REVISION OF PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

12 Months Ended

Sep. 30, 2023

REVISION OF PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

15. REVISION OF PREVIOUSLY REPORTED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the preparation of its consolidated financial statements for the twelve months ended September 30, 2023, the Company determined that its previously issued consolidated financial statements for the period ended September 30, 2022 contained errors in the application of GAAP as follows:

i.The Company incorrectly netted accounts receivable and deferred revenue balances where the right of offset did not exist, which resulted in an understatement of $8.0 million in both accounts receivable, net and deferred revenue, current portion.

ii.The Company determined it had failed to include the impact of share-based compensation deductions triggered by the HooYu Acquisition when recording the business combination in March 2022. This resulted in an understatement of $21.6 million of deferred tax assets relating to NOLs that should have been recorded in the Company’s deferred tax asset balance (understatement of $5.4 million, tax effected) upon the acquisition of HooYu. The adjustment was $4.6 million after the impacts of foreign exchange.

iii.The Company incorrectly identified termination for convenience clauses in six software license contracts and incorrectly recognized revenue on certain of its multiyear term licenses. As such, the Company recognized $0.9 million of additional revenue for the twelve months ended September 30, 2022. This also resulted in a increase in contract assets, current portion of $0.8 million, a decrease in deferred revenue of $0.2 million, a decrease in income tax benefit of $0.2 million, a decrease in prepaids of $0.1 million, a decrease in deferred income tax assets of $0.1 million, an increase in income tax payables of $12,000 and a decrease in other current liabilities of $7,000.

In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” (“SAB 99”) and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” (“SAB 108”), the Company evaluated the errors and has determined that the related impact was immaterial to the previously issued consolidated financial statements; however, correcting the error in the current period would have a material impact on the current financial statements. Therefore, the Company, in consultation with the Audit Committee of the Company’s Board of Directors, concluded that the affected period should be revised to present the identified adjustment discussed below. The Company has not filed, and does not intend to file, an amendment to the previously filed Annual Report on Form 10-K for the period ended September 30, 2022, but instead is revising its previously reported financial statements in this Annual Report on Form 10-K, as follows (amounts in thousands):


	As of September 30, 2022
	As Previously Reported		Total Adjustments		As Revised

Accounts receivable, net (i)	$	27,874	$	8,048	$	35,922
Contract assets, current portion (iii)	6,273		764		7,037
Prepaid expenses (iii)	2,000		(54)		1,946
Goodwill (ii)	120,186		(4,554)		115,632
Deferred income tax assets (iii)	10,245		(135)		10,110
Total assets	360,410		4,069		364,479
Income tax payables (iii)	194		12		206
Other current liabilities (iii)	2,409		(7)		2,402
Deferred revenue, current portion (i)(iii)	13,394		7,956		21,350
Deferred income tax liabilities (ii)	14,132		(4,554)		9,578
Total liabilities	$	190,093	$	3,407	$	193,500


	Twelve months ended September 30, 2022
	As Previously Reported		Total Adjustments		As Revised
Revenue
Software and hardware (iii)	$	72,494	$	434	$	72,928
Services and other (iii)	71,449		427		71,876
Total revenue	143,943		861		144,804
Operating income	11,339		861		12,200
Other expense, net (iii)	(370)		4		(366)
Income tax benefit (iii)	295		(203)		92
Net income	$	3,032	$	662	$	3,694

The statement of cash flows and impacted footnote disclosures have also been revised to give effect to this correction. Management also evaluated the above misstatements and concluded they were not material to the interim periods for fiscal years 2022 and 2023, individually and in aggregate. As a result, the Company plans to prospectively correct the relevant prior period condensed consolidated financial statements and related footnotes for these misstatements.