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RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (Tables) | 6 Months Ended
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Dec. 31, 2018
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
| Three months ended December 31, 2017
Audit Committee Investigation-related Adjustments: |
Revenue | $ | (866 | )
Costs of sales | $ | (1,225 | )
Gross profit | $ | 359 |
Operating loss | $ | 359 |
Loss before income taxes | $ | 357 |
Acquisition and Financial Integration-related Adjustments: |
Revenue | $ | (60 | )
Costs of sales | $ | (33 | )
Gross profit | $ | (27 | )
Operating loss | $ | (288 | )
Loss before income taxes | $ | (223 | )
Significant Account and Transaction Review and Other: |
Revenue | $ | (47 | )
Costs of sales | $ | 313 |
Gross profit | $ | (360 | )
Operating loss | $ | (775 | )
Loss before income taxes | $ | (1,041 | )
($ in thousands) | Increase / (Decrease) Restatement Impact
| Six months ended December 31, 2017
Audit Committee Investigation-related Adjustments: |
Revenue | $ | (1,277 | )
Costs of sales | $ | (1,060 | )
Gross profit | $ | (217 | )
Operating loss | $ | (217 | )
Loss before income taxes | $ | (219 | )
Acquisition and Financial Integration-related Adjustments: |
Revenue | $ | (60 | )
Costs of sales | $ | (33 | )
Gross profit | $ | (27 | )
Operating loss | $ | (288 | )
Loss before income taxes | $ | (223 | )
Significant Account and Transaction Review and Other: |
Revenue | $ | 6 |
Costs of sales | $ | 810 |
Gross profit | $ | (804 | )
Operating loss | $ | (1,397 | )
Loss before income taxes | $ | (1,927 | )
A summary of the impact of these matters on the condensed consolidated balance sheet is presented below, excluding any tax effect from the restatement adjustments in the aggregate:
($ in thousands) | Increase / (Decrease) Restatement Impact
| As of December 31, 2017
Audit Committee Investigation-related Adjustments: |
Accounts receivable | $ | (1,774 | )
Finance receivables, net | $ | (1,269 | )
Inventory, net | $ | 2,166 |
Prepaid expenses and other current assets | $ | 25 |
Other assets | $ | 76 |
Property and equipment, net | $ | (162 | )
Accounts payable | $ | 106 |
Accrued expenses | $ | 580 |
Acquisition and Financial Integration-related Adjustments: |
Cash and cash equivalents | $ | (26 | )
Accounts receivable | $ | 1,133 |
Finance receivables, net | $ | (1,324 | )
Inventory, net | $ | (500 | )
Prepaid expenses and other current assets | $ | (35 | )
Finance receivables due after one year, net | $ | (191 | )
Other assets | $ | (139 | )
Property and equipment, net | $ | 721 |
Goodwill | $ | 4,121 |
Accrued expenses | $ | 785 |
Deferred revenue | $ | (153 | )
Common stock | $ | 3,469 |
Significant Account and Transaction Review and Other: |
Accounts receivable | $ | (8 | )
Finance receivables, net | $ | 371 |
Inventory, net | $ | (861 | )
Prepaid expenses and other current assets | $ | (150 | )
Other assets | $ | (600 | )
Finance receivables due after one year, net | $ | 703 |
Property and equipment, net | $ | (737 | )
Accounts payable | $ | 27 |
Accrued expenses | $ | 9,087 |
Capital lease obligation and current obligations under long-term debt | $ | 367 |
Capital lease obligation and long-term debt, less current portion | $ | 697 |
Deferred revenue | $ | (27 | )
Deferred gain from sale-leaseback transactions | $ | (198 | )
Deferred gain from sale-leaseback transactions, less current portion | $ | (49 | )
Common stock | $ | (372 | )
The effect of the restatement on the previously filed condensed consolidated balance sheet as of December 31, 2017 is as follows:
| As of December 31, 2017
($ in thousands) | 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, net | 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 condensed consolidated statement of operations for the three and six months ended December 31, 2017 is as follows:
| Three months ended December 31, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |
License and transaction fees | $ | 22,853 |  |  | $ | 661 |  |  | $ | 23,514 |
Equipment sales | 9,653 |  |  | (1,635 | ) |  | 8,018 |
Total revenue | 32,506 |  |  | (974 | ) |  | 31,532 |
Costs of sales: |  |  |  |  |
Cost of services | 14,362 |  |  | (6 | ) |  | 14,356 |
Cost of equipment | 8,943 |  |  | (939 | ) |  | 8,004 |
Total costs of sales | 23,305 |  |  | (945 | ) |  | 22,360 |
Gross profit | 9,201 |  |  | (29 | ) |  | 9,172 |
Operating expenses: |  |  |  |  |
Selling, general and administrative | 8,329 |  |  | 676 |  |  | 9,005 |
Integration and acquisition costs | 3,335 |  |  | — |  |  | 3,335 |
Depreciation and amortization | 737 |  |  | — |  |  | 737 |
Total operating expenses | 12,401 |  |  | 676 |  |  | 13,077 |
Operating loss | (3,200 | ) |  | (705 | ) |  | (3,905 | )
Other income (expense): |  |  |  |  |
Interest income | 251 |  |  | 73 |  |  | 324 |
Interest expense | (494 | ) |  | (276 | ) |  | (770 | )
Total other expense, net | (243 | ) |  | (203 | ) |  | (446 | )
Loss before income taxes | (3,443 | ) |  | (908 | ) |  | (4,351 | )
(Provision) benefit for income taxes | (9,073 | ) |  | 9,230 |  |  | 157 |
Net loss | (12,516 | ) |  | 8,322 |  |  | (4,194 | )
Preferred dividends | — |  |  | — |  |  | — |
Net loss applicable to common shares | $ | (12,516 | ) |  | $ | 8,322 |  |  | $ | (4,194 | )
Net loss per common share |  |  |  |  |
Basic | $ | (0.24 | ) |  | $ | 0.16 |  |  | $ | (0.08 | )
Diluted | $ | (0.24 | ) |  | $ | 0.16 |  |  | $ | (0.08 | )
Weighted average number of common shares outstanding |  |  |  |  |
Basic | 52,150,106 |  |  | — |  |  | 52,150,106 |
Diluted | 52,150,106 |  |  | — |  |  | 52,150,106 |
| Six months ended December 31, 2017
($ in thousands, except per share data) | As Previously Reported |  | Adjustments |  | As Restated
Revenue: |  |  |  |  |
License and transaction fees | $ | 42,797 |  |  | $ | 114 |  |  | $ | 42,911 |
Equipment sales | 15,326 |  |  | (1,446 | ) |  | 13,880 |
Total revenue | 58,123 |  |  | (1,332 | ) |  | 56,791 |
Costs of sales: |  |  |  |  |
Cost of services | 27,688 |  |  | (85 | ) |  | 27,603 |
Cost of equipment | 14,033 |  |  | (198 | ) |  | 13,835 |
Total costs of sales | 41,721 |  |  | (283 | ) |  | 41,438 |
Gross profit | 16,402 |  |  | (1,049 | ) |  | 15,353 |
Operating expenses: |  |  |  |  |
Selling, general and administrative | 15,075 |  |  | 854 |  |  | 15,929 |
Integration and acquisition costs | 4,097 |  |  | — |  |  | 4,097 |
Depreciation and amortization | 982 |  |  | — |  |  | 982 |
Total operating expenses | 20,154 |  |  | 854 |  |  | 21,008 |
Operating loss | (3,752 | ) |  | (1,903 | ) |  | (5,655 | )
Other income (expense): |  |  |  |  |
Interest income | 331 |  |  | 73 |  |  | 404 |
Interest expense | (703 | ) |  | (540 | ) |  | (1,243 | )
Total other expense, net | (372 | ) |  | (467 | ) |  | (839 | )
Loss before income taxes | (4,124 | ) |  | (2,370 | ) |  | (6,494 | )
(Provision) benefit for income taxes | (8,605 | ) |  | 8,734 |  |  | 129 |
Net loss | (12,729 | ) |  | 6,364 |  |  | (6,365 | )
Preferred dividends | (334 | ) |  | — |  |  | (334 | )
Net loss applicable to common shares | $ | (13,063 | ) |  | $ | 6,364 |  |  | $ | (6,699 | )
Net loss per common share |  |  |  |  |
Basic | $ | (0.26 | ) |  | $ | 0.13 |  |  | $ | (0.13 | )
Diluted | $ | (0.26 | ) |  | $ | 0.13 |  |  | $ | (0.13 | )
Weighted average number of common shares outstanding |  |  |  |  |
Basic | 49,861,735 |  |  | — |  |  | 49,861,735 |
Diluted | 49,861,735 |  |  | — |  |  | 49,861,735 |
The effect of the restatement on the previously filed condensed 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 | 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, including rentals | 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 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 | (9,249 | ) |  | 8,206 |  |  | (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 |

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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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