 
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $20,111
3,138

 

 
3,138

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

 

 

Common stock, no par value, 640,000,000 shares authorized, 60,019,438 shares issued and outstanding
376,700

 

 
376,700

Accumulated deficit
(253,859
)
 
1,279

 
(252,580
)
Total shareholders’ equity
122,841

 
1,279

 
124,120

Total liabilities, convertible preferred stock and shareholders’ equity
$
187,270

 
$
1,485

 
$
188,755

The effect of the revision on the previously filed condensed consolidated statements of operations for the three and nine months ended March 31, 2019 is as follows:
 
Three months ended March 31, 2019
 
Nine months ended March 31, 2019
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Revised
 
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
License and transaction fees
$
31,630

 
$
(115
)
 
$
31,515

 
$
90,438

 
$
(519
)
 
$
89,919

Equipment sales
6,016

 
173

 
6,189

 
15,136

 
903

 
16,039

Total revenue
37,646

 
58

 
37,704

 
105,574

 
384

 
105,958

 
 
 
 
 
 
 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
 
 
 
 
 
 
Cost of services
20,423

 
(116
)
 
20,307

 
58,542

 
(401
)
 
58,141

Cost of equipment
7,444

 

 
7,444

 
17,900

 
(529
)
 
17,371

Total costs of sales
27,867

 
(116
)
 
27,751

 
76,442

 
(930
)
 
75,512

Gross profit
9,779

 
174

 
9,953

 
29,132

 
1,314

 
30,446

 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
11,156

 

 
11,156

 
31,537

 

 
31,537

Investigation and restatement expenses
1,408

 

 
1,408

 
13,122

 

 
13,122

Integration and acquisition costs
24

 

 
24

 
1,127

 

 
1,127

Depreciation and amortization
1,083

 

 
1,083

 
3,359

 

 
3,359

Total operating expenses
13,671

 

 
13,671

 
49,145

 

 
49,145

Operating loss
(3,892
)
 
174

 
(3,718
)
 
(20,013
)
 
1,314

 
(18,699
)
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
318

 
30

 
348

 
1,104

 
141

 
1,245

Interest expense
(913
)
 

 
(913
)
 
(2,518
)
 

 
(2,518
)
Total other expense, net
(595
)
 
30

 
(565
)
 
(1,414
)
 
141

 
(1,273
)
 
 
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
(4,487
)
 
204

 
(4,283
)
 
(21,427
)
 
1,455

 
(19,972
)
(Provision) benefit for income taxes
(23
)
 

 
(23
)
 
(60
)
 

 
(60
)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
(4,510
)
 
204

 
(4,306
)
 
(21,487
)
 
1,455

 
(20,032
)
Preferred dividends
(334
)
 

 
(334
)
 
(668
)
 

 
(668
)
Net loss applicable to common shares
$
(4,844
)
 
$
204

 
$
(4,640
)
 
$
(22,155
)
 
$
1,455

 
$
(20,700
)
Net loss per common share
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.08
)
 
$

 
$
(0.08
)
 
$
(0.37
)
 
$
0.03

 
$
(0.34
)
Diluted
$
(0.08
)
 
$

 
$
(0.08
)
 
$
(0.37
)
 
$
0.03

 
$
(0.34
)
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
Basic
60,065,053

 

 
60,065,053

 
60,059,594

 

 
60,059,594

Diluted
60,065,053

 

 
60,065,053

 
60,059,594

 

 
60,059,594


The effect of the revision on the previously filed condensed consolidated statement of cash flows for the nine months ended March 31, 2019 is as follows:
 
Nine months ended March 31, 2019
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
Net loss
$
(21,487
)
 
$
1,455

 
$
(20,032
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Non-cash stock based compensation
1,393

 

 
1,393

Gain on disposal of property and equipment
(39
)
 

 
(39
)
Non-cash interest and amortization of debt discount
286

 

 
286

Bad debt expense
1,537

 

 
1,537

Provision for inventory reserve
2,699

 

 
2,699

Depreciation and amortization
6,300

 
(401
)
 
5,899

Deferred income taxes
14

 

 
14

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(6,283
)
 
(5
)
 
(6,288
)
Finance receivables, net
368

 
(550
)
 
(182
)
Inventory, net
(5,349
)
 

 
(5,349
)
Prepaid expenses and other current assets
(1,545
)
 

 
(1,545
)
Accounts payable and accrued expenses
(3,866
)
 
30

 
(3,836
)
Deferred revenue
(316
)
 

 
(316
)
Income taxes payable
42

 

 
42

Net cash used in operating activities
(26,246
)
 
529

 
(25,717
)
 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
 
Purchase of property and equipment, including rentals
(2,627
)
 
(529
)
 
(3,156
)
Proceeds from sale of property and equipment, including rentals
103

 

 
103

Net cash used in investing activities
(2,524
)
 
(529
)
 
(3,053
)
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from exercise of common stock options
42

 

 
42

Payment of debt issuance costs
(135
)
 

 
(135
)
Repayment of capital lease obligations and long-term debt
(22,313
)
 

 
(22,313
)
Net cash used in financing activities
(22,406
)
 

 
(22,406
)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(51,176
)
 

 
(51,176
)
Cash and cash equivalents at beginning of year
83,964

 

 
83,964

Cash and cash equivalents at end of period
$
32,788

 
$

 
$
32,788

The effect of the revision on the previously filed condensed consolidated balance sheet as of December 31, 2018 is as follows:
 
As of December 31, 2018
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
63,193

 
$

 
$
63,193

Accounts receivable, less allowance of $3,385
10,132

 
(44
)
 
10,088

Finance receivables, net
5,591

 
381

 
5,972

Inventory, net
7,343

 

 
7,343

Prepaid expenses and other current assets
2,871

 

 
2,871

Total current assets
89,130

 
337

 
89,467

 
 
 
 
 
 
Non-current assets:
 
 
 
 
 
Finance receivables due after one year, net
11,910

 
928

 
12,838

Other assets
1,903

 

 
1,903

Property and equipment, net
9,546

 
190

 
9,736

Intangibles, net
27,740

 

 
27,740

Goodwill
64,149

 
(204
)
 
63,945

Total non-current assets
115,248

 
914

 
116,162

 
 
 
 
 
 
Total assets
$
204,378

 
$
1,251

 
$
205,629

 
 
 
 
 
 
Liabilities, convertible preferred stock and shareholders’ equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
17,570

 

 
$
17,570

Accrued expenses
21,150

 

 
21,150

Capital lease obligations and current obligations under long-term debt
33,235

 

 
33,235

Income taxes payable
25

 

 
25

Deferred revenue
1,437

 
176

 
1,613

Total current liabilities
73,417

 
176

 
73,593

 
 
 
 
 
 
Long-term liabilities:
 
 
 
 
 
Deferred income taxes
76

 

 
76

Capital lease obligations and long-term debt, less current portion
632

 

 
632

Accrued expenses, less current portion
101

 

 
101

Total long-term liabilities
809

 

 
809

 
 
 
 
 
 
Total liabilities
$
74,226

 
$
176

 
$
74,402

Commitments and contingencies
 
 
 
 
 
Convertible preferred stock:
 
 
 
 
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $19,777
3,138

 

 
3,138

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

 

 

Common stock, no par value, 640,000,000 shares authorized, 60,013,718 shares issued and outstanding
376,363

 

 
376,363

Accumulated deficit
(249,349
)
 
1,075

 
(248,274
)
Total shareholders’ equity
127,014

 
1,075

 
128,089

Total liabilities, convertible preferred stock and shareholders’ equity
$
204,378

 
$
1,251

 
$
205,629

The effect of the revision on the previously filed condensed consolidated statements of operations for the three and six months ended December 31, 2018 is as follows:
 
Three months ended December 31, 2018
 
Six months ended December 31, 2018
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Revised
 
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
License and transaction fees
$
29,837

 
$
(104
)
 
$
29,733

 
$
58,808

 
$
(404
)
 
$
58,404

Equipment sales
4,569

 
184

 
4,753

 
9,120

 
730

 
9,850

Total revenue
34,406

 
80

 
34,486

 
67,928

 
326

 
68,254

 
 
 
 
 
 
 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
 
 
 
 
 
 
Cost of services
19,575

 
(113
)
 
19,462

 
38,119

 
(285
)
 
37,834

Cost of equipment
5,588

 
1

 
5,589

 
10,456

 
(529
)
 
9,927

Total costs of sales
25,163

 
(112
)
 
25,051

 
48,575

 
(814
)
 
47,761

Gross profit
9,243

 
192

 
9,435

 
19,353

 
1,140

 
20,493

 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
10,931

 

 
10,931

 
20,381

 

 
20,381

Investigation and restatement expenses
7,188

 

 
7,188

 
11,714

 

 
11,714

Integration and acquisition costs
181

 

 
181

 
1,103

 

 
1,103

Depreciation and amortization
1,143

 

 
1,143

 
2,276

 

 
2,276

Total operating expenses
19,443

 

 
19,443

 
35,474

 

 
35,474

Operating loss
(10,200
)
 
192

 
(10,008
)
 
(16,121
)
 
1,140

 
(14,981
)
 
 
 
 
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
Interest income
381

 
27

 
408

 
786

 
111

 
897

Interest expense
(819
)
 

 
(819
)
 
(1,605
)
 

 
(1,605
)
Total other expense, net
(438
)
 
27

 
(411
)
 
(819
)
 
111

 
(708
)
 
 
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
(10,638
)
 
219

 
(10,419
)
 
(16,940
)
 
1,251

 
(15,689
)
(Provision) benefit for income taxes
(19
)
 

 
(19
)
 
(37
)
 

 
(37
)
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
(10,657
)
 
219

 
(10,438
)
 
(16,977
)
 
1,251

 
(15,726
)
Preferred dividends

 

 

 
(334
)
 

 
(334
)
Net loss applicable to common shares
$
(10,657
)
 
$
219

 
$
(10,438
)
 
$
(17,311
)
 
$
1,251

 
$
(16,060
)
Net loss per common share
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.18
)
 
$
0.01

 
$
(0.17
)
 
$
(0.29
)
 
$
0.02

 
$
(0.27
)
Diluted
$
(0.18
)
 
$
0.01

 
$
(0.17
)
 
$
(0.29
)
 
$
0.02

 
$
(0.27
)
Weighted average number of common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
Basic
60,059,936

 

 
60,059,936

 
60,056,924

 

 
60,056,924

Diluted
60,059,936

 

 
60,059,936

 
60,056,924

 

 
60,056,924


The effect of the revision on the previously filed condensed consolidated statement of cash flows for the six months ended December 31, 2018 is as follows:
 
Six months ended December 31, 2018
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
Net loss
$
(16,977
)
 
$
1,251

 
$
(15,726
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Non-cash stock based compensation
972

 

 
972

Gain on disposal of property and equipment
(29
)
 

 
(29
)
Non-cash interest and amortization of debt discount
45

 

 
45

Bad debt expense
1,308

 

 
1,308

Provision for inventory reserve
1,211

 

 
1,211

Depreciation and amortization
4,257

 
(285
)
 
3,972

Deferred income taxes
9

 

 
9

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
4,312

 
20

 
4,332

Finance receivables, net
348

 
(457
)
 
(109
)
Inventory, net
284

 

 
284

Prepaid expenses and other current assets
(1,588
)
 

 
(1,588
)
Accounts payable and accrued expenses
(11,095
)
 

 
(11,095
)
Deferred revenue
(201
)
 

 
(201
)
Income taxes payable
25

 

 
25

Net cash used in operating activities
(17,119
)
 
529

 
(16,590
)
 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
 
Purchase of property and equipment, including rentals
(1,795
)
 
(529
)
 
(2,324
)
Proceeds from sale of property and equipment, including rentals
82

 

 
82

Net cash used in investing activities
(1,713
)
 
(529
)
 
(2,242
)
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from exercise of common stock options
42

 

 
42

Payment of debt issuance costs
(53
)
 

 
(53
)
Repayment of capital lease obligations and long-term debt
(1,928
)
 

 
(1,928
)
Net cash used in financing activities
(1,939
)
 

 
(1,939
)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(20,771
)
 

 
(20,771
)
Cash and cash equivalents at beginning of year
83,964

 

 
83,964

Cash and cash equivalents at end of period
$
63,193

 
$

 
$
63,193

The effect of the revision on the previously filed condensed consolidated balance sheet as of September 30, 2018 is as follows:
 
As of September 30, 2018
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
68,262

 
$

 
$
68,262

Accounts receivable, less allowance of $3,125
18,921

 
(39
)
 
18,882

Finance receivables, net
5,141

 
339

 
5,480

Inventory, net
6,915

 

 
6,915

Prepaid expenses and other current assets
1,463

 

 
1,463

Total current assets
100,702

 
300

 
101,002

 
 
 
 
 
 
Non-current assets:
 
 
 
 
 
Finance receivables due after one year, net
12,770

 
859

 
13,629

Other assets
1,900

 

 
1,900

Property and equipment, net
9,778

 
77

 
9,855

Intangibles, net
28,533

 

 
28,533

Goodwill
64,149

 
(204
)
 
63,945

Total non-current assets
117,130

 
732

 
117,862

 
 
 
 
 
 
Total assets
$
217,832

 
$
1,032

 
$
218,864

 
 
 
 
 
 
Liabilities, convertible preferred stock and shareholders’ equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
19,335

 

 
$
19,335

Accrued expenses
21,848

 

 
21,848

Capital lease obligations and current obligations under long-term debt
33,889

 

 
33,889

Income taxes payable
11

 

 
11

Deferred revenue
1,428

 
176

 
1,604

Total current liabilities
76,511

 
176

 
76,687

 
 
 
 
 
 
Long-term liabilities:
 
 
 
 
 
Deferred income taxes
71

 

 
71

Capital lease obligations and long-term debt, less current portion
932

 

 
932

Accrued expenses, less current portion
66

 

 
66

Total long-term liabilities
1,069

 

 
1,069

 
 
 
 
 
 
Total liabilities
$
77,580

 
$
176

 
$
77,756

Commitments and contingencies
 
 
 
 
 
Convertible preferred stock:
 
 
 
 
 
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $19,777
3,138

 

 
3,138

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

 

 

Common stock, no par value, 640,000,000 shares authorized, 60,012,155 shares issued and outstanding
375,806

 

 
375,806

Accumulated deficit
(238,692
)
 
856

 
(237,836
)
Total shareholders’ equity
137,114

 
856

 
137,970

Total liabilities, convertible preferred stock and shareholders’ equity
$
217,832

 
$
1,032

 
$
218,864

The effect of the revision on the previously filed condensed consolidated statement of operations for the three months ended September 30, 2018 is as follows:
 
Three months ended September 30, 2018
($ in thousands, except per share data)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
Revenue:
 
 
 
 
 
License and transaction fees
$
28,971

 
$
(300
)
 
$
28,671

Equipment sales
4,551

 
546

 
5,097

Total revenue
33,522

 
246

 
33,768

 
 
 
 
 
 
Costs of sales:
 
 
 
 
 
Cost of services
18,544

 
(172
)
 
18,372

Cost of equipment
4,868

 
(530
)
 
4,338

Total costs of sales
23,412

 
(702
)
 
22,710

Gross profit
10,110

 
948

 
11,058

 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
Selling, general and administrative
9,450

 

 
9,450

Investigation and restatement expenses
4,526

 

 
4,526

Integration and acquisition costs
922

 

 
922

Depreciation and amortization
1,133

 

 
1,133

Total operating expenses
16,031

 

 
16,031

Operating income (loss)
(5,921
)
 
948

 
(4,973
)
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
Interest income
405

 
84

 
489

Interest expense
(786
)
 

 
(786
)
Total other income (expense), net
(381
)
 
84

 
(297
)
 
 
 
 
 
 
Loss before income taxes
(6,302
)
 
1,032

 
(5,270
)
Provision for income taxes
(18
)
 

 
(18
)
 
 
 
 
 
 
Net loss
(6,320
)
 
1,032

 
(5,288
)
Preferred dividends
(334
)
 

 
(334
)
Net loss applicable to common shares
$
(6,654
)
 
$
1,032

 
$
(5,622
)
Net loss per common share
 
 
 
 
 
Basic
$
(0.11
)
 
$
0.02

 
$
(0.09
)
Diluted
$
(0.11
)
 
$
0.02

 
$
(0.09
)
Weighted average number of common shares outstanding
 
 
 
 
 
Basic
60,053,912

 

 
60,053,912

Diluted
60,053,912

 

 
60,053,912


The effect of the revision on the previously filed condensed consolidated statement of cash flows for the three months ended September 30, 2018 is as follows:
 
Three months ended September 30, 2018
($ in thousands)
As Previously Reported
 
Adjustments
 
As Revised
 
 
 
 
 
 
OPERATING ACTIVITIES:
 
 
 
 
 
Net loss
$
(6,320
)
 
$
1,032

 
$
(5,288
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Non-cash stock based compensation
415

 

 
415

Loss on disposal of property and equipment
7

 

 
7

Non-cash interest and amortization of debt discount
22

 

 
22

Bad debt expense
509

 

 
509

Provision for inventory reserve
212

 

 
212

Depreciation and amortization
2,147

 
(172
)
 
1,975

Deferred income taxes
4

 

 
4

Changes in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
(3,678
)
 
15

 
(3,663
)
Finance receivables, net
(63
)
 
(346
)
 
(409
)
Inventory, net
1,707

 

 
1,707

Prepaid expenses and other current assets
(220
)
 

 
(220
)
Accounts payable and accrued expenses
(8,665
)
 

 
(8,665
)
Deferred revenue
(210
)
 

 
(210
)
Income taxes payable
11

 

 
11

Net cash used in operating activities
(14,122
)
 
529

 
(13,593
)
 
 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
 
Purchase of property and equipment, including rentals
(693
)
 
(529
)
 
(1,222
)
Proceeds from sale of property and equipment, including rentals
30

 

 
30

Net cash used in investing activities
(663
)
 
(529
)
 
(1,192
)
 
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
 
Proceeds from exercise of common stock options
42

 

 
42

Repayment of capital lease obligations and long-term debt
(959
)
 

 
(959
)
Net cash used in financing activities
(917
)
 

 
(917
)
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(15,702
)
 

 
(15,702
)
Cash and cash equivalents at beginning of year
83,964

 

 
83,964

Cash and cash equivalents at end of period
$
68,262

 
$

 
$
68,262