10-Q 1 ctlp-20220331.htm 10-Q ctlp-20220331
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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, 2022
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
ctlp-20220331_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 Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 29, 2022 there were 71,111,008 outstanding shares of Common Stock, no par value.



Cantaloupe, Inc.
TABLE OF CONTENTS



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

($ in thousands, except share data)March 31, 2022 (Unaudited)June 30,
2021
Assets
Current assets:
Cash and cash equivalents$75,086 $88,136 
Accounts receivable, net29,802 27,470 
Finance receivables, net6,586 7,967 
Inventory, net13,650 5,292 
Prepaid expenses and other current assets3,737 2,414 
Total current assets128,861 131,279 
Non-current assets:
Finance receivables due after one year, net13,214 11,632 
Property and equipment, net11,284 5,570 
Operating lease assets2,661 3,049 
Intangibles, net18,777 19,992 
Goodwill66,656 63,945 
Other assets2,792 2,205 
Total non-current assets115,384 106,393 
Total assets$244,245 $237,672 
Liabilities, convertible preferred stock and shareholders’ equity
Current liabilities:
Accounts payable$37,552 $36,775 
Accrued expenses26,603 26,460 
Current obligations under long-term debt771 675 
Deferred revenue1,970 1,763 
Total current liabilities66,896 65,673 
Long-term liabilities:
Deferred income taxes195 179 
Long-term debt, less current portion14,010 13,644 
Operating lease liabilities, non-current2,763 3,645 
Total long-term liabilities16,968 17,468 
Total liabilities83,864 83,141 
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 $22,113 and $21,447 at March 31, 2022 and June 30, 2021, 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, 71,097,674 and 71,258,047 shares issued and outstanding at March 31, 2022 and June 30, 2021, respectively
468,248 462,775 
Accumulated deficit(311,005)(311,382)
Total shareholders’ equity157,243 151,393 
Total liabilities, convertible preferred stock and shareholders’ equity$244,245 $237,672 
See accompanying notes.
3

Cantaloupe, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three months endedNine months ended
March 31,March 31,
($ in thousands, except per share data)2022202120222021
Revenues:
Subscription and transaction fees$42,143 $34,686 $123,956 $101,008 
Equipment sales8,157 8,074 23,215 16,913 
Total revenues50,300 42,760 147,171 117,921 
Costs of sales:
Cost of subscription and transaction fees25,291 20,463 76,234 60,415 
Cost of equipment sales8,809 9,593 23,871 18,262 
Total costs of sales34,100 30,056 100,105 78,677 
Gross profit16,200 12,704 47,066 39,244 
Operating expenses:
Sales and marketing1,937 1,754 6,021 4,873 
Technology and product development5,532 4,425 16,701 11,422 
General and administrative6,788 7,552 21,724 28,076 
Depreciation and amortization1,062 991 3,197 3,111 
Total operating expenses15,319 14,722 47,643 47,482 
Operating income (loss)881 (2,018)(577)(8,238)
Other income (expense):
Interest income445 302 1,363 978 
Interest expense852 (88)(100)(3,970)
Other income (expense)(7) (83) 
Total other income (expense), net1,290 214 1,180 (2,992)
Income (loss) before income taxes2,171 (1,804)603 (11,230)
Provision for income taxes(35)(44)(226)(133)
Net income (loss)2,136 (1,848)377 (11,363)
Preferred dividends(334)(334)(668)(668)
Net income (loss) applicable to common shares$1,802 $(2,182)$(291)$(12,031)
Net earnings (loss) per common share
Basic and diluted$0.03 $(0.03)$0.00$(0.18)
Weighted average number of common shares outstanding used to compute net income (loss) per share applicable to common shares
Basic71,083,044 67,112,511 71,076,022 65,617,458 
Diluted71,486,718 67,112,511 71,076,022 65,617,458 
See accompanying notes.

4

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

Nine Month Period Ended March 31, 2022
Common StockAccumulated
Deficit
Total
($ in thousands, except share data)SharesAmount
Balance, June 30, 202171,258,047 $462,775 $(311,382)$151,393 
Stock-based compensation and exercises (net)20,958 1,762 — 1,762 
Retirement of common stock(319,823)— — — 
Net loss— — (1,291)(1,291)
Balance, September 30, 202170,959,182 464,537 (312,673)151,864 
Stock-based compensation and exercises (net)28,316 1,453 — 1,453 
Net loss— — (468)(468)
Balance, December 31, 202170,987,498 465,990 (313,141)152,849 
Stock-based compensation and exercises (net)110,176 2,258 — 2,258 
Net income— — 2,136 2,136 
Balance, March 31, 202271,097,674 $468,248 $(311,005)$157,243 


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 compensation and exercises (net)56,083 1,502 — 1,502 
Net loss— — (6,613)(6,613)
Balance, September 30, 202065,252,965 402,742 (309,290)93,452 
Stock based compensation and exercises (net)32,709 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 compensation and exercises (net)53,485 3,216 — 3,216 
Net loss— — (1,848)(1,848)
Balance, March 31, 202171,081,313 $460,059 $(314,040)$146,019 
See accompanying notes.
5

Cantaloupe, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
March 31,
($ in thousands)20222021
Cash flows from operating activities:
Net income (loss)$377 $(11,363)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Stock based compensation4,624 6,366 
Amortization of debt issuance costs and discounts68 2,696 
Provision for expected losses2,519 1,286 
Provision for inventory reserve334 768 
Depreciation and amortization included in operating expenses3,197 3,111 
Depreciation included in costs of sales for rental equipment738 1,055 
Property and equipment write-off 1,658 
Other402 1,192 
Changes in operating assets and liabilities:
Accounts receivable(4,415)(6,031)
Finance receivables(627)(252)
Inventory(8,691)2,297 
Prepaid expenses and other assets(1,909)(1,343)
Accounts payable and accrued expenses(206)7,218 
Operating lease liabilities(547)(795)
Deferred revenue207 (28)
Net cash (used in) provided by operating activities(3,929)7,835 
Cash flows from investing activities:
Cash paid for acquisition(2,966) 
Purchase of property and equipment(7,198)(1,281)
Proceeds from sale of property and equipment 12 
Net cash used in investing activities(10,164)(1,269)
Cash flows from financing activities:
Proceeds from debt facilities, net of issuance costs738 14,550 
Repayment of debt facilities(437)(15,554)
Proceeds from private placement 55,008 
Payment of equity issuance costs (2,598)
Proceeds from exercise of common stock options849 77 
Payment of third-party debt issuance costs(107) 
Payment of Antara prepayment penalty and commitment termination fee (1,200)
Net cash provided by financing activities1,043 50,283 
Net (decrease) increase in cash and cash equivalents(13,050)56,849 
Cash and cash equivalents at beginning of year88,136 31,713 
Cash and cash equivalents at end of period$75,086 $88,562 
Supplemental disclosures of cash flow information:
Interest paid in cash$542 $804 

See accompanying notes.
6

Cantaloupe, Inc.
Condensed Notes to Consolidated Financial Statements
(Unaudited)
1. BUSINESS

Cantaloupe, Inc. (“Cantaloupe” or the “Company”), previously known as USA Technologies, Inc., is organized under the laws of the Commonwealth of Pennsylvania. 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 is a digital payments and software services company that provides end-to-end technology solutions for the unattended retail market. We are transforming the unattended retail world by offering a solution for payments processing, as well as one that handles inventory management, pre-kitting, route logistics, warehouse and back-office management. Our enterprise-wide platform is designed to increase consumer engagement and sales revenue through digital payments, digital advertising and customer loyalty programs, while providing retailers with control and visibility over their operations and inventory. As a result, customers ranging from vending machine companies to operators of micro-markets, car wash and electric vehicle charging stations, commercial laundry, kiosks, amusements and more, can run their businesses more proactively, predictably, and competitively.

COVID-19 Update

The Company, its employees, and its customers operate in geographic locations in which its business operations and financial performance continues to be affected by the COVID-19 pandemic. While businesses, schools and other organizations re-open, which has led to increased foot-traffic to distributed assets containing our electronic payment solutions, the emergence of new strains and variants and resurgence of the virus, such as the recent outbreak of the Omicron variant, have and may in the future lead to additional shutdowns and closures that impact our operations and financial results. Such impacts to our financial statements include, but not limited to, the impairment of goodwill and intangible assets, impairment of long-lived assets including operating lease 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 condensed consolidated financial statements as soon as they become known.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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, 2021 Annual Report on Form 10-K.

All intercompany transactions and balances have been eliminated in consolidation. 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 nine months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2022. Actual results could differ from estimates. The balance sheet at June 30, 2021 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. Certain prior period amounts have been reclassified to conform with current year presentation.

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.

7

Condensed Consolidated Statement of Operations: operating expenses presentation

Beginning in the first quarter of fiscal year 2022, the Company revised its presentation of operating expenses within its Condensed Consolidated Statement of Operations by disaggregating the previously disclosed Selling, general, and administrative costs into Sales and marketing, Technology and product development, and General and administrative costs. The updated presentation is intended to provide additional transparency to the readers of the financial statements and better align the Company’s financial performance with how management views and monitors business operations and makes strategic decisions. Prior period amounts for fiscal year 2021 have been reclassified to conform with current year presentation.

Below is a brief description of the various categories within Operating expenses:

Sales and marketing: Sales and marketing expenses consist primarily of our sales and marketing team personnel costs which include non-capitalized wages, bonuses, stock-based compensation, sales commissions, severance costs, benefits, and employer taxes. In addition, this category includes fees paid for advertising, trade shows and external consultants who assist in outreach initiatives designed to build brand awareness and showcase the value of our products and services to our opportunity markets.

Technology and product development: Technology and product development expenses consist primarily of our technology and product team personnel costs and fees paid to external consultants relating to innovating and maintaining our portfolio of products and services and strengthening our network environment and platform. These costs include but are not limited to engineering, platform and software development, fees for software licenses, contract labor and other technology and product related items.

General, and administrative: General and administrative expenses consist primarily of our customer support, business operations, finance, legal, human resources and other administrative personnel costs and fees paid to external consultants for these respective departments. In addition, this category includes rent and occupancy costs and other miscellaneous costs incurred in the course of operating the business.

Depreciation and amortization: No changes made to the accounting policies or previously reported amounts included within the Company’s June 30, 2021 Annual Report on Form 10-K for this category. Depreciation expense on our property and equipment, excluding property and equipment used for rentals, and amortization expense on our intangible assets are included within the Depreciation and amortization caption in the Consolidated Statements of Operations.

The presentation changes described above did not impact total operating expenses, operating loss, net loss or net loss per common share.

Below are excerpts from the Condensed Consolidated Statement of Operations for each quarter of fiscal year 2021 before and after the revisions:
Revised presentation:Three months ended
Year ended
 

June 30, 2021
($ in thousands)September 30, 2020December 31, 2020March 31, 2021June 30, 2021
Sales and marketing$1,599 $1,520 $1,754 $2,062 $6,935 
Technology and product development3,214 3,783 4,425 4,513 15,935 
General and administrative11,997 8,528 7,552 7,677 35,754 
Depreciation and amortization1,068 1,052 991 996 4,107 
Total operating expenses$17,878 $14,883 $14,722 $15,248 $62,731 

As previously reported:Three months ended
Year ended


June 30, 2021
($ in thousands)September 30, 2020December 31, 2020March 31, 2021June 30, 2021
Selling, general, and administrative$16,810 $13,831 $13,731 $14,252 $58,624 
Depreciation and amortization1,068 1,052 991 996 4,107 
Total operating expenses$17,878 $14,883 $14,722 $15,248 $62,731 

8

Condensed Consolidated Statement of Operations: updated caption

Beginning in the first quarter of fiscal year 2022, the Company revised the previously reported revenue caption of License and transaction fees to Subscription and transaction fees within its Condensed Consolidated Statement of Operations to provide a more accurate description of the revenue stream and align with commonly used terminology by industry participants. No changes were made to the revenue recognition accounting policies or previously reported amounts included within the Company’s June 30, 2021 Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements

Measurement of Credit Losses on Financial Statements

The Company adopted "Financial Instruments - Credit Losses" (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 following table represents a roll forward of the allowance for doubtful accounts for accounts and finance receivables for the
three and nine months ending March 31, 2022:
Three months ended March 31,
20222021
($ in thousands)Accounts ReceivableFinance ReceivableAccounts ReceivableFinance Receivable
Balance, beginning of period$7,161 $1,062 $7,855 $909 
Provision for expected losses981 225   
Write-offs(1,022)(138)(827) 
Balance, end of period$7,120 $1,149 $7,028 $909 


Nine months ended March 31,
20222021
($ in thousands)Accounts ReceivableFinance ReceivableAccounts ReceivableFinance Receivable
Balance, beginning of period$6,614 $1,109 $7,676 $150 
Impact of adoption of ASC 326*
— — (757)409 
Provision for expected losses2,094 425 936 350 
Write-offs$(1,588)$(385)$(827)$ 
Balance, end of period$7,120 $1,149 $7,028 $909 

* The Company adopted ASC 326 on July 1, 2020.

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

On July 1, 2021, the Company adopted 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. The adoption of this accounting standard did not materially impact the Company’s 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.

9


Reference Rate Reform

In March 2020 and January 2021, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and ASU 2021-01, “Reference Rate Reform: Scope”, respectively. Together, the ASUs provide temporary optional expedients and exceptions for applying U.S. GAAP guidance on contract modifications and hedging relationships that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These optional expedients and exceptions are effective beginning March 12, 2020 through December 31, 2022 and adoption is permitted at any time in the effective period. The Company is currently evaluating and assessing the impact these accounting standards will have on its condensed consolidated financial statements and related disclosures and if it will elect these optional standards.

Lessor Classification

In July 2021, the FASB issued ASU 2021-05, “Lessors – Certain Leases with Variable Lease Payments” which requires lessors to classify leases as operating leases if they have variable lease payments that do not depend on an index or rate and would have selling losses if they were classified as sales-type or direct financing leases. ASU 2021-05 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. We plan to adopt this pronouncement for our fiscal year beginning July 1, 2022. The Company has evaluated the impact of this accounting standard and does not expect there to be a material effect at adoption to our condensed consolidated financial statements.

Accounting for Debt and Equity Instruments

In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” which simplifies accounting for convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related earnings per share ("EPS") guidance. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. We plan to adopt this pronouncement for our fiscal year beginning July 1, 2022. The Company has evaluated the impact of this accounting standard and does not expect there to be a material effect at adoption to our condensed consolidated financial statements.


3. LEASES

Lessee Accounting
The Company has operating leases for office space, warehouses, and office equipment. At March 31, 2022, the Company had the following balances recorded in the balance sheet related to its lease arrangements:
($ in thousands)Balance Sheet ClassificationAs of March 31, 2022As of June 30, 2021
Assets:Operating lease assets$2,661 $3,049 
Liabilities:
CurrentAccrued expenses1,501 1,166 
Long-termOperating lease liabilities, non-current2,763 3,645 
Total lease liabilities$4,264 $4,811 

Components of lease cost are as follows:
($ in thousands)Three months ended March 31, 2022Three months ended March 31, 2021
Operating lease costs*$462 $471 

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($ in thousands)Nine months ended March 31, 2022Nine months ended March 31, 2021
Operating lease costs*1,347 1,535 
* Includes short-term lease and variable lease costs, which are not material.
Supplemental cash flow information and non-cash activity related to our leases are as follows:

($ in thousands)Nine months ended March 31, 2022Nine months ended March 31, 2021
Supplemental cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities$1,257 $1,155 
Non-cash activity:
Lease assets obtained in exchange for new operating lease liabilities$471 $ 

Maturities of lease liabilities by fiscal year for our leases are as follows:
($ in thousands)Operating
Leases
Remainder of 2022$430 
20231,758 
20241,029 
2025707 
2026628 
Thereafter265 
Total lease payments4,817 
Less: Imputed interest(553)
Present value of lease liabilities$4,264 

Lessor Accounting

Property and equipment used for the operating lease rental program consisted of the following:
($ in thousands)March 31,
2022
June 30,
2021
Cost$22,516 $26,753 
Accumulated depreciation(20,627)(24,487)
Net$1,889 $2,266 

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, 2022 are disclosed within Note 6 - Finance Receivables.

4. REVENUE

Disaggregated Revenue

Beginning in the first quarter of fiscal year 2022, the Company disaggregated Subscription and transaction fees presented on the Condensed Consolidated Statement of Operations to Transaction fees and Subscription fees categories (described below) as this additional disclosure provides greater visibility into the Company's revenue streams and better aligns the Company’s financial performance including how management views and monitors business operations and makes strategic decisions.
Transaction fees: The Company charges its customers a transaction fee generally calculated as a percentage rate on volumes processed through our payment devices.
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Subscription fees: Subscription fees are primarily comprised of the monthly service fee charged to our customers for our cashless payment services, service fees originated through our rental program and Seed software services that include inventory management, route logistics optimization, warehouse and accounting management, and responsive merchandising.

Based on similar operational characteristics, the Company's revenue is disaggregated as follows:

Three months ended March 31,Nine months ended March 31,
($ in thousands)2022202120222021
Transaction fees$27,509 $21,002 $80,704 $61,133 
Subscription fees14,634 13,684 43,252 39,875 
Subscription and transaction fees42,143 34,686 123,956 101,008 
Equipment sales8,157 8,074 23,215 16,913 
Total revenues$50,300 $42,760 $147,171 $117,921 


Disaggregation of revenues for the previously reported quarters for fiscal year-ended June 30, 2021 utilizing the above described methodology is presented as follows:
Three months ended
Year ended


June 30, 2021
($ in thousands)September 30, 2020December 31, 2020March 31, 2021June 30, 2021
Transaction fees$19,677 $20,454 $21,002 $24,365 $85,498 
Subscription fees13,431 12,760 13,684 13,869 53,744 
Subscription and transaction fees33,108 33,214 34,686 38,234 139,242 
Equipment sales3,769 5,071 8,074 10,783 27,697 
Total revenues$36,877 $38,285 $42,760 $49,017 $166,939 


Transaction Price Allocated to Future Performance Obligations

In determining the transaction price allocated to future 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, 2022
2022$3,677 
202313,562 
20249,434 
20255,737 
20263,837 
Thereafter1,223 
Total$37,470 

12

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)20222021
Deferred revenue, beginning of the period$1,745 $1,648 
Deferred revenue, end of the period1,970 1,670 
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period87 97 
Nine months ended March 31,Nine months ended March 31,
($ in thousands)20222021
Deferred revenue, beginning of the period$1,763 $1,698 
Deferred revenue, end of the period1,970 1,670 
Revenue recognized in the period from amounts included in deferred revenue at the beginning of the period301 274 

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, 2022, the Company had net capitalized costs to obtain contracts of $0.4 million included in Prepaid expenses and other current assets and $2.1 million included in Other noncurrent assets on the Condensed Consolidated Balance Sheet. At June 30, 2021, the Company had net capitalized costs to obtain contracts of $0.4 million included in Prepaid expenses and other current assets and $2.0 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, 2022, amortization of capitalized contract costs was $0.2 million and $0.5 million. During the three and nine months ended March 31, 2021, amortization of capitalized contract costs was $0.2 million and $0.4 million.

5. ACQUISITION

In August 2021, we completed the acquisition of certain assets and liabilities of Delicious Nutritious LLC, doing business as Yoke Payments (“Yoke”), a micro market payments company. The acquisition of Yoke was accounted for as a business combination using the acquisition method of accounting which includes the results of operations of the acquired business from the date of acquisition. The purchase price of the acquired company is allocated between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values using primarily Level 3 inputs under ASC Topic 820, Fair Value Measurement, with the residual of the purchase price recorded as goodwill.

Through the acquisition, Yoke’s point of sale platform will now extend its offering to provide self-checkout while seamlessly integrating with Cantaloupe’s inventory management and payment processing platforms. We plan to differentiate ourselves by providing a single platform to manage consumer and operational aspects of micro markets, while also integrating multiple service providers for flexibility and ultimate ease to our customers.

The consideration transferred for the acquisition includes payments of $3 million in cash at the close of the transaction and $1 million in deferred cash payment due on or before July 30, 2022 based on the achievement of certain sales growth targets. As of the date of the acquisition and as of March 31, 2022, we expect to pay the entire deferred cash payment and we have accrued a contingent consideration liability of $1 million which is included within Accrued expenses in our Condensed Consolidated Balance Sheet.

Additionally in connection with the acquisition, the Company will issue common stock to the former owners of Yoke based on the achievement of certain sales growth targets for software licenses through July 31, 2024 and continued employment as of the
13

respective measurement dates. The accounting treatment for these awards in the context of the business combination is to recognize the awards as a post-combination expense and were not included in the purchase price. We will begin recognizing compensation expense for these awards over the requisite service period when it becomes probable that the performance condition would be satisfied pursuant to ASC 718. At each reporting date, we assess the probability of achieving the sales targets and fulfilling the performance condition. As of March 31, 2022, we determined that it is not probable that the performance condition would be satisfied and, accordingly, have not recognized compensation expense related to these awards for the nine months ended March 31, 2022.

The following table summarizes the total consideration paid for Yoke, total net assets acquired, identifiable assets and goodwill recognized at the acquisition date:

($ in thousands)Amount
Consideration
Cash $2,966 
Contingent consideration arrangement1,000 
Fair value of total consideration transferred3,966 
Recognized amounts of identifiable assets
Total net assets acquired21 
Identifiable intangible assets1,235 
Total identifiable net assets1,256 
Goodwill$2,710 

Amounts allocated to identifiable intangible assets included $0.9 million related to developed technology, $0.3 million related to customer relationships, and $0.1 million related to other intangible assets. The fair value of the acquired developed technology was determined using a multi-period excess earnings method. The fair value of the acquired customer relationships was determined using the with-and-without method which estimates the value using the cash flow impact in a scenario where the customer relationships are not in place. The recognized intangible assets will be amortized on a straight-line basis over the estimated useful lives of the respective assets.

Goodwill of $2.7 million arising from the acquisition includes the expected synergies between Yoke and the Company and intangible assets that do not qualify for separate recognition at the time of acquisition. The goodwill, which is deductible for income tax purposes, was assigned to the Company’s only reporting unit.

The above allocation of the purchase price is provisional and is still subject to change within the measurement period. The final allocation of the purchase price is expected to be completed as soon as practicable, but no later than one year from the date of the acquisition. Pro forma financial information of the acquisition is not presented due to the immaterial impact of the financial results of Yoke in the Company's Consolidated Financial Statements.


6. 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, 2022 and June 30, 2021, finance receivables consist of the following:
($ in thousands)March 31,
2022
June 30,
2021
Current finance receivables, net$6,586 $7,967 
Finance receivables due after one year, net13,214 11,632 
Total finance receivables, net of allowance of $1,149 and $1,109, respectively
$19,800 $19,599 

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
14

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 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 sufficient to cover monthly fees) and low ratio customers (customers that do not consistently have adequate transaction processing volumes sufficient 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, 2022, 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$7,194 $3,186 $4,241 $3,321 $986 $198 $19,126 
30 days and under32 15 41 28 5  121 
31-60 days81 34 59 41 10 2 227 
61-90 days62 26 46 32 6 2 174 
Greater than 90 days533 213 237 255 47 16 1,301 
Total finance receivables$7,902 $3,474 $4,624 $3,677 $1,054 $218 $20,949 

At June 30, 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$6,736 $3,970 $3,942 $3,081 $1,358 $31 $19,118 
30 days and under19 67 90 93 11 1 281 
31-60 days4 9 22 2 1  38 
61-90 days10 42 66 54 10  182 
Greater than 90 days46 69 490 419 54 11 1,089 
Total finance receivables$6,815 $4,157 $4,610 $3,649 $1,434 $43 $20,708 


15

At March 31, 2022, credit quality indicators by year of origination consisted of the following:

Leases by Origination
($ in thousands)Up to 1 Year Ago