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UNAUDITED QUARTERLY DATA (Tables) | 12 Months Ended
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Jun. 30, 2019
Quarterly Financial Information Disclosure [Abstract] |
Schedule of unaudited quarterly data |
|  | Three months ended
($ in thousands, except per share data) |  | September 30, 2018 |  | December 31, 2018 |  | March 31, 2019 |  | June 30, 2019
|  | (unaudited) |  | (unaudited) |  | (unaudited) |  | (unaudited)
Revenue |  | $ | 33,522 |  |  | $ | 34,406 |  |  | $ | 37,646 |  |  | $ | 38,225 |
Gross profit |  | $ | 10,110 |  |  | $ | 9,243 |  |  | $ | 9,779 |  |  | $ | 8,987 |
Operating loss |  | $ | (5,921 | ) |  | $ | (10,200 | ) |  | $ | (3,892 | ) |  | $ | (10,143 | )
Net loss |  | $ | (6,320 | ) |  | $ | (10,657 | ) |  | $ | (4,510 | ) |  | $ | (10,541 | )
Cumulative preferred dividends |  | $ | (334 | ) |  | $ | — |  |  | $ | (334 | ) |  | $ | — |
Net loss applicable to common shares |  | $ | (6,654 | ) |  | $ | (10,657 | ) |  | $ | (4,844 | ) |  | $ | (10,541 | )
Net loss per common share - basic |  | $ | (0.11 | ) |  | $ | (0.18 | ) |  | $ | (0.08 | ) |  | $ | (0.18 | )
Net loss per common share - diluted |  | $ | (0.11 | ) |  | $ | (0.18 | ) |  | $ | (0.08 | ) |  | $ | (0.18 | )
Weighted average number of common shares outstanding - basic |  | 60,053,912 |  |  | 60,059,936 |  |  | 60,065,053 |  |  | 60,065,978 |
Weighted average number of common shares outstanding - diluted |  | 60,053,912 |  |  | 60,059,936 |  |  | 60,065,053 |  |  | 60,065,978 |
|  | Three months ended
($ in thousands, except per share data) |  | September 30, 2017 (As Restated) |  | December 31, 2017 (As Restated) |  | March 31, 2018 (As Restated) |  | June 30, 2018
|  | (unaudited) |  | (unaudited) |  | (unaudited) |  | (unaudited)
Revenue |  | $ | 25,259 |  |  | $ | 31,532 |  |  | $ | 33,592 |  |  | $ | 42,125 |
Gross profit |  | $ | 6,181 |  |  | $ | 9,172 |  |  | $ | 9,845 |  |  | $ | 10,478 |
Operating loss |  | $ | (1,750 | ) |  | $ | (3,905 | ) |  | $ | (2,566 | ) |  | $ | (1,002 | )
Net loss |  | $ | (2,171 | ) |  | $ | (4,194 | ) |  | $ | (3,223 | ) |  | $ | (1,696 | )
Cumulative preferred dividends |  | $ | (334 | ) |  | $ | — |  |  | $ | (334 | ) |  | $ | — |
Net loss applicable to common shares |  | $ | (2,505 | ) |  | $ | (4,194 | ) |  | $ | (3,557 | ) |  | $ | (1,696 | )
Net loss per common share - basic |  | $ | (0.05 | ) |  | $ | (0.08 | ) |  | $ | (0.07 | ) |  | $ | (0.03 | )
Net loss per common share - diluted |  | $ | (0.05 | ) |  | $ | (0.08 | ) |  | $ | (0.07 | ) |  | $ | (0.03 | )
Weighted average number of common shares outstanding - basic |  | 47,573,364 |  |  | 52,150,106 |  |  | 53,637,085 |  |  | 54,064,750 |
Weighted average number of common shares outstanding - diluted |  | 47,573,364 |  |  | 52,150,106 |  |  | 53,637,085 |  |  | 54,064,750 |
|  | Three months ended
($ in thousands, except per share data) |  | September 30, 2016 (As Restated) |  | December 31, 2016 (As Restated) |  | March 31, 2017 (As Restated) |  | June 30, 2017 (As Restated)
|  | (unaudited) |  | (unaudited) |  | (unaudited) |  | (unaudited)
Revenue |  | $ | 21,569 |  |  | $ | 21,787 |  |  | $ | 26,301 |  |  | $ | 31,779 |
Gross profit |  | $ | 6,297 |  |  | $ | 6,445 |  |  | $ | 6,342 |  |  | $ | 5,977 |
Operating loss |  | $ | (1,383 | ) |  | $ | 109 |  |  | $ | (459 | ) |  | $ | (2,401 | )
Net loss |  | $ | (3,370 | ) |  | $ | (232 | ) |  | $ | (925 | ) |  | $ | (2,938 | )
Cumulative preferred dividends |  | $ | (334 | ) |  | $ | — |  |  | $ | (334 | ) |  | $ | — |
Net loss applicable to common shares |  | $ | (3,704 | ) |  | $ | (232 | ) |  | $ | (1,259 | ) |  | $ | (2,938 | )
Net loss per common share - basic |  | $ | (0.10 | ) |  | $ | (0.01 | ) |  | $ | (0.03 | ) |  | $ | (0.07 | )
Net loss per common share - diluted |  | $ | (0.10 | ) |  | $ | (0.01 | ) |  | $ | (0.03 | ) |  | $ | (0.07 | )
Weighted average number of common shares outstanding - basic |  | 38,488,005 |  |  | 40,308,934 |  |  | 40,327,697 |  |  | 40,331,993 |
Weighted average number of common shares outstanding - diluted |  | 38,488,005 |  |  | 40,308,934 |  |  | 40,327,697 |  |  | 40,331,993 |
Summary of impact of correction of errors | RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS Overview This Annual Report on Form 10-K for the fiscal year ended June 30, 2019 contains our audited consolidated financial statements for the fiscal years ended June 30, 2019 and 2018, which have not previously been filed, as well as restatements of the following previously filed consolidated financial statements: (i) our audited consolidated financial statements for the fiscal year ended June 30, 2017; (ii) our selected financial data as of and for the fiscal years ended June 30, 2017, 2016 and 2015 contained in Item 6 of this Form 10-K; and (iii) our unaudited consolidated financial statements for the fiscal quarters ended September 30, 2017 and 2016, December 31, 2017 and 2016, March 31, 2018 and 2017, and June 30, 2017 in Note 20, “Unaudited Quarterly Data” of the Notes to Consolidated Financial Statements. We have not filed and do not intend to file amendments to any of our previously filed Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for the periods affected by the restatements of our consolidated financial statements. In addition, we have not filed and do not intend to file a separate Annual Report on Form 10-K for the fiscal year ended June 30, 2018. Concurrent with this filing, we are filing our Quarterly Reports on Form 10-Q for each of the fiscal quarters ended September 30, 2018, December 31, 2018, and March 31, 2019 (the “Fiscal Year 2019 Form 10-Qs”). We have not timely filed our Annual Report on Form 10-K for the fiscal year ended June 30, 2018 and the Fiscal Year 2019 Form 10-Qs as a result of the internal investigation of the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) and the subsequent restatement of certain of our prior period financial statements as more fully described below. Background On September 11, 2018, the Company announced that the Audit Committee with the assistance of independent legal and forensic accounting advisors, was in the process of conducting an internal investigation of current and prior period matters relating to certain of the Company’s contractual arrangements, including the accounting treatment, financial reporting and internal controls related to such arrangements. The Audit Committee’s investigation focused principally on certain customer transactions entered into by the Company during fiscal years 2017 and 2018. On January 14, 2019, the Company reported that the Audit Committee’s internal investigation relating to accounting and reporting matters was substantially completed, the principal findings of the internal investigation, and the remedial actions to be implemented by the Company as a result of the internal investigation. The Audit Committee found that, for certain of the customer transactions under review, the Company had prematurely recognized revenue. The Audit Committee proposed certain adjustments to previously reported revenues related to fiscal quarters occurring during the 2017 and 2018 fiscal years of the Company. In most cases, revenues that had been recognized prematurely were, or were expected to be, recognized in subsequent quarters, including quarters subsequent to the quarters impacted by the investigative findings. The investigation further found that certain items that had been recorded as expenses, such as the payment of marketing or servicing fees, were more appropriately treated as contra-revenue items in earlier fiscal quarters. On February 4, 2019, the Board of Directors of the Company, upon the recommendation of the Audit Committee, and based upon the adjustments to previously reported revenues proposed by the Audit Committee, determined that the following financial statements previously issued by the Company should no longer be relied upon: (1) the audited consolidated financial statements for the fiscal year ended June 30, 2017; and (2) the quarterly and year-to-date unaudited consolidated financial statements for September 30, 2017, December 31, 2017, and March 31, 2018. In addition to the Audit Committee investigation matter described above, the Company also corrected for (i) out of period adjustments and errors related to the Company's acquisition and financial integration of Cantaloupe and (ii) out of period adjustments and errors identified during management's review of significant accounts and transactions. The acquisition and financial integration-related adjustments referred to in (i) above were made in the restatement and relate to errors in the purchase accounting for our acquisition of Cantaloupe and errors in periods subsequent to the acquisition resulting from an ineffective integration of the financial systems and processes of the acquired entity with those of the Company. The significant account and transaction review adjustments referred to in (ii) above were made in the restatement and relate to revenue recognition, deferred income tax accounting, sales-tax reserves, reserves for bad debts, inventory reserves, sale-leaseback accounting, balance sheet classification of preferred stock, and various other matters. On October 7, 2019, the Board of Directors of the Company, upon the recommendation of the Audit Committee, determined that the following financial statements previously issued by the Company should no longer be relied upon: (1) the audited consolidated financial statements for the fiscal year ended June 30, 2015; (2) the audited consolidated financial statements for the fiscal year ended June 30, 2016; and (3) the quarterly and year-to-date unaudited consolidated financial statements for September 30, 2016, December 31, 2016, and March 31, 2017. Effect of Restatement on Previously Filed June 30, 2017 Form 10-K 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 restatement adjustments related to fiscal years 2016 and 2015 are reflected in the beginning accumulated deficit and deferred income taxes balances in the consolidated financial statements for fiscal year 2017. The cumulative impact of these adjustments increased accumulated deficit and decreased deferred income taxes by approximately $32.6 million and $27.8 million, respectively, at the beginning of fiscal year 2017. The restatement adjustments were tax effected and any tax adjustments reflected in the consolidated financial statements for fiscal year 2017 relate entirely to the tax effect on the restatement adjustments. The tables below present the effect of the financial statement adjustments related to the restatement discussed above of the Company's previously reported financial statements as of and for the year ended June 30, 2017. The effect of the restatement on the previously filed consolidated balance sheet as of June 30, 2017 is as follows:
| As of June 30, 2017
($ 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 |
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 September 30, 2017 |  | Three months ended December 31, 2017 |  | Six months ended December 31, 2017 |  | Three months ended March 31, 2018 |  | Nine months ended March 31, 2018
Audit Committee Investigation-related Adjustments: |  |  |  |  |  |  |  |  |
Revenue | $ | (411 | ) |  | $ | (866 | ) |  | $ | (1,277 | ) |  | $ | (768 | ) |  | $ | (2,045 | )
Costs of sales | $ | 165 |  |  | $ | (1,225 | ) |  | $ | (1,060 | ) |  | $ | (293 | ) |  | $ | (1,353 | )
Gross profit | $ | (576 | ) |  | $ | 359 |  |  | $ | (217 | ) |  | $ | (475 | ) |  | $ | (692 | )
Operating income (loss) | $ | (576 | ) |  | $ | 359 |  |  | $ | (217 | ) |  | $ | (9 | ) |  | $ | (226 | )
Income (loss) before income taxes | $ | (576 | ) |  | $ | 357 |  |  | $ | (219 | ) |  | $ | (29 | ) |  | $ | (248 | )
Acquisition and Financial Integration-related Adjustments: |  |  |  |  |  |  |  |  |
Revenue | $ | — |  |  | $ | (60 | ) |  | $ | (60 | ) |  | $ | (1,546 | ) |  | $ | (1,606 | )
Costs of sales | $ | — |  |  | $ | (33 | ) |  | $ | (33 | ) |  | $ | (79 | ) |  | $ | (112 | )
Gross profit | $ | — |  |  | $ | (27 | ) |  | $ | (27 | ) |  | $ | (1,467 | ) |  | $ | (1,494 | )
Operating income (loss) | $ | — |  |  | $ | (288 | ) |  | $ | (288 | ) |  | $ | (1,594 | ) |  | $ | (1,882 | )
Income (loss) before income taxes | $ | — |  |  | $ | (223 | ) |  | $ | (223 | ) |  | $ | (1,499 | ) |  | $ | (1,722 | )
Significant Account and Transaction Review and Other: |  |  |  |  |  |  |  |  |
Revenue | $ | 53 |  |  | $ | (47 | ) |  | $ | 6 |  |  | $ | 75 |  |  | $ | 81 |
Costs of sales | $ | 497 |  |  | $ | 313 |  |  | $ | 810 |  |  | $ | 231 |  |  | $ | 1,041 |
Gross profit | $ | (444 | ) |  | $ | (360 | ) |  | $ | (804 | ) |  | $ | (156 | ) |  | $ | (960 | )
Operating income (loss) | $ | (622 | ) |  | $ | (775 | ) |  | $ | (1,397 | ) |  | $ | (461 | ) |  | $ | (1,858 | )
Income (loss) before income taxes | $ | (886 | ) |  | $ | (1,041 | ) |  | $ | (1,927 | ) |  | $ | (696 | ) |  | $ | (2,623 | )
($ in thousands) | Increase / (Decrease) Restatement Impact |  |
| Three months ended September 30, 2016 |  | Three months ended December 31, 2016 |  | Six months ended December 31, 2016 |  | Three months ended March 31, 2017 |  | Nine months ended March 31, 2017 |  | Three months ended June 30, 2017
Audit Committee Investigation-related Adjustments: |  |  |  |  |  |  |  |  |  |  |
Revenue | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (111 | ) |  | $ | (111 | ) |  | $ | (2,457 | )
Costs of sales | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (24 | ) |  | $ | (24 | ) |  | $ | (1,139 | )
Gross profit | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (87 | ) |  | $ | (87 | ) |  | $ | (1,318 | )
Operating income (loss) | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (87 | ) |  | $ | (87 | ) |  | $ | (1,318 | )
Income (loss) before income taxes | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (87 | ) |  | $ | (87 | ) |  | $ | (1,318 | )
Significant Account and Transaction Review and Other: |  |  |  |  |  |  |  |  |  |  |
Revenue | $ | (18 | ) |  | $ | 31 |  |  | $ | 13 |  |  | $ | (49 | ) |  | $ | (36 | ) |  | $ | (53 | )
Costs of sales | $ | (148 | ) |  | $ | (81 | ) |  | $ | (229 | ) |  | $ | 147 |  |  | $ | (82 | ) |  | $ | 173 |
Gross profit | $ | 130 |  |  | $ | 112 |  |  | $ | 242 |  |  | $ | (196 | ) |  | $ | 46 |  |  | $ | (226 | )
Operating income (loss) | $ | (434 | ) |  | $ | (124 | ) |  | $ | (558 | ) |  | $ | (790 | ) |  | $ | (1,348 | ) |  | $ | (1,516 | )
Income (loss) before income taxes | $ | (769 | ) |  | $ | (441 | ) |  | $ | (1,210 | ) |  | $ | (1,159 | ) |  | $ | (2,369 | ) |  | $ | (1,831 | )
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 September 30, 2016 |  | As of December 31, 2016 |  | As of March 31, 2017 |  | As of September 30, 2017 |  | As of December 31, 2017 |  | As of March 31, 2018
Audit Committee Investigation-related Adjustments: |  |  |  |  |  |  |  |  |  |  |
Accounts receivables | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (315 | ) |  | $ | (1,774 | ) |  | $ | (1,954 | )
Finance receivables, net | $ | — |  |  | $ | — |  |  | $ | 92 |  |  | $ | (1,640 | ) |  | $ | (1,269 | ) |  | $ | (1,666 | )
Inventory, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 941 |  |  | $ | 2,166 |  |  | $ | 2,459 |
Prepaid expenses and other current assets | $ | — |  |  | $ | — |  |  | $ | 30 |  |  | $ | 25 |  |  | $ | 25 |  |  | $ | 25 |
Other assets | $ | — |  |  | $ | — |  |  | $ | 95 |  |  | $ | 82 |  |  | $ | 76 |  |  | $ | 69 |
Property and equipment, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (162 | ) |  | $ | (146 | )
Accounts payable | $ | — |  |  | $ | — |  |  | $ | 270 |  |  | $ | 270 |  |  | $ | 106 |  |  | $ | 99 |
Accrued expenses | $ | — |  |  | $ | — |  |  | $ | 34 |  |  | $ | 803 |  |  | $ | 580 |  |  | $ | 341 |
Acquisition and Financial Integration-related Adjustments: |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (26 | ) |  | $ | (52 | )
Accounts receivables | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,133 |  |  | $ | (1,974 | )
Finance receivables, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (1,515 | ) |  | $ | 158 |
Inventory, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (500 | ) |  | $ | (500 | )
Prepaid expenses and other current assets | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (35 | ) |  | $ | (44 | )
Property and equipment, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 721 |  |  | $ | 826 |
Other assets | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (139 | ) |  | $ | (175 | )
Goodwill | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4,121 |  |  | $ | 4,121 |
Accrued expenses | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 785 |  |  | $ | 883 |
Deferred revenue | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (153 | ) |  | $ | (153 | )
Common stock | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 3,469 |  |  | $ | 3,469 |
Significant Account and Transaction Review and Other: |  |  |  |  |  |  |  |  |  |  |
Accounts receivables | $ | (143 | ) |  | $ | 110 |  |  | $ | 61 |  |  | $ | 77 |  |  | $ | (8 | ) |  | $ | 127 |
Finance receivables, net | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,074 |  |  | $ | 28 |
Inventory, net | $ | (338 | ) |  | $ | (348 | ) |  | $ | (470 | ) |  | $ | (305 | ) |  | $ | (861 | ) |  | $ | (1,067 | )
Prepaid expenses and other current assets | $ | 13 |  |  | $ | 13 |  |  | $ | 13 |  |  | $ | (136 | ) |  | $ | (150 | ) |  | $ | (173 | )
Other assets | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (543 | ) |  | $ | (600 | ) |  | $ | (693 | )
Property and equipment, net | $ | 2,865 |  |  | $ | 2,561 |  |  | $ | 2,168 |  |  | $ | (1,149 | ) |  | $ | (737 | ) |  | $ | (635 | )
Accounts payable | $ | 17 |  |  | $ | 19 |  |  | $ | 21 |  |  | $ | 25 |  |  | $ | 27 |  |  | $ | 29 |
Accrued expenses | $ | 4,506 |  |  | $ | 5,222 |  |  | $ | 6,166 |  |  | $ | 8,319 |  |  | $ | 9,087 |  |  | $ | 9,877 |
Line of credit, net | $ | 13 |  |  | $ | 13 |  |  | $ | 13 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Capital lease obligation and current obligations under long-term debt | $ | 4,117 |  |  | $ | 3,566 |  |  | $ | 2,998 |  |  | $ | (21 | ) |  | $ | 367 |  |  | $ | (5 | )
Deferred revenue | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (27 | ) |  | $ | (27 | ) |  | $ | (27 | )
Deferred gain from sale-leaseback transactions | $ | (685 | ) |  | $ | (470 | ) |  | $ | (255 | ) |  | $ | (198 | ) |  | $ | (198 | ) |  | $ | (198 | )
Deferred gain from sale-leaseback transactions, less current portion | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (99 | ) |  | $ | (49 | ) |  | $ | — |
Capital lease obligation and long-term debt, less current portion | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 697 |  |  | $ | — |
Common stock | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (166 | ) |  | $ | (372 | ) |  | $ | (867 | )
The effect of the restatement on the previously filed consolidated balance sheet as of September 30, 2017 is as follows:
| As of September 30, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 51,870 |  |  | $ | — |  |  | $ | 51,870 |
Accounts receivable | 10,288 |  |  | (473 | ) |  | 9,815 |
Finance receivables, net | 3,082 |  |  | (1,641 | ) |  | 1,441 |
Inventory, net | 8,240 |  |  | 636 |  |  | 8,876 |
Prepaid expenses and other current assets | 1,122 |  |  | (66 | ) |  | 1,056 |
Total current assets | 74,602 |  |  | (1,544 | ) |  | 73,058 |
Non-current assets: |  |  |  |  |
Finance receivables due after one year | 7,742 |  |  | — |  |  | 7,742 |
Other assets | 750 |  |  | (461 | ) |  | 289 |
Property and equipment, net | 11,850 |  |  | (1,149 | ) |  | 10,701 |
Deferred income taxes | 28,205 |  |  | (28,205 | ) |  | — |
Intangibles, net | 578 |  |  | — |  |  | 578 |
Goodwill | 11,492 |  |  | — |  |  | 11,492 |
Total non-current assets | 60,617 |  |  | (29,815 | ) |  | 30,802 |
Total assets | $ | 135,219 |  |  | $ | (31,359 | ) |  | $ | 103,860 |
Liabilities, convertible preferred stock and shareholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 14,211 |  |  | $ | 295 |  |  | $ | 14,506 |
Accrued expenses | 3,795 |  |  | 8,422 |  |  | 12,217 |
Line of credit, net | 7,051 |  |  | — |  |  | 7,051 |
Capital lease obligations and current obligations under long-term debt | 2,649 |  |  | (21 | ) |  | 2,628 |
Income taxes payable | 10 |  |  | (10 | ) |  | — |
Deferred revenue | — |  |  | 439 |  |  | 439 |
Deferred gain from sale-leaseback transactions | 197 |  |  | (197 | ) |  | — |
Total current liabilities | 27,913 |  |  | 8,928 |  |  | 36,841 |
Long-term liabilities: |  |  |  |  |
Deferred income taxes | — |  |  | 109 |  |  | 109 |
Capital lease obligations and long-term debt, less current portion | 1,049 |  |  | — |  |  | 1,049 |
Accrued expenses, less current portion | 62 |  |  | — |  |  | 62 |
Deferred gain from sale-leaseback transactions, less current portion | 99 |  |  | (99 | ) |  | — |
Total long-term liabilities | 1,210 |  |  | 10 |  |  | 1,220 |
Total liabilities | $ | 29,123 |  |  | $ | 8,938 |  |  | $ | 38,061 |
Commitments and contingencies |  |  |  |  |  |  |  |
Convertible preferred stock: |  |  |  |  |
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $19,109 at September 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 $19,109 at September 30, 2017 | 3,138 |  |  | (3,138 | ) |  | — |
Common stock, no par value, 640,000,000 shares authorized, 50,194,731 shares issued and outstanding at September 30, 2017 | 286,463 |  |  | (167 | ) |  | 286,296 |
Accumulated deficit | (183,505 | ) |  | (40,130 | ) |  | (223,635 | )
Total shareholders’ equity | 106,096 |  |  | (43,435 | ) |  | 62,661 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 135,219 |  |  | $ | (31,359 | ) |  | $ | 103,860 |
The effect of the restatement on the previously filed consolidated statement of operations for the three months ended September 30, 2017 is as follows:
| Three months ended September 30, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |
License and transaction fees | $ | 19,944 |  |  | $ | (547 | ) |  | $ | 19,397 |
Equipment sales | 5,673 |  |  | 189 |  |  | 5,862 |
Total revenue | 25,617 |  |  | (358 | ) |  | 25,259 |
Costs of sales: |  |  |  |  |
Cost of services | 13,326 |  |  | (79 | ) |  | 13,247 |
Cost of equipment | 5,090 |  |  | 741 |  |  | 5,831 |
Total costs of sales | 18,416 |  |  | 662 |  |  | 19,078 |
Gross profit | 7,201 |  |  | (1,020 | ) |  | 6,181 |
Operating expenses: |  |  |  |  |
Selling, general and administrative | 6,746 |  |  | 178 |  |  | 6,924 |
Integration and acquisition costs | 762 |  |  | — |  |  | 762 |
Depreciation and amortization | 245 |  |  | — |  |  | 245 |
Total operating expenses | 7,753 |  |  | 178 |  |  | 7,931 |
Operating loss | (552 | ) |  | (1,198 | ) |  | (1,750 | )
Other income (expense): |  |  |  |  |
Interest income | 80 |  |  | — |  |  | 80 |
Interest expense | (209 | ) |  | (264 | ) |  | (473 | )
Total other expense, net | (129 | ) |  | (264 | ) |  | (393 | )
Loss before income taxes | (681 | ) |  | (1,462 | ) |  | (2,143 | )
Benefit (provision) for income taxes | 468 |  |  | (496 | ) |  | (28 | )
Net loss | (213 | ) |  | (1,958 | ) |  | (2,171 | )
Preferred dividends | (334 | ) |  | — |  |  | (334 | )
Net loss applicable to common shares | $ | (547 | ) |  | $ | (1,958 | ) |  | $ | (2,505 | )
Net loss per common share |  |  |  |  |
Basic | $ | (0.01 | ) |  | $ | (0.04 | ) |  | $ | (0.05 | )
Diluted | $ | (0.01 | ) |  | $ | (0.04 | ) |  | $ | (0.05 | )
Weighted average number of common shares outstanding |  |  |  |  |
Basic | 47,573,364 |  |  | — |  |  | 47,573,364 |
Diluted | 47,573,364 |  |  | — |  |  | 47,573,364 |
The effect of the restatement on the previously filed consolidated statement of cash flows for the three months ended September 30, 2017 is as follows:
| Three months ended September 30, 2017
($ in thousands) | As Previously Reported |  | Adjustments |  | As Restated
OPERATING ACTIVITIES: |  |  |  |  |
Net loss | $ | (213 | ) |  | $ | (1,958 | ) |  | $ | (2,171 | )
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |  |  |
Non-cash stock-based compensation | 576 |  |  | (167 | ) |  | 409 |
(Gain) loss on disposal of property and equipment | (18 | ) |  | — |  |  | (18 | )
Non-cash interest and amortization of debt discount | 15 |  |  | 2 |  |  | 17 |
Bad debt expense | 118 |  |  | 50 |  |  | 168 |
Provision for inventory reserve | — |  |  | 221 |  |  | 221 |
Depreciation and amortization | 1,492 |  |  | (122 | ) |  | 1,370 |
Excess tax benefits | 67 |  |  | — |  |  | 67 |
Deferred income taxes, net | (535 | ) |  | 551 |  |  | 16 |
Recognition of deferred gain from sale-leaseback transactions | (43 | ) |  | 43 |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (3,192 | ) |  | 43 |  |  | (3,149 | )
Finance receivables, net | 8,771 |  |  | 397 |  |  | 9,168 |
Inventory, net | (3,648 | ) |  | (252 | ) |  | (3,900 | )
Prepaid expenses and other current assets | (217 | ) |  | 114 |  |  | (103 | )
Accounts payable and accrued expenses | (2,168 | ) |  | 678 |  |  | (1,490 | )
Deferred revenue | — |  |  | 171 |  |  | 171 |
Income taxes payable | — |  |  | (55 | ) |  | (55 | )
Net cash provided by operating activities | 1,005 |  |  | (284 | ) |  | 721 |
INVESTING ACTIVITIES: |  |  |  |  |
Purchase of property and equipment, including rentals | (992 | ) |  | 272 |  |  | (720 | )
Proceeds from sale of property and equipment | 45 |  |  | — |  |  | 45 |
Net cash used in investing activities | (947 | ) |  | 272 |  |  | (675 | )
FINANCING ACTIVITIES: |  |  |  |  |
Issuance of common stock in public offering, net | 39,888 |  |  | — |  |  | 39,888 |
Repayment of capital lease obligations and long-term debt | (821 | ) |  | 12 |  |  | (809 | )
Net cash provided by financing activities | 39,067 |  |  | 12 |  |  | 39,079 |
Net increase in cash and cash equivalents | 39,125 |  |  | — |  |  | 39,125 |
Cash and cash equivalents at beginning of year | 12,745 |  |  | — |  |  | 12,745 |
Cash and cash equivalents at end of period | $ | 51,870 |  |  | $ | — |  |  | $ | 51,870 |
The effect of the restatement on the previously filed consolidated balance sheet as of December 31, 2017 is as follows:
| As of December 31, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 15,386 |  |  | $ | (26 | ) |  | $ | 15,360 |
Accounts receivable | 15,472 |  |  | (765 | ) |  | 14,707 |
Finance receivables, net | 5,517 |  |  | (2,221 | ) |  | 3,296 |
Inventory, net | 11,215 |  |  | 804 |  |  | 12,019 |
Prepaid expenses and other current assets | 1,971 |  |  | (361 | ) |  | 1,610 |
Total current assets | 49,561 |  |  | (2,569 | ) |  | 46,992 |
Non-current assets: |  |  |  |  |
Finance receivables due after one year | 11,215 |  |  | 513 |  |  | 11,728 |
Other assets | 1,120 |  |  | (662 | ) |  | 458 |
Property and equipment, net | 12,622 |  |  | (179 | ) |  | 12,443 |
Deferred income taxes | 14,774 |  |  | (14,774 | ) |  | — |
Intangibles, net | 30,910 |  |  | — |  |  | 30,910 |
Goodwill | 64,449 |  |  | (46 | ) |  | 64,403 |
Total non-current assets | 135,090 |  |  | (15,148 | ) |  | 119,942 |
Total assets | $ | 184,651 |  |  | $ | (17,717 | ) |  | $ | 166,934 |
Liabilities, convertible preferred stock and shareholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 23,775 |  |  | $ | 133 |  |  | $ | 23,908 |
Accrued expenses | 6,798 |  |  | 9,825 |  |  | 16,623 |
Capital lease obligations, current obligations under long-term debt, and collateralized borrowings | 5,121 |  |  | 367 |  |  | 5,488 |
Income taxes payable | 6 |  |  | (6 | ) |  | — |
Deferred revenue | 595 |  |  | 135 |  |  | 730 |
Deferred gain from sale-leaseback transactions | 198 |  |  | (198 | ) |  | — |
Total current liabilities | 36,493 |  |  | 10,256 |  |  | 46,749 |
Long-term liabilities: |  |  |  |  |
Revolving credit facility | 10,000 |  |  | — |  |  | 10,000 |
Deferred income taxes | — |  |  | 91 |  |  | 91 |
Capital lease obligations, long-term debt, and collateralized borrowings, less current portion | 23,874 |  |  | 696 |  |  | 24,570 |
Accrued expenses, less current portion | 65 |  |  | — |  |  | 65 |
Deferred gain from sale-leaseback transactions, less current portion | 49 |  |  | (49 | ) |  | — |
Total long-term liabilities | 33,988 |  |  | 738 |  |  | 34,726 |
Total liabilities | $ | 70,481 |  |  | $ | 10,994 |  |  | $ | 81,475 |
Commitments and contingencies |  |  |  |  |  |  |  |
Convertible preferred stock: |  |  |  |  |
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $19,109 at December 31, 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 $19,109 at December 31, 2017 | 3,138 |  |  | (3,138 | ) |  | — |
Common stock, no par value, 640,000,000 shares authorized, 53,619,898 shares issued and outstanding at December 31, 2017 | 307,053 |  |  | 3,097 |  |  | 310,150 |
Accumulated deficit | (196,021 | ) |  | (31,808 | ) |  | (227,829 | )
Total shareholders’ equity | 114,170 |  |  | (31,849 | ) |  | 82,321 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 184,651 |  |  | $ | (17,717 | ) |  | $ | 166,934 |
The effect of the restatement on the previously filed consolidated statement of operations for the three and six months ended December 31, 2017 is as follows:
| Three months ended December 31, 2017 |  | Six months ended December 31, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated |  | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |  |  |  |  |  |  |
License and transaction fees | $ | 22,853 |  |  | $ | 661 |  |  | $ | 23,514 |  |  | $ | 42,797 |  |  | $ | 114 |  |  | $ | 42,911 |
Equipment sales | 9,653 |  |  | (1,635 | ) |  | 8,018 |  |  | 15,326 |  |  | (1,446 | ) |  | 13,880 |
Total revenue | 32,506 |  |  | (974 | ) |  | 31,532 |  |  | 58,123 |  |  | (1,332 | ) |  | 56,791 |
Costs of sales: |  |  |  |  |  |  |  |  |  |  |
Cost of services | 14,362 |  |  | (6 | ) |  | 14,356 |  |  | 27,688 |  |  | (85 | ) |  | 27,603 |
Cost of equipment | 8,943 |  |  | (939 | ) |  | 8,004 |  |  | 14,033 |  |  | (198 | ) |  | 13,835 |
Total costs of sales | 23,305 |  |  | (945 | ) |  | 22,360 |  |  | 41,721 |  |  | (283 | ) |  | 41,438 |
Gross profit | 9,201 |  |  | (29 | ) |  | 9,172 |  |  | 16,402 |  |  | (1,049 | ) |  | 15,353 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative | 8,329 |  |  | 676 |  |  | 9,005 |  |  | 15,075 |  |  | 854 |  |  | 15,929 |
Integration and acquisition costs | 3,335 |  |  | — |  |  | 3,335 |  |  | 4,097 |  |  | — |  |  | 4,097 |
Depreciation and amortization | 737 |  |  | — |  |  | 737 |  |  | 982 |  |  | — |  |  | 982 |
Total operating expenses | 12,401 |  |  | 676 |  |  | 13,077 |  |  | 20,154 |  |  | 854 |  |  | 21,008 |
Operating loss | (3,200 | ) |  | (705 | ) |  | (3,905 | ) |  | (3,752 | ) |  | (1,903 | ) |  | (5,655 | )
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest income | 251 |  |  | 73 |  |  | 324 |  |  | 331 |  |  | 73 |  |  | 404 |
Interest expense | (494 | ) |  | (276 | ) |  | (770 | ) |  | (703 | ) |  | (540 | ) |  | (1,243 | )
Total other expense, net | (243 | ) |  | (203 | ) |  | (446 | ) |  | (372 | ) |  | (467 | ) |  | (839 | )
Loss before income taxes | (3,443 | ) |  | (908 | ) |  | (4,351 | ) |  | (4,124 | ) |  | (2,370 | ) |  | (6,494 | )
(Provision) benefit for income taxes | (9,073 | ) |  | 9,230 |  |  | 157 |  |  | (8,605 | ) |  | 8,734 |  |  | 129 |
Net loss | (12,516 | ) |  | 8,322 |  |  | (4,194 | ) |  | (12,729 | ) |  | 6,364 |  |  | (6,365 | )
Preferred dividends | — |  |  | — |  |  | — |  |  | (334 | ) |  | — |  |  | (334 | )
Net loss applicable to common shares | $ | (12,516 | ) |  | $ | 8,322 |  |  | $ | (4,194 | ) |  | $ | (13,063 | ) |  | $ | 6,364 |  |  | $ | (6,699 | )
Net loss per common share |  |  |  |  |  |  |  |  |  |  |
Basic | $ | (0.24 | ) |  | $ | 0.16 |  |  | $ | (0.08 | ) |  | $ | (0.26 | ) |  | $ | 0.13 |  |  | $ | (0.13 | )
Diluted | $ | (0.24 | ) |  | $ | 0.16 |  |  | $ | (0.08 | ) |  | $ | (0.26 | ) |  | $ | 0.13 |  |  | $ | (0.13 | )
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |  |
Basic | 52,150,106 |  |  | — |  |  | 52,150,106 |  |  | 49,861,735 |  |  | — |  |  | 49,861,735 |
Diluted | 52,150,106 |  |  | — |  |  | 52,150,106 |  |  | 49,861,735 |  |  | — |  |  | 49,861,735 |
The effect of the restatement on the previously filed consolidated statement of cash flows for the six months ended December 31, 2017 is as follows:
| Six months ended December 31, 2017
($ in thousands) | As Previously Reported |  | Adjustments |  | As Restated
OPERATING ACTIVITIES: |  |  |  |  |
Net loss | $ | (12,729 | ) |  | $ | 6,364 |  |  | $ | (6,365 | )
Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |  |  |
Non-cash stock-based compensation | 1,356 |  |  | (372 | ) |  | 984 |
(Gain) loss on disposal of property and equipment | (83 | ) |  | 3 |  |  | (80 | )
Non-cash interest and amortization of debt discount | 86 |  |  | 8 |  |  | 94 |
Bad debt expense | 291 |  |  | 91 |  |  | 382 |
Provision for inventory reserve | — |  |  | 1,091 |  |  | 1,091 |
Depreciation and amortization | 3,476 |  |  | (198 | ) |  | 3,278 |
Excess tax benefits | 67 |  |  | — |  |  | 67 |
Deferred income taxes, net | 8,537 |  |  | (8,696 | ) |  | (159 | )
Recognition of deferred gain from sale-leaseback transactions | (93 | ) |  | 93 |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (5,290 | ) |  | (42 | ) |  | (5,332 | )
Finance receivables, net | 7,958 |  |  | (626 | ) |  | 7,332 |
Inventory, net | (5,822 | ) |  | (1,793 | ) |  | (7,615 | )
Prepaid expenses and other current assets | (606 | ) |  | 604 |  |  | (2 | )
Accounts payable and accrued expenses | 6,950 |  |  | 754 |  |  | 7,704 |
Deferred revenue | — |  |  | 570 |  |  | 570 |
Income taxes payable | 40 |  |  | (80 | ) |  | (40 | )
Net cash provided by operating activities | 4,138 |  |  | (2,229 | ) |  | 1,909 |
INVESTING ACTIVITIES: |  |  |  |  |
Purchase of property and equipment, including rentals | (1,767 | ) |  | 33 |  |  | (1,734 | )
Proceeds from sale of property and equipment | 157 |  |  | — |  |  | 157 |
Cash paid for acquisitions, net of cash acquired | (65,181 | ) |  | — |  |  | (65,181 | )
Net cash used in investing activities | (66,791 | ) |  | 33 |  |  | (66,758 | )
FINANCING ACTIVITIES: |  |  |  |  |
Proceeds from collateralized borrowing from the transfer of finance receivables | — |  |  | 1,075 |  |  | 1,075 |
Payment of debt issuance costs | (445 | ) |  | — |  |  | (445 | )
Proceeds from issuance of long-term debt | 25,100 |  |  | — |  |  | 25,100 |
Proceeds from revolving credit facility | 10,000 |  |  | — |  |  | 10,000 |
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 | (2,138 | ) |  | 1,095 |  |  | (1,043 | )
Net cash provided by financing activities | 65,294 |  |  | 2,170 |  |  | 67,464 |
Net increase in cash and cash equivalents | 2,641 |  |  | (26 | ) |  | 2,615 |
Cash and cash equivalents at beginning of year | 12,745 |  |  | — |  |  | 12,745 |
Cash and cash equivalents at end of period | $ | 15,386 |  |  | $ | (26 | ) |  | $ | 15,360 |
The effect of the restatement on the previously filed consolidated balance sheet as of March 31, 2018 is as follows:
| As of March 31, 2018
($ in thousands, except per share data) | 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 | 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 |
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 consolidated statement of operations for the three and nine months ended March 31, 2018 is as follows:
| Three months ended March 31, 2018 |  | Nine months ended March 31, 2018
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated |  | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |  |  |  |  |  |  |
License and transaction fees | $ | 27,020 |  |  | $ | (1,639 | ) |  | $ | 25,381 |  |  | $ | 69,817 |  |  | $ | (1,525 | ) |  | $ | 68,292 |
Equipment sales | 8,812 |  |  | (601 | ) |  | 8,211 |  |  | 24,138 |  |  | (2,047 | ) |  | 22,091 |
Total revenue | 35,832 |  |  | (2,240 | ) |  | 33,592 |  |  | 93,955 |  |  | (3,572 | ) |  | 90,383 |
Costs of sales: |  |  |  |  |  |  |  |  |  |  |
Cost of services | 16,012 |  |  | 25 |  |  | 16,037 |  |  | 43,700 |  |  | (60 | ) |  | 43,640 |
Cost of equipment | 7,876 |  |  | (166 | ) |  | 7,710 |  |  | 21,909 |  |  | (364 | ) |  | 21,545 |
Total costs of sales | 23,888 |  |  | (141 | ) |  | 23,747 |  |  | 65,609 |  |  | (424 | ) |  | 65,185 |
Gross profit | 11,944 |  |  | (2,099 | ) |  | 9,845 |  |  | 28,346 |  |  | (3,148 | ) |  | 25,198 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative | 9,572 |  |  | 57 |  |  | 9,629 |  |  | 24,647 |  |  | 911 |  |  | 25,558 |
Integration and acquisition costs | 1,747 |  |  | (70 | ) |  | 1,677 |  |  | 5,844 |  |  | (70 | ) |  | 5,774 |
Depreciation and amortization | 1,125 |  |  | (20 | ) |  | 1,105 |  |  | 2,107 |  |  | (20 | ) |  | 2,087 |
Total operating expenses | 12,444 |  |  | (33 | ) |  | 12,411 |  |  | 32,598 |  |  | 821 |  |  | 33,419 |
Operating loss | (500 | ) |  | (2,066 | ) |  | (2,566 | ) |  | (4,252 | ) |  | (3,969 | ) |  | (8,221 | )
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest income | 134 |  |  | 92 |  |  | 226 |  |  | 465 |  |  | 165 |  |  | 630 |
Interest expense | (612 | ) |  | (251 | ) |  | (863 | ) |  | (1,315 | ) |  | (791 | ) |  | (2,106 | )
Total other expense, net | (478 | ) |  | (159 | ) |  | (637 | ) |  | (850 | ) |  | (626 | ) |  | (1,476 | )
Loss before income taxes | (978 | ) |  | (2,225 | ) |  | (3,203 | ) |  | (5,102 | ) |  | (4,595 | ) |  | (9,697 | )
Benefit (provision) for income taxes | 2,138 |  |  | (2,158 | ) |  | (20 | ) |  | (6,467 | ) |  | 6,576 |  |  | 109 |
Net income (loss) | 1,160 |  |  | (4,383 | ) |  | (3,223 | ) |  | (11,569 | ) |  | 1,981 |  |  | (9,588 | )
Preferred dividends | (334 | ) |  | — |  |  | (334 | ) |  | (668 | ) |  | — |  |  | (668 | )
Net income (loss) applicable to common shares | $ | 826 |  |  | $ | (4,383 | ) |  | $ | (3,557 | ) |  | $ | (12,237 | ) |  | $ | 1,981 |  |  | $ | (10,256 | )
Net income (loss) per common share |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.02 |  |  | $ | (0.09 | ) |  | $ | (0.07 | ) |  | $ | (0.24 | ) |  | $ | 0.04 |  |  | $ | (0.20 | )
Diluted | $ | 0.02 |  |  | $ | (0.09 | ) |  | $ | (0.07 | ) |  | $ | (0.24 | ) |  | $ | 0.04 |  |  | $ | (0.20 | )
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |  |
Basic | 53,637,085 |  |  | — |  |  | 53,637,085 |  |  | 51,101,813 |  |  | — |  |  | 51,101,813 |
Diluted | 54,234,566 |  |  | (597,481 | ) |  | 53,637,085 |  |  | 51,101,813 |  |  | — |  |  | 51,101,813 |
The effect of the restatement on the previously filed 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, net | 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 | 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 |
Cash used in retirement of common stock | (156 | ) |  | — |  |  | (156 | )
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 | )
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 |
The effect of the restatement on the previously filed consolidated balance sheet as of September 30, 2016 is as follows:
| As of September 30, 2016
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 18,198 |  |  | $ | — |  |  | $ | 18,198 |
Accounts receivable | 5,840 |  |  | (233 | ) |  | 5,607 |
Finance receivables, net | 3,349 |  |  | — |  |  | 3,349 |
Inventory, net | 4,264 |  |  | (338 | ) |  | 3,926 |
Prepaid expenses and other current assets | 1,439 |  |  | (87 | ) |  | 1,352 |
Deferred income taxes | 2,271 |  |  | (2,271 | ) |  | — |
Total current assets | 35,361 |  |  | (2,929 | ) |  | 32,432 |
Non-current assets: |  |  |  |  |
Finance receivables due after one year | 3,962 |  |  | — |  |  | 3,962 |
Other assets | 163 |  |  | — |  |  | 163 |
Property and equipment, net | 9,570 |  |  | 2,866 |  |  | 12,436 |
Deferred income taxes | 25,568 |  |  | (25,568 | ) |  | — |
Intangibles, net | 754 |  |  | — |  |  | 754 |
Goodwill | 11,703 |  |  | — |  |  | 11,703 |
Total non-current assets | 51,720 |  |  | (22,702 | ) |  | 29,018 |
Total assets | $ | 87,081 |  |  | $ | (25,631 | ) |  | $ | 61,450 |
Liabilities, convertible preferred stock and shareholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 8,693 |  |  | $ | 17 |  |  | $ | 8,710 |
Accrued expenses | 3,912 |  |  | 4,223 |  |  | 8,135 |
Line of credit, net | 7,258 |  |  | 13 |  |  | 7,271 |
Capital lease obligations and current obligations under long-term debt | 834 |  |  | 4,118 |  |  | 4,952 |
Income taxes payable | 8 |  |  | 7 |  |  | 15 |
Deferred revenue | — |  |  | 94 |  |  | 94 |
Deferred gain from sale-leaseback transactions | 685 |  |  | (685 | ) |  | — |
Total current liabilities | 21,390 |  |  | 7,787 |  |  | 29,177 |
Long-term liabilities: |  |  |  |  |
Deferred income tax | — |  |  | 47 |  |  | 47 |
Capital lease obligations and long-term debt, less current portion | 1,517 |  |  | — |  |  | 1,517 |
Accrued expenses, less current portion | 11 |  |  | — |  |  | 11 |
Total long-term liabilities | 1,528 |  |  | 47 |  |  | 1,575 |
Total liabilities | $ | 22,918 |  |  | $ | 7,834 |  |  | $ | 30,752 |
Commitments and contingencies |  |  |  |  |  |  |  |
Convertible preferred stock: |  |  |  |  |
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $18,442 at September 30, 2016 | — |  |  | 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 $18,442 at September 30, 2016 | 3,138 |  |  | (3,138 | ) |  | — |
Common stock, no par value, 640,000,000 shares authorized, 40,295,425 shares issued and outstanding at September 30, 2016 | 244,996 |  |  | — |  |  | 244,996 |
Accumulated deficit | (183,971 | ) |  | (33,465 | ) |  | (217,436 | )
Total shareholders’ equity | 64,163 |  |  | (36,603 | ) |  | 27,560 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 87,081 |  |  | $ | (25,631 | ) |  | $ | 61,450 |
The effect of the restatement on the previously filed consolidated statement of operations for the three months ended September 30, 2016 is as follows:
| Three months ended September 30, 2016
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |
License and transaction fees | $ | 16,365 |  |  | $ | (2 | ) |  | $ | 16,363 |
Equipment sales | 5,223 |  |  | (17 | ) |  | 5,206 |
Total revenue | 21,588 |  |  | (19 | ) |  | 21,569 |
Costs of sales: |  |  |  |  |
Cost of services | 11,243 |  |  | (144 | ) |  | 11,099 |
Cost of equipment | 4,178 |  |  | (5 | ) |  | 4,173 |
Total costs of sales | 15,421 |  |  | (149 | ) |  | 15,272 |
Gross profit | 6,167 |  |  | 130 |  |  | 6,297 |
Operating expenses: |  |  |  |  |
Selling, general and administrative | 6,909 |  |  | 563 |  |  | 7,472 |
Depreciation and amortization | 208 |  |  | — |  |  | 208 |
Total operating expenses | 7,117 |  |  | 563 |  |  | 7,680 |
Operating loss | (950 | ) |  | (433 | ) |  | (1,383 | )
Other income (expense): |  |  |  |  |
Interest income | 73 |  |  | — |  |  | 73 |
Interest expense | (212 | ) |  | (335 | ) |  | (547 | )
Change in fair value of warrant liabilities | (1,490 | ) |  | — |  |  | (1,490 | )
Total other expense, net | (1,629 | ) |  | (335 | ) |  | (1,964 | )
Loss before income taxes | (2,579 | ) |  | (768 | ) |  | (3,347 | )
Benefit (provision) for income taxes | 115 |  |  | (138 | ) |  | (23 | )
Net loss | (2,464 | ) |  | (906 | ) |  | (3,370 | )
Preferred dividends | (334 | ) |  | — |  |  | (334 | )
Net loss applicable to common shares | $ | (2,798 | ) |  | $ | (906 | ) |  | $ | (3,704 | )
Net loss per common share |  |  |  |  |
Basic | $ | (0.07 | ) |  | $ | (0.03 | ) |  | $ | (0.10 | )
Diluted | $ | (0.07 | ) |  | $ | (0.03 | ) |  | $ | (0.10 | )
Weighted average number of common shares outstanding |  |  |  |  |
Basic | 38,488,005 |  |  | — |  |  | 38,488,005 |
Diluted | 38,488,005 |  |  | — |  |  | 38,488,005 |
The effect of the restatement on the previously filed consolidated statement of cash flows for the three months ended September 30, 2016 is as follows:
| Three months ended September 30, 2016
($ in thousands) | As Previously Reported |  | Adjustments |  | As Restated
OPERATING ACTIVITIES: |  |  |  |  |
Net loss | $ | (2,464 | ) |  | $ | (906 | ) |  | $ | (3,370 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
Non-cash stock-based compensation | 211 |  |  | — |  |  | 211 |
Non-cash interest and amortization of debt discount | 105 |  |  | 34 |  |  | 139 |
Bad debt expense | 97 |  |  | 102 |  |  | 199 |
Provision for inventory reserve | — |  |  | 248 |  |  | 248 |
Depreciation and amortization | 1,301 |  |  | 302 |  |  | 1,603 |
Change in fair value of warrant liabilities | 1,490 |  |  | — |  |  | 1,490 |
Deferred income taxes, net | (115 | ) |  | 130 |  |  | 15 |
Recognition of deferred gain from sale-leaseback transactions | (215 | ) |  | 215 |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (1,038 | ) |  | 35 |  |  | (1,003 | )
Finance receivables, net | (5 | ) |  | — |  |  | (5 | )
Inventory, net | (2,223 | ) |  | (490 | ) |  | (2,713 | )
Prepaid expenses and other current assets | (224 | ) |  | 100 |  |  | (124 | )
Accounts payable and accrued expenses | (3,175 | ) |  | 632 |  |  | (2,543 | )
Deferred revenue | — |  |  | (59 | ) |  | (59 | )
Income taxes payable | (10 | ) |  | 7 |  |  | (3 | )
Net cash used in operating activities | (6,265 | ) |  | 350 |  |  | (5,915 | )
INVESTING ACTIVITIES: |  |  |  |  |
Purchase of property and equipment, including rentals | (810 | ) |  | 187 |  |  | (623 | )
Net cash used in investing activities | (810 | ) |  | 187 |  |  | (623 | )
FINANCING ACTIVITIES: |  |  |  |  |
Cash used in retirement of common stock | (31 | ) |  | — |  |  | (31 | )
Proceeds from exercise of common stock warrants | 6,193 |  |  | — |  |  | 6,193 |
Repayment of capital lease obligations and long-term debt | (161 | ) |  | (537 | ) |  | (698 | )
Net cash provided by financing activities | 6,001 |  |  | (537 | ) |  | 5,464 |
Net decrease in cash and cash equivalents | (1,074 | ) |  | — |  |  | (1,074 | )
Cash and cash equivalents at beginning of year | 19,272 |  |  | — |  |  | 19,272 |
Cash and cash equivalents at end of period | $ | 18,198 |  |  | $ | — |  |  | $ | 18,198 |
The effect of the restatement on the previously filed consolidated balance sheet as of December 31, 2016 is as follows:
| As of December 31, 2016
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 18,034 |  |  | $ | — |  |  | $ | 18,034 |
Accounts receivable | 6,796 |  |  | 96 |  |  | 6,892 |
Finance receivables, net | 1,442 |  |  | — |  |  | 1,442 |
Inventory, net | 4,786 |  |  | (348 | ) |  | 4,438 |
Prepaid expenses and other current assets | 1,764 |  |  | (87 | ) |  | 1,677 |
Deferred income taxes | 2,271 |  |  | (2,271 | ) |  | — |
Total current assets | 35,093 |  |  | (2,610 | ) |  | 32,483 |
Non-current assets: |  |  |  |  |
Finance receivables due after one year | 3,956 |  |  | — |  |  | 3,956 |
Other assets | 145 |  |  | (1 | ) |  | 144 |
Property and equipment, net | 9,433 |  |  | 2,561 |  |  | 11,994 |
Deferred income taxes | 25,568 |  |  | (25,568 | ) |  | — |
Intangibles, net | 711 |  |  | — |  |  | 711 |
Goodwill | 11,492 |  |  | — |  |  | 11,492 |
Total non-current assets | 51,305 |  |  | (23,008 | ) |  | 28,297 |
Total assets | $ | 86,398 |  |  | $ | (25,618 | ) |  | $ | 60,780 |
Liabilities, convertible preferred stock and shareholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 9,090 |  |  | $ | 19 |  |  | $ | 9,109 |
Accrued expenses | 2,912 |  |  | 4,629 |  |  | 7,541 |
Line of credit, net | 7,078 |  |  | 13 |  |  | 7,091 |
Capital lease obligations and current obligations under long-term debt | 766 |  |  | 3,565 |  |  | 4,331 |
Income taxes payable | 6 |  |  | 15 |  |  | 21 |
Deferred revenue | — |  |  | 478 |  |  | 478 |
Deferred gain from sale-leaseback transactions | 470 |  |  | (470 | ) |  | — |
Total current liabilities | 20,322 |  |  | 8,249 |  |  | 28,571 |
Long-term liabilities: |  |  |  |  |
Deferred income taxes | — |  |  | 63 |  |  | 63 |
Capital lease obligations and long-term debt, less current portion | 1,394 |  |  | — |  |  | 1,394 |
Accrued expenses, less current portion | 52 |  |  | — |  |  | 52 |
Total long-term liabilities | 1,446 |  |  | 63 |  |  | 1,509 |
Total liabilities | $ | 21,768 |  |  | $ | 8,312 |  |  | $ | 30,080 |
Commitments and contingencies |  |  |  |  |  |  |  |
Convertible preferred stock: |  |  |  |  |
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $18,442 at December 31, 2016 | — |  |  | 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 $18,442 at December 31, 2016 | 3,138 |  |  | (3,138 | ) |  | — |
Common stock, no par value, 640,000,000 shares authorized, 40,321,941 shares issued and outstanding at December 31, 2016 | 245,230 |  |  | — |  |  | 245,230 |
Accumulated deficit | (183,738 | ) |  | (33,930 | ) |  | (217,668 | )
Total shareholders’ equity | 64,630 |  |  | (37,068 | ) |  | 27,562 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 86,398 |  |  | $ | (25,618 | ) |  | $ | 60,780 |
The effect of the restatement on the previously filed consolidated statement of operations for the three and six months ended December 31, 2016 is as follows:
| Three months ended December 31, 2016 |  | Six months ended December 31, 2016
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated |  | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |  |  |  |  |  |  |
License and transaction fees | $ | 16,639 |  |  | $ | (2 | ) |  | $ | 16,637 |  |  | $ | 33,004 |  |  | $ | (4 | ) |  | $ | 33,000 |
Equipment sales | 5,117 |  |  | 33 |  |  | 5,150 |  |  | 10,340 |  |  | 16 |  |  | 10,356 |
Total revenue | 21,756 |  |  | 31 |  |  | 21,787 |  |  | 43,344 |  |  | 12 |  |  | 43,356 |
Costs of sales: |  |  |  |  |  |  |  |  |  |  |
Cost of services | 11,389 |  |  | (143 | ) |  | 11,246 |  |  | 22,632 |  |  | (287 | ) |  | 22,345 |
Cost of equipment | 4,033 |  |  | 63 |  |  | 4,096 |  |  | 8,211 |  |  | 58 |  |  | 8,269 |
Total costs of sales | 15,422 |  |  | (80 | ) |  | 15,342 |  |  | 30,843 |  |  | (229 | ) |  | 30,614 |
Gross profit | 6,334 |  |  | 111 |  |  | 6,445 |  |  | 12,501 |  |  | 241 |  |  | 12,742 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative | 5,793 |  |  | 236 |  |  | 6,029 |  |  | 12,702 |  |  | 799 |  |  | 13,501 |
Depreciation and amortization | 307 |  |  | — |  |  | 307 |  |  | 515 |  |  | — |  |  | 515 |
Total operating expenses | 6,100 |  |  | 236 |  |  | 6,336 |  |  | 13,217 |  |  | 799 |  |  | 14,016 |
Operating income (loss) | 234 |  |  | (125 | ) |  | 109 |  |  | (716 | ) |  | (558 | ) |  | (1,274 | )
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest income | 200 |  |  | — |  |  | 200 |  |  | 273 |  |  | — |  |  | 273 |
Interest expense | (201 | ) |  | (317 | ) |  | (518 | ) |  | (413 | ) |  | (652 | ) |  | (1,065 | )
Change in fair value of warrant liabilities | — |  |  | — |  |  | — |  |  | (1,490 | ) |  | — |  |  | (1,490 | )
Total other expense, net | (1 | ) |  | (317 | ) |  | (318 | ) |  | (1,630 | ) |  | (652 | ) |  | (2,282 | )
Income (loss) before income taxes | 233 |  |  | (442 | ) |  | (209 | ) |  | (2,346 | ) |  | (1,210 | ) |  | (3,556 | )
(Provision) benefit for income taxes | — |  |  | (23 | ) |  | (23 | ) |  | 115 |  |  | (161 | ) |  | (46 | )
Net income (loss) | 233 |  |  | (465 | ) |  | (232 | ) |  | (2,231 | ) |  | (1,371 | ) |  | (3,602 | )
Preferred dividends | — |  |  | — |  |  | — |  |  | (334 | ) |  | — |  |  | (334 | )
Net income (loss) applicable to common shares | $ | 233 |  |  | $ | (465 | ) |  | $ | (232 | ) |  | $ | (2,565 | ) |  | $ | (1,371 | ) |  | $ | (3,936 | )
Net income (loss) per common share |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.01 |  |  | $ | (0.02 | ) |  | $ | (0.01 | ) |  | $ | (0.07 | ) |  | $ | (0.03 | ) |  | $ | (0.10 | )
Diluted | $ | 0.01 |  |  | $ | (0.02 | ) |  | $ | (0.01 | ) |  | $ | (0.07 | ) |  | $ | (0.03 | ) |  | $ | (0.10 | )
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |  |
Basic | 40,308,934 |  |  | — |  |  | 40,308,934 |  |  | 39,398,469 |  |  | — |  |  | 39,398,469 |
Diluted | 40,730,712 |  |  | (421,778 | ) |  | 40,308,934 |  |  | 39,398,469 |  |  | — |  |  | 39,398,469 |
The effect of the restatement on the previously filed consolidated statement of cash flows for the six months ended December 31, 2016 is as follows:
| Six months ended December 31, 2016
($ in thousands) | As Previously Reported |  | Adjustments |  | As Restated
OPERATING ACTIVITIES: |  |  |  |  |
Net loss | $ | (2,231 | ) |  | $ | (1,371 | ) |  | $ | (3,602 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
Non-cash stock-based compensation | 445 |  |  | — |  |  | 445 |
(Gain) loss on disposal of property and equipment | (31 | ) |  | (3 | ) |  | (34 | )
Non-cash interest and amortization of debt discount | 26 |  |  | 39 |  |  | 65 |
Bad debt expense | 450 |  |  | (119 | ) |  | 331 |
Provision for inventory reserve | — |  |  | 480 |  |  | 480 |
Depreciation and amortization | 2,564 |  |  | 600 |  |  | 3,164 |
Change in fair value of warrant liabilities | 1,490 |  |  | — |  |  | 1,490 |
Deferred income taxes, net | (115 | ) |  | 145 |  |  | 30 |
Recognition of deferred gain from sale-leaseback transactions | (430 | ) |  | 430 |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (2,347 | ) |  | (71 | ) |  | (2,418 | )
Finance receivables, net | 2,119 |  |  | — |  |  | 2,119 |
Inventory, net | (2,689 | ) |  | (714 | ) |  | (3,403 | )
Prepaid expenses and other current assets | (542 | ) |  | 100 |  |  | (442 | )
Accounts payable and accrued expenses | (3,840 | ) |  | 1,140 |  |  | (2,700 | )
Deferred revenue | — |  |  | 326 |  |  | 326 |
Income taxes payable | (12 | ) |  | 15 |  |  | 3 |
Net cash used in operating activities | (5,143 | ) |  | 997 |  |  | (4,146 | )
INVESTING ACTIVITIES: |  |  |  |  |
Purchase of property and equipment, including rentals | (1,944 | ) |  | 192 |  |  | (1,752 | )
Proceeds from sale of property and equipment | 61 |  |  | — |  |  | 61 |
Net cash used in investing activities | (1,883 | ) |  | 192 |  |  | (1,691 | )
FINANCING ACTIVITIES: |  |  |  |  |
Cash used in retirement of common stock | (31 | ) |  | — |  |  | (31 | )
Proceeds from exercise of common stock warrants | 6,193 |  |  | — |  |  | 6,193 |
Repayment of line of credit | — |  |  | (106 | ) |  | (106 | )
Repayment of capital lease obligations and long-term debt | (374 | ) |  | (1,083 | ) |  | (1,457 | )
Net cash provided by financing activities | 5,788 |  |  | (1,189 | ) |  | 4,599 |
Net decrease in cash and cash equivalents | (1,238 | ) |  | — |  |  | (1,238 | )
Cash and cash equivalents at beginning of year | 19,272 |  |  | — |  |  | 19,272 |
Cash and cash equivalents at end of period | $ | 18,034 |  |  | $ | — |  |  | $ | 18,034 |
The effect of the restatement on the previously filed consolidated balance sheet as of March 31, 2017 is as follows:
| As of March 31, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 17,780 |  |  | $ | — |  |  | $ | 17,780 |
Accounts receivable | 6,734 |  |  | (72 | ) |  | 6,662 |
Finance receivables, net | 2,057 |  |  | 92 |  |  | 2,149 |
Inventory, net | 4,147 |  |  | (470 | ) |  | 3,677 |
Prepaid expenses and other current assets | 1,628 |  |  | (34 | ) |  | 1,594 |
Deferred income taxes | 2,271 |  |  | (2,271 | ) |  | — |
Total current assets | 34,617 |  |  | (2,755 | ) |  | 31,862 |
Non-current assets: |  |  |  |  |
Finance receivables due after one year | 7,548 |  |  | — |  |  | 7,548 |
Other assets | 137 |  |  | 94 |  |  | 231 |
Property and equipment, net | 9,173 |  |  | 2,168 |  |  | 11,341 |
Deferred income taxes | 25,359 |  |  | (25,359 | ) |  | — |
Intangibles, net | 666 |  |  | — |  |  | 666 |
Goodwill | 11,492 |  |  | — |  |  | 11,492 |
Total non-current assets | 54,375 |  |  | (23,097 | ) |  | 31,278 |
Total assets | $ | 88,992 |  |  | $ | (25,852 | ) |  | $ | 63,140 |
Liabilities, convertible preferred stock and shareholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 11,529 |  |  | $ | 290 |  |  | $ | 11,819 |
Accrued expenses | 3,111 |  |  | 5,681 |  |  | 8,792 |
Line of credit, net | 7,021 |  |  | 13 |  |  | 7,034 |
Capital lease obligations and current obligations under long-term debt | 786 |  |  | 2,999 |  |  | 3,785 |
Income taxes payable | — |  |  | 23 |  |  | 23 |
Deferred revenue | — |  |  | 310 |  |  | 310 |
Deferred gain from sale-leaseback transactions | 255 |  |  | (255 | ) |  | — |
Total current liabilities | 22,702 |  |  | 9,061 |  |  | 31,763 |
Long-term liabilities: |  |  |  |  |
Deferred income taxes | — |  |  | 78 |  |  | 78 |
Capital lease obligations and long-term debt, less current portion | 1,239 |  |  | — |  |  | 1,239 |
Accrued expenses, less current portion | 52 |  |  | — |  |  | 52 |
Total long-term liabilities | 1,291 |  |  | 78 |  |  | 1,369 |
Total liabilities | $ | 23,993 |  |  | $ | 9,139 |  |  | $ | 33,132 |
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 March 31, 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 March 31, 2017 | 3,138 |  |  | (3,138 | ) |  | — |
Common stock, no par value, 640,000,000 shares authorized, 40,327,675 shares issued and outstanding at March 31, 2017 | 245,463 |  |  | — |  |  | 245,463 |
Accumulated deficit | (183,602 | ) |  | (34,991 | ) |  | (218,593 | )
Total shareholders’ equity | 64,999 |  |  | (38,129 | ) |  | 26,870 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 88,992 |  |  | $ | (25,852 | ) |  | $ | 63,140 |
The effect of the restatement on the previously filed consolidated statement of operations for the three and nine months ended March 31, 2017 is as follows:
| Three months ended March 31, 2017 |  | Nine months ended March 31, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated |  | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |  |  |  |  |  |  |
License and transaction fees | $ | 17,459 |  |  | $ | (1 | ) |  | $ | 17,458 |  |  | $ | 50,463 |  |  | $ | (5 | ) |  | $ | 50,458 |
Equipment sales | 9,001 |  |  | (158 | ) |  | 8,843 |  |  | 19,341 |  |  | (142 | ) |  | 19,199 |
Total revenue | 26,460 |  |  | (159 | ) |  | 26,301 |  |  | 69,804 |  |  | (147 | ) |  | 69,657 |
Costs of sales: |  |  |  |  |  |  |  |  |  |  |
Cost of services | 11,876 |  |  | (143 | ) |  | 11,733 |  |  | 34,508 |  |  | (430 | ) |  | 34,078 |
Cost of equipment | 7,959 |  |  | 267 |  |  | 8,226 |  |  | 16,170 |  |  | 325 |  |  | 16,495 |
Total costs of sales | 19,835 |  |  | 124 |  |  | 19,959 |  |  | 50,678 |  |  | (105 | ) |  | 50,573 |
Gross profit | 6,625 |  |  | (283 | ) |  | 6,342 |  |  | 19,126 |  |  | (42 | ) |  | 19,084 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |
Selling, general and administrative | 5,947 |  |  | 595 |  |  | 6,542 |  |  | 18,649 |  |  | 1,394 |  |  | 20,043 |
Depreciation and amortization | 259 |  |  | — |  |  | 259 |  |  | 774 |  |  | — |  |  | 774 |
Total operating expenses | 6,206 |  |  | 595 |  |  | 6,801 |  |  | 19,423 |  |  | 1,394 |  |  | 20,817 |
Operating income (loss) | 419 |  |  | (878 | ) |  | (459 | ) |  | (297 | ) |  | (1,436 | ) |  | (1,733 | )
Other income (expense): |  |  |  |  |  |  |  |  |  |  |
Interest income | 114 |  |  | — |  |  | 114 |  |  | 387 |  |  | — |  |  | 387 |
Interest expense | (188 | ) |  | (369 | ) |  | (557 | ) |  | (601 | ) |  | (1,021 | ) |  | (1,622 | )
Change in fair value of warrant liabilities | — |  |  | — |  |  | — |  |  | (1,490 | ) |  | — |  |  | (1,490 | )
Total other expense, net | (74 | ) |  | (369 | ) |  | (443 | ) |  | (1,704 | ) |  | (1,021 | ) |  | (2,725 | )
Income (loss) before income taxes | 345 |  |  | (1,247 | ) |  | (902 | ) |  | (2,001 | ) |  | (2,457 | ) |  | (4,458 | )
(Provision) benefit for income taxes | (209 | ) |  | 186 |  |  | (23 | ) |  | (94 | ) |  | 25 |  |  | (69 | )
Net income (loss) | 136 |  |  | (1,061 | ) |  | (925 | ) |  | (2,095 | ) |  | (2,432 | ) |  | (4,527 | )
Preferred dividends | (334 | ) |  | — |  |  | (334 | ) |  | (668 | ) |  | — |  |  | (668 | )
Net loss applicable to common shares | $ | (198 | ) |  | $ | (1,061 | ) |  | $ | (1,259 | ) |  | $ | (2,763 | ) |  | $ | (2,432 | ) |  | $ | (5,195 | )
Net loss per common share |  |  |  |  |  |  |  |  |  |  |
Basic | $ | — |  |  | $ | (0.03 | ) |  | $ | (0.03 | ) |  | $ | (0.07 | ) |  | $ | (0.06 | ) |  | $ | (0.13 | )
Diluted | $ | — |  |  | $ | (0.03 | ) |  | $ | (0.03 | ) |  | $ | (0.07 | ) |  | $ | (0.06 | ) |  | $ | (0.13 | )
Weighted average number of common shares outstanding |  |  |  |  |  |  |  |  |  |  |
Basic | 40,327,697 |  |  | — |  |  | 40,327,697 |  |  | 39,703,690 |  |  | — |  |  | 39,703,690 |
Diluted | 40,327,697 |  |  | — |  |  | 40,327,697 |  |  | 39,703,690 |  |  | — |  |  | 39,703,690 |
The effect of the restatement on the previously filed consolidated statement of cash flows for the nine months ended March 31, 2017 is as follows:
| Nine months ended March 31, 2017
($ in thousands) | As Previously Reported |  | Adjustments |  | As Restated
OPERATING ACTIVITIES: |  |  |  |  |
Net loss | $ | (2,095 | ) |  | $ | (2,432 | ) |  | $ | (4,527 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
Non-cash stock-based compensation | 678 |  |  | — |  |  | 678 |
(Gain) loss on disposal of property and equipment | (59 | ) |  | — |  |  | (59 | )
Non-cash interest and amortization of debt discount | 98 |  |  | — |  |  | 98 |
Bad debt expense | 577 |  |  | (117 | ) |  | 460 |
Provision for inventory reserve | — |  |  | 804 |  |  | 804 |
Depreciation and amortization | 3,774 |  |  | 905 |  |  | 4,679 |
Change in fair value of warrant liabilities | 1,490 |  |  | — |  |  | 1,490 |
Deferred income taxes, net | 94 |  |  | (48 | ) |  | 46 |
Recognition of deferred gain from sale-leaseback transactions | (646 | ) |  | 646 |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (2,388 | ) |  | 72 |  |  | (2,316 | )
Finance receivables, net | (2,113 | ) |  | (67 | ) |  | (2,180 | )
Inventory, net | (2,042 | ) |  | (915 | ) |  | (2,957 | )
Prepaid expenses and other current assets | (406 | ) |  | (48 | ) |  | (454 | )
Accounts payable and accrued expenses | (1,239 | ) |  | 2,501 |  |  | 1,262 |
Deferred revenue | — |  |  | 157 |  |  | 157 |
Income taxes payable | (18 | ) |  | 22 |  |  | 4 |
Net cash used in operating activities | (4,295 | ) |  | 1,480 |  |  | (2,815 | )
INVESTING ACTIVITIES: |  |  |  |  |
Purchase of property and equipment, including rentals | (2,818 | ) |  | 282 |  |  | (2,536 | )
Proceeds from sale of property and equipment | 105 |  |  | — |  |  | 105 |
Net cash used in investing activities | (2,713 | ) |  | 282 |  |  | (2,431 | )
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 | (556 | ) |  | (1,656 | ) |  | (2,212 | )
Net cash provided by financing activities | 5,516 |  |  | (1,762 | ) |  | 3,754 |
Net decrease in cash and cash equivalents | (1,492 | ) |  | — |  |  | (1,492 | )
Cash and cash equivalents at beginning of year | 19,272 |  |  | — |  |  | 19,272 |
Cash and cash equivalents at end of period | $ | 17,780 |  |  | $ | — |  |  | $ | 17,780 |
The effect of the restatement on the previously filed consolidated statement of operations for the three months ended June 30, 2017 is as follows:
| Three months ended June 30, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |
License and transaction fees | $ | 18,679 |  |  | $ | (3 | ) |  | $ | 18,676 |
Equipment sales | 15,610 |  |  | (2,507 | ) |  | 13,103 |
Total revenue | 34,289 |  |  | (2,510 | ) |  | 31,779 |
Costs of sales: |  |  |  |  |
Cost of services | 12,545 |  |  | (103 | ) |  | 12,442 |
Cost of equipment | 14,224 |  |  | (864 | ) |  | 13,360 |
Total costs of sales | 26,769 |  |  | (967 | ) |  | 25,802 |
Gross profit | 7,520 |  |  | (1,543 | ) |  | 5,977 |
Operating expenses: |  |  |  |  |
Selling, general and administrative | 6,844 |  |  | 1,290 |  |  | 8,134 |
Depreciation and amortization | 244 |  |  | — |  |  | 244 |
Total operating expenses | 7,088 |  |  | 1,290 |  |  | 8,378 |
Operating income (loss) | 432 |  |  | (2,833 | ) |  | (2,401 | )
Other income (expense): |  |  |  |  |
Interest income | 95 |  |  | — |  |  | 95 |
Interest expense | (291 | ) |  | (315 | ) |  | (606 | )
Total other expense, net | (196 | ) |  | (315 | ) |  | (511 | )
Income (loss) before income taxes | 236 |  |  | (3,148 | ) |  | (2,912 | )
Benefit (provision) for income taxes | 7 |  |  | (33 | ) |  | (26 | )
Net income (loss) | 243 |  |  | (3,181 | ) |  | (2,938 | )
Preferred dividends | — |  |  | — |  |  | — |
Net income (loss) applicable to common shares | $ | 243 |  |  | $ | (3,181 | ) |  | $ | (2,938 | )
Net income (loss) per common share |  |  |  |  |
Basic | $ | 0.01 |  |  | $ | (0.08 | ) |  | $ | (0.07 | )
Diluted | $ | 0.01 |  |  | $ | (0.08 | ) |  | $ | (0.07 | )
Weighted average number of common shares outstanding |  |  |  |  |
Basic | 40,331,993 |  |  | — |  |  | 40,331,993 |
Diluted | 40,772,482 |  |  | (440,489 | ) |  | 40,331,993 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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