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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
For the transition period from _________ to _________                         
Commission file number 001-33365
https://cdn.kscope.io/097a7c5a03a3a007d99f182db990df3c-ctlp-20210331_g1.jpg
Cantaloupe, Inc.
_______________________________________________________________
(Exact name of registrant as specified in its charter)
Pennsylvania23-2679963
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
100 Deerfield Lane,Suite 300,Malvern,Pennsylvania19355
(Address of principal executive offices)(Zip Code)
(610) 989-0340
_______________________________________________________________
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName Of Each Exchange On Which Registered
Common Stock, no par valueCTLPThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No

As of April 30, 2021 there were 71,111,313 outstanding shares of Common Stock, no par value.



Table of Contents
Cantaloupe, Inc.
TABLE OF CONTENTS



Table of Contents
Part I. Financial Information
Item 1. Consolidated Financial Statements
Cantaloupe, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
($ in thousands, except share data)March 31,
2021
June 30,
2020
Assets
Current assets:
Cash and cash equivalents$88,562 $31,713 
Accounts receivable, net23,124 17,273 
Finance receivables, net7,050 7,468 
Inventory, net6,064 9,128 
Prepaid expenses and other current assets2,977 1,782 
Total current assets127,777 67,364 
Non-current assets:
Finance receivables due after one year11,123 11,213 
Property and equipment, net5,598 7,872 
Operating lease right-of-use assets4,570 5,603 
Intangibles, net20,747 23,033 
Goodwill63,945 63,945 
Other assets2,148 1,993 
Total non-current assets108,131 113,659 
Total assets$235,908 $181,023 
Liabilities, convertible preferred stock and shareholders’ equity
Current liabilities:
Accounts payable$34,761 $27,058 
Accrued expenses28,676 30,265 
Current obligations under long-term debt3,746 3,328 
Deferred revenue1,670 1,698 
Total current liabilities68,853 62,349 
Long-term liabilities:
Deferred income taxes153 137 
Long-term debt, less current portion13,798 12,435 
Operating lease liabilities, non-current3,947 4,749 
Total long-term liabilities17,898 17,321 
Total liabilities86,751 79,670 
Commitments and contingencies (Note 13)
Convertible preferred stock:
Series A convertible preferred stock, 900,000 shares authorized, 445,063 issued and outstanding, with liquidation preferences of $21,446 and $20,779 at March 31, 2021 and June 30, 2020, respectively
3,138 3,138 
Shareholders’ equity:
Preferred stock, no par value, 1,800,000 shares authorized
  
Common stock, no par value, 640,000,000 shares authorized, 71,081,313 and 65,196,882 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively
460,059 401,240 
Accumulated deficit(314,040)(303,025)
Total shareholders’ equity146,019 98,215 
Total liabilities, convertible preferred stock and shareholders’ equity$235,908 $181,023 
See accompanying notes.
3

Table of Contents
Cantaloupe, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months endedNine months ended
March 31,March 31,
($ in thousands, except per share data)2021202020212020
Revenue:
License and transaction fees$34,686 $34,961 $101,008 $105,324 
Equipment sales8,074 8,137 16,913 25,184 
Total revenue42,760 43,098 117,921 130,508 
Cost of sales:
Cost of license and transaction fees20,463 22,244 60,415 66,912 
Cost of equipment sales9,593 9,856 18,262 28,420 
Total cost of sales30,056 32,100 78,677 95,332 
Gross profit12,704 10,998 39,244 35,176 
Operating expenses:
Selling, general and administrative13,731 15,888 44,371 47,230 
Investigation, proxy solicitation and restatement expenses 4,181  13,949 
Depreciation and amortization991 1,107 3,111 3,209 
Total operating expenses14,722 21,176 47,482 64,388 
Operating loss(2,018)(10,178)(8,238)(29,212)
Other income (expense):
Interest income302 411 978 988 
Interest expense(88)(683)(3,970)(1,981)
Change in fair value of derivative 1,070  1,070 
Total other income (expense), net214 798 (2,992)77 
Loss before income taxes(1,804)(9,380)(11,230)(29,135)
Provision for income taxes(44)85 (133)(46)
Net loss(1,848)(9,295)(11,363)(29,181)
Preferred dividends(334)(334)(668)(668)
Net loss applicable to common shares$(2,182)$(9,629)$(12,031)$(29,849)
Net loss per common share
Basic$(0.03)$(0.15)$(0.18)$(0.48)
Diluted$(0.03)$(0.15)$(0.18)$(0.48)
Weighted average number of common shares outstanding
Basic67,112,511 64,096,778 65,617,458 62,591,947 
Diluted67,112,511 64,096,778 65,617,458 62,591,947 
See accompanying notes.
4

Table of Contents
Cantaloupe, Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited)

Nine Month Period Ended March 31, 2021
Common StockAccumulated
Deficit
Total
($ in thousands, except share data)SharesAmount
Balance, June 30, 202065,196,882 $401,240 $(303,025)$98,215 
Impact of adoption of ASC 326— — 348 348 
Stock based compensation56,083 1,502 — 1,502 
Net loss— — (6,613)(6,613)
Balance, September 30, 202065,252,965 402,742 (309,290)93,452 
Stock based compensation32,709 1,691 — 1,691 
Net loss— — (2,902)(2,902)
Balance, December 31, 202065,285,674 404,433 (312,192)92,241 
Issuance of common stock in relation to private placement, net of offering costs incurred of $2,598
5,730,000 52,410 — 52,410 
Exercise of warrants12,154 — — — 
Stock based compensation53,485 3,216 — 3,216 
Net loss— — (1,848)(1,848)
Balance, March 31, 202171,081,313 $460,059 $(314,040)$146,019 

Nine Month Period Ended March 31, 2020
Common StockAccumulated
Deficit
Total
($ in thousands, except share data)SharesAmount
Balance, June 30, 201960,008,481 $376,853 $(262,430)$114,423 
Stock based compensation— 290 — 290 
Net loss— — (11,508)(11,508)
Balance, September 30, 201960,008,481 377,143 (273,938)103,205 
Issuance of common stock in relation to private placement, net of offering costs incurred of $1,102
3,800,000 16,777 — 16,777 
Stock based compensation362,941 1,742 — 1,742 
Net loss— — (8,378)(8,378)
Balance, December 31, 201964,171,422 395,662 (282,316)113,346 
Stock based compensation277,535 382 — 382 
Net loss— — (9,295)(9,295)
Balance, March 31, 202064,448,957 $396,044 $(291,611)$104,433 
See accompanying notes.
5

Table of Contents
Cantaloupe, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
March 31,
($ in thousands)20212020
Cash flows from operating activities:
Net loss$(11,363)$(29,181)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock based compensation6,366 2,453 
Amortization of debt discount and issuance costs2,696 1,040 
Provision for expected losses459 1,400 
Provision for inventory reserve768 (434)
Depreciation and amortization included in operating expenses3,111 3,209 
Depreciation included in cost of sales for rental equipment1,055 1,984 
Change in fair value of derivative (1,070)
Property and equipment write-off1,658  
Other1,192 1,501 
Changes in operating assets and liabilities:
Accounts receivable(5,204)2,088 
Finance receivables(252)(113)
Inventory2,297 2,204 
Prepaid expenses and other assets(1,343)(1,045)
Accounts payable and accrued expenses7,218 (500)
Operating lease liabilities(795)(1,102)
Deferred revenue(28)(60)
Net cash provided by (used in) operating activities7,835 (17,626)
Cash flows from investing activities:
Purchase of property and equipment(1,281)(1,711)
Proceeds from sale of property and equipment12 33 
Net cash used in investing activities(1,269)(1,678)
Cash flows from financing activities:
Proceeds from long-term debt issuance by Antara, net of issuance costs paid to Antara 14,248 
Payment of third-party debt issuance costs (1,980)
Proceeds from (repayments of) Revolving Credit Facility (10,000)
Proceeds from long-term debt issuance by JPMorgan Chase Bank, N.A., net of debt issuance costs14,550  
Repayment of long-term debt(15,554)(2,413)
Proceeds from equity issuance by Antara, net of issuance costs paid to Antara 17,879 
Proceeds from private placement55,008  
Payment of equity issuance costs(2,598) 
Proceeds from exercise of common stock options77  
Payment of Antara prepayment penalty and commitment termination fee(1,200) 
Net cash used provided by financing activities50,283 17,734 
Net increase (decrease) in cash and cash equivalents56,849 (1,570)
Cash and cash equivalents at beginning of year31,713 27,464 
Cash and cash equivalents at end of period$88,562 $25,894 
Supplemental disclosures of cash flow information:
Interest paid in cash$804 $940 
See accompanying notes.
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Cantaloupe, Inc.
Condensed Notes to Consolidated Financial Statements
(Unaudited)
1. BUSINESS

On March 29, 2021, USA Technologies, Inc. filed Articles of Amendment to its Amended and Restated Articles of Incorporation with the Pennsylvania Department of State to effect a change of the Company’s name from “USA Technologies, Inc.” to “Cantaloupe, Inc.,” effective as of April 15, 2021. On April 19, 2021, the Company’s common stock, no par value per share (the “Common Stock”), began trading on the NASDAQ Global Select Market under the ticker symbol “CTLP” and the Company’s Series A Convertible Preferred Stock, no par value per share, began trading on the OTC Markets’ Pink Open Market under the trading symbol, “CTLPP”.

Cantaloupe, Inc. (“Cantaloupe” or the “Company”) was incorporated in the Commonwealth of Pennsylvania in January 1992. We are a software and payments company that provides end-to-end technology solutions for the unattended retail market. Cantaloupe is transforming the unattended retail community by offering one integrated solution for payments processing, logistics, and back-office management. The Company’s enterprise-wide platform is designed to increase consumer engagement and sales revenue through digital payments, digital advertising and customer loyalty programs, while providing retailers with control and visibility over their operations and inventory. As a result, customers ranging from vending machine companies to operators of micro-markets, gas and car charging stations, laundromats, metered parking terminals, kiosks, amusements and more, can run their businesses more proactively, predictably, and competitively.

Impact of COVID-19

The coronavirus (COVID-19) was first identified in China in December 2019, and subsequently declared a global pandemic in March 2020 by the World Health Organization. COVID-19 containment measures began in parts of the United States in March 2020 resulting in forced closure of non-essential businesses and social distancing protocols. As a result, COVID-19 has impacted our business, significantly reducing foot traffic to distributed assets containing our electronic payment solutions and reducing discretionary spending by consumers. The Company did not observe meaningful reductions in processing volume until middle of March 2020, when average daily processing volume decreased approximately 40%. By middle of April 2020, processing volumes began to recover and have improved through March 2021 and we are now approaching pre-pandemic levels of volumes. Continued COVID-19 recurrences could result in further reductions in foot traffic to distributed assets containing our electronic payment solutions and reduced discretionary spending by consumers.

In response to the outbreak and business disruption, we implemented liquidity conservation and cost savings initiatives that included: a 20% salary reduction for the senior leadership team through December 2020; deferral of all cash-based director fees until calendar year 2021; a temporary furlough of approximately 10% of our employee base; negotiations with and concessions from vendors in regard to cost reductions and/or payment deferrals; an increased collection effort to reduce outstanding accounts receivables; and various supply chain/inventory improvements. During the summer of 2020 as restrictions lifted, our offices were opened with strict guidelines for social distancing and with adherence to state and local mandates. All of our furloughed employees returned to work by June 26, 2020. Most of our employees continue to work remotely as of March 31, 2021. To date, our supply chain network has not been significantly disrupted and we are continuously monitoring for the impact from COVID-19. In addition, the Company received loan proceeds from the Paycheck Protection Program in the fourth quarter of fiscal year 2020. See Note 8 for additional information.

We continue to monitor the continuously evolving situation and follow guidance from federal, state and local public health authorities. Given the continued uncertainty of the situation, the Company cannot, at this time, reasonably estimate the longer-term repercussions of COVID-19 on our financial condition, results of operations or cash flows in the future. If the pandemic is not substantially contained in the near future, COVID-19 may have a material adverse impact on our revenue growth as well as our overall profitability in fiscal year 2021, and may lead to higher sales-related, inventory-related, and operating reserves. As of March 31, 2021, we have evaluated the potential impact of the COVID-19 outbreak on our financial statements, including, but not limited to, the impairment of goodwill and intangible assets, impairment of long-lived assets including operating lease right-of-use assets, property and equipment and allowance for doubtful accounts for accounts and finance receivables. We have concluded that there are no material impairments as a result of our evaluation. Where applicable, we have incorporated judgments and estimates of the expected impact of COVID-19 in the preparation of the financial statements based on information currently available. These judgments and estimates may change, as new events develop and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known.


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BASIS OF PRESENTATION AND PREPARATION

The accompanying unaudited condensed consolidated financial statements of the Company 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 June 30, 2020 Annual Report on Form 10-K.  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 nine months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2021. Actual results could differ from estimates. The balance sheet at June 30, 2020 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.

The Company operates as one operating segment because its chief operating decision maker, who is the Chief Executive Officer, reviews its financial information on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance.

As part of the Company’s financial statement close process for the quarter ended March 31, 2021, management identified a net adjustment totaling $1.3 million relating primarily to prior year activity. The error relates to the Company not derecognizing the carrying amount of the underlying assets for three finance receivables agreements that are classified as sales-type leases.
The Company analyzed the potential impact of the error in accordance with the appropriate guidance, from both a qualitative and quantitative perspective, and concluded that the error was not material to any individual interim or annual prior periods. Accordingly, during the three months ended March 31, 2021, the Company recorded $1.7 million in additional Cost of equipment sales offset by $0.4 million reversal of previously recognized depreciation expense resulting in a net carrying value reduction of $1.3 million of Property and equipment.


2. ACCOUNTING POLICIES

RECENT ACCOUNTING PRONOUNCEMENTS

Accounting pronouncements adopted

ASC Topic 326 - Credit Losses

On July 1, 2020, we adopted Topic 326, Financial Instruments-Credit Losses, which was primarily introduced under Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments – Measurement of Credit Losses on Financial Instruments”. Topic 326 introduces a new credit loss impairment methodology for financial assets measured at amortized cost, requiring recognition of the full lifetime expected credit losses upon initial recognition of the financial asset and each reporting period, replacing current GAAP, which generally requires that a loss be incurred before it is recognized. The expected credit loss model is based on historical experience, current conditions, and reasonable and supportable economic forecasts of collectability.

The Company adopted Topic 326 on July 1, 2020 using the modified retrospective approach through an adjustment to retained earnings, and began calculating our allowance for accounts and finance receivables under an expected loss model rather than an incurred loss model. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

We estimate our allowances using an aging analysis of the receivables balances, primarily based on historical loss experience, as there have been no significant changes in the mix or risk characteristics of the receivable revenue streams used to calculate historical loss rates. We also take into consideration that receivables for monthly service fees that are collected as part of the flow of funds from our transaction processing service have a lower risk profile than receivables for equipment and service fees billed under the Company’s standard payment terms of 30 to 60 days from invoice issuance, and adjust our aging analysis to incorporate those risk assessments. Current conditions are analyzed at each measurement date as we reassess whether our receivables continue to exhibit similar risk characteristics as the prior measurement date, and determine if the reserve calculation needs to be adjusted for new developments, such as a customer’s inability to meet its financial obligations. Lastly, we also factor reasonable and supportable economic expectations into our allowance estimate for the asset’s entire expected life, which is generally less than one year for accounts receivable and five years for finance receivables.
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The adoption of this pronouncement resulted in a net increase of $0.3 million in retained earnings, with an offsetting adjustment to the allowance for doubtful accounts and finance receivables as of July 1, 2020.

The following table represents a rollforward of the allowance for doubtful accounts for accounts and finance receivables for the nine months ending March 31, 2021:
Nine Months Ended March 31, 2021
($ in thousands)Accounts receivableFinance receivable
Beginning balance of allowance at June 30, 2020, prior to adopting ASC 326$7,676 $150 
Impact of adoption of ASC 326(757)409 
Provision for expected losses936 350 
Write-offs(827) 
Balance at March 31, 2021$7,028 $909 

ASU 2018-15 - Intangibles—Goodwill and Other (Topic 350): Internal-Use Software

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other (Topic 350): Internal-Use Software.” This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of this ASU on July 1, 2020 did not have a material impact on our condensed consolidated financial statements.

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 condensed consolidated financial position, results of operations or cash flows.

ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 is intended to simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The Company does not expect the changes to have a material impact on its financial statements.

ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This standard provides practical expedients for contract modifications with the transition from reference rates, such as LIBOR, that are expected to be discontinued. This guidance is applicable for the Company's revolving credit facility and secured term facility with JPMorgan Chase Bank, N.A., which uses LIBOR as a reference rate. In addition, the facility provides for an alternative rate of interest if LIBOR is discontinued. The Company will continue to evaluate ASU 2020-04 to determine the timing and extent to which we will apply the provided accounting relief.

ASU 2020-10, Codification Improvements

In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The purpose of the ASU is to update a variety of ASC Topics to make conforming amendments, clarifications to guidance, simplifications to wording or structure of guidance, and other minor improvements. The ASU is effective for fiscal years beginning after December 15, 2020 with early application permitted. The Company does not expect the changes to have a material impact on its financial statements.


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3. LEASES

Lessee Accounting
The Company determines if an arrangement is a lease at inception. The Company has operating leases for office space, warehouses, automobiles and office equipment. The exercise of lease renewal options is at the Company’s sole discretion. When deemed reasonably certain of exercise, the renewal options are included in the determination of the lease term. The Company’s lease agreements do not contain any material variable lease payments, material residual value guarantees or any material restrictive covenants.

Right-of-Use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, which is the collateralized rate of interest that we would pay to borrow over a similar term an amount equal to the lease payments, based on the information available at commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives received. The Company also has lease agreements with lease and non-lease components. The Company elected the practical expedient related to treating lease and non-lease components as a single lease component for all leases as well as electing a policy exclusion permitting leases with an original lease term of less than one year to be excluded from the ROU assets and lease liabilities. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

At March 31, 2021, the Company has the following balances recorded in the balance sheet related to its lease arrangements:
($ in thousands)Balance Sheet ClassificationAs of March 31, 2021As of June 30, 2020
Assets:Operating lease right-of-use assets$4,570 $5,603 
Liabilities:
CurrentAccrued expenses$1,139 $1,075 
Long-termOperating lease liabilities, non-current3,947 4,749 
Total lease liabilities$5,086 $5,824 

Components of lease cost are as follows:
($ in thousands)Three months ended March 31, 2021Three months ended March 31, 2020
Operating lease costs*471 515 
* Includes short-term lease and variable lease costs, which are not material.
($ in thousands)Nine months ended March 31, 2021Nine months ended March 31, 2020
Operating lease costs*1,535 1,970 
* Includes short-term lease and variable lease costs, which are not material.











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

($ in thousands)Nine months ended March 31, 2021Nine months ended March 31, 2020
Supplemental cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities$1,155 $1,350 
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations:
Operating lease liabilities$ $3,384 

Weighted-average remaining lease term and discount rate for our leases are as follows:
Nine months ended March 31, 2021
Weighted-average remaining lease term (years):
Operating leases4.56
Weighted-average discount rate:
Operating leases6.9 %

Maturities of lease liabilities by fiscal year for our leases are as follows:
($ in thousands)Operating
Leases
Remainder of 2021$360 
20221,460 
20231,492 
20241,029 
2025707 
Thereafter893 
Total lease payments$5,941 
Less: Imputed interest(855)
Present value of lease liabilities$5,086 

Lessor Accounting

The Company offers its customers financing for the lease of our point of sale ("POS") electronic payment devices. We account for these transactions as sales-type leases. Our sales-type leases generally have a non-cancellable term of 60 months. Certain leases contain an end-of-term purchase option that is generally insignificant and is reasonably certain to be exercised by the lessee. Leases that do not meet the criteria for sales-type lease accounting are accounted for as operating leases, which are typically our JumpStart program leases, which are agreements for renting POS electronic payment devices. JumpStart terms are typically 36 months and are cancellable with 30 to 60 days' written notice.

The Company treats lease and non-lease components as a single component for those leases where the timing and pattern of transfer for the non-lease component and associated lease component are the same and the stand-alone lease component would be classified as an operating lease if accounted for separately. The combined component is then accounted for under Topic 606, Revenue from Contracts with Customers or Topic 842 depending on the predominant characteristic of the combined component, which was Topic 606 for the Company's operating leases. All QuickStart leases are sales-type and do not qualify for the election.

Lessor consideration is allocated between lease components and the non-lease components using the requirements under Topic 606. Revenue from sales-type leases is recognized upon shipment to the customer and the interest portion is deferred and recognized as earned. The revenues related to the sales-type leases are included in Equipment sales in the Condensed
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Consolidated Statements of Operations and a portion of the lease payments as interest income. Revenue from operating leases is recognized ratably over the applicable service period with service fee revenue related to the leases included in License and transaction fees in the Condensed Consolidated Statements of Operations.

Property and equipment used for the operating lease rental program consisted of the following:
($ in thousands)March 31,
2021
June 30,
2020
Cost$30,483 32,445 
Accumulated depreciation(27,975)(27,745)
Net$2,508 $4,700 
The Company’s net investment in sales-type leases (carrying value of lease receivables) and the future minimum amounts to be collected on these lease receivables as of March 31, 2021 are disclosed within Note 5 - Finance Receivables.

4. REVENUE

Disaggregated Revenue

Based on similar operational and economic characteristics, the Company’s revenue from contracts with customers is disaggregated by License and transaction fees and Equipment sales, as reported in the Company’s Condensed Consolidated Statements of Operations. The Company believes these revenue categories depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are influenced by economic factors, and also represent the level at which management makes operating decisions and assesses financial performance.

Transaction Price Allocated to Future Performance Obligations

In determining the transaction price allocated to unsatisfied performance obligations, we do not include non-recurring charges. Further, we apply the practical expedient to not consider arrangements with an original expected duration of one year or less, which are primarily month-to-month rental agreements. The majority of our contracts have a contractual term of between 36 and 60 months based on implied and explicit termination penalties. These amounts will be converted into revenue in future periods as work is performed, primarily based on the services provided or at delivery and acceptance of products, depending on the applicable accounting method for the services or products being delivered.

The following table reflects the estimated fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
($ in thousands)As of March 31, 2021
Remainder of 2021$3,064 
202211,581 
20239,788 
20245,731 
2025 and thereafter3,460 
Total$33,624 












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Contract Liabilities

The Company’s contract liability (i.e., deferred revenue) balances are as follows:
Three months ended March 31,Three months ended March 31,
($ in thousands)20212020
Deferred revenue, beginning of the period$1,648 $1,629 
Deferred revenue, end of the period1,670 1,621 
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period$97 $120 
Nine months ended March 31,Nine months ended March 31,
($ in thousands)20212020
Deferred revenue, beginning of the period$1,698 $1,681 
Deferred revenue, end of the period1,670 1,621 
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period$274 $467 

The change in the contract liability balances period-over-period is primarily the result of timing difference between the Company’s satisfaction of a performance obligation and payment from the customer.

Contract Costs

At March 31, 2021, the Company had net capitalized costs to obtain contracts of $0.4 million included in Prepaid expenses and other current assets and $1.9 million included in Other noncurrent assets on the Condensed Consolidated Balance Sheet. At June 30, 2020, the Company had net capitalized costs to obtain contracts of $0.4 million included in Prepaid expenses and other current assets and $1.8 million included in Other noncurrent assets on the Condensed Consolidated Balance Sheet. None of these capitalized contract costs were impaired. During the three and nine months ended March 31, 2021, amortization of capitalized contract costs was $0.2 million and $0.4 million. During the three and nine months ended March 31, 2020, amortization of capitalized contract costs was $0.1 million and $0.4 million.

5. FINANCE RECEIVABLES

The Company's finance receivables consist of financed devices under the QuickStart program and devices contractually associated with the Seed platform. Predominately all of the Company’s finance receivables agreements are classified as non-cancellable sixty-month sales-type leases. As of March 31, 2021 and June 30, 2020, finance receivables consist of the following:
($ in thousands)March 31,
2021
June 30,
2020
Current finance receivables, net$7,050 $7,468 
Finance receivables due after one year, net11,123 11,213 
Total finance receivables, net of allowance of $909 and $150, respectively
$18,173 $18,681 

We collect lease payments from customers primarily as part of the flow of funds from our transaction processing service. Balances are considered past due if customers do not have sufficient transaction revenue to cover the monthly lease payment by the end of the monthly billing period. The Company routinely monitors customer payment performance and uses prior payment performance as a measure to assess the capability of the customer to repay contractual obligations of the lease agreements as scheduled. On an as-needed basis, qualitative information may be taken into consideration if new information arises related to the customer’s ability to repay the lease.

Credit risk for these receivables is continuously monitored by management and reflected within the allowance for finance receivables by aggregating leases with similar risk characteristics into pools that are collectively assessed. Because the Company’s lease contracts generally have similar terms, customer characteristics around transaction processing volume and sales were used to disaggregate the leases. Our key credit quality indicator is the amount of transaction revenue we process for
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each customer relative to their lease payment due, as we consider this customer characteristic to be the strongest predictor of the risk of customer default. Customers with low processing volume or with transaction sales that are insufficient to cover the lease payment are considered to be at a higher risk of customer default.

Customers are pooled based on their ratio of gross sales to required monthly lease obligations. We categorize outstanding receivables into two categories: high ratio customers (customers who have adequate transaction processing volumes to cover monthly fees) and low ratio customers (customers that do not consistently have adequate transaction processing volumes to cover monthly fees). Using these two categories, we performed an analysis of historical write-offs to calculate reserve percentages by aging buckets for each category of customer.

At March 31, 2021, the gross lease receivable by current payment performance on a contractual basis and year of origination consisted of the following:

Leases by Origination
($ in thousands)Up to 1 Year AgoBetween 1 and 2 Years AgoBetween 2 and 3 Years AgoBetween 3 and 4 Years AgoBetween 4 and 5 Years AgoMore than 5 Years AgoTotal
Current$4,353 $4,980 $5,257 $1,669 $1,381 $56 $17,696 
30 days and under14 31 84 17 5 1 152 
31-60 days25 89 113 41 4 1 273 
61-90 days8 30 78 8 2 2 128 
Greater than 90 days37 67 595 78 29 27 833 
Total finance receivables$4,437 $5,197 $6,127 $1,813 $1,421 $87 $19,082 

At June 30, 2020, the gross lease receivable by current payment performance on a contractual basis and year of origination consisted of the following:

Leases by Origination
($ in thousands)Up to 1 Year AgoBetween 1 and 2 Years AgoBetween 2 and 3 Years AgoBetween 3 and 4 Years AgoBetween 4 and 5 Years AgoMore than 5 Years AgoTotal
Current$4,950 $4,406 $4,811 $2,730 $555 $22 $17,474 
30 days and under40 66 121 28 11 1 267 
31-60 days13 15 13    41 
61-90 days10 44 62 19 3  138 
Greater than 90 days22 263 537 67 14 8 911 
Total finance receivables$5,035 $4,794 $5,544 $2,844 $583 $31 $18,831 

At March 31, 2021, credit quality indicators by year of origination consisted of the following:

Leases by Origination
($ in thousands)Up to 1 Year AgoBetween 1 and 2 Years AgoBetween 2 and 3 Years AgoBetween 3 and 4 Years AgoBetween 4 and 5 Years AgoMore than 5 Years AgoTotal
High ratio customers$4,095 $4,851 $5,102 $1,437 $1,294 $40 $16,819 
Low ratio customers342 346 1,025 376 127 47 2,263 
Total finance receivables$4,437 $5,197 $6,127 $1,813 $1,421 $87 $19,082 

The following table represents a rollforward of the allowance for finance receivables for the nine months ending March 31, 2021 and 2020:
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Nine months ended March 31,Nine months ended March 31,
($ in thousands)20212020
Balance at June 30$150 $606 
Impact of adoption of ASC 326*409 — 
Provision for expected losses350 101 
Write-offs (5)
Balance at March 31$909 $702 
* The Company adopted ASC 326 on July 1, 2020.

Cash to be collected on our performing finance receivables due for each of the fiscal years are as follows:
($ in thousands)
2021$6,209 
20226,086 
20234,841 
20243,399 
20251,707 
Thereafter379 
Total amounts to be collected22,621 
Less: interest(3,539)
Less: allowance for receivables(909)
Total finance receivables$18,173 

6. LOSS PER SHARE

The calculation of basic and diluted loss per share are presented below:
Three months ended
March 31,
($ in thousands, except per share data)20212020
Numerator for basic and diluted loss per share
Net loss$(1,848)$(9,295)
Preferred dividends(334)(334)
Net loss applicable to common shareholders(2,182)(9,629)
Denominator for basic loss per share - Weighted average shares outstanding
67,112,511 64,096,778 
Effect of dilutive potential common shares  
Denominator for diluted loss per share - Adjusted weighted average shares outstanding
67,112,511 64,096,778 
Basic loss per share$(0.03)$(0.15)
Diluted loss per share$(0.03)$(0.15)
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Nine months ended March 31,
($ in thousands, except per share data)20212020
Numerator for basic and diluted loss per share
Net loss$(11,363)$(29,181)
Preferred dividends(668)(668)
Net loss applicable to common shareholders(12,031)(29,849)
Denominator for basic loss per share - Weighted average shares outstanding
65,617,458 62,591,947 
Effect of dilutive potential common shares  
Denominator for diluted loss per share - Adjusted weighted average shares outstanding
65,617,458 62,591,947 
Basic loss per share$(0.18)$(0.48)
Diluted loss per share$(0.18)$(0.48)

Anti-dilutive shares excluded from the calculation of diluted loss per share were 4,099,170 for the three and nine months ended March 31, 2021 and 1,625,414 for the three and nine months ended March 31, 2020.

7. GOODWILL AND INTANGIBLES

Intangible asset balances and goodwill consisted of the following:
As of March 31, 2021
($ in thousands)GrossAccumulated
Amortization
NetAmortization
Period
Intangible assets:
Brand and tradenames$1,735 $(876)$859 
3 - 7 years
Developed technology10,939 (6,461)4,478 
5 - 6 years
Customer relationships19,049 (3,639)15,410 
10 - 18 years
Total intangible assets$31,723 $(10,976)$20,747 
Goodwill63,945 — 63,945 Indefinite
As of June 30, 2020
($ in thousands)GrossAccumulated
Amortization
NetAmortization
Period
Intangible assets:
Brand and tradenames1,695 (699)996 
3 - 7 years
Developed technology10,939 (5,110)5,829 
5 - 6 years
Customer relationships19,049 (2,841)16,208 
10 - 18 years
Total intangible assets$31,683 $(8,650)$23,033 
Goodwill63,945 — 63,945 Indefinite

For the three and nine months ended March 31, 2021 and 2020, there was $0.8 million and $2.4 million in amortization expense related to intangible assets, respectively, that was recognized. 

The Company performs an annual goodwill impairment test on April 1 and more frequently if events and circumstances indicate that the asset might be impaired. The Company has determined that there is a single reporting unit for purposes of testing goodwill for impairment. During the three and nine months ended March 31, 2021, the Company did not recognize any impairment charges related to goodwill.

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8. DEBT AND OTHER FINANCING ARRANGEMENTS

The Company's debt and other financing arrangements as of March 31, 2021 and June 30, 2020 consisted of the following:
As of March 31,As of June 30,
($ in thousands)20212020
2020 Antara Term Facility$ $15,000 
2021 JPMorgan Credit Facility14,625  
PPP and other loans3,180 3,358 
Less: unamortized issuance costs and debt discount(261)(2,595)
Total17,544 15,763 
Less: debt and other financing arrangements, current(3,746)(3,328)
Debt and other financing arrangements, noncurrent$13,798 $12,435 

Details of interest expense presented on the Condensed Consolidated Statements of Operations are as follows:
Three months endedNine months ended
March 31,March 31,
($ in thousands)2021202020212020
2020 Antara Term Facility$ $542 $