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RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 12 Months Ended
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Jun. 30, 2019
Accounting Changes and Error Corrections [Abstract] |
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | A summary of the impact of these matters on income (loss) before taxes is presented below:
($ in thousands) | Increase / (Decrease) Restatement Impact
| Year ended June 30, 2017
Audit Committee Investigation-related Adjustments: |
Revenue | $ | (2,568 | )
Costs of sales | $ | (1,163 | )
Gross profit | $ | (1,405 | )
Operating income (loss) | $ | (1,405 | )
Loss before income taxes | $ | (1,405 | )
Significant Account and Transaction Review and Other: |
Revenue | $ | (89 | )
Costs of sales | $ | 91 |
Gross profit | $ | (180 | )
Operating income (loss) | $ | (2,864 | )
Loss before income taxes | $ | (4,200 | )
A summary of the impact of these matters on the consolidated balance sheet is presented below, excluding any tax effect from the restatement adjustments in the aggregate:
($ in thousands) | Increase / (Decrease) Restatement Impact
| As of June 30, 2017
Audit Committee Investigation-related Adjustments: |
Accounts receivable | $ | (284 | )
Finance receivables, net | $ | (1,267 | )
Inventory, net | $ | 1,106 |
Prepaid expenses and other current assets | $ | 25 |
Other assets | $ | 88 |
Accounts payable | $ | 270 |
Accrued expenses | $ | 803 |
Significant Account and Transaction Review and Other: |
Accounts receivable | $ | (75 | )
Inventory, net | $ | (500 | )
Prepaid expenses and other current assets | $ | (114 | )
Other assets | $ | (456 | )
Property and equipment, net | $ | (1,000 | )
Accounts payable | $ | 21 |
Accrued expenses | $ | 7,235 |
Capital lease obligation and current obligations under long-term debt | $ | (32 | )
Deferred revenue | $ | (27 | )
Deferred gain from sale-leaseback transactions | $ | (239 | )
Deferred gain from sale-leaseback transactions, less current portion | $ | (100 | )
The effect of the restatement on the previously filed consolidated balance sheet as of June 30, 2017 is as follows:
| As of June 30, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 12,745 |  |  | $ | — |  |  | $ | 12,745 |
Accounts receivable | 7,193 |  |  | (359 | ) |  | 6,834 |
Finance receivables, net | 11,010 |  |  | (1,267 | ) |  | 9,743 |
Inventory, net | 4,586 |  |  | 606 |  |  | 5,192 |
Prepaid expenses and other current assets | 968 |  |  | (89 | ) |  | 879 |
Total current assets | 36,502 |  |  | (1,109 | ) |  | 35,393 |
Non-current assets: |  |  |  |  |
Finance receivables due after one year | 8,607 |  |  | — |  |  | 8,607 |
Other assets | 687 |  |  | (368 | ) |  | 319 |
Property and equipment, net | 12,111 |  |  | (1,000 | ) |  | 11,111 |
Deferred income taxes | 27,670 |  |  | (27,670 | ) |  | — |
Intangibles, net | 622 |  |  | — |  |  | 622 |
Goodwill | 11,492 |  |  | — |  |  | 11,492 |
Total non-current assets | 61,189 |  |  | (29,038 | ) |  | 32,151 |
Total assets | $ | 97,691 |  |  | $ | (30,147 | ) |  | $ | 67,544 |
Liabilities, convertible preferred stock and shareholders’ equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 16,054 |  |  | $ | 291 |  |  | $ | 16,345 |
Accrued expenses | 4,130 |  |  | 7,743 |  |  | 11,873 |
Line of credit, net | 7,036 |  |  | — |  |  | 7,036 |
Capital lease obligations and current obligations under long-term debt | 3,230 |  |  | (32 | ) |  | 3,198 |
Income taxes payable | 10 |  |  | — |  |  | 10 |
Deferred revenue | — |  |  | 268 |  |  | 268 |
Deferred gain from sale-leaseback transactions | 239 |  |  | (239 | ) |  | — |
Total current liabilities | 30,699 |  |  | 8,031 |  |  | 38,730 |
Long-term liabilities: |  |  |  |  |
Deferred income taxes | — |  |  | 94 |  |  | 94 |
Capital lease obligations and long-term debt, less current portion | 1,061 |  |  | — |  |  | 1,061 |
Accrued expenses, less current portion | 53 |  |  | — |  |  | 53 |
Deferred gain from sale-leaseback transactions, less current portion | 100 |  |  | (100 | ) |  | — |
Total long-term liabilities | 1,214 |  |  | (6 | ) |  | 1,208 |
Total liabilities | $ | 31,913 |  |  | $ | 8,025 |  |  | $ | 39,938 |
Commitments and contingencies |  |  |  |  |  |  |  |
Convertible preferred stock: |  |  |  |  |
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $18,775 at June 30, 2017 | — |  |  | 3,138 |  |  | 3,138 |
Shareholders’ equity: |  |  |  |  |
Preferred stock, no par value, 1,800,000 shares authorized, no shares issued | — |  |  | — |  |  | — |
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preference of $18,775 at June 30, 2017 | 3,138 |  |  | (3,138 | ) |  | — |
Common stock, no par value, 640,000,000 shares authorized, 40,331,645 shares issued and outstanding at June 30, 2017 | 245,999 |  |  | — |  |  | 245,999 |
Accumulated deficit | (183,359 | ) |  | (38,172 | ) |  | (221,531 | )
Total shareholders’ equity | 65,778 |  |  | (41,310 | ) |  | 24,468 |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 97,691 |  |  | $ | (30,147 | ) |  | $ | 67,544 |
The effect of the restatement on the previously filed consolidated statement of operations for the year ended June 30, 2017 is as follows:
| Year ended June 30, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |
License and transaction fees | $ | 69,142 |  |  | $ | (8 | ) |  | $ | 69,134 |
Equipment sales | 34,951 |  |  | (2,649 | ) |  | 32,302 |
Total revenue | 104,093 |  |  | (2,657 | ) |  | 101,436 |
Costs of sales: |  |  |  |  |
Cost of services | 47,053 |  |  | (533 | ) |  | 46,520 |
Cost of equipment | 30,394 |  |  | (539 | ) |  | 29,855 |
Total costs of sales | 77,447 |  |  | (1,072 | ) |  | 76,375 |
Gross profit | 26,646 |  |  | (1,585 | ) |  | 25,061 |
Operating expenses: |  |  |  |  |
Selling, general and administrative | 25,493 |  |  | 2,684 |  |  | 28,177 |
Depreciation and amortization | 1,018 |  |  | — |  |  | 1,018 |
Total operating expenses | 26,511 |  |  | 2,684 |  |  | 29,195 |
Operating income (loss) | 135 |  |  | (4,269 | ) |  | (4,134 | )
Other income (expense): |  |  |  |  |
Interest income | 482 |  |  | — |  |  | 482 |
Interest expense | (892 | ) |  | (1,336 | ) |  | (2,228 | )
Change in fair value of warrant liabilities | (1,490 | ) |  | — |  |  | (1,490 | )
Total other expense, net | (1,900 | ) |  | (1,336 | ) |  | (3,236 | )
Loss before income taxes | (1,765 | ) |  | (5,605 | ) |  | (7,370 | )
Provision for income taxes | (87 | ) |  | (8 | ) |  | (95 | )
Net loss | (1,852 | ) |  | (5,613 | ) |  | (7,465 | )
Preferred dividends | (668 | ) |  | — |  |  | (668 | )
Net loss applicable to common shares | $ | (2,520 | ) |  | $ | (5,613 | ) |  | $ | (8,133 | )
Net loss per common share |  |  |  |  |
Basic | $ | (0.06 | ) |  | $ | (0.14 | ) |  | $ | (0.20 | )
Diluted | $ | (0.06 | ) |  | $ | (0.14 | ) |  | $ | (0.20 | )
Weighted average number of common shares outstanding |  |  |  |  |
Basic | 39,860,335 |  |  | — |  |  | 39,860,335 |
Diluted | 39,860,335 |  |  | — |  |  | 39,860,335 |
The effect of the restatement on the previously filed consolidated statement of cash flows for the year ended June 30, 2017 is as follows:
| Year ended June 30, 2017
($ in thousands) | As Previously Reported |  | Adjustments |  | As Restated
OPERATING ACTIVITIES: |  |  |  |  |
Net loss | $ | (1,852 | ) |  | $ | (5,613 | ) |  | $ | (7,465 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
Non-cash stock-based compensation | 1,214 |  |  | — |  |  | 1,214 |
(Gain) loss on disposal of property and equipment | (177 | ) |  | — |  |  | (177 | )
Non-cash interest and amortization of debt discount | 113 |  |  | — |  |  | 113 |
Bad debt expense | 764 |  |  | (207 | ) |  | 557 |
Provision for inventory reserve | — |  |  | 877 |  |  | 877 |
Depreciation and amortization | 5,591 |  |  | 365 |  |  | 5,956 |
Change in fair value of warrant liabilities | 1,490 |  |  | — |  |  | 1,490 |
Deferred income taxes, net | 54 |  |  | 8 |  |  | 62 |
Recognition of deferred gain from sale-leaseback transactions | (560 | ) |  | 560 |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable | (2,988 | ) |  | 450 |  |  | (2,538 | )
Finance receivables, net | (12,119 | ) |  | 1,287 |  |  | (10,832 | )
Inventory, net | (2,399 | ) |  | (2,064 | ) |  | (4,463 | )
Prepaid expenses and other current assets | (304 | ) |  | 457 |  |  | 153 |
Accounts payable and accrued expenses | 4,410 |  |  | 4,464 |  |  | 8,874 |
Deferred revenue | — |  |  | 115 |  |  | 115 |
Income taxes payable | (8 | ) |  | — |  |  | (8 | )
Net cash used in operating activities | (6,771 | ) |  | 699 |  |  | (6,072 | )
INVESTING ACTIVITIES: |  |  |  |  |
Purchase of property and equipment, including rentals | (4,041 | ) |  | 254 |  |  | (3,787 | )
Proceeds from sale of property and equipment | 348 |  |  | — |  |  | 348 |
Net cash used in investing activities | (3,693 | ) |  | 254 |  |  | (3,439 | )
FINANCING ACTIVITIES: |  |  |  |  |
Cash used in retirement of common stock | (31 | ) |  | — |  |  | (31 | )
Proceeds from exercise of common stock warrants | 6,193 |  |  | — |  |  | 6,193 |
Payment of debt issuance costs | (90 | ) |  | — |  |  | (90 | )
Repayment of line of credit | (106 | ) |  | — |  |  | (106 | )
Repayment of capital lease obligations and long-term debt | (2,029 | ) |  | (953 | ) |  | (2,982 | )
Net cash provided by financing activities | 3,937 |  |  | (953 | ) |  | 2,984 |
Net decrease in cash and cash equivalents | (6,527 | ) |  | — |  |  | (6,527 | )
Cash and cash equivalents at beginning of year | 19,272 |  |  | — |  |  | 19,272 |
Cash and cash equivalents at end of year | $ | 12,745 |  |  | $ | — |  |  | $ | 12,745 |

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- Definition Tabular disclosure of prior period adjustments to previously issued financial statements including (1) the effect of the correction on each financial statement line item and any per-share amounts affected for each prior period presented (2) the cumulative effect of the change on retained earnings or other appropriate components of equity or net assets in the statement of financial position, as of the beginning of the earliest period presented, and (3) the effect of the prior period adjustments (both gross and net of applicable income tax) on the net income of each prior period presented in the entity's annual report for the year in which the adjustments are made. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22663-107794 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22644-107794 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22658-107794 + Details
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