XML 82 R11.htm IDEA: XBRL DOCUMENT
v3.19.3

ACQUISITION OF CANTALOUPE SYSTEMS, INC. | 9 Months Ended
--- | ---
Mar. 31, 2019
Business Combinations [Abstract] |
ACQUISITION OF CANTALOUPE SYSTEMS, INC. | ACQUISITION OF CANTALOUPE SYSTEMS, INC. On November 9, 2017, the Company acquired all of the outstanding equity interests of Cantaloupe pursuant to the Merger Agreement, for approximately $88.2 million in aggregate consideration. Cantaloupe is a premier provider of cloud and mobile solutions for vending, micro markets, and office coffee service. The acquisition expanded the Company’s existing platform to become an end-to-end enterprise platform integrating Cantaloupe’s Seed Cloud, which provides cloud and mobile solutions for dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management, as well as cashless vending. In addition to new technology and services, due to Cantaloupe’s existing customer base, the acquisition expands the Company’s footprint into new global markets. The fair value of the purchase price consideration consisted of the following:
($ in thousands) |  |
Cash consideration, net of cash acquired |  | $ | 65,181 |
USAT shares issued as stock consideration (As Restated) |  | 23,279 |
Post-closing adjustment for working capital |  | (253 | )
Total consideration (As Restated) |  | $ | 88,207 |
The Company financed a portion of the purchase price with proceeds from a $25.0 million term loan (“Term Loan”) and $10.0 million of borrowings under a line of credit (“Revolving Credit Facility”), provided by JPMorgan Chase Bank, N.A., for an aggregate principal amount of $35.0 million. Refer to Note 10 for additional details. The acquisition of Cantaloupe was accounted for as a business combination using the acquisition method. Under the acquisition method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at the date of acquisition at their respective fair values using assumptions that are subject to change. The Company has finalized its valuation of certain assets and liabilities recorded in connection with this transaction as of June 30, 2018. The following table summarizes the fair value of total consideration transferred to the holders of all of the outstanding equity interests of Cantaloupe at the acquisition date of November 9, 2017:
($ in thousands) |  | November 9, 2017 (As Restated)
Accounts receivable |  | $ | 2,921 |
Finance receivables |  | 1,480 |
Inventory |  | 282 |
Prepaid expense and other current assets |  | 646 |
Finance receivables due after one year |  | 3,603 |
Other assets |  | 50 |
Property and equipment |  | 2,234 |
Intangibles |  | 30,800 |
Total assets acquired |  | 42,016 |
Accounts payable |  | (1,591 | )
Accrued expenses |  | (2,401 | )
Deferred revenue |  | (518 | )
Capital lease obligations and current obligations under long-term debt |  | (666 | )
Capital lease obligations and long-term debt, less current portion |  | (1,134 | )
Deferred income tax liabilities |  | (157 | )
Total identifiable net assets |  | 35,549 |
Goodwill |  | 52,658 |
Total fair value |  | $ | 88,207 |
Amounts allocated to intangible assets included $18.9 million related to customer relationships, $10.3 million related to developed technology, and $1.6 million related to trade names. The fair value of the acquired customer relationships was determined using the excess earnings method. The fair value of both the acquired developed technology and the acquired trade names was determined using the relief from royalty method. The estimated useful life of the acquired intangible assets ranged from 6 to 18 years, with a weighted average estimated useful life of 13 years. The related amortization will be recorded on a straight-line basis. Goodwill of $52.7 million arising from the acquisition includes the expected synergies between Cantaloupe and the Company, the value of the employee workforce, and intangible assets that do not qualify for separate recognition at the time of acquisition. The goodwill, which is not deductible for income tax purposes, was assigned to the Company’s only reporting unit. The amount of Cantaloupe revenue included in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2018 is $7.3 million and $12.0 million, respectively. The amount of Cantaloupe (loss) earnings included in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2018 is $(0.5) million and $1.0 million, respectively. Supplemental disclosure of pro forma information The following supplemental unaudited pro forma information presents the combined results of USAT and Cantaloupe as if the acquisition of Cantaloupe occurred on July 1, 2016. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on July 1, 2016, nor are they indicative of any future results. The pro forma results include adjustments for the preliminary purchase accounting impact of the Cantaloupe acquisition (including, but not limited to, amortization associated with the acquired intangible assets, and the interest expense and amortization of deferred financing fees associated with the Term Loan and Revolving Credit Facility that were used to finance a portion of the purchase price, along with the related tax impacts) and the alignment of accounting policies. Other material non-recurring adjustments are reflected in the pro forma and described below:
|  | Three months ended |  | Nine months ended
($ in thousands, except per share data) |  | March 31, 2018
Revenue |  | $ | 33,592 |  |  | $ | 98,451 |
Net loss attributable to USAT |  | (1,895 | ) |  | (6,254 | )
Net loss attributable to USAT common shares |  | $ | (2,229 | ) |  | $ | (6,922 | )
Net loss per share: |  |  |  |
Basic |  | $ | (0.04 | ) |  | $ | (0.13 | )
Diluted |  | $ | (0.04 | ) |  | $ | (0.13 | )
Weighted average number of common shares outstanding: |  |  |  |
Basic |  | 53,637,085 |  |  | 53,601,684 |
Diluted |  | 53,637,085 |  |  | 53,601,684 |
The supplemental unaudited pro forma earnings for the three and nine months ended March 31, 2018 were adjusted to exclude $1.7 million and $5.8 million of integration and acquisition costs.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration