Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2017 | Feb. 02, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | USA TECHNOLOGIES INC | |
Entity Central Index Key | 896,429 | |
Current Fiscal Year End Date | --06-30 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 53,623,143 | |
Entity Current Reporting Status | Yes | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 15,386 | $ 12,745 |
Accounts receivable, less allowance of $3,740 and $3,149, respectively | 15,472 | 7,193 |
Finance receivables, less allowance of $49 and $19, respectively | 5,517 | 11,010 |
Inventory | 11,215 | 4,586 |
Prepaid expenses and other current assets | 1,971 | 968 |
Total current assets | 49,561 | 36,502 |
Non-current assets: | ||
Finance receivables, less current portion | 11,215 | 8,607 |
Other assets | 1,120 | 687 |
Property and equipment, net | 12,622 | 12,111 |
Deferred income taxes | 14,774 | 27,670 |
Intangibles, net | 30,910 | 622 |
Goodwill | 64,449 | 11,492 |
Total non-current assets | 135,090 | 61,189 |
Total assets | 184,651 | 97,691 |
Current liabilities: | ||
Accounts payable | 23,775 | 16,054 |
Accrued expenses | 6,798 | 4,130 |
Line of credit, net | 7,036 | |
Capital lease obligations and current obligations under long-term debt | 5,121 | 3,230 |
Income taxes payable | 6 | 10 |
Deferred revenue | 595 | |
Deferred gain from sale-leaseback transactions | 198 | 239 |
Total current liabilities | 36,493 | 30,699 |
Long-term liabilities: | ||
Revolving credit facility, net | 10,000 | |
Capital lease obligations and long-term debt, less current portion | 23,874 | 1,061 |
Accrued expenses, less current portion | 65 | 53 |
Deferred gain from sale-leaseback transactions, less current portion | 49 | 100 |
Total long-term liabilities | 33,988 | 1,214 |
Total liabilities | 70,481 | 31,913 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity: | ||
Preferred stock | ||
Common stock, no par value, 640,000,000 shares authorized, 53,619,898 and 40,331,645 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively | 307,053 | 245,999 |
Accumulated deficit | (196,021) | (183,359) |
Total shareholders' equity | 114,170 | 65,778 |
Total liabilities and shareholders' equity | 184,651 | 97,691 |
Series A Convertible | ||
Shareholders' equity: | ||
Preferred stock | $ 3,138 | $ 3,138 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
Allowance for uncollectible accounts receivable (in dollars) | $ 3,740 | $ 3,149 |
Allowance for uncollectible finance receivables (in dollars) | $ 49 | $ 19 |
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized | 1,800,000 | 1,800,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, shares authorized | 640,000,000 | 640,000,000 |
Common stock, shares issued | 53,619,898 | 40,331,645 |
Common stock, shares outstanding | 53,619,898 | 40,331,645 |
Series A Convertible | ||
Preferred stock, shares authorized | 900,000 | 900,000 |
Preferred stock, shares issued | 445,063 | 445,063 |
Preferred stock, liquidation preference value (in dollars) | $ 19,109 | $ 18,775 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | ||||
License and transaction fees | $ 22,853 | $ 16,639 | $ 42,797 | $ 33,004 |
Equipment sales | 9,653 | 5,117 | 15,326 | 10,340 |
Total revenues | 32,506 | 21,756 | 58,123 | 43,344 |
Costs of sales: | ||||
Cost of services | 14,362 | 11,389 | 27,688 | 22,632 |
Cost of equipment | 8,943 | 4,033 | 14,033 | 8,211 |
Total costs of sales | 23,305 | 15,422 | 41,721 | 30,843 |
Gross profit | 9,201 | 6,334 | 16,402 | 12,501 |
Operating expenses: | ||||
Selling, general and administrative | 8,329 | 5,785 | 15,075 | 12,593 |
Integration and acquisition costs | 3,335 | 8 | 4,097 | 109 |
Depreciation and amortization | 737 | 307 | 982 | 515 |
Total operating expenses | 12,401 | 6,100 | 20,154 | 13,217 |
Operating (loss) income | (3,200) | 234 | (3,752) | (716) |
Other income (expense): | ||||
Interest income | 251 | 200 | 331 | 273 |
Interest expense | (494) | (201) | (703) | (413) |
Change in fair value of warrant liabilities | (1,490) | |||
Total other expense, net | (243) | (1) | (372) | (1,630) |
(Loss) income before income taxes | (3,443) | 233 | (4,124) | (2,346) |
(Provision) benefit for income taxes | (9,073) | 0 | (8,605) | 115 |
Net (loss) income | (12,516) | 233 | (12,729) | (2,231) |
Preferred dividends | (334) | (334) | ||
Net (loss) income applicable to common shares | $ (12,516) | $ 233 | $ (13,063) | $ (2,565) |
Net (loss) income per common share | ||||
Basic (in dollars per share) | $ (0.24) | $ 0.01 | $ (0.26) | $ (0.07) |
Diluted (in dollars per share) | $ (0.24) | $ 0.01 | $ (0.26) | $ (0.07) |
Weighted average number of common shares outstanding | ||||
Basic (in shares) | 52,150,106 | 40,308,934 | 49,861,735 | 39,398,469 |
Diluted (in shares) | 52,150,106 | 40,730,712 | 49,861,735 | 39,398,469 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity (Unaudited) - 6 months ended Dec. 31, 2017 - USD ($) $ in Thousands | Series A ConvertiblePreferred stock | Common Stock | Accumulated Deficit | Total |
Balance at Jun. 30, 2017 | $ 3,138 | $ 245,999 | $ (183,359) | $ 65,778 |
Balance (in shares) at Jun. 30, 2017 | 445,063 | 40,331,645 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock in relation to public offering, net of offering costs incurred of $3,237 | $ 39,888 | 39,888 | ||
Issuance of common stock in relation to public offering, net of offering costs incurred of $3,237 (in shares) | 9,583,332 | |||
Issuance of common stock as merger consideration | $ 19,810 | 19,810 | ||
Issuance of common stock as merger consideration (in shares) | 3,423,367 | |||
Stock based compensation | $ 1,356 | 1,356 | ||
Stock based compensation (in shares) | 281,554 | |||
Excess tax benefit from stock plans | 67 | 67 | ||
Net loss | (12,729) | (12,729) | ||
Balance at Dec. 31, 2017 | $ 3,138 | $ 307,053 | $ (196,021) | $ 114,170 |
Balance (in shares) at Dec. 31, 2017 | 445,063 | 53,619,898 |
Consolidated Statements of Sha6
Consolidated Statements of Shareholders' Equity (Unaudited) (Parenthetical) $ in Thousands | 6 Months Ended |
Dec. 31, 2017USD ($) | |
Statement Of Stockholders Equity [Abstract] | |
Offering costs incurred | $ 3,237 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (12,729) | $ (2,231) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Non-cash stock based compensation | 1,356 | 445 |
Gain on disposal of property and equipment | (83) | (31) |
Non-cash interest and amortization of debt discount | 86 | 26 |
Bad debt expense | 291 | 450 |
Depreciation and amortization | 3,476 | 2,564 |
Change in fair value of warrant liabilities | 1,490 | |
Excess tax benefits | 67 | |
Deferred income taxes, net | 8,537 | (115) |
Recognition of deferred gain from sale-leaseback transactions | (93) | (430) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,290) | (2,347) |
Finance receivables | 7,958 | 2,119 |
Inventory | (5,822) | (2,689) |
Prepaid expenses and other current assets | (606) | (542) |
Accounts payable and accrued expenses | 6,950 | (3,840) |
Income taxes payable | 40 | (12) |
Net cash provided by (used in) operating activities | 4,138 | (5,143) |
INVESTING ACTIVITIES: | ||
Purchase of property and equipment, including rentals | (1,767) | (1,944) |
Proceeds from sale of property and equipment, including rentals | 157 | 61 |
Cash used for Cantaloupe acquisition | (65,181) | |
Net cash used in investing activities | (66,791) | (1,883) |
FINANCING ACTIVITIES: | ||
Cash used in retirement of common stock | (31) | |
Proceeds from exercise of common stock warrants | 6,193 | |
Payment of debt issuance costs | (445) | |
Proceeds from issuance of long-term debt | 25,100 | |
Proceeds from revolving credit facility | 10,000 | |
Issuance of common stock in public offering, net | 39,888 | |
Repayment of capital lease obligations and long-term debt | (9,249) | (374) |
Net cash provided by financing activities | 65,294 | 5,788 |
Net increase (decrease) in cash and cash equivalents | 2,641 | (1,238) |
Cash and cash equivalents at beginning of year | 12,745 | 19,272 |
Cash and cash equivalents at end of period | 15,386 | 18,034 |
Supplemental disclosures of cash flow information: | ||
Interest paid in cash | $ 557 | $ 469 |
Supplemental disclosures of noncash financing and investing activities: | ||
Equity issued in connection with Cantaloupe Acquisition | $ 19,810 | $- |
Equipment and software acquired under capital lease | $ 227 | $ 272 |
BUSINESS
BUSINESS | 6 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS | 1. BUSINESS USA Technologies, Inc. (the “Company”, “We”, “USAT”, or “Our”) was incorporated in the Commonwealth of Pennsylvania in January 1992. We are a provider of technology-enabled solutions and value-added services that facilitate electronic payment transactions and consumer engagement services primarily within the unattended Point of Sale (“POS”) market. We are a leading provider in the small ticket, beverage and food vending industry and are expanding our solutions and services to other unattended market segments, such as amusement, commercial laundry, kiosk and others. Since our founding, we have designed and marketed systems and solutions that facilitate electronic payment options, as well as telemetry Internet of Things (“IoT”) and machine-to-machine (“M2M”) services, which include the ability to remotely monitor, control, and report on the results of distributed assets containing our electronic payment solutions. Historically, these distributed assets have relied on cash for payment in the form of coins or bills, whereas, our systems allow them to accept cashless payments such as through the use of credit or debit cards or other emerging contactless forms, such as mobile payment. The connection to the ePort Connect Platform also enables consumer loyalty programs, national rewards programs and digital content, including advertisements and product information to be delivered at the point of sale. On November 9, 2017, the Company acquired all of the outstanding equity interests of Cantaloupe Systems, Inc. (“Cantaloupe”), pursuant to the Agreement and Plan of Merger (“Merger Agreement”). Cantaloupe is a premier provider of cloud and mobile solutions for vending, micro markets, and office coffee service. The acquisition expanded the Company’s existing platform to become an end-to-end enterprise platform integrating Cantaloupe’s Seed Cloud which provides cloud and mobile solutions for dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management, as well as cashless vending. The combined companies complete the value chain for customers by providing both top-line revenue generating services as well as bottom line business efficiency services to help operators of unattended retail machines run their business better. The combination also marries the data-rich Seed system with USAT’s consumer benefits, providing operators with valuable consumer data that results in customized experiences. In addition to new technology and services, due to Cantaloupe’s existing customer base, the acquisition expands the Company’s footprint into new global markets. INTERIM FINANCIAL INFORMATION The accompanying unaudited consolidated financial statements of USA Technologies, Inc. have been prepared in accordance with U.S. generally accepted accounting principles 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 Annual Report on Form 10-K for the year ended June 30, 2017. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting of normal recurring adjustments, have been included. Operating results for the three and six months ended December 31, 2017 are not necessarily indicative of the results that may be expected for the year ending June 30, 2018. The balance sheet at June 30, 2017 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures required by accounting principles generally accepted in the United States of America. BASIS OF PRESENTATION Certain reclassifications of prior year’s data have been made to conform to current year’s presentation. As disclosed in Note 3, the Company incurred integration and acquisition expenses during the current period and deemed it appropriate to have such costs individually captioned within the statement of operations. Accordingly, the Company retrospectively reclassified integration and acquisition costs incurred in the corresponding periods from the previous fiscal year to conform to the current period’s presentation. |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 6 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
ACCOUNTING POLICIES | 2. ACCOUNTING POLICIES RECENT ACCOUNTING PRONOUNCEMENTS Accounting pronouncements adopted in fiscal year 2018 In January 2017, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2017-04 ("ASU 2017-04"), which eliminates Step 2 from the goodwill impairment test. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We early adopted ASU 2017-04 for impairment tests to be performed on testing dates after July 1, 2017, which did not impact our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, which modifies the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when stock awards vest or are settled. In addition, cash flows related to excess tax benefits are to be separately classified as an operating activity apart from other income tax cash flows. The standard also allows the Company to repurchase more of an employee’s vested shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on the statement of cash flows. The Company adopted this standard as of July 1, 2017. The primary impact of adoption was the recognition of excess tax benefits in the Company's provision for income taxes which is applied prospectively starting July 1, 2017 in accordance with the guidance. Adoption of the new standard resulted in the recognition of $16 thousand of excess tax benefits in the Company's provision for income taxes for the six months ended December 31, 2017. Through June 30, 2017 excess tax benefits were reflected as a reduction of deferred tax assets via reducing actual operating loss carryforwards because such benefits had not reduced income taxes payable. Under the new standard the treatment of excess tax benefits changed and the cumulative excess tax benefits as of June 30, 2017 amounting to $67 thousand were credited to accumulated deficit. The adoption of ASU No. 2016-09 did not impact our statement of cash flows for the three and six months ended December 31, 2016. Accounting pronouncements to be adopted. The Company is evaluating whether the effects of the following recent accounting pronouncements or any other recently issued, but not yet effective accounting standards, will have a material effect on the Company’s consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606) (“the New Standard”).” This ASU was amended by ASU No. 2015-14, issued in August 2015, which deferred the original effective date by one year. The new guidance provides a single model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard also requires expanded qualitative and quantitative disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers. The ASU is now effective for fiscal years, and interim reporting periods within those years, beginning with the year ending June 30, 2019. The Company’s project plan includes a three-phase approach to implementing this standard update. The Company is currently evaluating the impact of the potential changes identified by its initial phase one assessment work which included internal surveys of the business, holding revenue recognition workshops with sales and business unit finance leadership, and reviewing a representative sample of revenue arrangements across the business to initially identify a set of applicable qualitative revenue recognition changes related to the new standard update. During the quarter, the Company completed an acquisition of Cantaloupe and has commenced the phase one assessment of the recently acquired business. The objectives for the second phase of the project will be to establish and document key accounting policies and assess disclosures, business process and control impacts resulting from the New Standard. New policies and procedures identified during phase two will be applied to both historical Company revenue streams and those of the recently acquired business to ensure compliance with the New Standard. Lastly, the objectives of phase three will comprise effectively implementing the new standard update and embedding the new accounting treatment into the Company’s business processes and controls to support the financial reporting requirements. Phase three is expected to be completed in the fourth quarter of fiscal year 2018. The Company is still evaluating the impact that the New Standard will have on the Company’s consolidated financial statements and will be unable to quantify its impact until the third phase of the project has been completed. The standard is expected to impact the Company’s revenue recognition processes, primarily in the areas of the allocation of contract revenues. An entity can elect to apply the guidance under one of the following two methods: (i) retrospectively to each prior reporting period presented – referred to as the full retrospective method; or (ii) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings – referred to as the modified retrospective method. The method of adoption has not yet been determined and is not expected to be finalized until the second phase of the project plan has been completed. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The company is the lessee under various agreements which are accounted for as operating leases. This amendment will be effective for the Company beginning with the year ending June 30, 2020, including interim periods within those fiscal years. Early application is permitted. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326).” The new guidance introduces the accounting for estimated credit losses pertaining to certain types of financial instruments, including but not limited to, trade and lease receivables. This pronouncement will be effective for fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments.” The new guidance makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This pronouncement will be effective for the Company beginning with the year ending June 30, 2019, and interim periods within that fiscal year. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The new guidance requires adoption on a retrospective basis unless it is impracticable to apply, in which case the company would be required to apply the amendments prospectively as of the earliest date practicable. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business.” ASU 2017-01 provides guidance in ascertaining whether a collection of assets and activities is considered a business. Adoption of the amendment will be applied prospectively effective for annual periods beginning after December 15, 2017 with early adoption permissible for specific transactions. Adoption is not expected to have a material effect on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting.” The standard provides guidance about which changes to the terms or conditions of a share-based payment award require modification accounting, which may result in a different fair value for the award. This ASU is effective for annual periods and interim periods beginning after December 15, 2017, with early adoption permissible. The guidance is required to be applied prospectively to awards modified on or after the effective date. Historically, modifications to our share-based payment awards have been limited. As such, we do not expect the application of this standard to have a material effect on our results of operations or financial position. |
ACQUISITION
ACQUISITION | 6 Months Ended |
Dec. 31, 2017 | |
ACQUISITION | |
ACQUISITION | 3. ACQUISITION OF CANTALOUPE SYSTEMS, INC. On November 9, 2017, the Company acquired all of the outstanding equity interests of Cantaloupe pursuant to the Merger Agreement, for approximately $85.0 million in aggregate consideration, net of cash acquired. Cantaloupe is a premier provider of cloud and mobile solutions for vending, micro markets, and office coffee service. The acquisition expanded the Company’s existing platform to become an end-to-end enterprise platform integrating Cantaloupe’s Seed Cloud which provides cloud and mobile solutions for dynamic route scheduling, automated pre-kitting, responsive merchandising, inventory management, warehouse and accounting management, as well as cashless vending. In addition to new technology and services, due to Cantaloupe’s existing customer base, the acquisition expands the Company’s footprint into new global markets. The preliminary fair value of the purchase price consideration consisted of the following: ($ in thousands) Cash consideration, net of cash acquired (1) $ (65,181) USAT shares issued as stock consideration (2) (19,810) Total consideration $ (84,991) (1) The Cash Consideration is subject to certain post-closing adjustments, including with respect to the Company’s net working capital, as set forth in the Merger Agreement. (2) Represents the stock consideration amount pursuant to the terms and conditions of the Merger Agreement equal to the 3,423,367 USAT Shares issued by the Company, multiplied by the fair market value per share of the USAT common stock, as determined by the Merger Agreement. Pursuant to an Escrow Agreement, 1,496,707 of the USAT Shares, with a value of $8.7 million as determined under the Merger Agreement, were not delivered to the former stockholders or warrant holders of Cantaloupe but are to be held in escrow for a minimum of fifteen months following the acquisition as partial security for certain indemnification obligations of the former stockholders and warrant holders of Cantaloupe under the Merger Agreement. The Company financed a portion of the purchase price with proceeds from a $25.0 million term loan (“Term Loan”) and $10.0 million of borrowings under a line of credit (“Revolving Credit Facility”), provided by JPMorgan Chase Bank, N.A., for an aggregate principal amount of $35.0 million. Refer to Note 9 for additional details. The acquisition of Cantaloupe was accounted for as a business combination using the acquisition method. Under the acquisition method of accounting, the assets acquired and liabilities assumed in the transaction were recorded at the date of acquisition at their respective fair values using assumptions that are subject to change. The Company has not finalized its valuation of certain assets and liabilities recorded in connection with this transaction. Thus, the estimated measurements recorded to date are subject to change and any changes will be recorded as adjustments to the fair value of those assets and liabilities and residual amounts will be allocated to goodwill. The final valuation adjustments may also require adjustment to the consolidated statements of operations and cash flows. The final determination of these fair values will be completed as soon as possible but no later than one year from the acquisition date. The following table summarizes the fair value of total consideration transferred to the holders of all of the outstanding equity interests of Cantaloupe at the acquisition date of November 9, 2017: Cantaloupe ($ in thousands) Systems, Inc. Accounts receivable $ 3,232 Finance receivables, current portion 1,640 Inventory 782 Prepaid expense and other current assets 682 Finance receivables, less current portion 3,483 Other assets 50 Property and equipment 1,573 Intangibles 30,800 Goodwill 52,957 Total assets acquired 95,199 Accounts payable (1,591) Accrued expenses (1,832) Deferred revenue (626) Capital lease obligations and current obligations under long-term debt (666) Capital lease obligations and long-term debt, less current portion (1,134) Deferred income tax liabilities (4,359) Total net assets acquired $ 84,991 Amounts allocated to intangible assets included $18.9 million related to customer relationships, $10.3 million related to developed technology, and $1.6 million related to trade names. The fair value of the acquired customer relationships was determined using the excess earnings method. The fair value of both the acquired developed technology and the acquired trade names was determined using the relief from royalty method. The estimated useful life of the acquired intangible assets ranged from 6 to 18 years, with a weighted average estimated useful life of 13 years. The related amortization will be recorded on a straight-line basis. Goodwill of $53.0 million arising from the acquisition includes the expected synergies between Cantaloupe and the Company, the value of the employee workforce, and intangible assets that do not qualify for separate recognition at the time of acquisition. The goodwill, which is not deductible for income tax purposes, was assigned to the Company’s only reporting unit. The amount of Cantaloupe revenues included in the Company’s Consolidated Statements of Operations for both the three and six months ended December 31, 2017 is $4.7 million. The amount of Cantaloupe earnings included in the Company’s Consolidated Statements of Operations for both the three and six months ended December 31, 2017 is $1.8 million, which was primarily driven by an income tax benefit of $1.7 million. As a result of the acquisition of Cantaloupe, the Company incurred the following integration and acquisition costs and other one-time charges related to the acquisition in the three and six months ended December 31, 2017: Three months ended Six months ended ($ in thousands) December 31, 2017 December 31, 2017 Cost of equipment Acquired inventory fair market value step-up $ 23 $ 23 Operating expenses Integration and acquisition costs 3,335 4,097 Interest expense Write-off of deferred financing costs 55 55 Total integration and acquisition-related costs $ 3,413 $ 4,175 Supplemental disclosure of pro forma information The following supplemental unaudited pro forma information presents the combined results of USAT and Cantaloupe as if the acquisition of Cantaloupe occurred on July 1, 2016. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been made on July 1, 2016, nor are they indicative of any future results. The pro forma results include adjustments for the preliminary purchase accounting impact of the Cantaloupe acquisition (including, but not limited to, amortization associated with the acquired intangible assets, and the interest expense and amortization of deferred financing fees associated with the Term Loan and Revolving Credit Facility that were used to finance a portion of the purchase price, along with the related tax impacts) and the alignment of accounting policies. Other material non-recurring adjustments are reflected in the pro forma and described below: Three months ended December 31, Six months ended December 31, (In thousands, except per share data) 2017 2016 2017 2016 Revenues $ 34,772 $ 27,521 $ 67,642 $ 54,704 Net loss attributable to USAT (10,632) (428) (10,552) (5,458) Net loss attributable to USAT common shares $ (10,632) $ (428) $ (10,886) $ (5,792) Net loss per share - basic and diluted (0.20) (0.01) (0.20) (0.11) Weighted average number of common shares outstanding - basic and diluted 53,619,921 53,315,633 53,584,368 52,369,824 The supplemental unaudited pro forma earnings for the three and six months ended December 31, 2017 were adjusted to exclude $3.3 million and $4.1 million of integration and acquisition costs, respectively. The supplemental unaudited pro forma earnings for the six months ended December 31, 2016 were adjusted to include $4.1 million of integration and acquisition costs. |
FINANCE RECEIVABLES
FINANCE RECEIVABLES | 6 Months Ended |
Dec. 31, 2017 | |
FINANCE RECEIVABLES | |
FINANCE RECEIVABLES | 4. FINANCE RECEIVABLES Finance receivables consist of the following: December 31, June 30, ($ in thousands) 2017 2017 Total finance receivables $ 16,732 $ 19,617 Less current portion 5,517 11,010 Non-current portion of finance receivables $ 11,215 $ 8,607 The Company accounts for their finance receivables using delinquency and nonaccrual data as key performance indicators. The Company classified $407 thousand and $102 thousand as outstanding and nonperforming as of December 31, 2017 and June 30, 2017, respectively. The Company expects to collect on their outstanding finance receivables, less any portion currently reserved, without the contracting of third parties. At December 31, 2017 and June 30, 2017, credit quality indicators consisted of the following: December 31, June 30, ($ in thousands) 2017 2017 Performing $ 16,325 $ 19,515 Nonperforming 407 102 Total $ 16,732 $ 19,617 Age Analysis of Past Due Finance Receivables As of December 31, 2017 30 and Under 31 – 60 61 – 90 Greater than Total Total Days Past Days Past Days Past 90 Days Past Non- Finance ($ in thousands) Due Due Due Due Performing Performing Receivables QuickStart Leases $ 40 $ 85 $ 162 $ 120 $ 407 $ 16,325 $ 16,732 Age Analysis of Past Due Finance Receivables As of June 30, 2017 30 and Under 31 – 60 61 – 90 Greater than Total Total Days Past Days Past Days Past 90 Days Past Non- Finance ($ in thousands) Due Due Due Due Performing Performing Receivables QuickStart Leases $ 29 $ 3 $ 35 $ 35 $ 102 $ 19,515 $ 19,617 |
INVENTORY
INVENTORY | 6 Months Ended |
Dec. 31, 2017 | |
INVENTORY | |
INVENTORY | 5. INVENTORY Inventory, net of reserves, was $11. 2 million and $4.6 million as of December 31, 2017 and June 30, 2017, respectively. Inventory consists of finished goods. The Company's inventories are valued at the lower of cost or net realizable value. The Company establishes allowances for obsolescence of inventory based upon quality considerations and assumptions about future demand and market conditions. The fair value of Cantaloupe inventories acquired included a fair market value step-up of $23 thousand. In the three and six months ended December 31, 2017, the Company recognized the $23 thousand fair market value step-up as a component of cost of equipment, as the inventory acquired was sold to the Company’s customers. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 6. EARNINGS PER SHARE The calculation of basic earnings per share (“EPS”) and diluted EPS are presented below: Three months ended December 31, 2017 2016 Net Loss Shares Per-Share Net Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net (loss) income from continuing operations $ (12,516) $ 233 Less: Preferred stock dividends - - Basic EPS Net (loss) income available to common shareholders (12,516) 52,150,106 $ (0.24) 233 40,308,934 $ 0.01 Effect of Dilutive Securities Incremental shares - - (a) - 421,778 Diluted EPS Net (loss) income available to common shareholders plus assumed conversions $ (12,516) 52,150,106 $ (0.24) $ 233 40,730,712 $ 0.01 Six months ended December 31, 2017 2016 Net Loss Shares Per-Share Net Loss Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net loss from continuing operations $ (12,729) $ (2,231) Less: Preferred stock dividends (334) (334) Basic EPS Net loss available to common shareholders (13,063) 49,861,735 $ (0.26) (2,565) 39,398,469 $ (0.07) Effect of Dilutive Securities Incremental shares - - (a) - - (a) Diluted EPS Net loss available to common shareholders plus assumed conversions $ (13,063) 49,861,735 $ (0.26) $ (2,565) 39,398,469 $ (0.07) a) 645,417, 581,621, and 851,407 shares were excluded for the three and six months ended December 31, 2017 and six months ended December 31, 2016, respectively, as the effects would be anti-dilutive. The changes in the average number of shares that were anti-dilutive in the three and six months ended December 31, 2017 compared to the same period last year, were due to warrants exercised in connection with our common stock during September 2016. |
GOODWILL AND INTANGIBLES
GOODWILL AND INTANGIBLES | 6 Months Ended |
Dec. 31, 2017 | |
GOODWILL AND INTANGIBLES | |
GOODWILL AND INTANGIBLES | 7. GOODWILL AND INTANGIBLES Intangible asset balances and goodwill consisted of the following: As of December 31, 2017 Accumulated Amortization ($ in thousands) Gross Amortization Net Period Intangible assets: Non-compete agreements 2 (2) — 2 years Brand and tradenames 1,695 (96) 1,599 3 - 7 years Developed technology 10,939 (499) 10,440 5 - 6 years Customer relationships 19,049 (178) 18,871 10 - 18 years Total intangible assets $ 31,685 $ (775) $ 30,910 Goodwill 64,449 — 64,449 Indefinite Total intangible assets & goodwill $ 96,134 (775) $ 95,359 As of June 30, 2017 Accumulated Amortization ($ in thousands) Gross Amortization Net Period Intangible assets: Non-compete agreements 2 (2) — 2 years Brand 95 (48) 47 3 years Developed technology 639 (191) 448 5 years Customer relationships 149 (22) 127 10 years Total intangible assets $ 885 $ (263) $ 622 Goodwill 11,492 — 11,492 Indefinite Total intangible assets & goodwill $ 12,377 (263) $ 12,114 For the three and six months ended December 31, 2017, there was $472 thousand and $516 thousand in amortization expense related to intangible assets, respectively, as compared to the three and six months ended December 31, 2016, for which there was $43 thousand and $87 thousand in amortization expense related to intangible assets, respectively. |
LINE OF CREDIT
LINE OF CREDIT | 6 Months Ended |
Dec. 31, 2017 | |
Line Of Credit Facility [Abstract] | |
LINE OF CREDIT | 8. LINE OF CREDIT During the fiscal year ended June 30, 2016, the Company entered into a Loan and Security Agreement and other ancillary documents (as amended, the “Heritage Loan Documents”) with Heritage Bank of Commerce (“Heritage Bank”), providing for a secured asset-based revolving line of credit in an amount of up to $12.0 million (the “Heritage Line of Credit”) at an interest rate calculated based on the Federal Reserves’ Prime plus 2.25%. The Heritage Line of Credit and the Company’s obligations under the Heritage Loan Documents were secured by substantially all of the Company’s assets, including its intellectual property. During March 2017, the Company entered into the third amendment with Heritage Bank that extended the maturity date of the Heritage Line of Credit from March 29, 2017 to September 30, 2018. On November 9, 2017, the Company paid all amounts due in respect of principal, interest, and fees, and satisfied all of its obligations under the Loan and Security Agreement dated as of March 29, 2016, as amended, and ancillary agreements by and between the Company and Heritage Bank of Commerce. The Company recorded a charge of $55 thousand to write-off any remaining deferred financing costs related to the Heritage Line of Credit to interest expense for the three and six months ended December 31, 2017. Pursuant to such payment, all commitments of Heritage Bank of Commerce were terminated, and the Heritage Loan and Security Agreement was terminated. As such, there was no outstanding balance on the Heritage Line of Credit at December 31, 2017. |
DEBT
DEBT | 6 Months Ended |
Dec. 31, 2017 | |
DEBT | |
DEBT | 9. DEBT Revolving Credit Facility and Term Loan On November 9, 2017, in connection with the acquisition of Cantaloupe, the Company entered into a five year credit agreement among the Company, as the borrower, its subsidiaries, as guarantors, and JPMorgan Chase Bank, N.A., as the lender and administrative agent for the lender (the “Lender”), pursuant to which the Lender (i) made a $25 million Term Loan to the Company and (ii) provided the Company with the Revolving Credit Facility under which the Company may borrow revolving credit loans in an aggregate principal amount not to exceed $12.5 million at any time. The proceeds of the Term Loan and borrowings under the Revolving Credit Facility, in an aggregate principal amount equal to $35.0 million, were used by the Company to finance a portion of the purchase price for the acquisition of Cantaloupe ($27.8 million) and repay existing indebtedness to Heritage Bank of Commerce ($7.2 million). Future borrowings under the Revolving Credit Facility may be used by the Company for working capital and general corporate purposes of the Company and its subsidiaries. The principal amount of the Term Loan is payable quarterly beginning on December 31, 2017, and the Term Loan, all advances under the Revolving Credit Facility, and all other obligations must be paid in full at maturity, on November 9, 2022. Loans under the five year credit agreement bear interest, at the Company's option, by reference to a base rate or a rate based on LIBOR, in either case, plus an applicable margin determined quarterly based on the Company's Total Leverage Ratio as of the last day of each fiscal quarter. The applicable interest rate on the loans for the three and six months ended December 31, 2017 is LIBOR plus 4%. The Term Loan and Revolving Credit Facility contain customary representations and warranties and affirmative and negative covenants and require the Company to maintain a minimum quarterly Total Leverage Ratio and Fixed Charge Coverage Ratio. As of December 31, 2017, the outstanding balances for the Revolving Credit Facility and the Term Loan were $10.0 million and $24.6 million, respectively. Other Long-Term Borrowings The Company periodically enters into capital lease obligations to finance network servers, computers, office furniture and equipment related support for use in its daily operations. During the six months ended December 31, 2017, the Company entered into capital lease obligations totaling $227 thousand, comprised of monthly installments of $7 thousand due within three years. The value of the acquired equipment is included in property and equipment and depreciated accordingly. In connection with the acquisition of Cantaloupe, the Company assumed debt of $1.8 million. At December 31, 2017, the debt is comprised of $550 thousand of promissory notes bearing an interest rate of a 5% and maturing on April 5, 2020 with principal and interest payments due monthly, $830 thousand of promissory notes bearing an interest rate of 10% and maturing on September 30, 2021 with principal and interest payments due quarterly, and $356 thousand of promissory notes bearing an interest rate of 12% and maturing on December 15, 2019 with principal and interest payments due quarterly. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Dec. 31, 2017 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 10. FAIR VALUE OF FINANCIAL INSTRUMENTS As of December 31, 2017, the Company held no level 1, level 2, or level 3 financial instruments. As of June 30, 2016, 2.2 million warrants with a fair value of $3.7 million comprised the Company’s Level 3 financial instruments. The Level 3 financial instruments consisted of common stock warrants issued by the Company in March 2011 to purchase shares of the Company’s common stock. The Level 3 financial instruments included features requiring liability treatment of the warrants, with the fair value of the common stock based on valuations performed by an independent third-party valuation firm. The fair value was determined using proprietary valuation models using the quality of the underlying securities of the warrants, restrictions on the warrants and security underlying the warrants, time restrictions and precedent sale transactions completed in the secondary market or in other private transactions. During the three months ended September 30, 2016, all of the aforementioned warrants were exercised resulting in a $5.2 million reclassification to Common Stock and the net difference of $1.5 million was recorded as a loss on fair value associated with the warrant liability. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | 11. INCOME TAXES On December 22, 2017, the “Tax Cuts and Jobs Act” (the “Act”) was signed into law. Substantially all of the provisions of the Act are effective for taxable years beginning after December 31, 2017. The Act includes significant changes to the Internal Revenue Code of 1986 (as amended, the “Code”), including amendments which significantly change the taxation of individuals, and business entities. The Act contains numerous provisions impacting the Company, the most significant of which reduces the Federal corporate statutory tax rate from 34% to 21%. The staff of the US Securities and Exchange Commission (“SEC”) has recognized the complexity of reflecting the impacts of the Act, and on December 22, 2017 issued guidance in Staff Accounting Bulletin 118 (“SAB 118”), which clarifies accounting for income taxes under ASC 740 if information is not yet available or complete and provides for up to a one year period in which to complete the required analyses and accounting (the measurement period). SAB 118 describes three scenarios (or “buckets”) associated with a company’s status of accounting for income tax reform: (1) a company is complete with its accounting for certain effects of tax reform, (2) a company is able to determine a reasonable estimate for certain effects of tax reform and records that estimate as a provisional amount, or (3) a company is not able to determine a reasonable estimate and therefore continues to apply ASC 740, based on the provisions of the tax laws that were in effect immediately prior to the Act being enacted. The various provisions under the Act deemed most relevant to the Company have been considered in preparation of its financial statements as of December 31, 2017. To the extent that clarifications or interpretations materialize in the future that would impact upon the effects of the Act incorporated into the December 31, 2017 financial statements, those effects will be reflected in the future as or if they materialize. For the three and six months ended December 31, 2017, the Company recorded income tax provisions of $9,073 thousand and $8,605 thousand, respectively, (substantially all deferred income taxes) which include a charge of $6,592 thousand related to the Act. These provisions are based upon income (loss) before income taxes using an estimated negative annual effective income tax rate of 49.20%, which is primarily driven by the impact of permanent differences. The tax rate reduction related to the Act was treated as a discrete item in the tax provisions for the three and six months ended December 31, 2017. The accounting for deferred income taxes in the acquisition of Cantaloupe did not consider the potential effects of IRS Code Section 382 relating to the limitation on use of operating loss carryforwards created by Cantaloupe for its changes in ownership because the analysis required for such determination has not yet been completed. If upon completion of such analysis there are limitations on the use of operating loss carryforwards created by Cantaloupe totaling approximately $13,271 thousand, the potential effect would be to record a valuation allowance in the opening balance sheet, as well as a tax benefit to reverse the provision recorded during the three months ended December 31, 2017 related to the rate reduction of the deferred tax assets acquired. For the three and six months ended December 31, 2016, income tax benefits of $0 and $115 thousand, respectively, (substantially all deferred income taxes) were recorded. The benefits are based upon income (loss) before income taxes using an estimated annual effective income tax rate of 30% for the fiscal year ended June 30, 2017. However, such benefits actually calculated have been limited to $115 thousand pending the materialization of additional income before income taxes resulting in an increase of $30 thousand in valuation allowances for the calculated additional benefits. The benefits for the six months ended December 31, 2016 were reduced by a provision for the tax effect of the change in the fair value of warrant liabilities which was treated discretely. All of those warrants were exercised as of September 30, 2016. |
EQUITY
EQUITY | 6 Months Ended |
Dec. 31, 2017 | |
EQUITY | |
EQUITY | 12. EQUITY On July 25, 2017, the Company closed its underwritten public offering of 9,583,332 shares of its common stock at a public offering price of $4.50 per share. The foregoing included the full exercise of the underwriters' option to purchase 1,249,999 additional shares from the Company. The gross proceeds to the Company from the offering, before deducting underwriting discounts and commissions and other offering expenses, was approximately $43.1 million. On November 6, 2017, the Company entered into a Merger Agreement with Cantaloupe for cash and 3,423,367 shares of the company’s stock valued at $19.8 million. Refer to Footnote 3 for details on the Merger Agreement. WARRANTS During the three and six months ended December 31, 2017, no warrants were exercised as compared to the three and six months ended December 31, 2016 where 2.4 million warrants were exercised at $2.6058 per share, yielding proceeds of $6.2 million. The following table summarizes warrant activity for the three and six months ended December 31, 2017 and 2016: Three months ended Six months ended December 31, December 31, 2017 2016 2017 2016 Beginning balance 23,978 68,978 23,978 2,445,653 Issued — — — — Exercised — (24,733) — (2,401,408) Expired — — — — Cancelled — (20,267) — (20,267) Ending balance 23,978 23,978 23,978 23,978 STOCK OPTIONS The Company estimates the grant date fair value of the stock options it grants 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 bases its assumptions for expected life of the new stock option grants on the life of the option granted, and if relevant, its analysis of the historical exercise patterns of its stock options. 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. In July 2017, 135,000 stock options were granted for 11 employees vesting 1/3 on July 26, 2018, 1/3 on July 26, 2019 and 1/3 on July 26, 2020 expiring if not exercised prior to July 26, 2022. The options are intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended. In August 2017, the Company awarded stock options to its Chief Executive Officer (CEO) and Chief Financial Officer (CFO) to purchase up to 19,047 and 25,000 shares respectively of common stock at an exercise price of $5.25 per share. The CEO options vest on August 16, 2018, expiring if not exercised prior to August 16, 2024. The CFO options vest 1/3 on August 16, 2018, 1/3 on August 16, 2019 and 1/3 on August 16, 2020, expiring if not exercised prior to August 16, 2024. The CEO options are intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended, and the CFO options are non-qualified stock options. The fair value of options granted during the six months ended December 31, 2017 and 2016 was determined using the following weighted average assumptions: Six months ended December 31, 2017 2016 Expected volatility (percent) 50.21 - 50.89 Expected life (years) 4.0 - 4.5 4.0 Expected dividends — — Risk-free interest rate (percent) 1.64 - 1.72 Number of options granted 179,047 20,080 Weighted average exercise price $ 5.66 $ 4.98 Weighted average grant date fair value $ 2.42 $ 1.98 Stock based compensation related to all stock options for the six months ended December 31, 2017 and 2016 was $276 thousand and $95 thousand, respectively. COMMON STOCK On July 1, 2017, $90 thousand of stock grants were awarded to each non-employee Director based on the closing price of the Company’s Common Stock on June 8, 2017 (the date for which the stock grants were initially approved), for a total of 98,184 shares. The shares vest ratably on a monthly basis over the two year period following July 1, 2017. The total expense recognized for these grants for the six months ending December 31, 2017 was $315 thousand. During the six months ended December 31, 2017, the Company awarded an aggregate of 177,363 shares to its Chief Executive Officer, Chief Financial Officer and Chief Services Officer under its fiscal year 2017 long term stock incentive plan and an aggregate of 6,007 shares to two non-employee Directors in satisfaction of board fees. LONG TERM INCENTIVE PLANS The Board approved the Fiscal Year 2018 Long-Term Stock Incentive Plan (the “2018 LTI Stock Plan”) which provides that executive officers would be awarded shares of common stock of the Company in the event that certain metrics relating to the Company’s 2018 fiscal year would result in specified ranges of year-over-year percentage growth. The metrics are total number of connections as of June 30, 2018 as compared to total number of connections as of June 30, 2017 (40% weighting) and adjusted EBITDA earned during the 2018 fiscal year as compared to the adjusted EBITDA earned during the 2017 fiscal year (60% weighting). If none of the minimum threshold year-over-year percentage target goals are achieved, the executive officers would not be awarded any shares. If all of the year-over-year percentage target goals are achieved, the executive officers would be awarded shares having the following value: Chief Executive Officer - $840,000 (160% of base salary), Chief Financial Officer - $300,000 (100% of base salary), Chief Services Officer - $275,000 (100% of base salary), and Chief Product Officer - $280,000 (100% of base salary and subject to pro ration). If all of the maximum distinguished year over year percentage target goals are achieved, the executive officers would be awarded shares having the following value: Chief Executive Officer - $1,260,000 (240% of base salary), Chief Financial Officer - $450,000 (150% of base salary), Chief Services Officer - $412,500 (150% of base salary), and Chief Product Officer - $420,000 (150% of base salary and subject to pro ration). Assuming the minimum threshold year-over-year percentage target goal would be achieved for a particular metric, the number of shares to be awarded for that metric would be determined on a pro rata basis, provided that the award would not exceed the maximum distinguished award for that metric. The shares awarded under the 2018 LTI Stock Plan would vest as follows: one-third at the time of issuance; one-third on June 30, 2019; and one-third on June 30, 2020. The Company had long-term stock incentive plans (“LTI”) in prior fiscal years for its then executive officers. Stock based compensation related to the LTI plans was as follows in the three and six months ended December 31, 2017 and 2016: Three months ended Six months ended December 31, December 31, ($ in thousands, except per share data) 2017 2016 2017 2016 FY18 LTI Plan $ 273 $ — $ 489 $ — FY17 LTI Plan 64 85 128 155 FY16 LTI Plan 9 23 19 50 FY15 LTI Plan — 3 — 3 Total $ 346 $ 111 $ 636 $ 208 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES During the current fiscal year, the Company expanded the leased space for its headquarters in Malvern, Pennsylvania to a total of 23,138 square feet. The company’s monthly base rent now is approximately $47 thousand with a lease expiration date of November 30, 2023. Through the Cantaloupe acquisition, the Company absorbed a noncancelable operating lease pertaining to Cantaloupe’s headquarters based in San Francisco, California. The leased premise consists of approximately 8,400 square feet and calls for rental payments of approximately $46 thousand due each month through its January 31, 2020 expiration date. From time to time, the Company is involved in various legal proceedings arising during the normal course of business. In the opinion of the Company’s management, these proceedings will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS The Company has evaluated subsequent events that occurred through the date of the filing of this Form 10-Q. No significant events occurred subsequent to the balance sheet date and prior to the filing date of this Form 10-Q that would have a material impact on the Consolidated Financial Statements. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Dec. 31, 2017 | |
ACCOUNTING POLICIES | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Accounting pronouncements adopted in fiscal year 2018 In January 2017, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update No. 2017-04 ("ASU 2017-04"), which eliminates Step 2 from the goodwill impairment test. Under ASU 2017-04, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We early adopted ASU 2017-04 for impairment tests to be performed on testing dates after July 1, 2017, which did not impact our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, which modifies the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when stock awards vest or are settled. In addition, cash flows related to excess tax benefits are to be separately classified as an operating activity apart from other income tax cash flows. The standard also allows the Company to repurchase more of an employee’s vested shares for tax withholding purposes without triggering liability accounting, and clarifies that all cash payments made to tax authorities on an employee’s behalf for withheld shares should be presented as a financing activity on the statement of cash flows. The Company adopted this standard as of July 1, 2017. The primary impact of adoption was the recognition of excess tax benefits in the Company's provision for income taxes which is applied prospectively starting July 1, 2017 in accordance with the guidance. Adoption of the new standard resulted in the recognition of $16 thousand of excess tax benefits in the Company's provision for income taxes for the six months ended December 31, 2017. Through June 30, 2017 excess tax benefits were reflected as a reduction of deferred tax assets via reducing actual operating loss carryforwards because such benefits had not reduced income taxes payable. Under the new standard the treatment of excess tax benefits changed and the cumulative excess tax benefits as of June 30, 2017 amounting to $67 thousand were credited to accumulated deficit. The adoption of ASU No. 2016-09 did not impact our statement of cash flows for the three and six months ended December 31, 2016. Accounting pronouncements to be adopted. The Company is evaluating whether the effects of the following recent accounting pronouncements or any other recently issued, but not yet effective accounting standards, will have a material effect on the Company’s consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606) (“the New Standard”).” This ASU was amended by ASU No. 2015-14, issued in August 2015, which deferred the original effective date by one year. The new guidance provides a single model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. The new standard also requires expanded qualitative and quantitative disclosures about the nature, timing and uncertainty of revenue and cash flows arising from contracts with customers. The ASU is now effective for fiscal years, and interim reporting periods within those years, beginning with the year ending June 30, 2019. The Company’s project plan includes a three-phase approach to implementing this standard update. The Company is currently evaluating the impact of the potential changes identified by its initial phase one assessment work which included internal surveys of the business, holding revenue recognition workshops with sales and business unit finance leadership, and reviewing a representative sample of revenue arrangements across the business to initially identify a set of applicable qualitative revenue recognition changes related to the new standard update. During the quarter, the Company completed an acquisition of Cantaloupe and has commenced the phase one assessment of the recently acquired business. The objectives for the second phase of the project will be to establish and document key accounting policies and assess disclosures, business process and control impacts resulting from the New Standard. New policies and procedures identified during phase two will be applied to both historical Company revenue streams and those of the recently acquired business to ensure compliance with the New Standard. Lastly, the objectives of phase three will comprise effectively implementing the new standard update and embedding the new accounting treatment into the Company’s business processes and controls to support the financial reporting requirements. Phase three is expected to be completed in the fourth quarter of fiscal year 2018. The Company is still evaluating the impact that the New Standard will have on the Company’s consolidated financial statements and will be unable to quantify its impact until the third phase of the project has been completed. The standard is expected to impact the Company’s revenue recognition processes, primarily in the areas of the allocation of contract revenues. An entity can elect to apply the guidance under one of the following two methods: (i) retrospectively to each prior reporting period presented – referred to as the full retrospective method; or (ii) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings – referred to as the modified retrospective method. The method of adoption has not yet been determined and is not expected to be finalized until the second phase of the project plan has been completed. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The company is the lessee under various agreements which are accounted for as operating leases. This amendment will be effective for the Company beginning with the year ending June 30, 2020, including interim periods within those fiscal years. Early application is permitted. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326).” The new guidance introduces the accounting for estimated credit losses pertaining to certain types of financial instruments, including but not limited to, trade and lease receivables. This pronouncement will be effective for fiscal years beginning after December 15, 2019. Early adoption of the guidance is permitted for fiscal years beginning after December 15, 2018. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments.” The new guidance makes eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. This pronouncement will be effective for the Company beginning with the year ending June 30, 2019, and interim periods within that fiscal year. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The new guidance requires adoption on a retrospective basis unless it is impracticable to apply, in which case the company would be required to apply the amendments prospectively as of the earliest date practicable. Upon adoption, the Company does not anticipate significant changes to the Company's existing accounting policies or presentation of the Statement of Cash Flows. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805), Clarifying the Definition of a Business.” ASU 2017-01 provides guidance in ascertaining whether a collection of assets and activities is considered a business. Adoption of the amendment will be applied prospectively effective for annual periods beginning after December 15, 2017 with early adoption permissible for specific transactions. Adoption is not expected to have a material effect on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting.” The standard provides guidance about which changes to the terms or conditions of a share-based payment award require modification accounting, which may result in a different fair value for the award. This ASU is effective for annual periods and interim periods beginning after December 15, 2017, with early adoption permissible. The guidance is required to be applied prospectively to awards modified on or after the effective date. Historically, modifications to our share-based payment awards have been limited. As such, we do not expect the application of this standard to have a material effect on our results of operations or financial position. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
ACQUISITION | |
Schedule of fair value of total consideration transferred to the acquisition date | Cantaloupe ($ in thousands) Systems, Inc. Accounts receivable $ 3,232 Finance receivables, current portion 1,640 Inventory 782 Prepaid expense and other current assets 682 Finance receivables, less current portion 3,483 Other assets 50 Property and equipment 1,573 Intangibles 30,800 Goodwill 52,957 Total assets acquired 95,199 Accounts payable (1,591) Accrued expenses (1,832) Deferred revenue (626) Capital lease obligations and current obligations under long-term debt (666) Capital lease obligations and long-term debt, less current portion (1,134) Deferred income tax liabilities (4,359) Total net assets acquired $ 84,991 |
Schedule of preliminary fair value of purchase price consideration | ($ in thousands) Cash consideration, net of cash acquired (1) $ (65,181) USAT shares issued as stock consideration (2) (19,810) Total consideration $ (84,991) |
Schedule of acquisition costs related to transaction and integration costs | As a result of the acquisition of Cantaloupe, the Company incurred the following integration and acquisition costs and other one-time charges related to the acquisition in the three and six months ended December 31, 2017: Three months ended Six months ended ($ in thousands) December 31, 2017 December 31, 2017 Cost of equipment Acquired inventory fair market value step-up $ 23 $ 23 Operating expenses Integration and acquisition costs 3,335 4,097 Interest expense Write-off of deferred financing costs 55 55 Total integration and acquisition-related costs $ 3,413 $ 4,175 |
Schedule of pro forma operations results | Three months ended December 31, Six months ended December 31, (In thousands, except per share data) 2017 2016 2017 2016 Revenues $ 34,772 $ 27,521 $ 67,642 $ 54,704 Net loss attributable to USAT (10,632) (428) (10,552) (5,458) Net loss attributable to USAT common shares $ (10,632) $ (428) $ (10,886) $ (5,792) Net loss per share - basic and diluted (0.20) (0.01) (0.20) (0.11) Weighted average number of common shares outstanding - basic and diluted 53,619,921 53,315,633 53,584,368 52,369,824 |
FINANCE RECEIVABLES (Tables)
FINANCE RECEIVABLES (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
FINANCE RECEIVABLES | |
Schedule of finance receivables | December 31, June 30, ($ in thousands) 2017 2017 Total finance receivables $ 16,732 $ 19,617 Less current portion 5,517 11,010 Non-current portion of finance receivables $ 11,215 $ 8,607 |
Schedule of credit quality indicators | December 31, June 30, ($ in thousands) 2017 2017 Performing $ 16,325 $ 19,515 Nonperforming 407 102 Total $ 16,732 $ 19,617 |
Schedule of age analysis of past due finance receivables | Age Analysis of Past Due Finance Receivables As of December 31, 2017 30 and Under 31 – 60 61 – 90 Greater than Total Total Days Past Days Past Days Past 90 Days Past Non- Finance ($ in thousands) Due Due Due Due Performing Performing Receivables QuickStart Leases $ 40 $ 85 $ 162 $ 120 $ 407 $ 16,325 $ 16,732 Age Analysis of Past Due Finance Receivables As of June 30, 2017 30 and Under 31 – 60 61 – 90 Greater than Total Total Days Past Days Past Days Past 90 Days Past Non- Finance ($ in thousands) Due Due Due Due Performing Performing Receivables QuickStart Leases $ 29 $ 3 $ 35 $ 35 $ 102 $ 19,515 $ 19,617 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
EARNINGS PER SHARE | |
Schedule of basic earnings per share and diluted earnings per share | Three months ended December 31, 2017 2016 Net Loss Shares Per-Share Net Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net (loss) income from continuing operations $ (12,516) $ 233 Less: Preferred stock dividends - - Basic EPS Net (loss) income available to common shareholders (12,516) 52,150,106 $ (0.24) 233 40,308,934 $ 0.01 Effect of Dilutive Securities Incremental shares - - (a) - 421,778 Diluted EPS Net (loss) income available to common shareholders plus assumed conversions $ (12,516) 52,150,106 $ (0.24) $ 233 40,730,712 $ 0.01 Six months ended December 31, 2017 2016 Net Loss Shares Per-Share Net Loss Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net loss from continuing operations $ (12,729) $ (2,231) Less: Preferred stock dividends (334) (334) Basic EPS Net loss available to common shareholders (13,063) 49,861,735 $ (0.26) (2,565) 39,398,469 $ (0.07) Effect of Dilutive Securities Incremental shares - - (a) - - (a) Diluted EPS Net loss available to common shareholders plus assumed conversions $ (13,063) 49,861,735 $ (0.26) $ (2,565) 39,398,469 $ (0.07) |
GOODWILL AND INTANGIBLES (Table
GOODWILL AND INTANGIBLES (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
GOODWILL AND INTANGIBLES | |
Schedule of final purchase price allocation | Cantaloupe ($ in thousands) Systems, Inc. Accounts receivable $ 3,232 Finance receivables, current portion 1,640 Inventory 782 Prepaid expense and other current assets 682 Finance receivables, less current portion 3,483 Other assets 50 Property and equipment 1,573 Intangibles 30,800 Goodwill 52,957 Total assets acquired 95,199 Accounts payable (1,591) Accrued expenses (1,832) Deferred revenue (626) Capital lease obligations and current obligations under long-term debt (666) Capital lease obligations and long-term debt, less current portion (1,134) Deferred income tax liabilities (4,359) Total net assets acquired $ 84,991 |
Schedule of intangible asset balances | As of December 31, 2017 Accumulated Amortization ($ in thousands) Gross Amortization Net Period Intangible assets: Non-compete agreements 2 (2) — 2 years Brand and tradenames 1,695 (96) 1,599 3 - 7 years Developed technology 10,939 (499) 10,440 5 - 6 years Customer relationships 19,049 (178) 18,871 10 - 18 years Total intangible assets $ 31,685 $ (775) $ 30,910 Goodwill 64,449 — 64,449 Indefinite Total intangible assets & goodwill $ 96,134 (775) $ 95,359 As of June 30, 2017 Accumulated Amortization ($ in thousands) Gross Amortization Net Period Intangible assets: Non-compete agreements 2 (2) — 2 years Brand 95 (48) 47 3 years Developed technology 639 (191) 448 5 years Customer relationships 149 (22) 127 10 years Total intangible assets $ 885 $ (263) $ 622 Goodwill 11,492 — 11,492 Indefinite Total intangible assets & goodwill $ 12,377 (263) $ 12,114 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Dec. 31, 2017 | |
EQUITY | |
Schedule of warrant activity | Three months ended Six months ended December 31, December 31, 2017 2016 2017 2016 Beginning balance 23,978 68,978 23,978 2,445,653 Issued — — — — Exercised — (24,733) — (2,401,408) Expired — — — — Cancelled — (20,267) — (20,267) Ending balance 23,978 23,978 23,978 23,978 |
Schedule of stock option granted weighted average assumptions | Six months ended December 31, 2017 2016 Expected volatility (percent) 50.21 - 50.89 Expected life (years) 4.0 - 4.5 4.0 Expected dividends — — Risk-free interest rate (percent) 1.64 - 1.72 Number of options granted 179,047 20,080 Weighted average exercise price $ 5.66 $ 4.98 Weighted average grant date fair value $ 2.42 $ 1.98 |
Schedule of stock based compensation related to the LTI plans | Three months ended Six months ended December 31, December 31, ($ in thousands, except per share data) 2017 2016 2017 2016 FY18 LTI Plan $ 273 $ — $ 489 $ — FY17 LTI Plan 64 85 128 155 FY16 LTI Plan 9 23 19 50 FY15 LTI Plan — 3 — 3 Total $ 346 $ 111 $ 636 $ 208 |
ACCOUNTING POLICIES (Details)
ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | |
Accounting Policies [Line Items] | |||||
Income tax expense (benefit) | $ 9,073 | $ 0 | $ 8,605 | $ (115) | |
Accounting standards update 2016-09 | |||||
Accounting Policies [Line Items] | |||||
Income tax expense (benefit) | $ 16,000 | $ 67,000 |
ACQUISITION - Fair value of tot
ACQUISITION - Fair value of total consideration transferred (Details) - USD ($) $ in Thousands | Nov. 09, 2017 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||
Cash used for Cantaloupe acquisition | $ (65,181) | |
Principal amount | $ 35,000 | |
Term loan | ||
Business Acquisition [Line Items] | ||
Principal amount | 25,000 | |
Revolving line of credit facility | ||
Business Acquisition [Line Items] | ||
Principal amount | 10,000 | |
Cantaloupe | ||
Business Acquisition [Line Items] | ||
Cash used for Cantaloupe acquisition | (65,181) | |
USAT shares issued as stock consideration | (19,810) | |
Total consideration | $ (84,991) | |
Shares issued | 3,423,367 | |
Shares held under Escrow account | 1,496,707 | |
Value of shares | $ 8,700 | |
Shares holding period in Escrow | 15 months |
ACQUISITION - Summary of fair v
ACQUISITION - Summary of fair value of total consideration (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Nov. 09, 2017 | Jun. 30, 2017 |
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | |||
Goodwill | $ 64,449 | $ 11,492 | |
Cantaloupe | |||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | |||
Accounts receivable | $ 3,232 | ||
Finance receivables | 1,640 | ||
Inventory | 782 | ||
Prepaid expense and other current assets | 682 | ||
Finance receivables, less current portion | 3,483 | ||
Other assets | 50 | ||
Property and equipment | 1,573 | ||
Intangibles | 30,800 | ||
Goodwill | 52,957 | ||
Total assets acquired | 95,199 | ||
Accounts payable | (1,591) | ||
Accrued expenses | (1,832) | ||
Deferred revenues | (626) | ||
Capital lease obligations and current obligations under long-term debt | (666) | ||
Capital lease obligations and long-term debt, less current portion | (1,134) | ||
Deferred income tax liabilities | (4,359) | ||
Total net assets acquired | $ 84,991 |
ACQUISITION - Amount allocated
ACQUISITION - Amount allocated to intangibles (Details) - USD ($) $ in Thousands | Nov. 09, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 |
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Revenues | $ 32,506 | $ 21,756 | $ 58,123 | $ 43,344 | ||
Net income (loss) | (12,516) | 233 | (12,729) | (2,231) | ||
Income tax benefit | (9,073) | $ 0 | (8,605) | $ 115 | ||
Cantaloupe | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Intangibles | $ 30,800 | |||||
Weighted average useful life | 13 years | |||||
Net income (loss) | 1,800 | 1,800 | ||||
Income tax benefit | (1,700) | (1,700) | ||||
Cantaloupe | Revenue | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Revenues | $ 4,700 | $ 4,700 | ||||
Cantaloupe | Minimum | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 6 years | |||||
Cantaloupe | Maximum | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 18 years | |||||
Customer relationships | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 10 years | |||||
Customer relationships | Minimum | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 10 years | |||||
Customer relationships | Maximum | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 18 years | |||||
Customer relationships | Cantaloupe | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Intangibles | $ 18,900 | |||||
Developed technology | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 5 years | |||||
Developed technology | Minimum | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 5 years | |||||
Developed technology | Maximum | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Useful life | 6 years | |||||
Developed technology | Cantaloupe | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Intangibles | 10,300 | |||||
Trade name | Cantaloupe | ||||||
Preliminary fair value of the net tangible assets acquired and liabilities assumed: | ||||||
Intangibles | $ 1,600 |
ACQUISITION - Pro forma results
ACQUISITION - Pro forma results (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | |
Business Acquisition [Line Items] | |||||
Inventory, Net | $ 11,215 | $ 11,215 | $ 4,586 | ||
Total integration and acquisition related costs | 3,335 | $ 8 | 4,097 | $ 109 | |
Excluded from unaudited pro forma earnings | |||||
Business Acquisition [Line Items] | |||||
Integration and acquisition costs | 3,300 | 4,100 | |||
Cantaloupe | |||||
Business Acquisition [Line Items] | |||||
Integration and acquisition costs | 3,335 | 4,097 | |||
Write-off of deferred financing costs | 55 | 55 | |||
Total integration and acquisition related costs | 3,413 | 4,175 | |||
Revenues | 34,772 | 27,521 | 67,642 | 54,704 | |
Net loss attributable to USAT | (10,632) | (428) | (10,552) | (5,458) | |
Net loss attributable to USAT common shares | $ (10,632) | $ (428) | $ (10,886) | $ (5,792) | |
Net loss per share - basic and diluted | $ (0.20) | $ (0.01) | $ (0.20) | $ (0.11) | |
Weighted average number of common shares outstanding - basic and diluted | 53,619,921 | 53,315,633 | 53,584,368 | 52,369,824 | |
Cantaloupe | Fair value step-up | |||||
Business Acquisition [Line Items] | |||||
Inventory, Net | $ 23 | $ 23 |
FINANCE RECEIVABLES - Informati
FINANCE RECEIVABLES - Information regarding finance receivables (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
FINANCE RECEIVABLES | ||
Total finance receivables | $ 16,732 | $ 19,617 |
Less current portion | 5,517 | 11,010 |
Non-current portion of finance receivables | $ 11,215 | $ 8,607 |
FINANCE RECEIVABLES - Credit ri
FINANCE RECEIVABLES - Credit risk profile based on payment activity (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
Financing Receivable, Recorded Investment [Line Items] | ||
Total finance receivables | $ 16,732 | $ 19,617 |
Performing | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total finance receivables | 16,325 | 19,515 |
Nonperforming | ||
Financing Receivable, Recorded Investment [Line Items] | ||
Total finance receivables | $ 407 | $ 102 |
FINANCE RECEIVABLES - Age analy
FINANCE RECEIVABLES - Age analysis of past due finance receivables (Details) - QuickStart Leases - USD ($) $ in Thousands | Dec. 31, 2017 | Jun. 30, 2017 |
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 16,732 | $ 19,617 |
30 and Under Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 40 | 29 |
31 - 60 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 85 | 3 |
61 - 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 162 | 35 |
Greater than 90 Days Past Due | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 120 | 35 |
Performing | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | 16,325 | 19,515 |
Nonperforming | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | ||
Total Past Due | $ 407 | $ 102 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | |
Inventory [Line Items] | |||||
Inventory, Net | $ 11,215 | $ 11,215 | $ 4,586 | ||
Cost of equipment | 8,943 | $ 4,033 | 14,033 | $ 8,211 | |
Cantaloupe | Fair value step-up | |||||
Inventory [Line Items] | |||||
Inventory, Net | 23 | 23 | |||
Cost of equipment | $ 23 | $ 23 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings per share | ||||
Net (loss) income from continuing operations | $ (12,516) | $ 233 | $ (12,729) | $ (2,231) |
Less: Preferred stock dividends | (334) | (334) | ||
Numerator for basic earnings per share - Net (loss) income available to common shareholders | (12,516) | 233 | (13,063) | (2,565) |
Numerator for diluted earnings per share - Net (loss) income available to common shareholders | $ (12,516) | $ 233 | $ (13,063) | $ (2,565) |
Denominator for basic earnings per share - Weighted average shares outstanding | 52,150,106 | 40,308,934 | 49,861,735 | 39,398,469 |
Effect of dilutive securities incremental shares | 421,778 | |||
Denominator for diluted earnings per share - Adjusted weighted average shares outstanding | 52,150,106 | 40,730,712 | 49,861,735 | 39,398,469 |
Basic earnings (loss) per share | $ (0.24) | $ 0.01 | $ (0.26) | $ (0.07) |
Diluted earnings (loss) per share | $ (0.24) | $ 0.01 | $ (0.26) | $ (0.07) |
Antidilutive shares excluded from the calculation of diluted earnings per shares | 645,417 | 581,621 | 851,407 |
GOODWILL AND INTANGIBLES - Summ
GOODWILL AND INTANGIBLES - Summary of intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets gross | $ 31,685 | $ 885 | ||
Accumulated amortization | (775) | (263) | ||
Intangible assets net | 30,910 | 622 | ||
Goodwill, gross | 64,449 | 11,492 | ||
Goodwill | 64,449 | 11,492 | ||
Intangible Assets, Net (Including Goodwill) [Abstract] | ||||
Total intangible assets & goodwill gross | 96,134 | 12,377 | ||
Total intangible assets & goodwill Net | 95,359 | 12,114 | ||
Amortization expense related to intangible assets | $ 43 | 516 | $ 87 | |
Non-compete agreements | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets gross | 2 | 2 | ||
Accumulated amortization | $ (2) | $ (2) | ||
Amortization period | 2 years | 2 years | ||
Brand and tradenames | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets gross | $ 1,695 | |||
Accumulated amortization | (96) | |||
Intangible assets net | 1,599 | |||
Brand | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets gross | $ 95 | |||
Accumulated amortization | (48) | |||
Intangible assets net | $ 47 | |||
Amortization period | 3 years | |||
Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets gross | 10,939 | $ 639 | ||
Accumulated amortization | (499) | (191) | ||
Intangible assets net | 10,440 | $ 448 | ||
Amortization period | 5 years | |||
Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Intangible assets gross | 19,049 | $ 149 | ||
Accumulated amortization | (178) | (22) | ||
Intangible assets net | $ 18,871 | $ 127 | ||
Amortization period | 10 years | |||
Maximum | Brand and tradenames | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 7 years | |||
Maximum | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 6 years | |||
Maximum | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 18 years | |||
Minimum | Brand and tradenames | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 3 years | |||
Minimum | Developed technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 5 years | |||
Minimum | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization period | 10 years |
LINE OF CREDIT (Details)
LINE OF CREDIT (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2017 | Jun. 30, 2016 | |
Line of Credit Facility [Line Items] | |||
Outstanding amount | $ 10,000,000 | $ 10,000,000 | |
Revolving line of credit facility | |||
Line of Credit Facility [Line Items] | |||
Outstanding amount | 10,000,000 | 10,000,000 | |
Revolving line of credit facility | Heritage Bank of Commerce | Loan and Security Agreement | |||
Line of Credit Facility [Line Items] | |||
Maximum limit of amount under line of credit | $ 12,000,000 | ||
Line of credit facility, basis of measurement | Federal Reserves' Prime | ||
Percentage of interest rate above prime rate | 2.25% | ||
Write off deferred finance cost | 55,000 | 55,000 | |
Outstanding amount | $ 0 | $ 0 |
DEBT (Details)
DEBT (Details) - USD ($) | Nov. 09, 2017 | Dec. 31, 2017 | Dec. 31, 2017 | Jun. 30, 2016 |
Line of Credit Facility [Line Items] | ||||
Outstanding amount | $ 10,000,000 | $ 10,000,000 | ||
Cantaloupe | ||||
Line of Credit Facility [Line Items] | ||||
Borrowings under line of credit | $ 27,800,000 | |||
Revolving line of credit facility | ||||
Line of Credit Facility [Line Items] | ||||
Outstanding amount | $ 10,000,000 | $ 10,000,000 | ||
Revolving line of credit facility | Credit Agreement | LIBOR | ||||
Line of Credit Facility [Line Items] | ||||
Interest rate | 4.00% | 4.00% | ||
Revolving line of credit facility | Heritage Bank of Commerce | Loan and Security Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Maximum limit of amount under line of credit | $ 12,000,000 | |||
Repayments of Lines of Credit | $ 7,200,000 | |||
Outstanding amount | $ 0 | $ 0 | ||
Revolving line of credit facility | JPMorgan Chase Bank, N.A | Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument term | 5 years | |||
Borrowings under line of credit | $ 35,000,000 | |||
Maximum limit of amount under line of credit | 12,500,000 | |||
Term loan | ||||
Line of Credit Facility [Line Items] | ||||
Outstanding amount | $ 24,600,000 | $ 24,600,000 | ||
Term loan | JPMorgan Chase Bank, N.A | Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Borrowings under line of credit | $ 25,000,000 |
DEBT - Other long-term borrowin
DEBT - Other long-term borrowings (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2017USD ($) | |
Cantaloupe | |
Debt Instrument [Line Items] | |
Long term debt outstanding | $ 1,800 |
Cantaloupe | Notes due April 2020 | |
Debt Instrument [Line Items] | |
Long term debt outstanding | $ 550 |
Stated interest rate as a percentage | 5.00% |
Cantaloupe | Notes due September 2021 | |
Debt Instrument [Line Items] | |
Long term debt outstanding | $ 830 |
Stated interest rate as a percentage | 10.00% |
Cantaloupe | Notes due December 2019 | |
Debt Instrument [Line Items] | |
Long term debt outstanding | $ 356 |
Stated interest rate as a percentage | 12.00% |
Capital Lease Obligations | |
Debt Instrument [Line Items] | |
Capital lease obligations | $ 227 |
Capital lease due in 36 monthly installment | $ 7 |
Term of capital lease | 3 years |
FAIR VALUE OF FINANCIAL INSTR42
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | 6 Months Ended | |
Dec. 31, 2017 | Jun. 30, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Fair value transfers assets, Level 1 to Level 2 | $ 0 | |
Fair value transfers assets, Level 2 to Level 1 | 0 | |
Fair Value transfers liabilities, Level 1 to Level 2 | 0 | |
Fair Value transfers liabilities, Level 2 to Level 1 | 0 | |
Fair value of common stock warrants | $ 2,200,000 | |
Fair values of Level 3 financial instrument | $ 3,700,000 | |
Warrants exercised | 5,200,000 | |
Loss on fair value associated with the warrant liability | $ 1,500,000 | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Valuation method used to determine fair value | proprietary valuation models |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 22, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2017 |
Federal statutory rate | 34.00% | 21.00% | ||||
(Provision) benefit for income taxes | $ (9,073) | $ 0 | $ (8,605) | $ 115 | ||
Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ 6,592 | |||||
Estimated annual effective income tax rate | 49.20% | 30.00% | ||||
Maximum income tax (benefits) considered before additional income before taxes | 115 | |||||
Valuation allowances | $ 30 | $ 30 | ||||
Cantaloupe | ||||||
(Provision) benefit for income taxes | (1,700) | $ (1,700) | ||||
Operating loss carryforwards valuation allowance | $ 13,271 | $ 13,271 |
EQUITY (Details)
EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | Nov. 06, 2017 | Jul. 25, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Class of Warrant or Right [Line Items] | ||||||
Issuance of common stock as merger consideration (in shares) | 3,423,367 | |||||
Issuance of common stock as merger consideration | $ 19,800 | $ 19,810 | ||||
Number of warrants exercised | 0 | 0 | ||||
Proceeds from exercise of common stock warrants | $ 6,193 | |||||
Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Exercise price per share | $ 2.6058 | $ 2.6058 | ||||
Proceeds from exercise of common stock warrants | $ 6,200 | |||||
Class Of Warrant Or Right [Roll Forward] | ||||||
Beginning balance | 23,978 | 68,978 | 23,978 | 2,445,653 | ||
Exercised | 0 | (24,733) | 0 | (2,401,408) | ||
Cancelled | (20,267) | (20,267) | ||||
Ending balance | 23,978 | 23,978 | 23,978 | 23,978 | ||
Underwriting | ||||||
Class of Warrant or Right [Line Items] | ||||||
Issuance of common stock in relation to initial public offering | 9,583,332 | |||||
Public offering price | $ 4.50 | |||||
Option to purchase additional shares | 1,249,999 | |||||
Gross proceeds | $ 43,100 |
EQUITY - Stock options (Detail)
EQUITY - Stock options (Detail) - Stock options | 1 Months Ended | 6 Months Ended | ||
Aug. 31, 2017$ / sharesshares | Jul. 31, 2017employeeshares | Dec. 31, 2017shares | Dec. 31, 2016shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock option valuation method | Black-Scholes valuation model | |||
Granted | 135,000 | 179,047 | 20,080 | |
Number of employees | employee | 11 | |||
2,018 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 0.33% | |||
2,019 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 0.33% | |||
2,020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 0.33% | |||
Chief Executive Officer ("CEO") | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 19,047 | |||
Exercise price of awarded options | $ / shares | $ 5.25 | |||
Chief Financial Officer ("CFO") | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted | 25,000 | |||
Exercise price of awarded options | $ / shares | $ 5.25 | |||
Chief Financial Officer ("CFO") | 2018 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 0.33% | |||
Chief Financial Officer ("CFO") | 2019 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 0.33% | |||
Chief Financial Officer ("CFO") | 2020 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting percentage | 0.33% |
EQUITY - Fair value of options
EQUITY - Fair value of options (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock based compensation | $ 346 | $ 111 | $ 636 | $ 208 | |
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility (percent) | 50.00% | ||||
Expected life (years) | 4 years | ||||
Risk-free interest rate (percent) | 1.06% | ||||
Number of options granted | 135,000 | 179,047 | 20,080 | ||
Weighted average exercise price | $ 5.66 | $ 4.98 | $ 5.66 | $ 4.98 | |
Weighted average grant date fair value | $ 2.42 | $ 1.98 | $ 2.42 | $ 1.98 | |
Stock based compensation | $ 276 | $ 95 | |||
Stock options | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility (percent) | 50.21% | ||||
Expected life (years) | 4 years | ||||
Risk-free interest rate (percent) | 1.64% | ||||
Stock options | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility (percent) | 50.89% | ||||
Expected life (years) | 4 years 6 months | ||||
Risk-free interest rate (percent) | 1.72% |
EQUITY - Long term incentive pl
EQUITY - Long term incentive plans (Detail) $ in Thousands | Jul. 01, 2017USD ($)shares | Dec. 31, 2017USD ($)employeeshares |
Non Employee Director | Long Term Stock Incentive Plan (LTT) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | 177,363 | |
Common Stock | Non Employee Director | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share granted, amount | $ | $ 90 | |
Number of shares granted | 98,184 | |
Vesting period | 2 years | |
Total expense recognized | $ | $ 315 | |
Common Stock | Non Employee Director | Long Term Stock Incentive Plan (LTT) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of non-employee | employee | 2 | |
Common Stock | Chief Executive Officer And Chief Services Officer [Member] | Long Term Stock Incentive Plan (LTT) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares granted | 6,007 |
EQUITY - Long term incentive 48
EQUITY - Long term incentive plans, executive officers (Detail) - Long Term Stock Incentive Plan (LTT) - USD ($) | 6 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage total number of connections | 40.00% | |
Percentage adjusted EBITDA earned | 60.00% | |
Chief Executive Officer ("CEO") | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 840,000 | |
Percentage of shares awarded on target achievement | 160.00% | |
Chief Financial Officer ("CFO") | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 300,000 | |
Percentage of shares awarded on target achievement | 100.00% | |
Chief Services Officer ("CSO") | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 275,000 | |
Percentage of shares awarded on target achievement | 100.00% | |
Chief Product Officer (CPO) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 280,000 | |
Percentage of shares awarded on target achievement | 100.00% | |
Maximum | Chief Executive Officer ("CEO") | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 1,260,000 | |
Percentage of shares awarded on target achievement | 240.00% | |
Maximum | Chief Financial Officer ("CFO") | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 450,000 | |
Percentage of shares awarded on target achievement | 150.00% | |
Maximum | Chief Services Officer ("CSO") | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 412,500 | |
Percentage of shares awarded on target achievement | 150.00% | |
Maximum | Chief Product Officer (CPO) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Officers compensation | $ 420,000 | |
Percentage of shares awarded on target achievement | 150.00% | |
2,018 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 0.33% | |
2,019 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 0.33% | |
2,020 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting percentage | 0.33% |
EQUITY - Schedule of long term
EQUITY - Schedule of long term incentive plans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation | $ 346 | $ 111 | $ 636 | $ 208 |
FY18 LTI Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation | 273 | 489 | ||
FY17 LTI Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation | 64 | 85 | 128 | 155 |
FY16 LTI Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation | $ 9 | 23 | $ 19 | 50 |
FY15 LTI Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation | $ 3 | $ 3 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 6 Months Ended |
Dec. 31, 2017USD ($)ft² | |
Area of new premises (in square feet) | ft² | 23,138 |
Rent expense under operating leases | $ | $ 47 |
Cantaloupe | |
Area of new premises (in square feet) | ft² | 8,400 |
Rent expense under operating leases | $ | $ 46 |