Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Quantitative and Qualitative Disclosures About Market Risk.
Financial Statements and Supplementary Data.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Controls and Procedures.
Other Information.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
PART III
Item
Directors, Executive Officers and Corporate Governance.
Executive Compensation.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Certain Relationships and Related Transactions, and Director Independence.
Principal Accounting Fees and Services.
PART IV
Item
Exhibits, Financial Statement Schedules.
Form 10-K Summary .
PART I
In this Annual Report on Form 10-K, or Annual Report, and unless otherwise indicated, the terms "Cantaloupe", the "Company", "CTLP", "we", "us", "our", "our company" and "our business" refer to Cantaloupe, Inc., formerly known as USA Technologies, Inc.
The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. Due to rounding, figures in tables may not sum exactly.
FORWARD-LOOKING STATEMENTS
This Annual Report contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding, among other things, the anticipated financial and operating results of Cantaloupe, Inc. For this purpose, forward-looking statements are any statements contained herein that are not statements of historical fact and include, but are not limited to, those preceded by or that include the words “estimate,” “could,” “should,” “would,” “likely,” “may,” “will,” “plan,” “intend,” “believes,” “expects,” “anticipates,” “projected,” or similar expressions. Those statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. The forward-looking information is based on various factors and was derived using numerous assumptions. Important factors that could cause the Company’s actual results to differ materially from those projected include, for example:
• disruption to our business caused by the acquisition of us by 365 Retail Markets, LLC (“365 Retail Markets”);
• our ability to consummate the transaction with 365 Retail Markets within the contemplated timeframe, or at all, including risks and uncertainties related to securing the necessary regulatory approvals and the satisfaction of other closing conditions;
• the impact on our stock price, business, financial condition and results of operations if the proposed transaction with 365 Retail Markets is not consummated;
• costs, charges and expenses relating to the proposed transaction with 365 Retail Markets;
• proceedings, including litigation that seeks to prevent the proposed transaction with 365 Retail Markets from being consummated within the contemplated timeframe, or at all;
• general economic, market or business conditions unrelated to our operating performance, including inflation, elevated interests rates, supply chain disruptions, financial institution disruptions, geopolitical conflicts, public health emergencies, and declines in consumer confidence and discretionary spending;
• our ability to compete with our competitors and increase market share;
• failure to comply with the financial covenants in our debt facilities;
• our ability to maintain compliance with rules and regulations applicable to our business operations and industry;
• disruptions in other card payment processors, software and manufacturing partners upon whom we rely;
• whether our customers continue to utilize our transaction processing and related services, as our customer agreements are generally cancellable by the customer with thirty days’ notice;
• our ability to acquire and develop relevant technology offerings for current, new and potential customers and partners;
• risks and uncertainties associated with our expansion into and our operations in Europe, Mexico and other foreign markets, including general economic conditions, policy changes affecting international trade (including the imposition of new tariffs, or changes and adjustments to existing tariffs), political instability, inflation rates, recessions, sanctions, foreign currency exchange rates and controls, foreign investment and repatriation restrictions, legal and regulatory constraints, civil unrest, armed conflict, war, and other economic and political factors;
• our ability to satisfy our trade obligations included in accounts payable and accrued expenses;
• our ability to attract, develop and retain key personnel, or our loss of the services of our key executives;
• the incurrence by us of any unanticipated or unusual non-operating expenses, which may require us to divert our cash resources from achieving our business plan;
• our ability to predict or estimate our future quarterly or annual revenue and expenses given the developing and unpredictable market for our products;
• our ability to successfully integrate acquired companies into our current products and services structure;
• our ability to add new customers and retain key existing customers from whom a significant portion of our revenue is derived;
• the ability of a key customer to reduce or delay purchasing products from us;
• our ability to obtain widespread commercial acceptance of our products and service offerings;
• whether any patents issued to us will provide any competitive advantages or adequate protection for our products, or would be challenged, invalidated or circumvented by others;
• the ability of our products and services to avoid disruptions to our systems or unauthorized hacking or credit card fraud;
• risks associated with cyber-attacks and data breaches; and
• our ability to maintain effective internal controls and to timely file periodic and current reports with the Securities and Exchange Commission ("SEC").
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Actual results or business conditions may differ materially from those projected or suggested in forward-looking statements as a result of various factors including, but not limited to, those described above and in Part I, Item 1A, “Risk Factors” of this Annual Report. We cannot assure you that we have identified all the factors that create uncertainties. Moreover, new risks emerge from time to time and it is not possible for our management to predict all risks, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Readers should not place undue reliance on forward-looking statements.
Any forward-looking statement made by us in this Annual Report speaks only as of the date of this Annual Report. Unless required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this Annual Report or to reflect the occurrence of unanticipated events.
Item 1. Business.
OVERVIEW
Cantaloupe, Inc. (Nasdaq: CTLP) is organized under the laws of the Commonwealth of Pennsylvania. We are a global technology leader powering self-service commerce. Cantaloupe offers a comprehensive suite of solutions including micro-payment processing, self-checkout kiosks, mobile ordering, connected point-of-sale ("POS") systems, and enterprise cloud software. Handling more than a billion transactions annually, our solutions enhance operational efficiency and consumer engagement across sectors like food & beverage markets, smart automated retail, hospitality, entertainment venues, laundromats and more. Committed to innovation, we aim to drive advancements in digital payments and business optimization, serving 34,896 customers in the United States, United Kingdom, European Union countries, Australia, and Mexico.
Our revenue streams consist of subscription, transaction processing and equipment sales. We derive the majority of our revenues from subscription and transaction fees resulting from transactions on, as well as connectivity and telemetry services provided by, our cashless devices, Seed™ software, Cantaloupe Go software, Cheq software (acquired in February 2024), SB Software (acquired in September 2024), and our API services used via our Seed API (formerly known as Quick Connect) product. These services include digital payment processing, loyalty programs, inventory management, route logistics optimization, warehouse and accounting management, intelligent merchandising, digital advertising, mobile ordering, and more. Devices and POS terminals operating on the Company’s platform and using our services include those resulting from the sale, finance or a monthly bundled subscription (Cantaloupe ONE program) of our POS electronic payment devices and
checkout kiosks, telemetry devices, certified payment software or the servicing of similar third-party installed POS terminals and telemetry devices. The majority of customers pay a monthly service fee plus a blended percentage rate on transaction volumes. Transaction fees on volumes processed through our payment devices and POS systems are the most significant driver of our revenues.
Merger with 365 Retail Markets, LLC
On June 15, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with 365 Retail Markets, Catalyst Holdco I, Inc. (“Holdco”), Catalyst Holdco II, Inc. (“Holdco II”) and Catalyst MergerSub Inc. (“Merger Sub”). Subject to the terms and conditions of the Merger Agreement, 365 Retail Markets has agreed to acquire the Company in an all-cash transaction for $11.20 per share of common stock, without interest (the “Merger Consideration”). Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned, indirect subsidiary of 365 Retail Markets. Upon the consummation of the Merger, Cantaloupe will cease to be a publicly traded company.
We have agreed to various customary covenants and agreements in the Merger Agreement, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements.
On September 4, 2025, the Company held a special meeting of shareholders, where shareholders approved a proposal to approve and adopt the Merger Agreement, including the Merger. Assuming timely satisfaction of the remaining necessary closing conditions, including the receipt of required regulatory approvals, we expect that the Merger will be completed in the second half of calendar year 2025. Upon consummation of the Merger, our common stock will be delisted from The Nasdaq Stock Market LLC and deregistered under Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Additional information about the Merger is set forth in our Current Report on Form 8-K filed with the SEC on September 4, 2025, and our definitive Proxy Statement on Schedule 14A filed with the SEC on July 24, 2025 (the "Definitive Proxy Statement").
THE INDUSTRY
We offer a variety of solutions for self-service commerce, which enable the acceptance of digital payments and allow our customers to simplify inventory, analytics, warehouse, logistics, and back-office management. We believe the following industry trends are driving growth in demand for digital payment systems and advanced logistics management both in general and within the specific markets we serve:
• Increased adoption of cashier-less models via vending machines, self-service kiosks, automated stores, and mobile ordering to meet demand for and more use of fast, simple and seamless digital purchase and payment experiences;
• Rising consumer demand for transaction convenience, safety, and security, as evidenced by the growth in digital payment adoption, especially contactless payments; and
• Ongoing labor challenges and inflation drive increased utility of actionable operational business intelligence from new technologies like machine learning and artificial intelligence ("AI") to drive operational efficiencies and operational transparency through modern, cloud-based logistics and inventory management solutions.
Cashier-less stores that minimize or remove human intervention have shifted consumer expectations on retail shopping experiences. Retailers are also finding that self-service helps them respond to the ongoing labor challenges and inflation costs they are facing while also appealing to changing consumer habits who are eager to use self-checkout solutions.
OUR SOLUTION
We aim to transform self-service commerce by offering one integrated solution for payments processing, logistics, and back-office management. Our 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 can run their businesses more proactively, predictably, and competitively. We offer customers several different ways to connect and manage their distributed assets. These range from our cashless hardware, both attended and self-checkout kiosks, our Seed platform, our Cantaloupe Go platform, our Cheq platform, SB Software, and API services via Seed API. Our platform is designed to transmit payment information from our customers’ POS terminal or locations for payment processing, process sales and performance data to optimize assets, and generate reports which provide greater control and visibility to our customers. Through our platform, we enable customers to easily manage assets, make changes, and push updates all remotely, ensuring they run as efficiently as possible.
PRODUCTS AND SERVICES
Our hardware includes Cantaloupe card readers, our integrated payment device, Cantaloupe Go POS kiosks, our wide range of POS terminals, as well as the Cheq POS attended and self-service kiosks, our solution for the stadium, entertainment venue and festival verticals. With a variety of self-service hardware solutions, our deployment currently supports applications such as vending, micro-markets, amusement, arcade, commercial laundry, air/vacuum, car wash, and others.
Our cashless devices, which come in a variety of styles, facilitate digital payments by capturing payment information and transmitting it to our platform for authorization and processing through the payment networks (e.g., credit card processors). Additionally, our devices send sales data into the Seed platform, along with third-party platforms, for advanced reporting, including remote asset management. Our cashless devices have earned a reputation for quality, reliability, and innovation.
Our Cantaloupe Go product line provides a variety of self-checkout kiosks, which range from tablet-based POS terminals, to feature-rich 46” kiosk screens that are equipped with ADA height compliant and audio assist features for the visually impaired. In addition to processing and transmitting transaction data into the cloud, our kiosks seamlessly integrate into the Cantaloupe Go platform for ease of kiosk management, loyalty and reward features, promotions, advertising, and more. Cantaloupe Go also enables complete management of an operator’s business by integrating into the Seed platform for one central place to manage inventory, warehouse processes, driver accountability and operating results.
Our Cheq product line supports both an attended and unattended self-service kiosk mode for concessionaire and event-goers to easily checkout while enjoying a game, concert or festival. Within the Cheq hardware line, we also offer clients handheld devices for taking payments on the go, along with mobile ordering activation areas for making it easier to order from the seat for pick-up or in-seat delivery. Like our kiosks, our Cheq POS terminals process payments and transmit transaction data into the Cheq platform via the cloud, while also seamlessly integrating into a variety of venue applications. Our Cheq POS terminals also offer a robust back-end reporting platform for ease of venue management.
Our SB Software platform includes industry-leading Vendmanager and Coffeemanager software solutions that are designed and built for the U.K. and E.M.E.A. vending operator. This platform not only provides efficient business management tools, inventory tracking, routing and logistics, but provides data analytics and reporting to help customers better run their vending, coffee and micro market business.
Our hardware is available for customers through purchase, finance, or subscription with our new Cantaloupe ONE Platform.
• Our G11 Cashless Kit and G11 Pulse Kit are 4G LTE digital payment devices that enable faster processing and enhanced functionality for payment and consumer engagement applications. They support functionality that requires higher speeds and large data loads, operate on the AT&T and Verizon networks, and have built-in near field communication "NFC" (contactless) support for mobile payments, traditional credit and debit cards, in addition to EMV- contactless. The G11 Pulse Kit also includes functionality which simulates a coin drop using a pulse adapter interface. These devices are currently available in the United States and Canada.
• Our G11 Chip Kit is a digital reader that accepts contact EMV (chip cards) and contactless EMV (tap) payment methods, along with other standard forms of digital payments that include credit/debit card, and mobile wallet. The reader functions with the existing G11 telemeter and reports into the Seed platform similar to a G11 Cashless Kit (see below for a description of the Seed platform). This device is currently available in the United States and Canada.
• Our Engage Series, which includes the Engage, Engage Combo, and the Engage Pulse designed specifically for the amusement and entertainment market, are our next generation of digital touchscreen devices designed to provide retailers the ability to captivate consumers in new ways and enables truly frictionless purchasing. The Engage Series offers networking, security and interactivity, including acceptance of contact EMV (chip cards) and contactless EMV (tap) payment methods. The devices can be fitted in a range of hardware configurations, including vending, kiosks, amusement parks, and more.
• Our P Series, which include the P66, P100, P100Pro and P30, are our card touchscreen card readers that support the U.K./E.M.E.A. and MX/LAC markets. Based on various in-country features, these devices are equipped with digital touch screens and can easily accept all major forms of payments in the countries in which they serve today. The P30 is also used as the primary payment terminal in the United States for our Cooler Cafe solution. All devices offer 4G LTE connectivity and ability to accept contactless EMV payments.
Cantaloupe Go offers a modern line of self-checkout kiosks, Smart Store concepts and the Cantaloupe Go management platform.
• The Go Mini is a cost-effective cash or cashless kiosk great for smaller locations or areas where customers want a quick self-checkout cashless experience. This kiosk includes a 10.5” touchscreen, built in LTE and Wi-Fi, bill acceptor and cash system add-on, credit card reader, multiple mounting options, and a barcode scanner.
• The Go MiniX is a compact, cashless kiosk ideal for locations where quick cashless only self-checkout is key, and is more public friendly with additional accessibility features. This kiosk includes a 15” touchscreen, vertical or horizontal orientation, built-in-camera, barcode scanner, biometric scanner (optional), credit card reader, and accessibility features for the visually impaired.
• The Go Plus100 is a cash and cashless kiosk for tabletop cabinetry in mid-size or larger locations where customers may want to offer cash acceptance that can be loaded onto a stored value card. This kiosk includes a 19” touchscreen, built-in camera, barcode scanner, biometric scanner, bill acceptor (optional), credit card reader, and accessibility features for the visually impaired.
• The Go Plus200 is designed for customers with space constraints. Customers can opt for our standalone kiosk in mid-size or larger locations where the ability to offer cash acceptance loaded onto a stored value card is available. This kiosk includes a 19” touchscreen, built-in camera, barcode scanner, biometric scanner, credit card reader, bill acceptor (optional), customization options for colors and decals, and accessibility features for the visually impaired.
• The Go Plus300 is a robust kiosk designed for government or military locations, offering cash-in and cash-out options to allow for flexible payment options for single-use visitors. This kiosk includes a 19” touchscreen, built-in camera, barcode scanner, biometric scanner, credit card reader, bill acceptor (optional), cash in/out available, customization options for colors and decals, and accessibility features for the visually impaired.
• The Go Max is a digital touchscreen kiosk that supports cash and cashless acceptance for locations looking for an attractive kiosk screen that allows for complete payment flexibility and advanced accessibility features for consumers. This kiosk includes a 43” touchscreen, built-in camera, barcode scanner, biometric scanner, bill acceptor (optional), cash in/out available, customization options for colors and decals, and accessibility features for the visually impaired as well as ADA height compliant features.
• The Cooler Café is designed to deliver the micro market experience with a smaller footprint. Equipped with Cantaloupe’s Smart Lock technology and a cashless POS device, the Cooler Café remains locked until a payment is made. As a result, customers can save on upfront investment costs while maximizing revenue with higher margin food and beverage options. This solution integrates directly into Seed to enhance operator management.
• The Smart Store Go Micro kiosk, which is Cantaloupe's newest self-service micro market kiosk, designed with affordability, versatility and seamless management in mind. Its compact footprint, integrated barcode scanner and five-inch touchscreen provide a seamless checkout experience for consumers and enables operators to manage all their markets regardless of size.
• The Cantaloupe Smart Aisle is a frictionless retail experience that operates without an attendant, relying instead on 3D cameras, and weighted-shelf technology to analyze motion and keep track of transactions. Customers provide a payment method to enter, and while inside they can grab any item, which is added to their virtual cart in real time. Customers verify their cart before leaving, and the transaction is completed and payment method charged upon exit.
We offer integrated software services that leverage payment or asset tracking devices in the field to connect into our feature-rich platform for advanced data management, analytics, route scheduling, loyalty and reward programs, and other offerings:
• The Seed platform is a cloud-based asset management and optimization solution that provides advanced analytics, dynamic route scheduling, automated pre-kitting, proactive equipment management, intelligent merchandising, inventory management, warehouse purchasing, and accounting management. The Seed platform has a reputation for providing innovative software features and functionality that solve every day customer challenges. It includes Seed Live for sales reporting and asset management, Seed Cashless+ for small business owner advanced management tools, Seed Pro for logistics optimization; Seed Office for back-office management; Seed Markets for integrated micro market management; and Seed Delivery for integrated online ordering and office coffee service ("OCS") optimization.
• Add-on software services within the Seed platform include our new Remote Price Change ("RPC") and integration with our e-commerce partners. RPC seeks to save customers time and money by enabling them to manage prices for products in their machines remotely through Seed. Our e-commerce integration partners enable customers to integrate their online stores to Seed platform for inventory and warehouse management.
• The Cantaloupe Go Portal is a robust cloud-based platform that provides operators the customization to extend market and Smart Cooler features on a location-by-location basis. They can manage kiosk performance and uptime, view inventory and integrate the portal directly into Seed for better market management and service efficiencies. Some of the customizable features inside of the Cantaloupe Go portal include the ability to create coupons and guest passes, loyalty and reward programs, enable payroll deduct, client subsidy programs, health and wellness programs, manage credit card fees and deposits, kiosk alerts and more.
• The Cheq platform provides real-time updates for on-the-fly changes that need to be deployed across multiple POS menus at any given time during an event. It includes intuitive reporting functionality to provide key data insights into both specific venue stations and overall event performance metrics. As a mobile-first platform, Cheq provides access to consumer buying trends and data points to leverage in-app or text notifications for driving new revenue back to any given venue. The Cheq platform seamlessly integrates with over 10 partners today to support the unique business needs of clients and their venues.
• Seed API (formerly known as Quick Connect), is an API web service that allows a client application to securely interface with the Company’s payment processing and asset managing services.
• Additional services include our Cantaloupe Go consumer mobile app loyalty programs, campus card integrations, digital ad-management, and data warehouse services.
We support our offerings through a number of professional services and back-office functions:
• Professional Services. For our larger customers we offer a variety of professional services to aid deployment and use of the platform. These include planning, project management, deployment, installation support, Seed implementation, and marketing and performance evaluation.
• Network Infrastructure. Our services and platforms operate on a combination of proprietary and third-party technologies and are supported by geographically diverse teams.
• Card Processing Services. Through our existing relationships with card processors and card associations, we provide merchant account and terminal ID set up, prenegotiated discounted fees on small ticket purchases, and direct electronic funds transfers to our customers’ bank accounts for all settled card transactions and ensure compliance with processing protocols.
• Customer/Consumer Services. We support our services by providing help desk support, repairs, and replacement services. Inbound consumer billing inquiries are handled through a 24‑hour help desk, which reduces our customers’ exposure to consumer billing inquiries and potential chargebacks. We provide remote maintenance updates and enhancements to software, settings, and features to our card readers via wireless connections.
COMPETITION
The self-service industry is highly competitive with service providers ranging from well-established enterprises to early-stage companies within the financial technology and software services industries. The markets for our products and services are characterized by evolving industry standards, aggressive pricing, continuous innovation, and changing consumer trends. Many of our competitors are challenging our industry position as an industry leader, particularly when it comes to pricing, emulating products, services, and marketing, as well as addressing consumer trends. However, we believe we have competitive strengths that position us for continued success.
Consumers are expecting more from their shopping experience, with access to buy what they want, when they want, with the ability to pay with any shape or form of digital currency. This has led to a multitude of new devices on the market that enable a more engaging experience at the POS. In addition, micro markets are becoming larger growth sectors in the convenience services industry, with many competitors. While we believe we have a strong competitive offering that positions us favorably in software services for self-service industry, competitors are entering the market with modernized back-end systems that are focused on the user interface along with real-life product planogram possibilities.
MARKETS WE SERVE
While the below key verticals represent only a fraction of our total market potential, these are the areas where we have seen the most traction to date.
OUR GROWTH OPPORTUNITY
Our primary objective is to continue enhancing our position as a leading provider of technology powering self-service commerce. Our vertically integrated solutions are designed to fuel growth by offering payment processing, enterprise cloud software, IoT technology, as well as kiosk and POS innovations that serve a variety of locations such as vending, micro markets and smart retail, entertainment venues and festivals, EV charging stations, laundromats, metered parking terminals, amusement and entertainment venues, IoT services and more. Key elements of our strategy are to:
Maximize Growth in Existing Customers/Partners. Having experienced the benefits of our products and services, we believe our current customers represent the largest opportunity to scale recurring revenue and connections, through the addition of new products and services, as well as expanding our footprint of current product offerings. We are continuously seeking to enhance our solutions and services with additional features and functionality that create add-on service offerings to existing customers such as RPC, Seed Markets, Seed Analytics, Seed Pick Easy, and Cantaloupe Go POS solutions. We believe our continued innovation will lead to further adoption of Cantaloupe’s solutions and services in the self-service market.
Capitalize on the Emerging Cashless, Contactless, EMV, NFC, and Growing Mobile Payments Trends Globally. With growing consumer adoption of cashless and digital wallet payments, we believe this trend will continue to drive significant opportunity for us to further penetrate cashless transactions in both existing and new markets in the United States and abroad.
Expand into Micro Markets and Smart Stores. With our Cantaloupe Go platform, we are expanding the growing vertical of micro markets and smart stores both in near-vending channels as well as adjacent verticals. We differentiate ourselves by providing a single platform to manage consumer and operational aspects of micro markets and smart stores, while also integrating multiple service providers for flexibility and ultimate ease to our customers.
Capitalize on Opportunities in International Markets. With the acquisitions of Three Square Market in December 2022 and SB Software in September 2024, as well setting up operations in Mexico, we believe we are well positioned to expand across Mexico and Europe, while focusing on increasing market share in the United States. We are focused on continuing to grow our self-checkout micro market kiosks in these regions while also leveraging our Seed platform to optimize a customer’s vending and micro market business. Along with POS terminals, Smart Markets, Cantaloupe Go platform and Seed platform, we’ll establish a presence in cashless payment devices to give a one-stop-shop for our customers. In order to do so, we have dedicated sales resources to spearhead international opportunities, support implementation, and customer success.
Deliver an Exceptional Guest Experience at Stadiums, Venues and Festivals. With our acquisition of Cheq in February 2024, we believe we are also well positioned to disrupt the POS market that supports both large and small entertainment venues, stadiums, festivals, state fairs and more. As a mobile-first built POS, the platform is focused on ensuring guests never miss a moment with in-seat mobile ordering, handhelds to take payments anywhere in venue, and both attended or self-checkout stations for fast-tracking lines. With our existing penetration across more than a dozen venues, we plan to continue delivering a POS platform that meets the consumer needs of today and into the future.
Further Penetrate Attractive Adjacent Markets. We will continue to introduce our turn-key solutions and services to various adjacent markets and verticals where there is a strong need for convenience, safety and security. Key growth verticals we will focus on include amusement and arcades, residential buildings, hotels and hospitality, college campuses and universities and retailers seeking new ways to create grab-and-go experiences both in-store and off-premise concepts. We plan to leverage solutions like our Cantaloupe Go line of products for micro markets, smart coolers and cashless payment acceptance to meet the needs of these industries seeking to deliver self-service solutions for today's consumer.
Extend IoT Services into New Verticals. Leveraging Seed’s ability to know where to go, when to go, and what to take, we can extend our telemetry services into other verticals that currently run on static scheduling models. We believe these verticals provide tremendous greenfield to move static routes to dynamic, servicing locations at the right time and driving greater efficiencies into business operators who provide these services on a daily basis.
Comprehensive Service and Support. In addition to its industry-leading hardware and software, we seek to provide our customers with a comprehensive platform designed to encourage optimal return on investment through business planning and performance optimization; a loyalty and rewards program for consumer engagement; sales data and machine alerts; DEX data transmission; and the ability to extend digital payments capabilities and the full suite of services across multiple aspects of an operator’s business.
SALES AND MARKETING
Our go-to-market strategy includes both direct sales and indirect channels, depending on the particular dynamics of each of our markets. Our direct sale efforts are supported by both inside and external sales team members, which are aligned to serve our enterprise, mid-market, and small business customers and prospects, along with our channel partners and resellers both domestically and internationally. In order to expand our sales reach, we maintain agreements with resellers, affiliate networks, and distributors in select market segments. Our marketing drives growth through a variety of online and offline initiatives designed to build brand awareness, position our thought leadership within the self-service commerce market, highlight our competitive strengths, and illustrate the value of our products and services to our opportunity markets. Activities include creating a vibrant company and product presence on the web, digital advertising, Search Engine Optimization (“SEO”), and social media; affiliate and referral programs; our e-commerce store, the use of direct mail and email campaigns; educational online and in-person user conferences; content curation through blogs, white papers, guides, podcasts, and joint industry studies; advertising in vertically-oriented trade publications; participating in industry trade shows and events; and working closely with customers and key strategic partners on co-marketing opportunities that drive customer and consumer adoption of our services.
IMPORTANT RELATIONSHIPS
Our most important relationships are with our 34,896 customers, which are governed by services agreements that provide for terms and conditions of purchase, rental, subscription or lease of the devices, licensing of our solutions, and processing services. Under the terms, we typically collect our fees from settled funds, including activation fees, monthly service fees, and transaction processing fees. Our relationships with certain large customers are governed by customized terms and conditions contained within individually negotiated services agreements.
In addition to our customer relationships:
• We maintain broad and long-standing relationships with card industry associations. From time to time, we enter into short-term incentive and promotional agreements with the card industry counterparties.
• We maintain close relationships with domestic wireless telecommunications carriers with which we have long-term bespoke pricing and support terms.
• We have long-term agreements with our payment processors, each of which is seamlessly integrated with our products and customers.
• We have established reseller relationships with select solutions providers for add-on features and services within our traditional offerings.
Lastly, we have a number of key technology vendors supporting our network environment and technology, our product development and our product offerings.
MANUFACTURING AND SUPPLY CHAIN
We utilize independent third-party manufacturing partners to produce the substantial majority of our electronic payment device hardware products that we market and sell to our customers. Production by our manufacturing partners is required to be performed in accordance with our product specifications, quality control and compliance standards.
Our internal processes are centered around quality assurance of materials and testing of finished goods received from our contract manufacturers.
We are continually monitoring and evaluating manufacturing partners to accommodate our growth objectives while minimizing risks of disruption within our supply chain operations.
TRADEMARKS, PROPRIETARY INFORMATION, AND PATENTS
The Company owns US federal and foreign registrations for the following trademarks and service marks: Because Machines Can’t Cry For Help®, Blue Light Sequence (design only) BUSINESS EXPRESS®, CANTALOUPE®, Cantaloupe circle logo (design only), Cantaloupe Systems®, Cantaloupe Systems & design (Cantaloupe circle logo), CM2IQ®, COMPUVEND®, COOLER CAFE®, EnergyMiser®, ePort®, EPORT CONNECT®, INTELLIGENT VENDING®, PICK-EASY®, PICK-EASY & design, RETAIL RENEGADES®, ROUTEMASTER®, SEED®, seed & design, SEED OFFICE®, TSM SMART LOCK®, VendPro®, VM2IQ®, YOKE®.
Much of the technology developed or to be developed by us is subject to trade secret protection. To reduce the risk of loss of trade secret protection through disclosure, we have entered into confidentiality agreements with our key employees.
As of June 30, 2025, 143 patents have been granted to or acquired since our inception in 1992. Of the 143 patents, 49 are still in force as of June 30, 2025. Our patents expire between 2025 and 2045. To the extent renewable, we intend to renew these patents. We will pursue intellectual property protection to the extent we believe it would be beneficial and cost-effective.
ACTIVE DEVICES AND ACTIVE CUSTOMERS
In order to present meaningful information on our business, we report "Active Devices" and "Active Customers". Active Devices are devices that have communicated with us or have had a transaction in the last twelve months. Included in the number of Active Devices are devices that communicate through other devices that communicate or transact with us. For example, a self-service retail location that utilizes an ePort cashless payment device as well as Seed management services constitutes only one device. We define Active Customers as all customers with at least one active device.
We had 34,896 Active Customers and 1.28 million Active Devices connected to our service as of June 30, 2025 compared to 31,466 Active Customers and 1.22 million Active Devices as of June 30, 2024.
HUMAN CAPITAL MANAGEMENT
As of June 30, 2025, we had 358 full-time employees compared to 359 full-time employees as of June 30, 2024. This represents a headcount decrease of less than 1% over prior fiscal year. The headcount aligns with our overall objective to focus on growth both domestically and internationally and enables us to invest in innovative technologies and products and increase marketing spend to penetrate new and existing customers. We seek employees who share a passion for our technology and its ability to improve our customers’ businesses.
We believe our ability to attract and retain the most qualified candidates in all areas of our business is critical to our future success and growth, and we strive for a well-balanced and diverse workforce. In addition to standard Company-wide Compliance trainings, we prioritize and invest in helping our employees grow professionally in their career. We offer a combination of interactive professional development trainings, access to on demand online courses through our learning management system, and group learning programs.
We offer our employees wages and benefit packages that we believe are competitive with others throughout our industry. In addition to salaries, we provide benefits including a 401(k) retirement savings plan, healthcare and insurance benefits, health savings and flexible spending accounts, tuition reimbursement, paid time off, as well as other benefits including access to mental health benefits, and a paid parental leave policy.
Each year, we request our employees to complete a Company-wide employee engagement survey. The survey is facilitated internally through our Human Resources department. The survey reflects questions to gauge employee sentiments toward current trends and issues including company direction and strategy, communication by management, individual development, team culture, and overall satisfaction. With the information provided by the annual engagement survey, leadership is provided key insights and valuable feedback which we implement in our Company-wide action plans with the intent to focus on key areas to prioritize, enhance, and drive increased employee engagement, learning and development, and professional growth for our employees.
AVAILABLE INFORMATION
The public may access any materials the Company files with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements for our annual stockholder meetings, and amendments to those reports, through the SEC’s Interactive Data Electronic Applications system at http://www.sec.gov. These reports are also available free of charge on our website, www.cantaloupe.com, as soon as reasonably practicable after we electronically file the material with the SEC. In addition, our website includes, among other things, charters of the various committees of our Board of Directors and our code of business conduct and ethics applicable to all employees, officers and directors. Within the time period required by the SEC, we will post on our website any amendment to the code of business conduct and ethics and any waiver applicable to any executive officer, director or senior financial officer. We use our website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information on our website does not constitute part of this document.
Item 1A. Risk Factors.
The risks and uncertainties described below are not the only ones we face. There may be other unknown or unpredictable economic, business, competitive, regulatory or other factors that could have material adverse effects on our future results. The occurrence of any of these risks could materially adversely affect our business, financial condition, results of operations and cash flows. Accordingly, you should carefully consider the following risk factors, as well as other information contained in or incorporated by reference in this Annual Report.
Risks related to our pending Merger with 365 Retail Markets, LLC
The pendency of the Merger may result in disruptions to our business.
On June 15, 2025, we entered into the Merger Agreement with 365 Retail Markets, Holdco, Holdco II and Merger Sub, pursuant to which, subject to the terms and conditions thereof, we will be acquired by 365 Retail Markets in an all-cash transaction. The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the Merger and prohibits us, without 365 Retail Markets’ consent, from taking certain specified actions until the Merger has been consummated. These prohibitions may affect our ability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows.
Further, in connection with the Merger, our current and prospective employees may experience uncertainty about their future roles with us following the Merger, which may adversely affect our ability to attract and retain key personnel. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with us following the Merger, and may depart prior to the consummation of the Merger. Accordingly, no assurance can be given that we will be able to attract and retain key employees to the same extent that we have been able to in the past.
The Merger could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations. Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.
The Merger may place a significant burden on management and internal resources. It may also divert management’s time and attention from the day-to-day operation of our businesses and the execution of our other strategic initiatives. This could adversely affect our financial results. In addition, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger, and many of these fees and costs are payable regardless of whether or not such transaction is consummated.
Any of the foregoing could materially and adversely affect our business, our financial condition and our results of operations and prospects.
The Merger may not be consummated within the intended timeframe, or at all, and the failure to consummate the Merger will adversely affect the market price of our common stock and could adversely affect our business, results of operations and financial condition.
There can be no assurance that the Merger will be consummated within the intended timeframe, or at all. The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the Merger, including the expiration or termination of any applicable waiting periods under the Hart-Scott-Rodino ("HSR") Antitrust Improvements Act of 1976, as amended (the “HSR Act”).
Subject to the satisfaction or, to the extent permitted by law, waiver of requisite closing conditions, including the expiration or termination of the requisite statutory waiting period under the HSR Act described below, the Company currently expects the Merger to be completed in the second half of calendar year 2025. However, there can be no assurance that the remaining closing conditions will be satisfied (or waived, if applicable), and if all closing conditions are satisfied (or waived, if applicable), we can provide no assurance that the Merger will be consummated promptly or at all. There may be a significant or longer than expected time period between the approval of the Merger by our shareholders o n September 4, 2025 and the closing of the Merger, due to the timing of required regulatory approvals, satisfaction of other closing conditions, or other factors, including those described herein.
For instance, at any time before the effective time of the Merger, notwithstanding the expiration or termination of the waiting period under the HSR Act, the Federal Trade Commission, the Antitrust Division of the Department of Justice, or any state could take action under antitrust laws as it deems necessary or desirable in the public interest with respect to the Merger, including seeking to enjoin the completion of the Merger, to rescind the Merger, or to conditionally approve the Merger upon the divestiture of assets, or to impose restrictions on the our operations or the operations of 365 Retail Markets following the completion of the Merger. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. There can be no assurance that the Merger will not be challenged on antitrust grounds or, if such a challenge is made, that the will not be .
The Merger is complex in nature, and unanticipated developments, including among other things, changes in law, the macroeconomic environment, market conditions, regulatory or geopolitical conditions, may affect our, or 365 Retail Market’s ability to close the Merger as currently expected and within the anticipated timeframe.
If the Merger is not consummated within the intended timeframe or at all, we may not realize some or all of the expected benefits of the Merger or may realize them on a different timeline than expected. The price of our common stock could significantly decline if the Merger is not consummated within the intended timeframe or at all. In addition, some costs related to the Merger must be paid whether or not the Merger is consummated, as we have already incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger. If the Merger is not consummated within the intended timeframe or at all, we may also experience negative reactions from our investors, customers, partners, suppliers, and employees. Along with transaction costs and fees, the Merger has required and will continue to require the attention and resources of our management team. If the Merger is not consummated within the intended timeframe or at all, our management team’s attention and resources will have been diverted from other uses with little to no additional benefit to the Company.
We have in the past, and may again in future, become subject to lawsuits relating to the Merger, which could adversely affect our business, financial condition and operating results.
We and/or our respective directors and officers have in the past, and may again in the future, become subject to lawsuits relating to the Merger. Such litigation is very common in connection with acquisitions of public companies, regardless of the merits of the underlying acquisition.
For instance, as previously disclosed, following the filing of our Preliminary Proxy Statement on Schedule 14A with the SEC on July 11, 2025 and the Definitive Proxy Statement (the “Proxy Statements”) in connection with the Merger, we received certain complaints and demand letters on behalf of purported Cantaloupe shareholders alleging deficiencies regarding the disclosures contained in the Proxy Statements. These complaints (the “Complaints”) asserted individual claims against the Company and the members of our board of directors for negligent misrepresentation and concealment and negligence, based upon information included in or omitted from the Proxy Statements. The Complaints sought, among other relief, an injunction the from consummating the Merger unless we the material information from the Proxy Statement, rescission of the Merger in the event it is consummated without our disclosure of the material information from the Proxy Statement and an award of costs, including attorneys’ and experts’ fees and expenses. In addition, we have received certain demand letters (the “Demand Letters”) regarding the disclosures contained in the Proxy Statements.
While we believe that the disclosures set forth in the Proxy Statements fully comply with all applicable law and deny the allegations set forth in the Complaints and Demand Letters, in order to moot the purported shareholders’ disclosure claims, to avoid nuisance and possible expense and disruption to the Merger and to provide additional information to our shareholders, on August 22, 2025, we filed additional supplemental proxy materials with the SEC, containing supplemental disclosures.
While we will evaluate and defend against the foregoing any similar actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation, including potential delays to the Merger, could have an adverse effect on our business, financial condition and operating results.
Risks related to our business
General economic, market or business conditions unrelated to our operating performance, including global supply chain disruptions and inflationary pressures and tariffs could adversely affect our business and results of operations.
The global payments technology industry depends heavily on the overall level of consumer, business and government spending. We are exposed to general economic conditions that affect consumer confidence, spending, and discretionary income and changes in consumer purchasing habits. A sustained deterioration in general economic conditions in the markets in which we operate, supply chain disruptions, geopolitical conflicts, political uncertainty, inflationary pressure, tariffs, elevated interest rates or interest rate fluctuations such as those that occurred recently, may adversely affect our financial performance by reducing the number or active devices, active customers and total number of transactions using our payment solutions.
A downturn in the economy and other adverse economic trends may accelerate the timing, or increase the impact of, risks to our financial performance. These trends could include the following:
• low levels of consumer and business confidence typically associated with recessionary environments may result in decreased spending by consumers;
• higher consumer debt levels or high unemployment may result in decreased spending by consumers;
• budgetary concerns in the United States and other countries could affect sovereign credit ratings, and impact consumer confidence and spending;
• supply chain disruptions may result in decreased spending by consumers whose ability to provide goods and services is materially impacted;
• supply chain disruptions could also impact our ability to purchase devices for existing or prospective customers;
• current and potential future inflationary pressures, which may adversely impact spending by consumers; and
• deterioration of emerging market economies, which tend to be more sensitive to adverse economic trends than the more established markets we serve.
In addition, climate-related events, including extreme weather events and natural disasters and their effect on critical infrastructure in the U.S. or internationally, could have similar adverse effects on our customers and our operations.
Impacts of widespread inflation and tariffs could negatively affect our industry.
Our own costs, including labor, hardware, services, technology providers, and other variable expenses could be impacted by severe, widespread or continuing inflation and the levying of tariffs. Our customer base includes many small businesses, some of which operate on tight margins. Our customers may not successfully navigate a rising cost environment, causing collection issues or bankruptcies. Inflation could seriously erode the discretionary buying decisions of consumers, impacting size of purchases or volumes at our unattended points of sale.
We only recently began to be profitable and if we incur losses in the future, the price of our shares can be expected to fall.
We experienced losses from inception through June 30, 2012, and from fiscal year 2015 through fiscal year 2022. For fiscal years 2025, 2024 and 2023, we recognized net income of $64.5 million, $12.0 million and $0.6 million, respectively. Despite recent profitability, there can be no assurance that we will continue to be profitable in the future. Accordingly, we may be required to use our cash and cash equivalents on hand and may raise capital to meet cash flow requirements including the issuance of common stock or debt financing. Additionally, if we incur losses in the future, the price of our common stock can be expected to fall.
If we are not able to implement successful enhancements and new features for our products and services, our business could be materially and adversely affected.
Our success depends on our ability to develop new products and services to address the rapidly evolving market for cashless payments and cloud and mobile solutions for the self-service retail markets. Rapid and significant technological changes continue to confront the industries in which we operate, including developments in proximity payment devices. These new services and technologies may be superior to, impair, or render obsolete the products and services we currently offer or the technologies we currently use to provide them. Incorporating new and acquired technologies into our products and services may require substantial expenditures and take considerable time, and we may not be successful in realizing a return on these development efforts in a timely manner or at all. There can be no assurance that any new products or services we develop and offer to our customers will achieve significant commercial acceptance. Our ability to develop new products and services may be inhibited by industry-wide standards, payment card networks, existing and future laws and regulations, resistance to change from our customers, of integration with a wide variety of legacy end-point machines, or third parties’ intellectual property rights. If we are to provide and new features for our products and services or to develop new products and services that market acceptance or that keep pace with rapid technological developments and evolving industry standards, our business would be materially and affected.
In addition, because our products and services are designed to operate with a variety of systems, infrastructures, and devices, we need to continuously modify and enhance our products and services to keep pace with changes in mobile, software, communication, and database technologies. We may not be successful in either developing these modifications and enhancements or in bringing them to market in a timely and cost-effective manner. Any failure of our products and services to continue to operate effectively with third-party infrastructures and technologies could reduce the demand for our products and services, result in dissatisfaction of our customers, and materially and adversely affect our business.
Substantially all of the service contracts with our customers are terminable for any or no reason upon thirty days advance notice.
Substantially all of our customers may terminate their services with us for any or no reason by providing us with thirty days' advance notice, subject to early termination fees. Accordingly, consistent demand for and satisfaction with our products by our customers is critical to our financial condition and future success. Problems, outages, defects, or other issues with our products or services or competition in the marketplace could cause us to lose a substantial number of our customers with minimal notice. If a substantial number of our customers were to exercise their termination rights, it would result in a material adverse effect to our business, operating results, and financial condition.
We may not successfully implement our go-to-market strategy which may adversely affect growth and profitability.
Our current core business is highly concentrated among several large customers in the vending industry. We have made inroads into other adjacent markets including micro-markets, laundry, gaming, entertainment, vehicle services, and other commercial payments applications and continued expansion into these markets is a substantial piece of our potential future growth prospects. Changing technology, customer preferences, and competitor actions may limit our ability to successfully grow and expand beyond our core business.
We engage in the outsourcing of engineering work, including outsourcing of software work overseas.
We may, from time-to-time, outsource engineering work related to the design, development, and operations of our products and services, typically to save money and gain access to additional engineering resources. We have worked, and expect to work in the future, with companies located in jurisdictions outside of the U.S., including, but not limited to Sweden, Romania, Columbia, Russia, Ukraine, India and Bangladesh. If we are unable to properly manage and oversee the outsourcing of engineering and other work to third parties located internationally that operate under different laws and regulations than those in the U.S., we could suffer the loss of valuable intellectual property, or the loss of the ability to claim such intellectual property, including patents and trade names. Additionally, instead of saving money, we could in fact incur significant additional costs because of inefficient engineering services and poor work product, which could harm our business, financial results, reputation, and brand.
The loss of one or more of our key customers could significantly reduce our revenues, results of operations, and reduce net income.
We have derived, and believe we will continue to derive, a significant portion of our revenues from one large customer or a limited number of large customers. Customer concentrations for the years ended June 30, 2025, 2024 and 2023 were as follows:
For the year ended June 30,
Single customer
Total revenue
The loss of such customers could materially adversely affect our revenues. Additionally, a major customer in one year may not purchase any of our products or services in another year, which may negatively affect our financial performance. We have offered, and may in the future offer, discounts to our large customers to incentivize them to continue to utilize our products and services. If we are required to sell products to any of our large customers at reduced prices or unfavorable terms, our revenue and earnings could be materially adversely affected. Further, there is no assurance that our customers will continue to utilize our transaction processing and related services as our customer agreements are generally cancellable by the customer on thirty days notice.
Increases in card association and debit network interchange fees could increase our operating costs or otherwise adversely affect our operations.
We are obligated to pay interchange fees and other network fees set by the bankcard networks to the card issuing bank and the bankcard networks for each transaction we process through our network. From time to time, card associations and debit networks increase the organization and/or processing fees, known as interchange fees that they charge. Under our processing agreements with our customers, we are permitted to pass along these fee increases to our customers through corresponding increases in our processing fees. Passing along such increases could result in some of our customers canceling their contracts with us. Consequently, it is possible that competitive pressures will result in us absorbing some or all of the increases in the future, which would increase our operating costs, reduce our gross profit and adversely affect our business.
Our efforts to expand into international markets may not be successful; our products and services may not gain traction in new markets; and managing international operations may be challenging or may fail.
As we seek to expand into international markets, we may not be successful, or our plans may be delayed. Our products will need to be localized in some cases and if our localization efforts fail or are delayed or our products and services do not gain traction in new markets, our business could be adversely affected.
Geopolitical conflicts, including the conflict between Russia and Ukraine and the conflicts between Israel and Hamas and Israel and Iran, may adversely affect our business and results of operations.
While we do not currently have employees, customers or corporate offices in impacted areas, we have worked, and expect to work in the future, with companies located in jurisdictions outside of the U.S., including, but not limited to Ukraine. In addition, we are focused on international expansion. As a result, our operations and international expansion efforts could be impacted by economic, political and other conditions resulting from the current conflict between Russia and Ukraine and the conflicts between Israel and Hamas and Israel and Iran, which could, among other things, lead to a reduction in consumer, government or corporate spending, international sanctions, embargoes, heightened inflation, volatility in global financial markets, increased cyber disruptions or attacks, higher supply chain costs and increased tensions between the United States and countries in which we operate, which could result in charges related to the recoverability of assets, including financial assets, long-lived assets and goodwill and other losses, and could adversely affect our financial position and results of operations. To the extent the Russia-Ukraine conflict or the Israel-Hamas and Israel-Iran affects our business, it may also have the effect of heightening many other risks in this Annual Report, any of which could have a material effect on our business and results of operations.
Increased scrutiny from shareholders, customers and other stakeholders regarding our environmental, social, and governance, or sustainability responsibilities, could adversely impact our liquidity, results of operations, reputation, and stock price.
Shareholders, customers and other stakeholders have begun to consider how corporations are addressing environmental, social and governance (“ESG”) issues. Government regulators, investors, customers and the general public are increasingly focused on ESG practices and disclosures, and views about ESG are diverse and rapidly changing. These shifts in investing priorities may result in adverse effects on the trading price of our common stock if investors determine that the Company has not made sufficient progress on ESG matters. We could also face potential negative ESG-related publicity in traditional media or social media if shareholders or other stakeholders determine that we have not adequately considered or addressed ESG matters.
Operational and liquidity
Disruptions to our systems, breaches in the security of transactions involving our products or services, or failure of our processing systems could adversely affect our reputation, business and results of operations.
We rely on information technology and other systems to transmit financial information of consumers making cashless transactions and to provide accounting and inventory management services to our customers. As such, the information we transmit and/or maintain is exposed to the ever-evolving threat of compromised security, in the form of a risk of potential breach, system failure, computer virus, cyber-attack or unauthorized or fraudulent use by consumers, customers, company employees, or employees of third party vendors. While we have implemented various cybersecurity defense mechanisms and risk management initiatives, there can be no assurance that such mechanisms and initiatives will be effective, and may experience a cybersecurity breach. A cybersecurity breach of our informational technology systems, or those of third parties upon whom we rely, could result in disclosure of confidential information and intellectual property, or cause operational disruptions and compromised data. We may be unable to anticipate or prevent techniques to obtain access or to systems because they change frequently and often are not detected until after an has occurred. Further, cybersecurity attacks are becoming more frequent and sophisticated, including through emerging AI technologies, which may intensify or cybersecurity risks or introduce new risks.
In addition, our processing systems may experience errors, interruptions, delays or damage from a number of causes, including, but not limited to, power outages, hardware, software and network failures, internal design, manual or usage errors, terrorism, workplace violence or wrongdoing, catastrophic events, climate-related events such as natural disasters and severe weather conditions. The steps we take to deter and mitigate these risks, including annual validation of our compliance with the Payment Card Industry Data Security Standard, may not be successful, and any resulting compromise or loss of data or systems could adversely impact the marketplace acceptance of our products and services, and could result in significant remedial expenses to not only assess and repair any to our systems, but also to reimburse customers for that occur from service or the use of confidential data. Additionally, we could become subject to significant , , and of reputation, potentially impacting our financial results.
Furthermore, the technology systems of businesses that we have acquired, or may acquire, as well as their practices related to the collection, use, maintenance, and disclosure of data, could present issues that we were not able to identify prior to the acquisition or other issues that continue to pose risk to use, such as cybersecurity vulnerabilities or past cybersecurity or privacy incidents. Following an acquisition, we take steps to ensure our data and system security protection measures cover the acquired business as part of our integration process. As such, there may be a period of increased cybersecurity risk during the period between closing an acquisition and the completion of our data and system security integration. Furthermore, despite these efforts, especially in light of increasingly sophisticated techniques used in cybersecurity attacks, our information technology systems and those of third parties with who we do business or communicate may be damaged, disrupted, or shut down due to attacks by unauthorized access, malicious software, computer viruses, , hardware , or other events and in these circumstances where we cannot fully anticipate, detect, repel, or implement fully preventative measures, our recovery plans may be or .
We depend on our key personnel and, if they leave us, or if we are unable to attract highly skilled personnel, our business could be adversely affected.
While we have maintained business continuity and operational success despite recent management changes over the past several years, our success and future growth also depends, to a significant degree, on the skills and continued services of our management team. Further, due to the complexity of the work required to make needed improvements within the Company, it may be difficult for us to retain existing senior management and new hires, sales personnel, and development and engineering personnel critical to our ability to execute our business plan, which could result in harm to key customer relationships, loss of key information, expertise or know-how and unanticipated recruitment and training costs.
We may experience a loss of productivity due to the departure of key personnel and the associated loss of institutional knowledge, or while new personnel integrate into our business and transition into their respective roles.
Our future success also depends on our ability to attract and motivate highly skilled technical, managerial, sales, marketing and customer service personnel, including members of our management team.
The termination of our relationships with certain third-party suppliers upon whom we rely for services that are critical to our products could adversely affect our business and delay achievement of our business plan.
The operation of our networked devices depends upon the capacity, reliability and security of services provided to us by our wireless telecommunication services providers, equipment manufacturers and other suppliers. In addition, if we terminate relationships with our current telecommunications service providers and other third-party suppliers, we may have to replace hardware that is part of our existing ePort, Seed, or other products that are already installed in the marketplace. This could significantly harm our reputation and could cause us to lose customers and revenue.
We rely on other card payment processors, and if they fail or no longer agree to provide their services or we fail to operate in compliance with the requirements of those relationships, our customer relationships could be adversely affected, and we could lose business.
We rely on agreements with other large payment processing organizations to enable us to provide card authorization, data capture and transmission, settlement and merchant accounting services for the customers we serve. The termination by our card processing providers of their arrangements with us or their failure to perform their services efficiently and effectively would adversely affect our relationships with the customers whose accounts we serve and may cause those customers to terminate their processing agreements with us.
Further, substantially all of the cashless payment transactions handled by our network involve the three largest credit card associations. If we fail to comply with the applicable standards or requirements of these card associations relating to security, they could suspend or terminate our registration with them. The termination of our registration with them or any changes in the respective rules that would impair our registration with them could require us to stop providing cashless payment services through our network. In such event, our business plan and/or competitive advantages in the market place would be materially adversely affected.
Disruptions at other participants in the financial system could prevent us from delivering our cashless payment services.
The operations and systems of many participants in the financial system are interconnected. Many of the transactions that involve our cashless payment services rely on multiple participants in the financial system to accurately move funds and communicate information to the next participant in the transaction chain. A disruption for any reason at one of the participants in the financial system could impact our ability to cause funds to be moved in a manner to successfully deliver our services. Although we work with other participants to avoid any disruptions, there is no assurance that such efforts will be effective. Such a disruption could lead to the inability for us to deliver services, reputational damage, lost customers and lost revenue, loss of customers’ confidence, as well as additional costs, all of which could have a material adverse effect on our revenue, profitability, financial condition, and future growth.
Any increase in chargebacks not paid by our customers may adversely affect our results of operations, financial condition and cash flows.
In the event a dispute between a cardholder and a customer is not resolved in favor of the customer, the transaction is normally charged back to the customer and the purchase price is credited or otherwise refunded to the cardholder. If we are unable to collect such amounts from the customer's account, or if the customer refuses or is unable, due to closure, bankruptcy or other reasons, to reimburse us for a chargeback, we bear the loss for the amount of the refund paid to the cardholder. We may experience significant losses from chargebacks in the future. Any increase in chargebacks not paid by our customers could have a material adverse effect on our business, financial condition, results of operations and cash flows. We have policies to manage customer-related credit risk and attempt to mitigate such risk by monitoring transaction activity. Notwithstanding our programs and policies for managing credit risk, it is possible that a default on such obligations by one or more of our customers could have a material effect on our business.
We may not fully realize the benefits of acquisitions, it may take longer than we anticipate for us to achieve those benefits, they may be difficult to integrate, may disrupt our business, or divert management attention and may adversely affect our financial condition.
We could acquire additional products, technologies, or businesses to complement or expand our existing business. We may be unable to negotiate favorable terms in a timely manner or at all. Negotiation and integration of these types of potential business combinations could divert management’s time and resources. In addition, we may encounter unanticipated costs, operational challenges, or potential disruption of our business and diversion of management’s attention from our core business. We may not realize the anticipated benefits from our acquisitions. We could reduce the cash that would otherwise be available to fund operations or other purposes, or we could incur debt, potentially on unfavorable terms.
Additionally, for any future acquisition, we need to determine the appropriate level of integration of products, services, associates, and information technology, financial, human resources, compliance, and other systems and processes, and then successfully manage that integration into our corporate structure. Integration can be a complex and time-consuming process, and if the integration is not fully successful or is delayed for a material period of time, we may not achieve the anticipated synergies or benefits of the acquisition. In addition, the integration of businesses may create complexity in our financial systems, internal controls, technology and cybersecurity systems, and operations and may make them more difficult to manage. Even if the target companies are successfully integrated, the acquisitions may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products or services, and expose us to additional risks and liabilities.
Our dependence on proprietary technology and limited ability to protect our intellectual property may adversely affect our ability to compete.
Challenge to our ownership of our intellectual property could materially damage our business prospects. Our technology may infringe upon the proprietary rights of others. Our ability to execute our business plan is dependent, in part, on our ability to obtain patent protection for our proprietary products, maintain trade secret protection and operate without infringing the proprietary rights of others.
As of June 30, 2025, the United States Government and other countries have granted us 143 patents, of which 49 are still in force. Our patents expire between 2024 and 2038. There can be no assurance that we will be able to successfully renew any of these patents following their expiration. We also have a number of pending patent applications, and will consider filing applications for additional patents covering aspects of our future developments, although there can be no assurance that we will do so. In addition, there can be no assurance that we will maintain or prosecute these applications. There can be no assurance that:
• any of the remaining patent applications will be granted to us;
• we will develop additional products that are patentable or that do not infringe the patents of others;
• any patents issued to us will provide us with any competitive advantages or adequate protection for our products;
• any patents issued to us will not be challenged, invalidated or circumvented by others; or
• any of our products would not infringe the patents of others.
If any of our products or services is found to have infringed any patent, there can be no assurance that we will be able to obtain licenses to continue to manufacture, use, sell, and license such product or service or that we will not have to pay damages and/or be enjoined as a result of such infringement.
If we are unable to adequately protect our proprietary technology or fail to enforce or prosecute our patents against others, third parties may be able to compete more effectively against us, which could result in the loss of customers and our business being adversely affected. Patent and proprietary rights litigation entails substantial legal and other costs and diverts Company resources as well as the attention of our management. There can be no assurance we will have the necessary financial resources to appropriately defend or prosecute our intellectual property rights in connection with any such litigation.
We may require additional financing or find it necessary to raise capital to sustain our operations and without it we may not be able to achieve our business plan.
At June 30, 2025, we had a net working capital surplus of $70.5 million and cash and cash equivalents of $51.1 million. We had net cash provided by operating activities of $20.3 million, $27.7 million, and $14.2 million for fiscal years ended 2025, 2024, and 2023, respectively. We may need additional funds to continue these operations. We may also need additional capital to respond to unusual or unanticipated non-operational events. Should the financing that we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could have a material adverse effect on our business, operating results, financial condition and future prospects.
Failure to comply with any of the financial covenants under the Company’s debt facilities could result in an event of default which may accelerate our outstanding indebtedness or other obligations and have a material adverse impact on our business, liquidity position and financial position.
We are party to an amended and restated credit agreement with JPMorgan Chase Bank, N.A. and Capital One, N.A. which provides for a $30 million secured revolving credit facility (as amended, the “2025 Revolving Facility”) and a $40 million secured term facility (as amended, the “2025 Secured Term Facility”) and a $30 million secured delayed draw term loan facility (the "Delayed Draw Term Loan Facility", and together with the 2025 Revolving Facility and 2025 Secured Term Facility, the “2025 Credit Facility”).
The 2025 Credit Facility has a five-year maturity and includes customary representations, warranties and covenants, and acceleration, indemnity and events of default provisions, including, among other things, two financial covenants. The first financial covenant requires the Company to maintain a total leverage ratio of not more than 3.50 to 1.00 on the last day of any fiscal quarter. However, if a material acquisition occurs, the Company is required to maintain a total leverage ratio not greater than 4.00 to 1.00 on the last day of the fiscal quarter for the next four fiscal quarters following the material acquisition. The second financial covenant does not permit the Company to have a fixed charge coverage ratio of less than 1.15 to 1.00 for four consecutive fiscal quarters.
We were in compliance with its financial covenants as of June 30, 2025. Failure to comply with the foregoing financial covenants, if not cured or waived, will result in an event of default that could trigger acceleration of our indebtedness, which would require us to repay all amounts owed under the 2025 Credit Facility and could have a material adverse impact on our business, liquidity position and financial position.
We cannot be certain that our future operating results will be sufficient to ensure compliance with the financial covenants in the 2025 Credit Facility or to remedy any defaults. In addition, in the event of any event of default and related acceleration, we may not have or be able to obtain sufficient funds to make the accelerated payments required under the 2025 Credit Facility.
Upon the consummation of the Merger, our 2025 Credit Facility will be paid off in full. However, there can be no assurance that the Merger will be consummated within the anticipated timeline or at all. For additional discussion regarding our risks related to the Merger, see the risks described under the caption “Risks related to the Merger” in this Annual Report. In the event our indebtedness under the 2025 Credit Facility is not repaid in connection with the consummation of the Merger, our indebtedness exposes us to certain risks, including those risks set forth above.
Legal, regulatory, and compliance risks
We are subject to laws and regulations that affect the products, services and markets in which we operate. Failure by us to comply with these laws or regulations would have an adverse effect on our business, financial condition, or results of operations.
We are, among other things, subject to certain banking regulations and credit card association regulations. Failure to comply with these regulations may result in the suspension of our business, the limitation, suspension or termination of service, and/or the imposition of fines that could have an adverse effect on our financial condition. Additionally, changes to legal rules and regulations, or interpretation or enforcement thereof, could have a negative financial effect on us or our product offerings. To the extent this occurs, we could be subject to additional technical, contractual or other requirements as a condition of our continuing to conduct our payment processing business. These requirements could cause us to incur additional costs, which could be significant, or to lose revenues to the extent we do not comply with these requirements.
We are subject to additional risks with respect to our current and potential international operations.
We are subject to laws, regulations and business practices of the foreign jurisdictions in which we operate. These laws, regulations and business practices expose us to risks that are different than or in addition to those commonly found in the United States. Risks relating to our international operations and properties include:
• changing governmental rules and policies;
• enactment of laws restricting the ability to remove profits earned from activities within a particular country to a person’s or company’s country of origin;
• changes in laws or policies governing foreign trade or investment and use of foreign operations or workers, and any negative sentiments towards multinational companies as a result of any such changes to laws, regulations or policies or due to trends such as political populism and economic nationalism;
• variations in currency exchange rates and the imposition of currency controls;
• adverse market conditions caused by terrorism, civil unrest, natural disasters, infectious disease and changes in international, national or local governmental or economic conditions;
• business disruptions arising from public health crises and outbreaks of communicable diseases;
• the willingness of U.S. or international lenders to make loans in certain countries and changes in the availability, cost and terms of secured and unsecured debt resulting from varying governmental economic policies;
• the imposition of unique tax structures and changes in other tax rates and other operating expenses in particular countries, including the potential imposition of adverse or confiscatory taxes;
• the potential imposition of restrictions on currency conversions or the transfer of funds;
• general political and economic instability; and
• our limited experience and expertise in foreign countries, particularly European countries, relative to our experience and expertise in the United States.
If any of the foregoing risks were to materialize, they could materially and adversely affect us.
We could be subject to claims and lawsuits, which could require significant additional management time and attention, result in significant additional legal expenses or result in government enforcement actions.
Litigation, investigation or other actions that may be filed or initiated against us may be time consuming and expensive. We cannot predict what losses we may incur in these matters, and contingencies related to our obligations under the federal and state securities laws, or in other legal proceedings or governmental investigations or proceedings related to these matters.
Any legal proceedings, if decided adversely to us, could result in significant monetary damages, penalties and reputational harm, and will likely involve significant defense and other costs. Further, our insurance may not cover all claims that have been or may be brought against us, and insurance coverage may not continue to be available to us at a reasonable cost. As a result, we may be exposed to substantial uninsured liabilities, including pursuant to our indemnification obligations, which could materially adversely affect our business, prospects, results of operations and financial condition.
Failure to maintain effective systems of internal control over financial reporting and disclosure controls and procedures could cause a loss of confidence in our financial reporting and adversely affect the trading price of our common stock.
Effective internal control over financial reporting is necessary for us to provide accurate financial information. Section 404 of the Sarbanes-Oxley Act requires us to evaluate the effectiveness of our internal control over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of our internal control over financial reporting in our An nual Report on Form 10-K.
We have identified material weaknesses in our internal controls in the past, including as disclosed in our Annual Report on Form 10-K for the year ended June 30, 2023. We have also previously restated certain of our consolidated financial statements (most recently in February 2020 for the fiscal period ended September 20, 2019). We may identify additional material weaknesses or significant deficiencies in our internal controls in the future. If any such control deficiencies occur in the future, we may not detect errors on a timely basis and our financial statements could be materially misstated. As a result, we may be forced to restate our financial statements and take other actions which will take significant financial and managerial resources, as well as be subject to fines and other government enforcement actions. A restatement of our financial results could, among other potential effects, impact our ability to timely file our periodic reports until the is completed. In addition, investors could confidence in the accuracy and completeness of our financial reports, which could affect the market price of our common stock, perhaps significantly. In addition, we could become subject to , or with stockholders, which could have an impact on our business.
Risks related to our common stock
Director and officer liability is limited and shareholders may have limited rights to recover against directors for breach of fiduciary duty.
As permitted by Pennsylvania law, our by-laws limit the liability of our directors for monetary damages for breach of a director’s fiduciary duty except for liability in certain instances. As a result of our by-law provisions and Pennsylvania law, shareholders may have limited rights to recover against directors for breach of fiduciary duty. In addition, our by-laws and indemnification agreements entered into by the Company with each of the officers and directors provide that we shall indemnify our directors and officers to the fullest extent permitted by law.
An active trading market for our common stock may not be maintained.
We can provide no assurance that we will be able to maintain an active trading market for our common stock on the Nasdaq Global Select Market, or any other exchange in the future. If an active market for our common stock is not maintained, or if we fail to satisfy the continued listing standards of Nasdaq for any reason and our securities are delisted, it may be difficult for our security holders to sell their securities without depressing the market price for the securities or at all. An inactive trading market may also impair our ability to both raise capital by selling shares of common stock and complete other acquisitions by using our shares of common stock as consideration.
If securities and/or industry analysts fail to continue publishing research about our business, if they change their recommendations adversely, or if our results of operations do not meet their expectations, our stock price and trading volume could decline.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly for any reason, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. In addition, it is likely that, in some future period, our operating results will be below the expectations of securities analysts or investors. If one or more of the analysts who cover us downgrade our stock, or if our results of operations do not meet their expectations, our stock price could decline.
Exclusion from the Russell 2000® Index could result in a decline in the price of our stock.
Although we are currently included in the Russell 2000® Index, if our market capitalization were to fall below the minimum necessary, we could be dropped from inclusion. If we were no longer included in the Russell 2000® Index, it could result in a decline in demand for our common stock and, accordingly, the trading price of our common stock following such events.
Upon certain fundamental transactions involving the Company, such as a merger or sale of substantially all of our assets, we may be required to distribute the liquidation preference then due to the holders of our Series A Preferred Stock which would reduce the amount of the distributions otherwise to be made to the holders of our common stock in connection with such transactions.
Our articles of incorporation provide that upon a merger or sale of substantially all of our assets or upon the disposition of more than 50% of our voting power, the transaction will be treated as a liquidation if approved by the holders at least 50% of the preferred stock. Upon our liquidation, the holders of our preferred stock are entitled to receive a liquidation preference prior to any distribution to the holders of common stock which, as of June 30, 2025 was approximately $23.3 million, inclusive of accrued dividends. No dividend may be paid on our common stock until all accumulated and unpaid dividends on our preferred stock have been paid.
In addition, in accordance with the terms of the Merger Agreement, the Company expects to redeem, immediately prior to the effective time of the Merger, all shares of our Series A Preferred Stock that are issued and outstanding as of the closing of the Merger. Following such redemption, the shares of our Series A Preferred Stock will be canceled for no consideration at the effective time of the Merger. However, there can be no assurance that the Merger, and therefore the redemption of our Series A Preferred Stock, will be consummated within the anticipated timeline or at all.
Item 1B. Unresolved Staff Comments.
None.
Item 1C. Cybersecurity
Risk Management & Strategy
Our cybersecurity program is designed to safeguard the confidentiality, integrity and availability of information assets by monitoring the cyber threat landscape, internal threats and technological changes and through the development of controls to mitigate risk to the organization and our customers. While cybersecurity is a dynamic and constantly evolving field, we strive to minimize the occurrence and impact of unauthorized access, disruption to our information systems and are committed to staying informed about emerging threats, adopting industry best practices, and integrating feedback from our assessment and incidents. We deploy and manage both preventive and detective controls and processes to mitigate cybersecurity threats, including monitoring our network for known vulnerabilities and signs of unauthorized attempts to access our data and systems. We also deploy and manage preventive and detective controls and processes related to the mitigation of risks from our use of third-party service providers.
Our organization undergoes annual reviews by third-party consultants to help assess the implementation and operational effectiveness of the security controls implemented in our service environment which is in scope for Payment Card Industry Data Security Standard ("PCI DSS") and American Institute of Certified Public Accountants ("AICPA") System and Organization Controls ("SOC").
Our program is designed to guide our practices which are based on relevant industry frameworks and laws. This program consists of policies and procedures designed to manage material risks from cybersecurity threats, including training requirements, threat monitoring and detection and threat containment and risk assessments. Additionally, we leverage third-party firms to conduct routine external and internal penetration testing to emulate the common tactics and techniques of cyber threat actors and have processes to address identified vulnerabilities, although it may take time to mitigate or manage such vulnerabilities. The results of this testing are included in the Company's SOC report. Further, we also carry cyber security insurance, which is renewed annually and covers cyber events and business interruption. We closely monitor costs of breaches within the industry in an effort to ensure that our coverage is sufficient to address all reasonably foreseeable threats and levels of risk.
We have an Incident Management Policy ("IMP") and Incident Response Plan ("IRP") which helps enable us to quickly detect, respond to, and recover from third-party malicious attacks and potential security incidents. This plan includes formal steps to review incidents and implement improvements, including steps to involve the CISO and CTO as appropriate.
Oversight
Our Information Security Program is overseen by our Chief Information Security Officer (“CISO”), who reports to our Chief Technology Officer (“CTO”) . Our CISO oversees the third-party consultants who help assess our security controls and penetration testing previously described. The CTO provides oversight, leadership and direction for data risks, technology risks and information security risks. Our CISO leads the Cybersecurity organization and has the overall responsibility of implementing its strategy and objectives to build a strong cyber engineering function.
Our CISO has over 20 years of information technology experience with specialization in information security and risk management. Our CISO has industry recognized certifications including Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), Payment Card Industry Professional (PCI ISA & PCIP). Our CISO has worked in various information security roles at other large publicly traded companies.
The CISO and CTO report to the Board of Directors who have ultimate responsibility in overseeing enterprise risks, including cybersecurity threats.
Item 2. Properties.
Our current headquarters are located at 101 Lindenwood Drive, Malvern, Pennsylvania. All of our current locations are leased and expire in varying years outlined below. All of our leased facilities are used for corporate functions, product development, sales, and other purposes. We believe our existing facilities are sufficient for our current and future needs. The Company also leases other small facilities on a short term basis which are not included in the table below.
Location
Approximate Monthly Base Rent
Lease Expiration
Approximate Size
Atlanta, Georgia
July 2029
Malvern, Pennsylvania
March 2035
Denver, Colorado (1)
December 2026
River Falls, Wisconsin
November 2027
(1) This office space location is no longer utilized by the Company and has been sub-leased.
Item 3. Legal Proceedings.
We are a party to litigation and other proceedings that arise in the ordinary course of our business. We establish accruals for those matters in circumstances when a loss contingency is considered probable and the related amount is reasonably estimable. Any such accruals may be adjusted as circumstances change. Assessments of losses are inherently subjective and involve unpredictable factors. It is possible that future results of operations for any particular quarterly or annual period could be materially and adversely affected by any developments relating to the legal proceedings, claims and investigations.
Except as set forth in Note 18 - Commitments and contingencies to the consolidated financial statements in Part II, Item 8 of this Annual Report, we are not aware of any material pending legal or governmental proceedings as of the filing date of this Annual Report to which we are party, other than routine litigation incidental to our business.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock is traded on The NASDAQ Global Market under the symbol “CTLP”. As of September 2, 2025 , there were 436 h olders of record of our common stock an d 203 rec ord holders of the preferred stock. This number does not include stockholders for whom shares were held in a “nominee” or “street” name.
The holders of the common stock are entitled to receive such dividends as the Board of Directors of the Company may from time to time declare out of funds legally available for payment of dividends. Through the date hereof, no cash dividends have been declared on the Company’s common stock or preferred stock. No dividend may be paid on the common stock until all accumulated and unpaid dividends on the preferred stock have been paid. As of June 30, 2025, accumulated unpaid preferred stock dividends amounted to approximately $19.4 million . The preferred stock is also entitled to a liquidation preference over the common stock. As of June 30, 2025, the liquidation preference was approximately $23.3 million, inclusive of the $19.4 million unpaid dividends .
PERFORMANCE GRAPH
The following graph shows a comparison of the 5‑year cumulative total shareholder return for our common stock with The US Small-Cap Russell 2000® Index and the S&P 500 Information Technology Index in the United States. The graph assumes a $100 investment on June 30, 2020 in our common stock and in the Small-Cap Russell 2000® Index and the S&P 500 Information Technology Index, including reinvestment of dividends.
The Company was added as a member of the US Small-Cap Russell 2000 ® Index in June 2021. We have included the Small-Cap Russell 2000® Index replacing the Nasdaq Composite Index in our cumulative total return comparisons below, which reflects a change from the presentation in prior fiscal years.
COMPARISON OF 5‑YEAR CUMULATIVE TOTAL RETURN
Among Cantaloupe, Inc., The US Small-Cap Russell 2000® Index, and The S&P 500 Information Technology Index
Total Return For:
Jun-20
Jun-21
Jun-22
Jun-23
Jun-24
Jun-25
Cantaloupe, Inc.
US Small-Cap Russell 2000® Index
S&P 500 Information Technology Index
The information in the performance graph is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act of 1934, as amended, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into such a filing. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this Annual Report, as well as the discussion under “Item 1A. Risk Factors.” For further discussion of the business, industry, our products and services, competitive strengths, and growth strategy, see “Item 1. Business.” Unless stated otherwise, the comparisons presented in this discussion and analysis refer to the year-over-year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended June 30, 2025 and June 30, 2024. Discussion of fiscal year 2024 items and the year-over year comparison of changes in our financial condition and results of operations as of and for the fiscal years ended June 30, 2024 and June 30, 2023 can be found in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, which was previously filed with the SEC on September 10, 2024.
The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. Furthermore, the period-over-period comparison of our historical results is not necessarily indicative of the results that may be expected in the future.
OVERVIEW OF THE COMPANY
We are a global technology leader powering self-service commerce. We offer a comprehensive suite of solutions including micro-payment processing, self-checkout kiosks, mobile ordering, connected POS systems, and enterprise cloud software. Handling more than a billion transactions annually, our solutions enhance operational efficiency and consumer engagement across sectors like food & beverage markets, smart automated retail, hospitality, entertainment venues, laundromats and more. Committed to innovation, we aim to drive advancements in digital payments and business optimization, serving 34,896 customers in the U.S., U.K., EU countries, Australia, and Mexico.
Our fiscal year ends June 30. We generate revenue in multiple ways. For the fiscal year ended June 30, 2025, we derived approximately 59% of our revenue from transaction fees, 28% from subscription fees, and approximately 13% from equipment sales. Active Devices on our service include POS electronic payment devices, certified payment software, or the servicing of similar third-party installed POS terminals. Customers can obtain POS electronic payment devices from us in the following ways:
• purchasing devices directly from the Company or one of its authorized resellers;
• financing devices under the Company’s QuickStart Program, which are non-cancellable 60-months sales-type leases directly from the Company; and
• renting devices under the Company's Cantaloupe ONE program, which are typically 36-months duration agreements.
Recent Developments
Merger with 365 Retail Markets, LLC
On June 15, 2025, we entered into the Merger Agreement with 365 Retail Markets , Holdco, Holdco II and Merger Sub. Subject to the terms and conditions of the Merger Agreement, 365 Retail Markets has agreed to acquire the Company in exchange for the Merger Consideration. Upon the consummation of the Merger, we will cease to be a publicly traded company. We have agreed to various customary covenants and agreements, including, among others, agreements to conduct our business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. We do not believe these restrictions will prevent us from meeting our debt service obligations, ongoing costs of operations, working capital needs, or capital expenditure requirements. The Merger is expected to close in the second half of calendar year 2025 , subject to customary closing conditions, including the receipt of required regulatory approvals.
One Big Beautiful Bill Act
On July 4, 2025, new U.S. tax legislation was signed into law (known as the “One Big Beautiful Bill Act” or “OBBBA”) which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. In addition, the OBBBA makes changes to certain U.S. corporate tax provisions, but many are generally not effective until 2026. The Company is currently evaluating the impact of the new legislation but does not expect it to have a material impact on the results of operations.
Highlights
Highlights of the Company for the fiscal year ended June 30, 2025 are below:
• Revenues of $303 million, an increase of 13% year over year, led by higher transaction and subscription fees revenue.
• $3.4 billion in dollar volume of transactions for the year ended June 30, 2025 compared to $3.0 billion for the year ended June 30, 2024, an increase of $0.4 billion, or 13%.
• 1.28 million Active Devices as of June 30, 2025 compared to 1.22 million as of June 30, 2024, an increase of approximately 57 thousand Active Devices, or 5%.
• 34,896 Active Customers to our service as of June 30, 2025 compared to 31,466 as of June 30, 2024, an increase of 3,430 Active Customers, or 11%.
• We acquired SB Software, which is in the business of vending and coffee management in the U.K. The acquisition enhances Cantaloupe's operational capabilities and market reach in Europe.
• In August 2024, we launched Suites, a premium suite management system designed to streamline and enhance the hospitality suite experience at stadiums and venues. This new offering within Cantaloupe's Cheq platform, aims to redefine how venues manage premium suite pre-orders by providing a seamless, user-friendly solution for both suite owners and venue operators.
• In September 2024, we released a significant update to our Seed vending management system (VMS) platform which underscores our ongoing commitment to enhancing our core products and delivering exceptional user experience to our vending operators. The refreshed Seed platform offers a modernized user interface that is designed to improve usability and visual appeal. The update is optimized for mobile devices and enhances performance and stability.
• In October 2024, we launched our AdVantage program, which allows brands to engage with consumers through digital advertising on our point-of-sale (POS) touchscreen devices across the U.S. and Canada.
• In December 2024, we launched Smart Store. These are advanced, self-service retail solutions designed to address key issues such as labor shortages, theft and shrinkage, while maintaining a seamless consumer experience. Smart Stores work by unlocking after a customer presents payment at the POS. The customer then grabs the items, which are added to their cart, then completes the purchase by pressing "Pay" and walking away.
• In December 2024, we were selected by the San Jose Earthquakes, a Major League Soccer club, to be the POS technology solution and Cantaloupe’s Suites premium management system for all games and events at the stadium.
• In January 2025, we amended our outstanding credit facilities and entered into the 2025 Credit Facility. The 2025 Credit Facility provides for a $40 million secured term loan facility, a $30 million secured revolving credit, and a $30 million secured delayed draw term loan facility, taking our total borrowing capacity to $100 million.
• In January 2025, we launched Engage Pulse card readers for the arcade and amusement industry, which are designed to maximize revenue potential through a ladder pricing interface that allows players to pay once and then enjoy multiple plays. This feature enables the Engage Pulse to deliver a seamless consumer payment experience while increasing revenue for arcade and amusement operators.
• In January 2025, we held our annual user conference, Cantaloupe University, in Miami, Florida, where we showcased our latest technologies and provided two days of training and education around our entire platform and suite of products.
• In February 2025, we collaborated with Fundbox to launch Cantaloupe Capital, which provides small businesses with streamlined access to capital for expansion through equipment investments and flexible access to cash flow.
• In April 2025, we launched Go Micro, the industry's most affordable and versatile self-service micro market kiosk. The Go Micro offers all the essential features to successfully run a micro market.
• In April 2025, we continued our thought-leadership initiatives, including the release of our 2025 Micropayment Trends Report, which studied micro payment trends (transactions less than $10) at food and beverage vending and at amusement machines throughout the United States and Canada in 2024.
• In May 2025, we showcased a full suite of Smart Retail innovations at the 2025 National Automatic Merchandising Association (NAMA) Show in Las Vegas, Nevada, highlighting the Go Micro kiosk and new Smart Aisle.
• In May, 2025, we entered into a partnership with Carnival Cruise Line to provide POS technology at Celebration Key.
• In June 2025, we entered into the Merger Agreement, pursuant to which we will to be acquired by 365 Retail Markets. See Note 21 - Subsequent Events .
MARKET CONDITIONS
The self-service industry is highly competitive with service providers ranging from well-established enterprises to early-stage companies within the financial technology and software services industries. The markets for our products and services are characterized by evolving industry standards, aggressive pricing, continuous innovation, and changing consumer trends. We believe the following macroeconomic conditions and specific industry trends and uncertainties are most likely to impact our financial results:
• Our ability to meet rising demand from the increased adoption of cashier-less models via vending machines, self-service kiosks, and mobile ordering as consumer preferences for use of faster, simpler and more seamless digital purchase and payment experiences continues to grow;
• Our ability to implement successful enhancements and new features for our products and services and to successfully target, acquire and integrate new businesses;
• The broader implications of the macroeconomic environment, including a potentially sustained deterioration in general economic conditions in the markets in which we operate, including as a result of supply chain disruptions, geopolitical conflicts (including the conflicts between Russia and Ukraine, Israel and Hamas, and Israel and Iran), political uncertainty, inflationary pressure, tariffs, elevated interest rates or interest rate fluctuations such as those that occurred recently; and
• Ongoing labor challenges and inflation drive increased utility of actionable operational business intelligence from new technologies like machine learning and AI to drive operational efficiencies and operational transparency through modern, cloud-based logistics and inventory management solutions.
For a further discussion of trends, uncertainties and other factors that could affect our business performance and our financial and operating results, see the section entitled “Risk Factors” in Item 1A.
KEY METRICS
The following table shows certain financial and non-financial data that management believes give readers insight into certain trends and relationships about the Company’s financial performance. We believe the metrics (Active Devices, Active Customers, Total Number of Transactions and Total Dollar Volume of Transactions) are useful in allowing management and readers to evaluate our strategy of driving growth in devices and transactions.
Active Devices
Active Devices are devices that have communicated with us or have had a transaction in the last twelve months. Included in the number of Active Devices are devices that communicate through other devices that communicate or transact with us. For example, a self-service retail location that utilizes an ePort cashless payment device as well as Seed management services constitutes only one device.
Active Customers
The Company defines Active Customers as all customers with at least one Active Device.
Total Number of Transactions and Total Dollar Volume of Transactions
Transactions are defined as electronic payment transactions that are processed by our technology-enabled solutions. Management uses Total Number of Transactions and Total Dollar Volume of Transactions to evaluate the effectiveness of our new customer strategy and ability to leverage existing customers and partners.
As of and for the years ended
June 30, 2025
June 30, 2024
June 30, 2023
Devices:
Active Devices (thousands)
Customers:
Active Customers
Volumes:
Total Number of Transactions (millions)
Total Dollar Volume of Transactions (millions)
Subscription and transaction fees - Trailing 12 months (thousands)
Average revenue per unit (ARPU)
RESULTS OF OPERATIONS
Year Ended June 30,
Change
Percent Change
($ in thousands)
Transaction fees
Cost of transaction fees
Gross profit, transaction (1)
Gross margin, transaction
Subscription fees
Cost of subscription fees
Amortization (2)
Gross profit, subscription fees
Gross margin, subscription
Equipment sales
Cost of equipment sales
Gross profit, equipment (1)
Gross margin, equipment
Total gross profit
Total gross margin
(1) The Company's internal-use software assets and developed technology assets are not associated with transaction fees and equipment revenue.
(2) Amortization of internal-use software assets and developed technology assets. For the year ended June 30, 2025, the Company recognized additional charges of $3.0 million, due to certain capitalized internal-use software is no longer expected to provide future economic benefits as a result of changes in business strategy and evolving technology initiatives.
Revenues
Total revenues increased by $34.0 million, or 13%, from $268.6 million for the year ended June 30, 2024, to $302.5 million for the year ended June 30, 2025. The increase was attributable to a $23.4 million increase in transaction fees, an $8.3 million increase in subscription fees, and a $2.3 million increase in equipment sales.
The increase in transaction fees was primarily driven by increased average ticket items sold, increased average ticket price, increased processing volumes, and the acquisition Cheq, with an approximately 13% increase in total dollar volumes for the year ended June 30, 2025 compared to the prior fiscal year. There was also an increase in the total number of active devices relative to the prior fiscal year.
Our subscription fees increased approximately $8.3 million, or 11% for the year ended June 30, 2025 which is attributed to a continued focus of management to grow our recurring subscription services to our customer base and an increase in our active devices compared to last year as well as the acquisition of SB Software and Cheq.
Equipment revenue increased by $2.3 million primarily due to the increased sales of our Smart Stores product, which we launched in December 2024.
Costs of sales
Costs of sales increased $12.8 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The increase was attributed to a $11.3 million increase in cost of transaction fees, a $1.1 million increase in equipment costs, and a $0.4 million increase in cost of subscription fees. Cost of transaction fees increased primarily due to corresponding increases in transaction processing fee revenue and transaction processing volumes. Cost of equipment sales increased $1.1 million primarily due to increased equipment sales, in particular our new Smart Stores product.
Amortization
Amortization of internal-use software assets and developed technology assets increased $4.9 million for the year ended June 30, 2025 compared to the prior fiscal year, primarily as a result of certain capitalized internal-use software which is no longer expected to provide future economic benefits as a result of changes in business strategy and evolving technology initiatives and amortization of intangibles from the acquisitions of Cheq and SB Software.
Operating Expenses
Year ended June 30,
Change
Percent Change
($ in thousands)
Sales and marketing
Technology and product development
General and administrative
Investigation, proxy solicitation and restatement expenses, net of insurance recoveries
Integration, acquisition, due diligence, and license application expenses
Depreciation and amortization
Total operating expenses
Total operating expenses. Operating expenses increased by $13.0 million, or 14.7%, for the year ended June 30, 2025 compared to the prior fiscal year. The change was primarily attributed to an increase of $2.7 million in general and administrative expenses, a $2.8 million increase in sales and marketing costs, a $5.3 million increase in depreciation and amortization, a $1.5 million increase in investigation, proxy solicitation and restatement expenses, and a $0.9 million increase in technology and product development expenses. This increase was partially offset by a $0.2 million decrease in Integration, acquisition, due diligence, and license application expenses. See further details within individual categories below.
Sales and marketing. Sales and marketing expenses increased approximately $2.8 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The change was primarily due to an increased $1.4 million due to advertising and trade show expenses and higher sales and marketing employee personnel costs in the current year with a $1.1 million increase due to employee compensation and benefits. The increased personnel costs are to support our expanding business and service offerings in the United States and international markets. Sales and marketing increased by $0.3 million due to various other marketing expenses.
Technology and product development. Technology and product development expenses increased approximately $0.9 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The increase in the current year was driven by a $1.0 million increase in subscriptions and cloud hosting fees, a $0.1 million increase in compensation and benefits, offset by a $0.1 decrease in contractor expenses and a $0.1 decrease in various other technology and product development expenses.
General and administrative expenses. General and administrative expenses increased approximately $2.7 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. This is due to a $3.2 million increase in compensation and benefits, $1.3 million smaller release in sales and use taxes reserves compared to the same period last year, a $0.9 increase in bad debt expense and $0.1 million in other general and administrative expenses. This is offset by a $2.7 million decrease in contractor expenses.
Investigation, proxy solicitation and restatement expenses, net of insurance recoveries. In April 2024, we agreed to a net settlement of approximately $1.5 million with a third-party insurance carrier related to the reimbursement of expenses associated with the 2019 Investigation. The settlement was recognized as a gain in our consolidated statement of operations for the year ended June 30, 2024. There were no investigation, proxy solicitation, restatement expenses or insurance recoveries for the year ended June 30, 2025.
Integration, acquisition, due diligence, and license application expenses. For the fiscal year ended June 30, 2025, the Company integration, acquisition, due diligence and license application expenses were $1.6 million from accounting, legal, investing banking advisors and consulting services for the successful completion of the SB acquisition and seller due diligence fees associated with the sale of the Company as described in Note 21 - Subsequent Events . This is offset by a $0.6 million decrease in the fair value of the contingent consideration. For the fiscal year ended June 30, 2024, the Company incurred professional service fees of $1.2 million from accounting, legal, investing banking advisors and consulting services for the successful completion of the Cheq acquisition, as well as post-acquisition costs associated with the integration process.
Depreciation and amortization. Depreciation and amortization expense increased $5.3 million for the year ended June 30, 2025 compared to the prior fiscal year as a result of certain capitalized internal-use software which is no longer expected to provide future economic benefits as a result of changes in business strategy and evolving technology initiatives. Depreciation and amortization expenses also increased due to the amortization of intangibles from the acquisitions of Cheq and SB Software.
Other (expense) income, Net
Year ended June 30,
Change
Percent Change
($ in thousands)
Other (expense) income:
Interest income
Interest expense
Other income (expense), net
Total other (expense) income, net
Other (expense) income, net
Total other expense, net for the fiscal year ended June 30, 2025 was $0.1 million, compared to an income of $1.2 million for the year ended June 30, 2024.
Interest income decreased $0.4 million primarily due to a decrease in the finance receivables balance associated with our equipment financing program. Our interest expense decreased $0.2 million primarily due to the modification of our long-term debt as described in Note 7 - Debt and Other Financing Arrangements .
Other income (expense), net increased primarily due to realized and unrealized gains on foreign currency transactions.
Non-GAAP Financial Measures
We use non-GAAP financial measures for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for the financial measures prepared and presented in accordance with GAAP. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with our net income as determined in accordance with GAAP, and are not a substitute for or a measure of our profitability or net earnings.
Adjusted Gross Profit and Margin
We define Adjusted Gross Profit as revenue less cost of sales, exclusive of depreciation of internally-developed software and amortization of intangible assets related to technologies obtained through acquisitions. We believe this non-GAAP measure is useful to view the resulting figures excluding the aforementioned non-cash charges because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations and such amounts vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. We define Adjusted Gross Margin as Adjusted Gross Profit divided by revenue.
We have provided below a reconciliation of U.S. GAAP gross profit to Adjusted Gross Profit and Adjusted Gross Margin for the fiscal years ended June 30, 2025 and 2024:
Year Ended June 30,
Change
Percent Change
($ in thousands)
Gross profit, transaction (GAAP)
Gross margin, transaction (GAAP)
Gross profit, subscription (GAAP)
Amortization (1)
Adjusted Gross Profit, subscription fees (non-GAAP)
Adjusted Gross Margin, subscription fees (non-GAAP)
Gross profit, equipment (GAAP)
Gross margin, equipment (GAAP)
Total Adjusted Gross Profit (non-GAAP)
Total Adjusted Gross Margin (non-GAAP)
(1) Amortization of internal-use software assets and developed technology assets. For the year ended June 30, 2025, the Company recognized additional charges of $3.0 million, due to certain capitalized internal-use software is no longer expected to provide future economic benefits as a result of changes in business strategy and evolving technology initiatives.
Total Adjusted Gross Margin (non-GAAP) was 40.9% for the year ended June 30, 2025, from 38.2% for the year ended June 30, 2024. The increase in Adjusted Gross Margin was primarily driven by an increase in our subscription fees revenue which is inherently a higher margin revenue stream. Additionally, our equipment sales gross margins improved from the prior fiscal year primarily driven by the diversification of our equipment sales and higher margins on certain micro market equipment.
Adjusted EBITDA
We define Adjusted EBITDA as U.S. GAAP net income before (i) interest income, (ii) interest expense, (iii) income tax provision, (iv) depreciation, (v) amortization, (vi) stock-based compensation expense, and (vii) certain other significant infrequent or unusual losses and gains that are not indicative of our core operations such as (a) investigation, proxy solicitation and restatement expenses, net of insurance recoveries, (b) integration, acquisition, due diligence, and license application expenses, (c) costs as a result of auditor transitions, (d) severance, and (e) remediation expenses.
We believe Adjusted EBITDA is useful for investors in comparing our financial performance to other companies and from period to period. Adjusted EBITDA is widely used by investors and securities analysts to measure a company’s operating performance without regard to items such as depreciation and amortization, interest expense, and interest income, which can vary substantially from company to company depending on their financing and capital structures and the method by which their assets were acquired. In addition, Adjusted EBITDA eliminates the impact of certain items that may obscure trends in the underlying performance of our business. Additionally, we utilize Adjusted EBITDA as a metric in our executive officer and management incentive compensation plans.
Adjusted EBITDA has limitations as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. For example, although depreciation expense is a non-cash charge, the assets being depreciated may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new asset acquisitions. In addition, Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. Adjusted EBITDA also does not reflect changes in, or cash requirements for, our working capital needs; interest expense, or the cash requirements necessary to service interest or principal payments on our debt, which reduces the cash available to us; or tax payments that may represent a reduction in cash available to us. The expenses and other items which are excluded from the calculation of Adjusted EBITDA may differ from the expenses and other items that other companies may exclude from Adjusted EBITDA when they report their financial results.
Below is a reconciliation of U.S. GAAP net income to Adjusted EBITDA for the fiscal years ended June 30, 2025 and 2024:
Year ended June 30,
($ in thousands)
Net income
Less: interest income
Plus: interest expense
Plus: income tax (benefit) provision
Plus: depreciation expense included in cost of sales for rentals
Plus: depreciation and amortization expense in operating expenses
EBITDA
Plus: stock-based compensation (a)
Plus: investigation, proxy solicitation and restatement expenses, net of insurance recoveries (b)
Plus: integration, acquisition, due diligence, and license application expenses (c)
Plus: auditor transition costs
Plus: severance expenses (d)
Plus: remediation expenses (e)
Adjustments to EBITDA
Adjusted EBITDA
(a) We have excluded stock-based compensation, as it does not reflect our cash-based operations.
(b) We have excluded the costs and corresponding reimbursements related to the 2019 Investigation, because we believe that they represent charges that are not related to our core operations. During the year ended June 30, 2024, we received $1.5 million in insurance reimbursement for legal fees and expenses incurred in connection with the 2019 Investigation. Accordingly, Adjusted EBITDA contains a negative adjustment.
(c) We have excluded expenses incurred in connection with business acquisitions as it does not represent recurring costs or charges related to our core operations. We have also excluded expenses incurred associated with the acquisition of the Company as described in Note 21 - Subsequent Events and one-time license applications fees.
(d) Consists of expenses incurred in connection with non-recurring severance charges related to work force reduction.
(e) Consists of expenses incurred in connection with fully remediating previously identified material weaknesses in our internal control over financial reporting.
LIQUIDITY AND CAPITAL RESOURCES
Merger with 365 Retail Markets
The Merger Agreement with 365 Retail Markets imposes certain limitations on how we conduct our business during the period between the execution of the Merger Agreement and the effective time of the Merger, including limitations on our ability to, among other things, engage in certain acquisitions, incur indebtedness or issue or sell new debt securities.
Sources and Uses of Cash
Historically, we have financed our operations primarily through cash from operating activities, debt financings, and equity issuances. Our primary sources of capital available are cash and cash equivalents on hand of $51.1 million as of June 30, 2025 and the cash that we expect to be provided by operating activities.
We believe that our current financial resources will be sufficient to fund its current twelve-month operating budget from the date of issuance of these consolidated financial statements. Our primary focus as part of our core operations to increase cash flow from operating activities is to prioritize collection efforts to reduce outstanding accounts receivable, utilize existing inventory to support equipment sales over the next year, focusing on various operational efficiencies to improve overall profitability of the business and continued to grow our business both domestically and internationally.
Net cash provided by operating activities
Net cash provided by operating activities was $20.3 million for the year ended June 30, 2025 compared to $27.7 million for the year ended June 30, 2024. We recognized $64.5 million in net income offset by $18.4 million in non-cash operating charges and $25.8 million cash utilized in working capital accounts.
The change in working capital was primarily driven by a $25.0 million decrease in accounts payable and accrued expenses, a $4.6 million increase in prepaid and other current assets, and a $4.6 million increase in inventory, offset by a $4.7 million decrease in accounts receivable, a $4.8 million decrease in finance receivables and a $1.3 million increase in operating lease liabilities. The increase in inventory was a result of the Company expansion plans in Mexico and the U.K. The decrease in accounts payable and accrued expenses as well as the decrease in accounts receivable is primarily due to the timing of merchant accounts in processing at year end compared to the prior fiscal year.
Non-cash operating charges for the year ended June 30, 2025 primarily consisted of the release of our deferred income tax valuation allowance, depreciation of property and equipment, amortization of our intangible assets, stock-based compensation, and provisions for expected losses.
Net cash used in investing activities
Net cash used in investing activities was $28.1 million for the year ended June 30, 2025 compared to $18.6 million in the prior fiscal year. We paid $11.1 million in cash for business acquisitions during the year ended June 30, 2025, compared to $3.7 million for the year ended June 30, 2024. We invested $17.0 million in capital expenditures as the Company focuses on investing in innovative technologies and products, and increasing rental devices enrolled in the Company's Cantaloupe One program compared to $14.9 million for the year ended June 30, 2024.
Net cash provided by (used in) financing activities
Net cash provided by financing activities was less than $0.1 million for the year ended June 30, 2025, which was the result of $0.7 million in deferred consideration associated with the Cheq acquisition offset by proceeds from the exercise of common stock options. In fiscal year 2024, net cash used in financing activities was $1.1 million which was primarily principal payments on the Company's long-term debt.
CONTRACTUAL OBLIGATIONS
As of June 30, 2025, the Company had certain contractual obligations due over a period of time as summarized in the following table:
Payments Due by Fiscal Year
($ in thousands)
Total
Less than 1 year
1-3 years
3-5 years
More than 5 years
Debt and financing obligations (a)
Operating lease obligations (b)
Total contractual obligations
(a) Our debt and financing obligations include both principal and interest obligations. As of June 30, 2025, an interest rate of 7.14% was used to compute the amount of the contractual obligations for interest on the JPMorgan Credit Agreement. See Note 7 - Debt and Other Financing Arrangements to the consolidated financial statements for further information.
(b) Operating lease obligations represent our undiscounted operating lease liabilities as of June 30, 2025. See Note 6 - Leases to the consolidated financial statements for further information.
CRITICAL ACCOUNTING ESTIMATES
Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”, "GAAP"), and they conform to general practices in our industry. The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions, and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and strategic or economic assumptions may prove inaccurate or subject to variations and may significantly affect our reported results and financial position for the period or in future periods. Changes in underlying factors, assumptions, or estimates in any of these areas could have a material impact on our future financial condition and results of operations. We apply critical accounting estimates consistently from period to period and intend that any change in methodology occur in an appropriate manner.
Accounting estimates currently deemed critical to our business operations and the understanding of our results of operations are listed below. For a detailed discussion on the application of these and other accounting estimates, see Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements included in this Annual Report.
Revenue Recognition. The Company derives revenue primarily from the sale or lease of equipment and services to the small ticket, unattended POS market.
The Company’s application of the accounting principles in U.S. GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Complex arrangements may require significant judgment in contract interpretation to determine the appropriate accounting.
The Company assesses the goods and/or services promised in each customer contract and separately identifies a performance obligation for each promise to transfer to the customer a distinct good or service. The Company then allocates the transaction price to those performance obligations in the contract using relative standalone selling prices where applicable. The Company determines standalone selling prices based on the price at which a good or service is sold separately. If the standalone selling price is not observable through historic data, the Company estimates the standalone selling price by considering all reasonably available information, including market data, trends, as well as other company- or customer-specific factors.
Certain contracts require significant contract interpretation to determine appropriate accounting due to complex arrangements with nonstandard contract terms. In particular, the determination of whether the Company is principal (gross revenue) or agent (net revenue) in a transaction can require significant judgment. A change in this judgment could result in a significant reduction in the Company's revenues, but no impact to the Company's net income. Certain contracts also require significant judgment related to the relative standalone selling prices and the allocation to equipment and subscription services. A change in these judgments could result in a significant change in the timing of the Company's revenue recognition.
Capitalization of internal-use soft ware and cloud computing arrangements. We have significant expenditures associated with the technological maintenance and improvement of our network and technology offerings. These expenditures include both the cost of internal employees, who spend portions of their time on various technological projects, and the use of external temporary labor and consultants. Capitalization of internal-use software occurs when we have completed the preliminary project stage, management authorizes the project, management commits to funding the project, it is probable the project will be completed and the project will be used to perform the function intended. We are required to assess these expenditures and make a determination as to whether the costs should be expensed as incurred or are subject to capitalization. In making these determinations, we consider the stage of the development project, the probability of successful development and if the development is resulting in increased features and functionality. In addition, if we determine that a project qualifies for capitalization, the amount of capitalization is subject to various estimates, including the amount of time spent on the development work and the cost of internal employees and external consultants. Internal-use software is included within Property and equipment, net on our Consolidated Balance Sheets and is amortized over its estimated useful life, which is typically 3 to 7 years.
We capitalize certain costs related to hosting arrangements that are service contracts (cloud computing arrangements) following the internal-use software capitalization criteria described above. Our cloud computing arrangements involve services we use to support internal corporate functions, our platforms and technology offerings. Capitalized costs relating to cloud computing arrangements are included within Prepaid expenses and other current assets or Other assets on our Consolidated Balance Sheets and are amortized on a straight-line basis over the estimated useful life, which is typically 3 to 5 years.
Significant judgments include whether a project qualifies for capitalization, whether costs incurred directly relate to a project, and the stage of the project's development. There have been no changes in the Company's capitalization judgments.
Business Combinations. The Company allocates the acquisition purchase price to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates. The excess of total consideration over the fair values of the assets acquired and the liabilities assumed is recorded as goodwill. When determining the fair value of assets acquired and liabilities assumed, we make significant estimates and assumptions, especially with respect to intangible assets. We engage a third-party valuation firm to assist in establishing the fair value of the acquired intangible assets. We may adjust certain fair value estimates deemed provisional as of the acquisition date during the measurement period upon which we may obtain additional information needed to identify and more accurately measure the consideration transferred, assets acquired, and liabilities assumed.
Income Taxes. The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies in accordance with applicable accounting standards and are based on management’s assumptions and estimates regarding future operating results and levels of taxable income, as well as management’s judgment regarding the interpretation of the provisions of applicable accounting standards. The carrying values of liabilities for income taxes currently payable are based on management’s interpretations of applicable tax laws and incorporate management’s assumptions and judgments regarding the use of tax planning strategies in various taxing jurisdictions.
We evaluate the recoverability of these deferred tax assets by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely heavily on estimates. We use our historical experience and our short and long-term business forecasts to provide insight. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.
As the Company has recently been profitable, significant judgment is involved in determining if and when the Company's valuation allowance could be released as well as the amount of the release (full or partial). Federal and state net operating loss carryforwards were reserved with a full valuation allowance for the years ended June 30, 2024 and 2023 because, based on the available evidence, the Company believed it is more likely than not that we would not be able to utilize those deferred tax assets in the future. During the year ended June 30, 2025, the Company determined that sufficient evidence existed to release our valuation allowance against federal and most state deferred tax assets. See Note 13 - Income Taxes . If the actual amounts of taxable income differ from our estimates, the amount of our valuation allowance could be materially impacted.
Sales tax reserve. The Company has recorded estimated liabilities for current and historical sales taxes, which are included in accrued expenses in the Consolidated Balance Sheets. On a quarterly basis, the Company accrues interest on the unpaid balance. The estimated liability is adjusted upon the payment of sales tax related to the accrual, the changes in state tax laws that may impact the accrual and the expiration of the statute of limitations for open years under review.
Significant judgment is inherent in the methodology utilized to determine the historical sales tax reserve. The liability includes significant judgments and estimates that may change in the future, and the actual liability may be different from our current estimate.
