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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934

For the transition period from _________ to _________
Commission file number 001-33365
Cantaloupe, Inc.
_______________________________________________________________
(Exact name of registrant as specified in its charter)

Pennsylvania |  | 23-2679963
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

101 Lindenwood Drive, Suite 405 | Malvern, | Pennsylvania |  | 19355
(Address of principal executive offices) |  | (Zip Code)

(610) 989-0340
_______________________________________________________________
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class | Trading Symbol | Name Of Each Exchange On Which Registered
Common Stock, no par value | CTLP | The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☑
Non-accelerated filer | ☐ | Smaller reporting company | ☐
Emerging growth company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
As of November 4, 2024, there were 72,986,172 outstanding shares of Common Stock, no par value.

Cantaloupe, Inc.
TABLE OF CONTENTS

Part I - Financial Information |
Item |  |  |
| 1. | Condensed Consolidated Financial Statements |
|  | Condensed Consolidated Balance Sheets - September 3 0, 2024 (unaudited) and June 30, 202 4 | 3
|  | Condensed Consolidated Statements of Operations - Three Months ended September 3 0, 2024 and 2023 (unaudited) | 4
|  | Condensed Consolidated Statements of Comprehensive Income - Three Months ended September 3 0, 2024 and 2023 (unaudited) | 5
|  | Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders’ Equity - Three Months ended September 3 0, 2024 and 2023 (unaudited) | 6
|  | Condensed Consolidated Statements of Cash Flows - Three Months ended September 3 0, 2024 and 2023 (unaudited) | 7
|  | Notes to Condensed Consolidated Financial Statements (unaudited) | 8
| 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21
| 3. | Quantitative and Qualitative Disclosures About Market Risk | 29
| 4. | Controls and Procedures | 30
Part II - Other Information |
Item |  |  |
| 1. | Legal Proceedings | 31
| 1A. | Risk Factors | 31
| 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31
| 3. | Defaults Upon Senior Securities | 31
| 4. | Mine Safety Disclosures | 31
| 5. | Other Information | 31
| 6. | Exhibits | 32
|  | Signatures | 33

Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Cantaloupe, Inc.
Condensed Consolidated Balance Sheets

| September 30, 2024 (Unaudited) |  | June 30, 2024
($ in thousands, except share data) |
Assets |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 33,124 |  |  | $ | 58,920 |
Accounts receivable, net | 32,490 |  |  | 43,848 |
Finance receivables, net | 6,104 |  |  | 6,391 |
Inventory | 44,571 |  |  | 40,791 |
Prepaid expenses and other current assets | 7,456 |  |  | 7,844 |
Total current assets | 123,745 |  |  | 157,794 |
Non-current assets: |  |  |
Finance receivables, net | 8,873 |  |  | 10,036 |
Property and equipment, net | 35,888 |  |  | 34,029 |
Operating lease right-of-use assets | 8,276 |  |  | 7,986 |
Intangibles, net | 26,762 |  |  | 24,626 |
Goodwill | 102,708 |  |  | 94,903 |
Other assets | 5,883 |  |  | 6,194 |
Total non-current assets | 188,390 |  |  | 177,774 |
Total assets | $ | 312,135 |  |  | $ | 335,568 |
Liabilities, convertible preferred stock, and shareholders’ equity |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 52,612 |  |  | $ | 78,895 |
Accrued expenses | 21,743 |  |  | 24,008 |
Current obligations under long-term debt | 1,362 |  |  | 1,266 |
Deferred revenue | 1,471 |  |  | 1,726 |
Total current liabilities | 77,188 |  |  | 105,895 |
Long-term liabilities: |  |  |
Deferred income taxes | 505 |  |  | 466 |
Long-term debt, less current portion | 35,919 |  |  | 36,284 |
Other noncurrent liabilities | 9,573 |  |  | 8,457 |
Total long-term liabilities | 45,997 |  |  | 45,207 |
Total liabilities | 123,185 |  |  | 151,102 |
Commitments and contingencies (Note 14) |  |  |
Convertible preferred stock: |  |  |
Series A convertible preferred stock, 900,000 shares authorized, 385,782 and 385,782 issued and outstanding, with liquidation preferences of $23,011 and $22,722 at September 30, 2024 and June 30, 2024, respectively | 2,720 |  |  | 2,720 |
Shareholders’ equity: |  |  |
Common stock, no par value, 640,000,000 shares authorized, 72,986,172 and 72,935,497 shares issued and outstanding at September 30, 2024 and June 30, 2024, respectively | — |  |  | — |
Additional paid-in capital | 483,052 |  |  | 482,329 |
Accumulated deficit | (296,887) |  |  | (300,459) |
Accumulated other comprehensive income (loss) | 65 |  |  | (124) |
Total shareholders’ equity | 186,230 |  |  | 181,746 |
Total liabilities, convertible preferred stock, and shareholders’ equity | $ | 312,135 |  |  | $ | 335,568 |

See accompanying notes to condensed consolidated financial statements.
3

Cantaloupe, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

|  | Three months ended
|  | September 30,
($ in thousands, except share and per share data) |  | 2024 |  | 2023
Revenues: |  |  |  |
Subscription and transaction fees |  | $ | 63,792 |  |  | $ | 55,135 |
Equipment sales |  | 7,044 |  |  | 7,548 |
Total revenues |  | 70,836 |  |  | 62,683 |
Costs of sales (exclusive of certain depreciation and amortization): |  |  |  |
Cost of subscription and transaction fees |  | 35,744 |  |  | 31,728 |
Cost of equipment sales |  | 6,241 |  |  | 6,627 |
Total costs of sales |  | 41,985 |  |  | 38,355 |
Operating expenses: |  |  |  |
Sales and marketing |  | 5,448 |  |  | 4,142 |
Technology and product development |  | 4,499 |  |  | 4,168 |
General and administrative |  | 11,928 |  |  | 10,438 |
Integration and acquisition expenses |  | 197 |  |  | 78 |
Depreciation and amortization |  | 2,672 |  |  | 2,747 |
Total operating expenses |  | 24,744 |  |  | 21,573 |
Operating income |  | 4,107 |  |  | 2,755 |
Other income (expense): |  |  |  |
Interest income |  | 447 |  |  | 517 |
Interest expense |  | (991) |  |  | (1,107) |
Other income (expense), net |  | 186 |  |  | (77) |
Total other expense, net |  | (358) |  |  | (667) |
Income before income taxes |  | 3,749 |  |  | 2,088 |
Provision for income taxes |  | (177) |  |  | (81) |
Net income |  | 3,572 |  |  | 2,007 |
Preferred dividends |  | (289) |  |  | (289) |
Net income applicable to common shares |  | $ | 3,283 |  |  | $ | 1,718 |
Net earnings per common share |  |  |  |
Basic |  | $ | 0.04 |  |  | $ | 0.02 |
Diluted |  | $ | 0.04 |  |  | $ | 0.02 |
Weighted average number of common shares outstanding used to compute net earnings per share applicable to common shares |  |  |  |
Basic |  | 73,068,856 |  |  | 72,717,965 |
Diluted |  | 73,921,186 |  |  | 74,305,512 |

See accompanying notes to condensed consolidated financial statements.
4

Cantaloupe, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)

|  | Three months ended September 30,
($ in thousands) |  | 2024 |  | 2023
Net income |  | 3,572 |  |  | $ | 2,007 |
Foreign currency translation adjustments |  | 189 |  |  | — |
Other comprehensive income |  | 189 |  |  | — |
Total comprehensive income |  | $ | 3,761 |  |  | $ | 2,007 |

See accompanying notes to condensed consolidated financial statements.
5

Cantaloupe, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders’ Equity
(Unaudited)
Three Month Period Ended September 30, 2024

($ in thousands, except share data) |  | Convertible Preferred Stock |  |  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Income (Loss) |  | Total Shareholders' Equity
| Shares |  | Amount |  |  | Shares |  | Amount |  |  |  |
Balance, June 30, 2024 |  | 385,782 |  |  | $ | 2,720 |  |  |  | 72,935,497 |  |  | $ | — |  |  | $ | 482,329 |  |  | $ | (300,459) |  |  | $ | (124) |  |  | $ | 181,746 |
Stock-based compensation |  | — |  |  | — |  |  |  | — |  |  | — |  |  | 723 |  |  | — |  |  | — |  |  | 723 |
Vesting of restricted stock |  | — |  |  | — |  |  |  | 50,675 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other comprehensive income |  | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 189 |  |  | 189 |
Net income |  | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | 3,572 |  |  | — |  |  | 3,572 |
Balance, September 30, 2024 |  | 385,782 |  |  | $ | 2,720 |  |  |  | 72,986,172 |  |  | $ | — |  |  | $ | 483,052 |  |  | $ | (296,887) |  |  | $ | 65 |  |  | $ | 186,230 |

Three Month Period Ended September 30, 2023

($ in thousands, except share data) |  | Convertible Preferred Stock |  |  | Common Stock |  | Additional Paid-in Capital |  | Accumulated Deficit |  | Accumulated Other Comprehensive Loss |  | Total Shareholders' Equity
| Shares |  | Amount |  |  | Shares |  | Amount |  |  |  |
Balance, June 30, 2023 |  | 385,782 |  |  | $ | 2,720 |  |  |  | 72,664,464 |  |  | $ | — |  |  | $ | 477,324 |  |  | $ | (312,452) |  |  | $ | — |  |  | $ | 164,872 |
Stock-based compensation |  | — |  |  | — |  |  |  | — |  |  | — |  |  | 1,934 |  |  | — |  |  | — |  |  | 1,934 |
Vesting of restricted stock |  | — |  |  | — |  |  |  | 20,801 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Exercise of stock options |  | — |  |  | — |  |  |  | 10,000 |  |  | — |  |  | 74 |  |  | — |  |  | — |  |  | 74 |
Net income |  | — |  |  | — |  |  |  | — |  |  | — |  |  | — |  |  | 2,007 |  |  | — |  |  | 2,007 |
Balance, September 30, 2023 |  | 385,782 |  |  | $ | 2,720 |  |  |  | 72,695,265 |  |  | $ | — |  |  | $ | 479,332 |  |  | $ | (310,445) |  |  | $ | — |  |  | $ | 168,887 |

See accompanying notes to condensed consolidated financial statements.
6

Cantaloupe, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

| Three months ended
| September 30,
($ in thousands) | 2024 |  | 2023
Cash flows from operating activities: |  |  |
Net income | $ | 3,572 |  |  | $ | 2,007 |
Adjustments to reconcile net income to net cash (used in) provided from operating activities: |  |  |
Stock-based compensation | 887 |  |  | 1,932 |
Amortization of debt issuance costs and discounts | 30 |  |  | 32 |
Provision for expected losses | 949 |  |  | 1,000 |
Provision for inventory reserve | 83 |  |  | — |
Depreciation and amortization | 3,192 |  |  | 3,089 |
Gain on foreign currency exchange rates | (211) |  |  | — |
Non-cash lease expense | 321 |  |  | 400 |
Deferred income taxes | 24 |  |  | 43 |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | 11,047 |  |  | (7,784) |
Finance receivables | 1,081 |  |  | 1,122 |
Inventory | (3,863) |  |  | (344) |
Prepaid expenses and other assets | 219 |  |  | 171 |
Accounts payable and accrued expenses | (28,897) |  |  | 5,152 |
Operating lease liabilities | (197) |  |  | (391) |
Deferred revenue | (255) |  |  | 274 |
Net cash (used in) provided by operating activities | (12,018) |  |  | 6,703 |
Cash flows from investing activities: |  |  |
Capital expenditures | (3,791) |  |  | (2,916) |
Acquisition of business, net of cash acquired | (9,761) |  |  | — |
Net cash used in investing activities | (13,552) |  |  | (2,916) |
Cash flows from financing activities: |  |  |
Repayment of long-term debt | (286) |  |  | (193) |
Proceeds from exercise of common stock options | — |  |  | 76 |
Payment of employee taxes related to stock-based compensation | (164) |  |  | — |
Net cash used in financing activities | (450) |  |  | (117) |
Effect of currency exchange rate changes on cash and cash equivalents | 224 |  |  | — |
Net (decrease) increase in cash and cash equivalents | (25,796) |  |  | 3,670 |
Cash and cash equivalents at beginning of year | 58,920 |  |  | 50,927 |
Cash and cash equivalents at end of period | $ | 33,124 |  |  | $ | 54,597 |
Supplemental disclosures of cash flow information: |  |  |
Interest paid in cash | $ | 883 |  |  | $ | 889 |
Income taxes paid in cash | $ | 251 |  |  | $ | 13 |

See accompanying notes to condensed consolidated financial statements.
7

Cantaloupe, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BUSINESS
Cantaloupe, Inc., is organized under the laws of the Commonwealth of Pennsylvania. We are a digital payments and software services company that provides end-to-end technology solutions for self-service commerce. We offer a single platform for self-service commerce which includes integrated payments processing and software solutions that handle inventory management, pre-kitting, route logistics, warehouse and back-office management. Our enterprise-wide platform is designed to increase consumer engagement and sales revenue through digital payments, digital advertising and customer loyalty programs, while providing retailers with control and visibility over their operations and inventory. Our customers range from vending machine companies to operators of micro-markets and smart retail, laundromats, metered parking terminals, amusement and entertainment venues, IoT services and more.
Cantaloupe, Inc. and its consolidated subsidiaries are referred to herein collectively as "Cantaloupe," the "Company," "we," "our" or "us," unless the context requires otherwise.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Preparation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements and therefore should be read in conjunction with the Company’s June 30, 2024 Annual Report on Form 10-K.
The Company has operations in the United States, Mexico and the United Kingdom. The functional currencies of our foreign wholly-owned subsidiaries are the local currencies. We translate the financial statements of these subsidiaries into U.S. dollars each reporting period for purposes of consolidation.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. The Company evaluates these estimates on an ongoing basis.
Estimates, judgments, and assumptions in these condensed consolidated financial statements include, but are not limited to, those related to revenue recognition, capitalization of internal-use software and cloud computing arrangements, fair value of acquired assets and liabilities including goodwill through purchase accounting, income taxes and sales tax reserves. See the Company's Annual Report, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, section Critical Accounting Estimates.
Reclassification
Certain reclassifications have been made to prior year's reported amounts in order to conform to the current year presentation. These reclassifications did not impact our previously reported net income or stockholders’ equity.
Recent Accounting Pronouncements
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, which expands income tax disclosure requirements to include additional information related to the rate reconciliation of effective tax rates to statutory rates as well as additional disaggregation of taxes
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paid. The amendments in the ASU also remove disclosures related to certain unrecognized tax benefits and deferred taxes. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, which is the Company's fiscal year ended June 30, 2026. The amendments may be applied prospectively or retrospectively, and early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.
ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to an entity's chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. Annual disclosures are required for fiscal years beginning after December 15, 2023, which is the Company's fiscal year ended June 30, 2025. Interim disclosures are required for periods within fiscal years beginning after December 15, 2024, which is the Company's fiscal year ended June 30, 2026. Retrospective application is required for all prior periods presented, and early adoption is permitted. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures.
No other new accounting pronouncements, issued or effective during the period ended September 30, 2024, have had or are expected to have a significant impact on the Company’s financial statements.
3. ACCOUNTS RECEIVABLE
Accounts receivable includes amounts due to the Company for sales of equipment and subscription fees, settlement receivables for amounts due from third-party payment processors, receivables from contract manufacturers and unbilled amounts due from customers, net of the allowance for credit losses. Accounts receivable, net of the allowance for uncollectible accounts were $32.5 million as of September 30, 2024 and $43.8 million as of June 30, 2024.
Allowance for credit losses
The following table represents a rollforward of the allowance for credit losses for the three months ended September 30, 2024 and 2023:

|  | Three months ended September 30,
($ in thousands) |  | 2024 |  | 2023
Balance, beginning of quarter |  | $ | 13,442 |  |  | $ | 10,815 |
Provision for expected losses |  | 558 |  |  | 958 |
Write-offs |  | (354) |  |  | (60) |
Balance, end of quarter |  | $ | 13,646 |  |  | $ | 11,713 |

4. FINANCE RECEIVABLES
The Company's finance receivables consist of devices under its financing program and devices contractually associated with the Seed platform. Predominately all of the Company’s finance receivables agreements are classified as non-cancellable sixty-month sales-type leases.
The Company collects lease payments from customers primarily as part of the flow of funds from our transaction processing services. Balances are considered past due if customers do not have sufficient transaction revenue to cover the monthly lease payment by the end of the monthly billing period.
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At September 30, 2024, the gross lease receivable by current payment performance on a contractual basis and year of origination consisted of the following:

| Leases by Origination
($ in thousands) |  | Up to 1 Year Ago |  | Between 1 and 2 Years Ago |  | Between 2 and 3 Years Ago |  | Between 3 and 4 Years Ago |  | Between 4 and 5 Years Ago |  | More than 5 Years Ago |  | Total
Current |  | $ | 2,066 |  |  | $ | 3,050 |  |  | $ | 6,029 |  |  | $ | 1,571 |  |  | $ | 562 |  |  | $ | 157 |  |  | $ | 13,435 |
30 days and under |  | 31 |  |  | 52 |  |  | 160 |  |  | 76 |  |  | 44 |  |  | 27 |  |  | 390 |
31 - 60 days |  | 11 |  |  | 23 |  |  | 119 |  |  | 67 |  |  | 47 |  |  | 27 |  |  | 294 |
61 - 90 days |  | 6 |  |  | 18 |  |  | 102 |  |  | 47 |  |  | 79 |  |  | 32 |  |  | 284 |
Greater than 90 days |  | 9 |  |  | 122 |  |  | 1,040 |  |  | 235 |  |  | 279 |  |  | 1,214 |  |  | 2,899 |
Total finance receivables |  | $ | 2,123 |  |  | $ | 3,265 |  |  | $ | 7,450 |  |  | $ | 1,996 |  |  | $ | 1,011 |  |  | $ | 1,457 |  |  | $ | 17,302 |

At June 30, 2024, the gross lease receivable by current payment performance on a contractual basis and year of origination consisted of the following:

| Leases by Origination
($ in thousands) |  | Up to 1 Year Ago |  | Between 1 and 2 Years Ago |  | Between 2 and 3 Years Ago |  | Between 3 and 4 Years Ago |  | Between 4 and 5 Years Ago |  | More than 5 Years Ago |  | Total
Current |  | $ | 2,199 |  |  | $ | 5,135 |  |  | $ | 4,668 |  |  | $ | 1,961 |  |  | $ | 456 |  |  | $ | 324 |  |  | $ | 14,743 |
30 days and under |  | 13 |  |  | 67 |  |  | 80 |  |  | 85 |  |  | 56 |  |  | 42 |  |  | 343 |
31 - 60 days |  | 8 |  |  | 64 |  |  | 58 |  |  | 49 |  |  | 47 |  |  | 38 |  |  | 264 |
61 - 90 days |  | 8 |  |  | 62 |  |  | 48 |  |  | 32 |  |  | 36 |  |  | 38 |  |  | 224 |
Greater than 90 days |  | 35 |  |  | 387 |  |  | 625 |  |  | 208 |  |  | 297 |  |  | 1,235 |  |  | 2,787 |
Total finance receivables |  | $ | 2,263 |  |  | $ | 5,715 |  |  | $ | 5,479 |  |  | $ | 2,335 |  |  | $ | 892 |  |  | $ | 1,677 |  |  | $ | 18,361 |

The following table represents a rollforward of the allowance for finance receivables for the three months ended September 30, 2024 and 2023:

|  | Three months ended September 30,
($ in thousands) |  | 2024 |  | 2023
Balance at June 30 |  | $ | 1,934 |  |  | $ | 2,098 |
Provision for expected losses |  | 391 |  |  | 51 |
Balance at September 30 |  | 2,325 |  |  | 2,149 |

There were no write-offs of finance receivables for the three months ended September 30, 2024 and 2023.
Cash to be collected on our performing finance receivables due for each of the fiscal years is as follows:

($ in thousands) | Amount
Remainder of 2025 | $ | 5,480 |
2026 | 6,003 |
2027 | 4,043 |
2028 | 2,051 |
2029 | 770 |
Thereafter | 85 |
Total amounts to be collected | 18,432 |
Less: interest | (1,130) |
Less: allowance for uncollectible receivables | (2,325) |
Total finance receivables | $ | 14,977 |

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5. LEASES
Lessee Accounting
We have operating leases which are primarily real estate leases used for corporate functions, product development, sales, and other purposes. The following table provides supplemental balance sheet information related to the Company's operating leases:

($ in thousands) |  | Balance Sheet Classification |  | September 30, 2024 |  | June 30, 2024
Assets: |  | Operating lease right-of-use assets |  | $ | 8,276 |  |  | $ | 7,986 |
Liabilities: |  |  |  |  |  |
Current |  | Accrued expenses |  | $ | 1,432 |  |  | $ | 1,320 |
Long-term |  | Other noncurrent liabilities |  | 8,759 |  |  | 8,457 |
Total lease liabilities |  |  |  | $ | 10,191 |  |  | $ | 9,777 |

Supplemental cash flow information and non-cash activity related to our leases are as follows:

($ in thousands) | Three months ended September 30,
| 2024 |  | 2023
Supplemental cash flow information: |  |  |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 485 |  |  | $ | 604 |
Non-cash activity: |  |  |
Right-of-use assets obtained in exchange for new lease obligations | $ | 290 |  |  | $ | 1,788 |

Maturities of lease liabilities by fiscal year for our leases as of September 30, 2024 are as follows:

($ in thousands) | Operating Leases
Remainder of 2025 | $ | 1,345 |
2026 | 2,405 |
2027 | 1,958 |
2028 | 1,456 |
2029 | 1,491 |
Thereafter | 5,720 |
Total lease payments | 14,375 |
Less: Imputed interest | (4,184) |
Present value of lease liabilities | $ | 10,191 |

Lessor Accounting
Property and equipment used for the operating lease rental program consisted of the following:

($ in thousands) |  | September 30, 2024 |  | June 30, 2024
Cost |  | $ | 32,777 |  |  | $ | 32,513 |
Accumulated depreciation |  | (25,229) |  |  | (24,742) |
Net |  | $ | 7,548 |  |  | $ | 7,771 |

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For the three months ended September 30, 2024 and 2023, the Company recognized $2.3 million and $2.0 million of revenue from its device rental program, respectively, which is included in the Subscription and Transaction fees on its Condensed Consolidated Statements of Operations.
The Company’s net investment in sales-type leases (carrying value of lease receivables) and the future minimum amounts to be collected on these lease receivables as of September 30, 2024 are disclosed within Note 4 - Finance Receivables.
6. DEBT AND OTHER FINANCING ARRANGEMENTS
The Company's debt and other financing arrangements as of September 30, 2024 and June 30, 2024 consisted of the following:

|  | As of September 30, |  | As of June 30,
($ in thousands) |  | 2024 |  | 2024
JPMorgan Credit Facility* |  | $ | 37,344 |  |  | $ | 37,625 |
Other obligations |  | 29 |  |  | 34 |
Less: unamortized issuance costs and debt discount |  | (92) |  |  | (109) |
Total |  | 37,281 |  |  | 37,550 |
Less: debt and other financing arrangements, current |  | (1,362) |  |  | (1,266) |
Debt and other financing arrangements, noncurrent |  | $ | 35,919 |  |  | $ | 36,284 |

* See discussion below on amendment to the JPMorgan Credit Facility.
JPMorgan Chase Bank Credit Facility
On March 17, 2022, the Company entered into an amended and restated credit agreement with JPMorgan Chase Bank, N.A. which provides for a $15 million secured revolving credit facility (the “Amended Revolving Facility”) and a $25 million secured term facility (the “Amended Secured Term Facility” and together with the Amended Revolving Facility, the “Amended JPMorgan Credit Facility”), and fully replaced our previous 2021 JPMorgan credit facility.
On December 1, 2022, the Company entered into an amendment (the “2022 Amendment”) the Amended and Restated Credit Agreement, dated as of March 17, 2022, which, among other things, amended the definition of the Company’s EBITDA under the Credit Agreement. On December 1, 2022, the Company borrowed an additional $25 million under the Amended JPMorgan Credit Facility, including $15 million from the revolving credit facility and $10 million from the term facility. No issuance costs were capitalized in connection with this amendment.
The Amended JPMorgan Credit Facility matures on March 16, 2026. Interest on the Amended JPMorgan Credit Facility will be based, at the Company’s option, on a base rate or SOFR plus an applicable margin tied to the Company’s total leverage ratio and having ranges of between 2.50% and 3.00% for base rate loans and between 3.50% and 4.00% for SOFR loans. Subject to the occurrence of a material acquisition and the Company’s total leverage ratio exceeding 3.00 to 1.00, the interest rate on the loans may increase by 0.25%. In an event of default, the interest rate may be increased by 2.00%. The Amended JPMorgan Credit Facility will also carry a commitment fee of 0.50% per annum on the unused portion. As of September 30, 2024, the weighted-average interest rate for the Amended JPMorgan Credit Facility is approximatel y 8.9%.
The Amended JPMorgan Credit Facility includes customary representations, warranties and covenants, and acceleration, indemnity and events of default provisions, including, among other things, two financial covenants. One financial covenant requires the Company to maintain, at all times, a total leverage ratio of not more than 3.00 to 1.00 on the last day of any fiscal quarter. The other financial covenant is conditional on a material acquisition occurring: if a material acquisition occurs, the Company is required to maintain a total leverage ratio not greater than 4.00 to 1.00 for the next four fiscal quarters following the material acquisition.
The Company was in compliance with its financial covenants for the Amended JPMorgan Credit Facility as of September 30, 2024.
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The expected maturities for each fiscal year associated with the Company’s outstanding debt and other financing arrangements as of September 30, 2024, were as follows:

($ in thousands) | Amount
Remainder of 2025 | $ | 1,047 |
2026 | 36,326 |
Principal amounts payable | 37,373 |
Unamortized issuance costs | (92) |
Total outstanding debt | $ | 37,281 |

7. ACCRUED EXPENSES
Accrued expenses consisted of the following as of September 30, 2024 and June 30, 2024:

|  | As of September 30, |  | As of June 30,
($ in thousands) |  | 2024 |  | 2024
Sales tax reserve |  | $ | 9,891 |  |  | $ | 9,947 |
Accrued compensation and related sales commissions |  | 1,907 |  |  | 4,061 |
Operating lease liabilities - current |  | 1,432 |  |  | 1,320 |
Accrued professional fees |  | 3,496 |  |  | 4,336 |
Sales tax payable |  | 1,969 |  |  | 2,123 |
Accrued other |  | 1,136 |  |  | 851 |
Current portion of the fair value of SB Software contingent consideration* |  | 542 |  |  | — |
Consideration withheld for the 32M acquisition |  | 442 |  |  | 442
Consideration withheld for the Cheq acquisition* |  | 928 |  |  | 928 |
Total accrued expenses |  | $ | 21,743 |  |  | $ | 24,008 |

* See Note 9 - Acquisition for description of the arrangement.
8. GOODWILL AND INTANGIBLES
Intangible asset balances and goodwill consisted of the following:

| As of September 30, 2024 |  | Weighted Average Remaining Useful Life (Years)
($ in thousands) | Gross |  | Accumulated Amortization |  | Net |
Intangible assets: |  |  |  |  |  |  |
Brand and trade names | $ | 2,526 |  |  | (1,971) |  |  | 555 |  |  | 2.0
Developed technology | 23,119 |  |  | (13,792) |  |  | 9,327 |  |  | 3.8
Customer relationships | 27,217 |  |  | (10,337) |  |  | 16,880 |  |  | 8.6
Total intangible assets | $ | 52,862 |  |  | $ | (26,100) |  |  | $ | 26,762 |  |  | 6.8
Goodwill | $ | 102,708 |  |  | $ | — |  |  | $ | 102,708 |  |  | Indefinite

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| As of June 30, 2024 |  | Weighted Average Useful Life (Years)
($ in thousands) | Gross |  | Accumulated Amortization |  | Net |
Intangible assets: |  |  |  |  |  |  |
Brand and trade names | $ | 2,361 |  |  | $ | (1,852) |  |  | $ | 509 |  |  | 1.6
Developed technology | 20,062 |  |  | (13,304) |  |  | 6,758 |  |  | 3.6
Customer relationships | 27,024 |  |  | (9,665) |  |  | 17,359 |  |  | 8.8
Total intangible assets | $ | 49,447 |  |  | $ | (24,821) |  |  | $ | 24,626 |  |  | 7.2
Goodwill | $ | 94,903 |  |  | $ | — |  |  | $ | 94,903 |  |  | Indefinite

During the three months ended September 30, 2024 and September 30, 2023, the Company recognize d $1.3 million and $1.6 million, respectively, in amortization expense related to intangible assets.
The Company performs an annual goodwill impairment test on April 1 and more frequently if events and circumstances indicate that the asset might be impaired. The Company has determined that there is one single reporting unit for purposes of testing goodwill for impairment. During the three ended September 30, 2024 and September 30, 2023, the Company did not recognize any impairment charges related to goodwill.
9. ACQUISITIONS
On September 5, 2024, the Company acquired all of the equity interests of SB Software Limited ("SB Software"), a United Kingdom private limited company. SB Software is in the business of vending and coffee machine management in the United Kingdom. The acquisition enhances Cantaloupe’s operational capabilities and market reach in Europe.
On February 1, 2024, the Company acquired all of the equity interests of Cheq Lifestyle Technology, Inc. ("Cheq"). Cheq powers payments for numerous professional sports teams, entertainment venues and festival operators through its enterprise-grade payment devices and mobile ordering platform. The acquisition positions Cantaloupe for expansion into the large and rapidly growing sports, entertainment, and restaurant sectors with a comprehensive suite of self-service solutions.
Both acquisitions were accounted for as business combinations using the acquisition method of accounting. The purchase price of each acquired company was allocated between tangible and intangible assets acquired and liabilities assumed from the acquired businesses based on their estimated fair values using primarily Level 3 inputs under ASC Topic 820, "Fair Value Measurement", with the residual of the purchase price recorded as goodwill.
SB Software
For SB Software, the Company paid a purchase price of approximately $11.4 million which includes cash paid of $10.0 million and the estimated fair value of contingent consideration to be paid out of $1.4 million. The acquisition was funded by the Company's cash on hand.
The $1.4 million fair value of the contingent consideration to be paid out represents the present value of up to $3.3 million in contingent consideration based on a Monte Carlo Simulation should SB Software achieve certain revenue growth metrics as defined in the share purchase agreement. Should these metrics be achieved, approximately $1.3 million, $1.0 million and $1.0 million will be payable in September 2025, September 2026 and September 2027, respectively. The current and noncurrent portions of the fair value of the contingent consideration of $0.5 million and $0.8 million are included in Accrued expenses and Other non-current liabilities on the Condensed Consolidated Balance Sheet, respectively.
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The following table summarizes the estimated fair value assigned to the assets acquired and liabilities assumed:

($ in thousands) | Amount
Cash and cash equivalents | $ | 284 |
Accounts receivable | 94 |
Inventory | 42 |
Prepaid expenses | 14 |
Property and equipment | 67 |
Operating lease right-of-use assets | 244 |
Intangible assets | 3,362 |
Total identifiable assets acquired | 4,107 |
Accounts payable | (71) |
Accrued expenses | (152) |
Operating lease liability | (244) |
Total liabilities assumed | (467) |
Total identifiable net assets | 3,640 |
Goodwill | 7,743 |
Fair value of total considerations transferred | $ | 11,383 |

The Company determined the estimated fair value of the identifiable intangible assets acquired with the assistance of third-party valuation consultants. Amounts allocated to identifiable intangible assets included $3.0 million related to developed technology, $0.2 million related to customer relationships, and $0.2 million related to trade names. The estimated fair value of the acquired developed technology was determined using a multi-period excess earnings method. The estimated fair value of the acquired customer relationships was determined using the distributor method which estimates the value using the cash flow impact in a scenario where the customer relationships are not in place. The estimated fair value of the acquired trade names was determined using the relief from royalty method which estimates the value using the discounted value of the royalty that a company would pay to license the trade name. The recognized intangible assets will be amortized on a straight-line basis over the estimated useful lives of the respective assets. The estimated useful lives for developed technology, customer relationship, trade names were 5, 3 and 3 years, respectively.
Goodwill of $7.7 million arising from the acquisition includes the expected synergies between SB Software and the Company. The goodwill, which is not deductible for income tax purposes, was assigned to the Company’s only reporting unit.
The Company recognized $0.2 million of integration and acquisition related costs that were expensed during the three months ended September 30, 2024. These costs are recorded within Integration and acquisition expenses in the Condensed Consolidated Statements of Operations.
The allocation of the purchase price is currently provisional and is subject to change over the remainder of the measurement period as the Company continues to evaluate and analyze the estimates and assumptions used in the valuation. Pro forma financial information of the acquisition and revenue and net income since acquisition are not presented due to the immaterial impact of the financial results of SB Software in the Company's Condensed Consolidated Financial Statements.
Cheq
For Cheq, the Company paid an aggregate purchase price consideration of $4.7 million, including $1.1 million in accounts payable paid concurrently with the acquisition and $0.9 million cash held back by the Company for net working capital and other post-closing adjustments. The acquisition was funded by the Company's cash on hand. Cash held back by the Company is expected to be paid after post-closing adjustments on January 1, 2025.
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The following table summarizes the adjusted fair value assigned to the assets acquired and liabilities assumed:

($ in thousands) | Amount
Cash and cash equivalents | $ | 84 |
Property and equipment | 1,136 |
Intangible assets | 1,750 |
Other assets | 486 |
Total identifiable assets acquired | 3,456 |
Accounts payable | (691) |
Other liabilities | (52) |
Total liabilities assumed | (743) |
Total identifiable net assets | 2,713 |
Goodwill | 2,000 |
Fair value of total considerations transferred | $ | 4,713 |

The Company determined the fair value of the identifiable intangible assets acquired with the assistance of third-party valuation consultants. Amounts allocated to identifiable intangible assets included $1.4 million related to developed technology, $0.2 million related to customer relationships, and $0.2 million related to trade names. The fair value of the acquired developed technology was determined using a multi-period excess earnings method. The fair value of the acquired customer relationships was determined using the distributor method which estimates the value using the cash flow impact in a scenario where the customer relationships are not in place. The fair value of the acquired trade names was determined using the relief from royalty method which estimates the value using the discounted value of the royalty that a company would pay to license the trade name. The recognized intangible assets will be amortized on a straight-line basis over the estimated useful lives of the respective assets. The estimated useful lives for developed technology, customer relationship, trade names were 5, 3 and 3 years, respectively.
Goodwill of $2.0 million arising from the acquisition includes the expected synergies between Cheq and the Company. The goodwill, which is not deductible for income tax purposes, was assigned to the Company’s only reporting unit.
The Company recognized $1.1 million of integration and acquisition related costs that were expensed during the year ended June 30, 2024. These costs are recorded within Integration and acquisition expenses in the Condensed Consolidated Statements of Operations.
10. REVENUES
Based on similar operational characteristics, the Company's revenues are disaggregated as follows:

|  |  | Three months ended September 30,
($ in thousands) |  |  |  |  | 2024 |  | 2023
Transaction fees |  |  |  |  | $ | 43,604 |  |  | $ | 37,030 |
Subscription fees |  |  |  |  | 20,188 |  |  | 18,105 |
Subscription and transaction fees |  |  |  |  | 63,792 |  |  | 55,135 |
Equipment sales |  |  |  |  | 7,044 |  |  | 7,548 |
Total revenues |  |  |  |  | $ | 70,836 |  |  | $ | 62,683 |

A portion of the Company’s revenues relate to rental lease arrangements. The Company leases equipment to customers under the Cantaloupe One program which is accounted for as operating leases in accordance with ASC 842. Lease revenue is recognized on a straight-line basis over the term of the lease. As described in Note 4 - Finance Receivables, the Company leases equipment under sales-type finance leases in accordance with ASC 842.
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The Company's revenues earned under ASC Topic 842 are as follows:

|  |  | Three months ended September 30,
($ in thousands) |  |  |  |  | 2024 |  | 2023
Operating leases |  |  |  |  | $ | 2,318 |  |  | $ | 1,990 |
Sales-type finance leases |  |  |  |  | 640 |  | 692
Total lease revenues |  |  |  |  | $ | 2,958 |  |  | $ | 2,682 |

Contract Assets
Contract assets represent revenues earned from customers that are not yet billable to customers, generally due to the timing of when equipment and services are delivered to customers on bundled contracts, or as a result of contracts costs as described below. Contract assets that will be billed within the next 12 months are included in Prepaid expenses and other current assets and all others are included in Other assets on the Condensed Consolidated Balance Sheets. Contract assets were $2.5 million and $2.6 million, as of September 30, 2024 and June 30, 2024.
Contract Liabilities
The change in the contract liability balances, presented as Deferred revenue on the Condensed Consolidated Balance Sheets, is primarily the result of timing difference between the Company’s satisfaction of a performance obligation and payment from the customer.
The Company's contract liability (i.e., deferred revenue) balances are as follows:

| Three months ended September 30,
($ in thousands) | 2024 |  | 2023
Deferred revenue, beginning of the period | $ | 1,726 |  |  | $ | 1,666 |
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period | (324) |  |  | (92) |
Additions | 69 |  |  | 366 |
Deferred revenue, end of the period | $ | 1,471 |  |  | $ | 1,940 |

Future Performance Obligations
The Company will recognize revenue in future periods related to remaining performance obligations for certain open contracts. Generally, these contracts have terms of one year or less. The amount of revenue related to unsatisfied performance obligations in which the original duration of the contract is greater than one year are primarily associated with the Company's Cantaloupe ONE rental program which has a contractual term of 36 months. The following table reflects the estimated fees to be recognized in the future related to performance obligations that are unsatisfied as of September 30, 2024:

($ in thousands) | As of September 30, 2024
Remainder of fiscal year 2025 | $ | 4,341 |
2026 | 4,250 |
2027 | 1,084 |
Thereafter | 26
Total | $ | 9,701 |

Contract Costs
The Company had net capitalized costs to obtain contracts of $0.9 million and $0.9 million included in Prepaid expenses and other current assets and $2.4 million and $2.4 million included in Other noncurrent assets on the Condensed Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024, respectively. None of these capitalized contract costs were impaired.
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During the three months ended September 30, 2024 and September 30, 2023, amortization of capitalized contract costs was $0.2 million and $0.2 million, respectively. Amortization of costs to obtain a contract are included within Sales and marketing expenses within the Consolidated Statement of Operations.
11. STOCK-BASED COMPENSATION
Stock Options
The Company estimates the grant date fair value of the stock options with service conditions (i.e., a condition that requires an employee to render services to the Company for a stated period of time to vest) using a Black-Scholes valuation model. The Company’s assumption for expected volatility is based on its historical volatility data related to market trading of its own common stock. The Company uses the simplified method to determine expected term, as the Company does not have adequate historical exercise and forfeiture behavior on which to base the expected life assumption. The dividend yield assumption is based on dividends expected to be paid over the expected life of the stock option. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected option term of each stock option.
The fair value of options granted during the three months ended September 30, 2024 and 2023 were determined using the following assumptions and includes only options with an established grant date under ASC 718:

| Three months ended September 30,
|  | 2024 |  | 2023
Expected volatility (percent) |  | 50.5% |  | 61.3% - 69.7%
Weighted average expected life (years) |  | 4.5 |  | 4.2 - 4.5
Dividend yield (percent) |  | 0.0 | % |  | 0.0 | %
Risk-free interest rate (percent) |  | 3.4% |  | 4.2% - 4.3%
Number of options granted |  | 20,000 |  |  | 110,000 |
Weighted average exercise price |  | $ | 6.35 |  |  | $ | 7.00 |
Weighted average grant date fair value |  | $ | 2.88 |  |  | $ | 4.35 |

Stock-based compensation related to stock options with an established grant date for the three months ended September 30, 2024 and 2023 was $0.5 million and $1.1 million, respectively.
Restricted Stock Awards
The Company grants service based restricted stock awards to employees. The Company determines expense related to restricted stock awards using the closing stock price on the grant date and these awards are expensed under the accelerated attribution method over the vesting period which is typically a three-year service period. The total expense recognized for restricted stock awards for the three months ended September 30, 2024 and 2023 wa s $0.4 million and $0.5 million, respectively.
12. INCOME TAXES
The Company computes its interim period income tax expense or benefit using a forecasted estimated annual effective tax rate ("EAETR") and adjusts for any discrete items arising during the interim period and any changes in the Company's projected full-year business interest expense and taxable income. For the three months ended September 30, 2024, the EAETR was 5.1% and was based primarily on minimum state tax obligations.
For the three months ended September 30, 2024 and 2023, the Company recorded an income tax provision of $0.2 million and $0.1 million, respectively. The income tax provisions for both quarters primarily relate to state income and deferred taxes related to goodwill amortization for tax purposes. The provision was based upon actual income before income taxes for the three months ended September 30, 2024, as this provides a more reliable estimate of the income tax provision than an estimated annual effective income tax rate. The Company had a total unrecognized income tax benefit of $0.7 million and $0.7 million as of September 30, 2024 and 2023, respectively.
The Company has significant deferred tax assets, a substantial amount of which result from operating loss carryforwards. The Company routinely evaluates its ability to realize the benefits of these assets to determine whether it is more likely than not that
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such benefit will be realized. The Company believes that for the year ended September 30, 2024, it is more likely than not that its deferred tax assets will not be realized. Accordingly, the Company has established a full valuation allowance on its net deferred tax assets. The Company intends to continue maintaining a full valuation allowance on its federal and state deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given the Company’s current earnings and anticipated future earnings, the Company believes that there is a reasonable possibility in a future period that sufficient positive evidence may become available to allow the Company to reach a conclusion that a significant portion of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that the Company is able to actually achieve.
13. EARNINGS PER SHARE CALCULATION
Basic earnings per share is computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per share, applicable only to years ended with reported income is computed by dividing net income by the weighted average number of common shares outstanding during the period plus the dilutive effect of outstanding stock options and restricted stock-based awards using the treasury stock method. The calculation of basic and diluted earnings per share is presented below:

|  | Three months ended September 30,
($ in thousands, except per share data) |  | 2024 |  | 2023
Numerator for basic and diluted loss per share |  |  |  |
Net income |  | $ | 3,572 |  |  | 2,007
Preferred dividends |  | (289) |  | (289) |
Net income applicable to common shareholders |  | $ | 3,283 |  |  | $ | 1,718 |
Denominator for basic earnings per share - Weighted average shares outstanding |  | 73,068,856 |  |  | 72,717,965 |
Effect of dilutive potential common shares |  | 852,330 |  |  | 1,587,547 |
Denominator for diluted earnings per share - Adjusted weighted average shares outstanding |  | 73,921,186 |  |  | 74,305,512 |
Basic earnings per share |  | $ | 0.04 |  |  | $ | 0.02 |
Diluted earnings per share |  | $ | 0.04 |  |  | $ | 0.02 |

Potentially anti-dilutive shares excluded from the calculation of diluted earnings per share were approximately 0.1 million and 1 million for the three months ended September 30, 2024 and 2023, respectively.
14. COMMITMENTS AND CONTINGENCIES
Litigation
From time to time, we may be a party to litigation and other proceedings that arise in the ordinary course of our business. These types of matters could result in fines, penalties, compensatory or treble damages or non-monetary sanctions or relief. In accordance with the accounting guidance for contingencies, we reserve for litigation claims and assessments asserted or threatened against us when a loss is probable and the amount of the loss can be reasonably estimated. We cannot predict the outcome of legal or other proceedings with certainty. We do not expect any claims with a reasonably possible adverse outcome to have a material impact on us, and, accordingly, have not accrued for any material claims.
15. RELATED PARTY TRANSACTIONS
A member of our Board of Directors serves as a strategic advisor to a consulting firm that we utilize for payments analytics and advisory services. These services are utilized by the Company to reduce the cost of our interchange and other processing fees charged by payment processors and credit card networks. As consideration for the services, we pay the consulting firm a success fee based on the savings realized by the Company, and a recurring monthly subscription fee for the analytical services.
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The total expense recognized within Cost of subscription and transaction fees for these arrangements was less than $0.1 million for both the three months ended September 30, 2024 and 2023.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.
Forward-Looking Statements
This Form 10‑Q contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, the anticipated financial and operating results of Cantaloupe, Inc. For this purpose, forward-looking statements are any statements contained herein that are not statements of historical fact and include, but are not limited to, those preceded by or that include the words, “estimate,” “could,” “should,” “would,” “likely,” “may,” “will,” “plan,” “intend,” “believes,” “expects,” “anticipates,” “projected,” or similar expressions. Those statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Important factors that could cause the Company’s actual results to differ materially from those projected include, for example:
•general economic, market or business conditions unrelated to our operating performance, including inflation, elevated interest rates, supply chain disruptions, financial institution disruptions, geopolitical conflicts, public health emergencies, and declines in consumer confidence and discretionary spending;
• our ability to compete with our competitors and increase market share;
• failure to comply with the financial covenants in our debt facilities;
• our ability to maintain compliance with rules and regulations applicable to our business operations and industry;
• disruptions in other card payment processors, software and manufacturing partners upon whom we rely;
• whether our customers continue to utilize our transaction processing and related services, as our customer agreements are generally cancellable by the customer with thirty days’ notice;
•our ability to acquire and develop relevant technology offerings for current, new and potential customers and partners;
•risks and uncertainties associated with our expansion into and our operations in Europe, Mexico and other foreign markets, including general economic conditions, policy changes affecting international trade, political instability, inflation rates, recessions, sanctions, foreign currency exchange rates and controls, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, armed conflict, war, and other economic and political factors;
• our ability to satisfy our trade obligations included in accounts payable and accrued expenses;
•our ability to attract, develop and retain key personnel, or our loss of the services of our key executives;
• the incurrence by us of any unanticipated or unusual non-operating expenses, which may require us to divert our cash resources from achieving our business plan;
• our ability to predict or estimate our future quarterly or annual revenue and expenses given the developing and unpredictable market for our products;
• our ability to successfully integrate acquired companies into our current products and services structure;
• our ability to add new customers and retain key existing customers from whom a significant portion of our revenue is derived;
• the ability of a key customer to reduce or delay purchasing products from us;
• our ability to obtain widespread commercial acceptance of our products and service offerings;
•whether any patents issued to us will provide any competitive advantages or adequate protection for our products, or would be challenged, invalidated or circumvented by others;
• the ability of our products and services to avoid disruptions to our systems or unauthorized hacking or credit card fraud;
•risks associated with cyber-attacks and data breaches; and
•our ability to maintain effective internal controls and to timely file periodic and current reports with the Securities and Exchange Commission ("SEC").
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Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described above, or those discussed under Part I, Item 1A. “Risk Factors” of our Annual Report for the fiscal year ended June 30, 2024. We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Readers should not place undue reliance on forward-looking statements.
Any forward-looking statement made by us in this Quarterly Report speaks only as of the date of this Quarterly Report. Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.
OVERVIEW OF THE COMPANY
Cantaloupe, Inc. (Nasdaq: CTLP) is organized under the laws of the Commonwealth of Pennsylvania. We are a global technology leader powering self-service commerce. Cantaloupe offers a comprehensive suite of solutions including micro-payment processing, self-checkout kiosks, mobile ordering, connected point-of-sale ("POS") systems, and enterprise cloud software. Handling more than a billion transactions annually, our solutions enhance operational efficiency and consumer engagement across sectors like food & beverage markets, smart automated retail, hospitality, entertainment venues, laundromats and more. Committed to innovation, we aim to drive advancements in digital payments and business optimization, serving customers in the United States, United Kingdom, European Union countries, Australia, and Mexico.
Our revenue streams consist of subscription, transaction processing and equipment sales. During the three months ended September 30, 2024 and September 30, 2023, we derived approximately 90% and 88%, respectively, from subscription and transaction fees, and 10% and 12%, respectively, from equipment sales.
Active Devices (as defined below) operating on the Company’s platform and using our services include those resulting from the sale or lease of our point of sale ("POS") electronic payment devices, telemetry devices or certified payment software or the servicing of similar third-party installed POS terminals or telemetry devices. Customers can obtain POS electronic payment devices from us in the following ways:
•Purchasing hardware directly from the Company or one of its authorized resellers;
•Financing hardware under the Company’s financing p rogram, which are non-cancellable 60-month sales-type leases; and
•Renting devices under the Company’s Cantaloupe One program, which are typically 36-months duration agreements.
Key Developments during the Quarter
Highlights of the Company for the fiscal quarter ended September 30, 2024 are below:
•We announced the acquisition of SB Software. The acquired company enhances our vending and coffee machine management software, as well as improves our operational capabilities and market reach in Europe.
•In August 2024, we launched Suites, a premium suite management system designed to streamline and enhance the hospitality suite experience at stadiums and venues. This new offering within Cantaloupe's Cheq platform, aims to redefine how venues manage premium suite pre-orders by providing a seamless, user-friendly solution for both suite owners and venue operators.
•In September 2024, we released a significant update to our Seed vending management system (VMS) platform which underscores our ongoing commitment to enhancing our core products and delivering exceptional user experience to our vending operators. The refreshed Seed platform offers a modernized user interface that is designed to improve usability and visual appeal. The update is optimized for mobile devices and enhances performance and stability.
As of September 30, 2024, we have approxi ma tely 360 f ull-time empl oyees in the United States, United Kingdom, and Mexico and offices in Malvern, Pennsylvania; Atlanta, Georgia; River Falls, Wisconsin; Seattle, Washington; Birmingham and Sheffield, United Kingdom; and Mexico City, Mexico.
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QUARTERLY RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes included in this Quarterly Report.
Key Metrics
We use certain operating metrics (Active Devices, Active Customers, Total Number of Transactions and Total Dollar Volume, and Average Revenue Per Unit, Gross Profit, and Gross Margin) and certain non-GAAP financial measures (Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA) which are defined below to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. Additionally, refer to the non-GAAP Financial Measures section below for additional information and their reconciliation to the most comparable GAAP measures.
Active Devices
Active Devices are devices that have communicated with us or have had a transaction in the last twelve months. Included in the number of Active Devices are devices that communicate through other devices that communicate or transact with us. For example, a self-service retail location that utilizes an ePort cashless payment device as well as Seed management services constitutes only one device.
Active Customers
The Company defines Active Customers as all customers with at least one active device.
Total Number of Transactions and Total Dollar Volume of Transactions
Transactions are defined as electronic payment transactions that are processed by our technology-enabled solutions. Management uses Total Number and Dollar Volume of transactions to evaluate the effectiveness of our new customer strategy and our ability to leverage existing customers and partners.
Average Revenue Per Unit
The Company defines average revenue per unit ("ARPU") as our total subscription and transaction fees for the trailing 12 months divided by average total active devices for the trailing 12 months.
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The following tables represents our selected operating metrics for the periods indicated:

| As of and for the three months ended
| September 30, 2024 |  | June 30, 2024 |  | March 31, 2024 |  | December 31, 2023 |  | September 30, 2023
Devices: |  |  |  |  |  |  |  |  |
Active Devices (thousands) | 1,230 |  |  | 1,223 |  |  | 1,217 |  |  | 1,226 |  |  | 1,192 |
Customers: |  |  |  |  |  |  |  |  |
Active Customers | 32,338 |  |  | 31,466 |  |  | 30,670 |  |  | 30,027 |  |  | 29,670 |
Volumes: |  |  |  |  |  |  |  |  |
Total Number of Transactions (millions) | 293.7 |  | 290.4 |  | 283.3 |  | 286.7 |  | 283.6 |
Total Dollar Volume of Transactions (millions) | 826.7 |  |  | 815.7 |  |  | 767.4 |  |  | 730.1 |  |  | 724.8 |
Subscription and transaction fees - Trailing 12 months (thousands) | $ | 240,153 |  |  | $ | 231,497 |  |  | $ | 223,342 |  |  | $ | 215,380 |  |  | $ | 208,283 |
Average revenue per unit (ARPU) | $ | 198.31 |  |  | $ | 193.64 |  |  | $ | 186.00 |  |  | $ | 181.91 |  |  | $ | 178.78 |

| 3 Months Ended September 30, | Change |  | Percent Change
($ in thousands) | 2024 |  | 2023 |  | 2024 v. 2023
Subscription and transaction fee revenue | $ | 63,792 |  |  | $ | 55,135 |  |  | $ | 8,657 |  |  | 15.7 | %
Cost of subscription and transaction fees(1) | 35,744 |  |  | 31,728 |  |  | 4,016 |  |  | 12.7 | %
Amortization(2) | 1,747 |  |  | 1,943 |  |  | (196) |  |  | (10.1) | %
Gross profit, subscription and transaction fees | $ | 26,301 |  |  | $ | 21,464 |  |  | $ | 4,837 |  |  | 22.5 | %
Equipment sales | $ | 7,044 |  |  | $ | 7,548 |  |  | $ | (504) |  |  | (6.7) | %
Cost of equipment sales | 6,241 |  |  | 6,627 |  |  | (386) |  |  | (5.8) | %
Gross profit, equipment(3) | $ | 803 |  |  | $ | 921 |  |  | $ | (118) |  |  | (12.8) | %
Total gross profit | $ | 27,104 |  |  | $ | 22,385 |  |  | $ | 4,719 |  |  | 21.1 | %
Gross margin |  |  |  |  |  |  |
Subscription and transaction fees | 41.2 | % |  | 38.9 | % |  | 2.3 | % |  |
Equipment sales | 11.4 | % |  | 12.2 | % |  | (0.8) | % |  |
Total gross margin | 38.3 | % |  | 35.7 | % |  | 2.6 | % |  |

(1) Cost of subscription and transaction fees excludes amortization of certain technology assets, see (2) and (3) below.
(2) Amortization of internal-use software assets and developed technology assets.
(3) The Company's internal-use software assets and developed technology assets are not associated with equipment sales.
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Highlights for the quarter ended September 30, 2024 include:
•Revenues of $70.8 million, an increase of 13.0% quarter over same quarter prior year. The increase was led by higher transaction fees and subsc ription fees revenue;
•1.23 million Active Devices compared to the same quarter last year of 1.19 million, an increase of approximately 38 thousand Active Devices, or 3.2%;
•32,338 Active Customers on our service compared to the same quarter last year of 29,670, an increase of 2,668 Active Customers, or 9.0%; and
•$826.7 million in Total Dollar Volume of Transactions for the quarter ended September 30, 2024 compared to $724.8 million for the quarter ended September 30, 2023, an increase of $101.9 million, or 14.1%. See "Revenues and Gross Margin" in Management’s Discussion and Analysis of Financial Condition and Results of Operations below for additional information.
Revenues. Total revenues increased by $8.2 million for the three months ended September 30, 2024 compared to the same period in 2023. The increase in revenues is attributed to a $8.7 million increase in subscription and transaction fees, offset by a $0.5 million decrease in equipment sales.
The increase in subscription and transaction fees was primarily driven by increased processing volumes and increased average ticket size, resulting in a 14.1% increase in total dollar volumes of transactions for the current fiscal year quarter relative to the same quarter in the prior year. There was also an increase in the total number of active devices relative to the same quarter in the prior year. Our subscription fees have increased 11.5% for the three months ended September 30, 2024 compared to the same period in 2023 which is attributed to a continued focus of management to grow our recurring subscription services to our customer base and an increase in our active devices compared to last year.
Equipment revenue decreased slightly from $7.0 million for the three months ended September 30, 2024, compared to $7.5 million for the same period in 2023.
Costs of sales. Costs of sales increased $3.6 million for the three months ended September 30, 2024 compared to the prior year period. The increase in costs of sales was primarily due to a $4.0 million increase in subscription and transaction costs as a direct result of increased transaction processing fees corresponding with an increase in processing volumes.
Gross margin. Total gross margin increased to 38.3% for the three months ended September 30, 2024 from 35.7% for the three months ended September 30, 2023. The increase was primarily a result of an increase in subscription and transaction fees which yield higher margins compared to equipment fees.
Operating Expenses

|  | Three months ended September 30, |  | Change
Category ($ in thousands) |  | 2024 |  | 2023 |  | Amount |  | Percentage
Sales and marketing |  | $ | 5,448 |  |  | $ | 4,142 |  |  | $ | 1,306 |  |  | 31.5 | %
Technology and product development |  | 4,499 |  |  | 4,168 |  |  | 331 |  |  | 7.9 | %
General and administrative expenses |  | 11,928 |  |  | 10,438 |  |  | 1,490 |  |  | 14.3 | %
Integration and acquisition expenses |  | 197 |  |  | 78 |  |  | 119 |  |  | 152.6 | %
Depreciation and amortization |  | 2,672 |  |  | 2,747 |  |  | (75) |  |  | (2.7) | %
Total operating expenses |  | $ | 24,744 |  |  | $ | 21,573 |  |  | $ | 3,171 |  |  | 14.7 | %

Total operatin g expenses. Operating expenses increased 14.7% for the three months ended September 30, 2024 compared to the same period in 2023. This is largely driven by increased sales and market and general and administrative expenses. See further details on individual categories below.
Sales and marketing. Sales and marketing expenses increased approximately $1.3 million for the three months ended September 30, 2024 compared to the same period in 2023 due to increases in marketing expense of approximately $0.7 million related to international expansion and the acquisition of Cheq, compensation costs of approximately $0.4 million due to increased employee headcount, and travel and entertainment costs of approximately $0.3 million to support our expanding business and service offerings in the United States and internationally. This is offset by a decrease in professional services and contractors of $0.1 million as we continue to hire employees to replace contractors.
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Technology and product development. Technology and product development expenses increased by $0.3 million for the three months ended September 30, 2024. The increase in the current year was driven by increased headcount partially offset by lower expensed personnel costs as we continued to invest in internal-use software which resulted in higher capitalized costs compared to the prior year.
General and administrative expenses. General and administrative expenses increased by $1.5 million for the three months ended September 30, 2024 compared to the same period in 2023 primarily due to a $0.4 million increase as a result of auditor transitions, a $0.3 million increase in legal expenses, a $0.2 million increase compensation costs, a $0.2 million increase in consulting fees, a $0.1 million increase in bad debt expense, and a $0.3 million increase in software subscriptions and other miscellaneous expenses compared to the same period in the 2023.
Integration and acquisition expenses. On September 5, 2024, the Company acquired all of the equity interests of SB Software. For the three months ended September 30, 2024, the Company incurred integration and acquisition expenses of $0.2 million primarily due to professional services from accounting and legal advisors and UK taxes. Integration and acquisition expenses for the three months ended September 30, 2023 related to the acquisition of 32M.
Depreciation and amortization. Depreciation and amortization expenses were consistent for the three months ended September 30, 2024 compared to the same period in 2023.
Other Expense, Net

|  | Three months ended September 30, |  | Change
($ in thousands) |  | 2024 |  | 2023 |  | Amount |  | Percentage
Other income (expense): |  |  |  |  |  |  |  |
Interest income from cash and leases |  | $ | 447 |  |  | $ | 517 |  |  | $ | (70) |  |  | (13.5) | %
Interest income (expense) from debt and tax liabilities |  | (991) |  |  | (1,107) |  |  | 116 |  |  | 10.5 | %
Other income (expense), net |  | 186 |  |  | (77) |  |  | 263 |  |  | 341.6 | %
Total other expense, net |  | $ | (358) |  |  | $ | (667) |  |  | $ | 309 |  |  | 46.3 | %

Other expense, net. Other expense decreased $0.3 million for the three months ended September 30, 2024 as compared to the same period in 2023. Our interest expense from debt and tax liabilities decreased $0.1 million primarily due to the reduction of the interest expense related to our outstanding debt balances. Decrease in interest income from cash and leases is primarily due to lower outstanding balances for our finance receivables. Other income (expense), net increased primarily due to foreign currency transaction gains.
Non-GAAP Financial Measures
We use non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with our net income as determined in accordance with GAAP, and are not a substitute for or a measure of our profitability or net earnings.
Adjusted Gross Profit and Margin (non-GAAP)
We define Adjusted Gross Profit (non-GAAP) as revenue less cost of sales, exclusive of depreciation of internally-developed software and amortization of intangible assets related to technologies obtained through acquisitions. We believe this non-GAAP measure is useful to view the resulting figures excluding the aforementioned non-cash charges because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and such amounts vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. We define Adjusted Gross Margin as Adjusted Gross Profit divided by revenue.
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We have provided below a reconciliation of U.S. GAAP gross profit to Adjusted Gross Profit and Adjusted Gross Margin for the fiscal years ended September 30, 2024 and 2023:

| 3 Months Ended September 30, | Change |  | Percent Change
($ in thousands) | 2024 |  | 2023 |  | 2024 v. 2023
Gross profit, subscription and transaction fees (GAAP) | $ | 26,301 |  |  | $ | 21,464 |  |  | $ | 4,837 |  |  | 22.5 | %
Amortization(1) | 1,747 |  |  | 1,943 |  |  | (196) |  |  | (10.1) | %
Adjusted Gross Profit, subscription and transaction fees (non-GAAP) | $ | 28,048 |  |  | $ | 23,407 |  |  | $ | 4,641 |  |  | 19.8 | %
Gross profit, equipment (GAAP) | $ | 803 |  |  | $ | 921 |  |  | $ | (118) |  |  | (12.8) | %
Total Adjusted Gross Profit (non-GAAP) | $ | 28,851 |  |  | $ | 24,328 |  |  | $ | 4,523 |  |  | 18.6 | %
Adjusted Gross Margin (non-GAAP): |  |  |  |  |  |  |
Subscription and transaction fees (non-GAAP) | 44.0 | % |  | 42.5 | % |  | 1.5 | % |  |
Equipment sales (GAAP) | 11.4 | % |  | 12.2 | % |  | (0.8) | % |  |
Total Adjusted Gross Margin (non-GAAP) | 40.7 | % |  | 38.8 | % |  | 1.9 | % |  |

(1) Amortization of internal-use software assets and developed technology assets.
Total Adjusted Gross Margin (non-GAAP) was 40.7% for the three months ended September 30, 2024, from 38.8% for the three months ended September 30, 2023. The increase in Adjusted Gross Margin was primarily driven by an increase in our subscription fees revenue and transaction which was a higher percentage of our total revenue in the current quarter and is inherently a higher mar gin revenue stream.
Adjusted EBITDA (non-GAAP)
The Company defines Adjusted EBITDA (non-GAAP) as U.S. GAAP net income before (i) interest income from cash and leases, (ii) interest (income) expense from debt and tax liabilities, (iii) income tax provision, (iv) depreciation, (v) amortization, (vi) stock-based compensation expense, and (vii) certain other significant infrequent or unusual losses and gains that are not indicative of our core operations such as integration and acquisition expenses and costs as a result of auditor transitions.
We believe Adjusted EBITDA is useful for investors in comparing our financial performance to other companies and from period to period. Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, and interest income, which can vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. In addition, Adjusted EBITDA eliminates the impact of certain items that may obscure trends in the underlying performance of our business. Additionally, we utilize Adjusted EBITDA as a metric in our executive officer and management incentive compensation plans.
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. For example, although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new asset acquisitions. In addition, Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. Adjusted EBITDA also does not reflect changes in, or cash requirements for, our working capital needs; interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces the cash available to us; or tax payments that may represent a reduction in cash available to us. The expenses and other items which are excluded from the calculation of Adjusted EBITDA may differ from the expenses and other items that other companies may exclude from Adjusted EBITDA when they report their financial results.
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Below is a reconciliation of U.S. GAAP net income to Adjusted EBITDA for the three months ended September 30, 2024 and 2023:

| 3 Months Ended September 30,
($ in thousands) | 2024 |  | 2023
Net income | $ | 3,572 |  |  | $ | 2,007 |
Less: interest income | (447) |  |  | (517) |
Plus: interest expense | 991 |  |  | 1,107 |
Plus: income tax provision | 177 |  |  | 81 |
Plus: depreciation expense included in cost of sales for rentals | 534 |  | 342
Plus: depreciation and amortization expense in operating expenses | 2,672 |  |  | 2,747 |
EBITDA | 7,499 |  |  | 5,767 |
Plus: stock-based compensation (a) | 887 |  |  | 1,932 |
Plus: integration and acquisition expenses (b) | 197 |  |  | 78 |
Plus: auditor transition costs (c) | 369 |  |  | — |
Plus: remediation expenses (d) | — |  |  | 44 |
Adjustments to EBITDA | 1,453 |  |  | 2,054 |
Adjusted EBITDA | $ | 8,952 |  |  | $ | 7,821 |

(a) We have excluded stock-based compensation, as it does not reflect our cash-based operations.
(b) We have excluded expenses incurred in connection with business acquisitions as it does not represent recurring costs or charges related to our core operations.
(c) Costs incurred as a result of former auditor consent procedures. See Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure of the Company's Annual Report.
(d) Consists of one-time project expenses incurred in connection with remediation of previously identified material weaknesses in our internal control over financial reporting which were remediated during fiscal year ended June 30, 2024. See Item 9A Section e - Remediation of Prior Material Weaknesses of the Company's Annual Report.
LIQUIDITY AND CAPITAL RESOURCES
Sources and Uses of Cash
Historically, we have financed our operations primarily through cash from operating activities, debt financings, and equity issuances. The Company's primary sources of capital available are cash and cash equivalents on hand of $33.1 million as of September 30, 2024 and the cash that we expect to be provided by operating activities by the Company.
The Company also has estimated and recorded for potential sales tax and related interest and penalty liabilities of $9.9 million in the aggregate as of September 30, 2024. The Company continues to evaluate these liabilities and the amount and timing of any such payments.
The Company believes that its current financial resources will be sufficient to fund its current twelve-month operating budget from the date of issuance of these condensed consolidated financial statements. Our primary focus as part of our core operations to increase cash flow from operating activities is to prioritize collection efforts to reduce outstanding accounts receivable, utilize existing inventory to support equipment sales over the next year, focusing on various operational efficiencies to improve overall profitability of the business and continued to grow our business both domestically and internationally.
Net cash used in operating activities
For the three months ended September 30, 2024, net cash used in operating activities was $12.0 million which is the result of $20.9 million of cash utilized by working capital accounts, offset by our net income of $3.6 million and non-cash operating charges of $5.3 million. The change in working capital was primarily driven by an increase in cash utilized by accounts payable and accrued expenses of $28.9 million, offset by a $11.0 million decrease in accounts receivable primarily due to cash collections. Increases in cash utilized by accounts payable and accrued expenses and as well as the collection of accounts receivable were the result of the timing of payments made to our customers for transaction processing as September 30, 2024.
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For the three months ended September 30, 2023, net cash provided by operating activities was $6.7 million which reflects our net income of $2.0 million and non-cash operating charges of $6.5 million, partially offset by $1.8 million of cash utilized by working capital accounts. The change in working capital accounts was primarily driven by a $7.8 million increase of accounts receivable, and an increase in accounts payable and accrued expenses of $5.2 million in the period. Increase in cash utilized by accounts receivable was a result of increased sales during the three months ended September 30, 2023 compared to the prior year period.
Non-cash operating charges primarily consisted of stock-based compensation, depreciation of property and equipment, amortization of our intangible assets, and provisions for expected losses for the three months ended September 30, 2024 and 2023.
Net cash used in investing activities
Net cash used in investing activities was $13.6 million for the three months ended September 30, 2024. We invested $3.8 million in property and equipment as the Company continued to focus on investing in innovative technologies and products, and increasing rental devices enrolled in the Company's Cantaloupe One program. Additionally, the Company invested $9.8 million through its SB Software acquisition.
Net cash used in investing activities was $2.9 million for the three months ended September 30, 2023. Increase in cash used was $2.9 million for increased property and equipment balances driven primarily by the Company's continued focus on investing in technologies and products and increasing rental devices enrolled in the Company's Cantaloupe one program.
Net cash provided by financing activities
Net cash used in financing activities was $0.5 million and $0.1 million for the three months ended September 30, 2024 and 2023, both of which are primarily driven by debt repayments on the JPMorgan Credit Facility.
CONTRACTUAL OBLIGATIONS
During the three months ended September 30, 2024, there were no significant changes to our contractual obligations from those disclosed in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the fiscal year ended June 30, 2024.
CRITICAL ACCOUNTING ESTIMATES
There have been no material changes to our critical accounting estimates from those disclosed in our Annual Report on for the fiscal year ended June 30, 2024.
Recent Accounting Pronouncements
See Note 2 - Summary of Significant Accounting Policies to the condensed consolidated financial statements for a description of recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As of September 30, 2024, we are exposed to market risk related to changes in interest rates on our outstanding borrowings. Our Amended JPMorgan Credit Facility has a four-year maturity. Interest on the Amended JPMorgan Credit Facility will be based, at the Company’s option, on a base rate or SOFR plus an applicable margin tied to the Company’s total leverage ratio and having ranges of between 2.50% and 3.00% for base rate loans and between 3.50% and 4.00% for SOFR loans. As of September 30, 2024, we have $37.3 million total outstanding borrowings, an increase of 100 basis points in SOFR Rate would result in a change in interest expen se of $0.4 million p er year.
We are also exposed to market risk related to changes in interest rates on our cash investments. We invest our excess cash in money market funds that we believe are highly liquid and marketable in the short term. These investments earn a floating rate of interest and are not held for trading or other speculative purposes. Consequently, our exposure to market risks for interest rate changes related to our money market funds is not material. Market risks related to fluctuations of foreign currencies are not material and we have no freestanding derivative instruments as of September 30, 2024.
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Item 4. Controls and Procedures
(a) Disclosure Controls and Procedures
We maintain disclosure controls and procedures to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.
Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness as of the end of the period covered by this Form 10-Q of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on this evaluation, our management, including our chief executive officer and chief financial officer, has concluded that our disclosure controls and procedure s were effective as of September 30, 2024.
(b) Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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Part II - Other Information
Item 1. Legal Proceedings
The information required by this Item is incorporated herein by reference to the Notes to condensed consolidated financial statements, Note 14 – Commitments and Contingencies in Part I, Item 1, of this Quarterly Report.
Item 1A. Risk Factors
For a discussion of the Company’s risk factors, see the information under the heading “Risk Factors” in the Company’s Annual Report on for the fiscal year ended June 30, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
N/A
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
N/A
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the fiscal quarter ended September 30, 2024, none of the Company's director or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
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Item 6. Exhibits

Exhibit Number |  | Description
3.1 |  | Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form 10-Q filed on February 4, 2022).
3.2 |  | Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Form 8-K filed on August 10, 2021)
31.1* |  | Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2* |  | Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1** |  | Certification of the Chief Executive Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2** |  | Certification of the Chief Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 |  | The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 7, 2024, is formatted in Inline Extensible Business Reporting Language (“iXBRL”): (1) the Condensed Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024, (2) the Condensed Consolidated Statements of Operations for the three-month periods ended September 30, 2024 and 2023, (3) the Condensed Consolidated Statements of Other Comprehensive Income for the three-month periods ended September 30, 2024 and 2023, (4) the Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders’ Equity for the three-month periods ended September 30, 2024 and 2023, (5) the Condensed Consolidated Statements of Cash Flows for the three-month periods ended September 30, 2024 and 2023, and (6) the Notes to Condensed Consolidated Financial Statements.
101.INS |  | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH* |  | Inline XBRL Taxonomy Extension Schema
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase
104 |  | The cover page from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the SEC on November 7, 2024, is formatted as Inline iXBRL and contained in Exhibit 101.

______________________________________
* Filed herewith.
** Furnished herewith.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| Cantaloupe, Inc.
Date: November 7, 2024 | /s/ Ravi Venkatesan
| Ravi Venkatesan
| Chief Executive Officer
Date: November 7, 2024 | /s/ Scott Stewart
| Scott Stewart
| Chief Financial Officer

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