Note 3. Supplemental Financial Information

Consolidated Balance Sheets

Financing receivables

A financing receivable is a contractual right to receive money, on demand or on fixed or determinable dates, that is recognized as an asset on the Company’s balance sheets. The Company’s financing receivables, consisting of its accounts receivable with contractual maturities of more than one year, are included in other assets on the consolidated balance sheets. The Company evaluates the credit quality of a customer at contract inception and monitors credit quality over the term of the underlying transactions. The Company performs a credit analysis for all new orders and reviews payment history, current order backlog, financial performance of the customers and other variables that augment or mitigate the inherent credit risk of a particular transaction. Such variables include the underlying value and liquidity of the collateral, the essential use of the equipment, the contract term and the inclusion of credit enhancements, such as guarantees, letters of credit or security deposits. Actual cash collections may differ from the contracted maturities due to early customer buyouts, refinancing, or defaults. The Company classifies accounts as high risk when it considers the financing receivable to be impaired or when management believes there is a significant near‑term risk of non‑payment. The Company performs an assessment each quarter on the allowance for credit losses related to its financing receivables.

A summary of the Company’s financing receivables is presented as follows (in thousands):

Inventories

Inventories consisted of the following (in thousands):

The Company’s inventories on the consolidated balance sheets are net of reserves.

Prepaid and Other Current Assets

Prepaid and other current assets consisted of the following (in thousands):

IEEPA refund receivables represent amounts recoverable from U.S. Customs and Border Protection (“CBP”) under the International Emergency Economic Powers Act (“IEEPA”). On April 21, 2026, the Company submitted approximately $8.9 million previously paid tariff refund claims, which were reported by CBP as having an accepted submission status. As of June 30, 2026, an additional $0.4 million of interest was reported by the CBP, resulting in a total refund claim balance of approximately $9.3 million. As of June 30, 2026, the Company had received $5.5 million of cash refunds, including interest, which the Company is obligated to pay to the third-party purchaser of these refund rights within five business days. As of June 30, 2026, all previously submitted claims remained in liquidation status. Based on its assessment of the underlying claims and the status of the refund process, the Company concluded that recovery of the previously paid IEEPA tariffs was probable and reasonably estimable. Accordingly, the Company recorded an IEEPA refund receivable of approximately $3.8 million as of June 30, 2026, representing the $9.3 million of approved refund claims, including interest, net of $5.5 million of refunds received as of that date.

Debt financing costs are related to the revolving credit facility included in the Financing Agreement (see Note 7. Debt, for more information). 

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

Depreciation expense related to property and equipment was $6.7 million, and $6.1 million during the years ended June 30, 2026, and 2025, respectively.

Goodwill

Activity related to goodwill consisted of the following (in thousands):

The Company performed its annual goodwill impairment test in the quarter ended December 31, 2025, and determined that there was no impairment to goodwill. The Company determined that a triggering event occurred due to a significant decline in its stock price, most notably in late March 2026, which resulted in a decrease in its market capitalization and as a result, on March 31, 2026, the Company performed a quantitative goodwill impairment test. The fair value of goodwill in the quantitative impairment test was determined using a combination of an income approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to their respective present values, and a market approach. The quantitative impairment test determined that the fair value of its reporting unit exceeded its respective carrying amount and therefore no goodwill impairment was recorded.

During the fourth quarter of fiscal 2026, the Company’s stock price continued to decline, with the most significant deterioration occurring during the final week of the fiscal year ended June 30, 2026. The decline in stock price further reduced the Company’s market capitalization and did not recover within a reasonable period subsequent to year-end. As a result, the Company concluded that an additional triggering event had occurred as of June 30, 2026 and performed a second quantitative goodwill impairment test as of that date. Consistent with the March 31, 2026 assessment, the fair value of the reporting unit was estimated using a combination of the income approach and market approach. Based on the results of the June 30, 2026 quantitative impairment test, the estimated fair value of the reporting unit exceeded its carrying amount and, accordingly, no goodwill impairment charge was recorded.

Therefore, no impairment of goodwill was identified during the fiscal years ended  June 30, 2026 and 2025.

Other Assets

Other assets consisted of the following (in thousands):

Duty drawback receivables are amounts due from U.S. Customs and Border Protection under Section 301, Section 122 and other customs programs. During fiscal 2026, based on updated information and developments related to the status and expected timing of collection of certain claims, the Company reassessed its estimate of when the related amounts are expected to be realized. As a result, a portion of all duty drawback receivables were classified as long-term as of June 30, 2026. This reclassification reflects a change in estimate regarding the expected timing of collection.

The amortization expense or amounts written down to net realizable value for the capitalized software costs to be sold during the year ended  June 30, 2026 was $1.2 million. There was no amortization expense or amounts written down to net realizable value for the year ended June 30, 2025. The Company did not identify any triggering events that would indicate a potential impairment of its definite-lived intangible and long-lived assets as of June 30, 2026. Debt financing costs are related to the $20 million revolving credit facility included in the Financing Agreement (see Note 7. Debt, for more information).

Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

On April 13, 2026, the Company entered into a participation agreement with a third party pursuant to which it agreed to transfer its rights to refunds of previously paid tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Under the terms of the agreement, the third party paid $6.6 million in exchange for approximately $9.3 million of asserted refund claims, including interest. The transaction did not qualify for derecognition under ASC 860, Transfers and Servicing, and was therefore accounted for as a financing arrangement. Accordingly, the $6.6 million of proceeds received was recognized as a liability. The Company is required to remit any IEEPA tariff refunds received, including related interest, to the third-party purchaser within five business days of receipt.

Financing costs associated with the arrangement are recognized using the effective interest method, which accretes the initial liability to the expected amount payable upon settlement of the underlying refund claims. During the fourth quarter of fiscal 2026, the Company recognized $2.4 million of financing costs, increasing the carrying amount of the liability from the initial proceeds of $6.6 million to the estimated settlement amount of $9.0 million. As of June 30, 2026, the Company recorded an aggregate liability of $6.6 million related to IEEPA tariffs. This amount consisted of $2.8 million of refunds received that had not yet been remitted to the third-party purchaser, which was included in accounts payable, and $3.8 million of estimated refunds for amounts not yet received, which was included in other accrued liabilities.

Consolidated Statements of Operations

Interest expense consisted of the following (in thousands)

Other income (expense), net, consisted of the following (in thousands):