RADIANT LOGISTICS, INC 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the consolidated financial statements and the related notes and other information included elsewhere in this report. Overview We operate as a third-party logistics company, providing multi-modal transportation and logistics services primarily in the United States and Canada. We service a large and diversified account base consisting of consumer goods, food and beverage, manufacturing and retail customers, which we support from an extensive network of operating locations across North America as well as an integrated international service partner network located in other key markets around the globe. We provide these services through a multi-brand network, which includes over 100 locations operated exclusively on our behalf by independent agents, who we also refer to as our “strategic operating partners”, as well as approximately 20 Company-owned offices. As a third-party logistics company, we have a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our carrier network. We believe shippers value our services because we are able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service without undue influence caused by the ownership of transportation assets. In addition, our minimal investment in physical assets affords us the opportunity for a higher return on invested capital and net cash flows than our asset-based competitors. Through our operating locations across North America, we offer domestic, international air and ocean freight forwarding services and freight brokerage services, including truckload services, LTL services, and intermodal services, which is the movement of freight in trailers or containers by combination of truck and rail. Our primary business operations involve arranging the shipment, on behalf of our customers, of materials, products, equipment and other goods that are generally larger than shipments handled by integrated carriers of primarily small parcels, such as FedEx, DHL and UPS. Our services include arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. We also provide other value-added logistics services, including customs brokerage and MM&D solutions to complement our core transportation service offering. The Company expects to grow its business organically and by completing acquisitions of other companies with complementary geographical and logistics service offerings. The Company’s organic growth strategy will continue to focus on strengthening existing and expanding new customer relationships leveraging the benefit of the Company’s truck brokerage and intermodal service offerings, while continuing its efforts on the organic build-out of the Company’s network of strategic operating partner locations. In addition, as the Company continues to grow and scale its business, the Company believes that it is creating density in its trade lanes, which creates opportunities for the Company to more efficiently source and manage its transportation capacity. In addition to its focus on organic growth, the Company will continue to search for acquisition candidates that bring critical mass from a geographic and purchasing power standpoint, along with providing complementary service offerings to the current platform. As the Company continues to grow and scale its business, it also remains focused on leveraging its back-office infrastructure and technology systems to drive productivity improvement across the organization. COVID-19 The COVID-19 pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. The pandemic has created significant volatility, uncertainty and economic disruption. We are closely monitoring the impact of the pandemic on all aspects of our business, our customers, employees and business partners. The overall demand for transportation services have been significantly impacted. COVID-19 has adversely affected most of our operations, financial condition, and results of operations in the fourth quarter of our fiscal year 2020. Beginning in April of 2020, we have experienced decreased customer demands in many parts of our business while seeing improvements in the demand in certain segments of business. We have been working hard to mitigate the negative financial impacts of COVID-19 with a number of initiatives in response to our declining revenues. However, the relative effectiveness will depend on the severity and duration of the pandemic. We face significant risks related to the spread of COVID-19 and the recent developments surrounding the global pandemic have had, and will continue to have, significant effects on our business, financial condition, results of operations, and cash flows. We are facing increased operational challenges from the need to protect employee health and safety. We expect to continue to incur additional costs as we continue to implement operational changes in response to the pandemic. We face significant risks related to the global economic downturn and severe reduction in revenues caused by the pandemic. These risks include materially reduced demand for our services and challenges to the ongoing viability of some of our customers. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. 26 The effect of the COVID-19 pandemic may last for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 outbreak has subsided. The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including: the severity and duration of the outbreak; governmental, business and other actions; the impact of the pandemic on economic activity; the effect on consumer confidence and spending, customer demand and buying patterns; the health of and the effect on our workforce and our ability to meet staffing needs; any impairment in value of our tangible or intangible assets that could be recorded as a result of weaker economic conditions; and the potential effects on our internal controls including those over financial reporting as a result of changes in working environments. P rovisions for bad debt expense may increase given the financial difficulty faced by our customers , which could impact our ability to borrow under our revolving credit facility. Due to the unprecedented and evolving nature of the COVID-19 pandemic, it remains very difficult to predict the extent of the impact on our industry generally and our business in particular. While we anticipate that our results of operations will continue to be impacted by this pandemic in fiscal year 2021, we are unable to reasonably estimate the extent of the impact on our full-year results of operations, our liquidity or our overall financial position. We may face similar risks in connection with any future public health crises. Our business model has also shown its strength in the diversity of our service offerings. Although the pandemic has had a substantial negative impact on many of the industry verticals and customers that we serve, the Radiant network is proud to be playing an active role in the fight against COVID-19: delivering personal protective equipment, food and beverage, consumer goods, technology and other essential products for our customers in North America and around the world. Notwithstanding this great effort by our team, we anticipate the contraction in our business from the shelter-at-home mandates, closing of manufacturing facilities and general global economic slowdown will more than off-set any financial benefit from our support of essential businesses. The effects of COVID-19, however, will not be fully reflected in our financial results until future periods. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict, including the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. These factors may adversely impact consumer, business, and government spending as well as customers' ability to pay for our services on an ongoing basis. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including receivables and forward-looking guidance. Performance Metrics Our principal source of income is derived from freight forwarding and freight brokerage services we provide to our customers. As a third-party logistics provider, we arrange for the shipment of our customers’ freight from point of origin to point of destination. Generally, we quote our customers a turnkey cost for the movement of their freight. Our price quote will often depend upon the customer’s time-definite needs (first day through fifth day delivery), special handling needs (heavy equipment, delicate items, environmentally sensitive goods, electronic components, etc.), and the means of transport (motor carrier, air, ocean or rail). In turn, we assume the responsibility for arranging and paying for the underlying means of transportation. Our transportation revenue represents the total dollar value of services we sell to our customers. Our cost of transportation includes direct costs of transportation, including motor carrier, air, ocean and rail services. Our net transportation revenue (gross transportation revenue less the direct cost of transportation) is the primary indicator of our ability to source, add value and resell services provided by third parties, and is considered by management to be a key performance measure. In addition, management believes measuring its operating costs as a function of net transportation revenue provides a useful metric, as our ability to control costs as a function of net transportation revenue directly impacts operating earnings. Our operating results will be affected as acquisitions occur. Since all acquisitions are made using the acquisition method of accounting for business combinations, our financial statements will only include the results of operations and cash flows of acquired companies for periods subsequent to the date of acquisition. Net revenues, a non-GAAP financial measure, is our total revenue minus our total cost of transportation and other services (excluding depreciation and amortization, which are reported separately) and net margin is net revenues as a percentage of our total revenue. We believe that these provide investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis. 27 Our GAAP-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and other intangible assets attributable to completed acquisitions. Under applicable accounting standards, purchasers are required to allocate the total consideration in a business combination to the identified assets acquired and liabilities assumed based on their fair values at the time of acquisition. The excess of the consideration paid over the fair value of the identifiable net assets acquired is to be allocated to goodwill, which is tested at least annually for impairment. Applicable accounting standards require that we separately account for and value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition. As a result of our acquisition strategy, our net income will include material non-cash charges relating to the amortization of customer related intangible assets and other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe we will be growing the value of our intangible assets (e.g. customer relationships). Thus, we believe that earnings before interest, taxes, depreciation and amortization, or EBITDA, is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business. EBITDA is a non-GAAP measure of income and does not include the effects of preferred stock dividends, interest and taxes, and excludes the “non-cash” effects of depreciation and amortization on long-term assets. Companies have some discretion as to which elements of depreciation and amortization are excluded in the EBITDA calculation. We exclude all depreciation charges related to property, technology, and equipment and all amortization charges (including amortization of leasehold improvements). We then further adjust EBITDA to exclude changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition and lease termination costs, foreign currency transaction gains and losses, share-based compensation expense, litigation expenses unrelated to our core operations, and other non-cash charges. While management considers EBITDA and adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our consolidated financial statements. Our operating results are also subject to seasonal trends when measured on a quarterly basis. The impact of seasonality on our business will depend on numerous factors, including the markets in which we operate, holiday seasons, consumer demand, and economic conditions. Since our revenue is largely derived from customers whose shipments are dependent upon consumer demand and just-in-time production schedules, the timing of our revenue is often beyond our control. Factors such as shifting demand for retail goods and/or manufacturing production delays could unexpectedly affect the timing of our revenue. As we increase the scale of our operations, seasonal trends in one area of our business may be offset to an extent by opposite trends in another area. We cannot accurately predict the timing of these factors, nor can we accurately estimate the impact of any particular factor, and thus we can give no assurance any historical seasonal patterns will continue in future periods. Critical Accounting Policies Accounting policies, methods and estimates are an integral part of the consolidated financial statements prepared by management and are based upon management’s current judgments. These judgments are normally based on knowledge and experience regarding past and current events and assumptions about future events. Certain accounting policies, methods and estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management’s current judgments. While there are a number of accounting policies, methods and estimates that affect our financial statements, the areas that are particularly significant include revenue recognition; accruals for the cost of purchased transportation; the fair value of acquired assets and liabilities; fair value of contingent consideration; and the assessment of the recoverability of long-lived assets, goodwill and intangible assets. We perform an annual impairment test for goodwill as of April 1 of each year unless events or circumstances indicate impairment may have occurred before that time. We assess qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount. After assessing qualitative factors, if further testing is necessary, we would determine the fair value of each reporting unit and compare the fair value to the reporting unit’s carrying amount. Intangible assets consist of customer related intangible assets, trade names and trademarks, and non-compete agreements arising from our acquisitions. Customer related intangible assets are amortized using the straight-line method over a period of up to ten years, trademarks and trade names are amortized using the straight-line method over 15 years, and non-compete agreements are amortized using the straight-line method over the term of the underlying agreements. We review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, we estimate fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. 28 As a non- asset-based carrier, we do not generally own transportation assets. We do, however, own certain trailers and refrigerated trailers that we use in our business. We generate the majority of our air and ocean freight forwarding and freight brokerage revenues by purchasing transportation services from direct (asset-based) carriers and reselling those services to our customers. Freight forwarding revenues related to shipments where we issue a House Airway Bill or a House Ocean Bill of Lading are recognized over the transit period as customers’ goods move from origin to destination. Costs related to the shipments are also recognized at this same time based upon anticipated margins, contractual arrangements with direct carriers, and other known factors. The estimates are routinely monitored and compared to actual invoiced costs. The estimates are adjusted as deemed necessary by us to reflect differences between the original accruals and actual costs of purchased transportation. All other revenue, including revenue from other value-added services including freight brokerage services, customs brokerage services and warehousing and fulfillment services, is recognized upon completion of the service. The Company has contingent obligations to transfer cash payments and equity shares to former shareholders of acquired operations in conjunction with certain acquisitions if specified operating results and financial objectives are met over the next four fiscal years. The Company uses projected future financial results based on recent and historical data to value the anticipated future earn-out payments. To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs. 29 Results of Operations Fiscal year ended June 30, 2020, compared to fiscal year ended June 30, 2019 The following table summarizes revenues, cost of transportation and other services, and net revenues by reportable operating segments for the fiscal years ended June 30, 2020 and 2019: Year Ended June 30, 2020 Year Ended June 30, 2019 (In thousands) United States Canada Corporate/ Eliminations Total United States Canada Corporate/ Eliminations Total Revenues Transportation $ 745,097 $ 80,090 $ (671 ) $ 824,516 $ 766,286 $ 91,710 $ (434 ) $ 857,562 Value-added services 14,142 16,539 — 30,681 13,385 19,570 — 32,955 759,239 96,629 (671 ) 855,197 779,671 111,280 (434 ) 890,517 Cost of transportation and other services Transportation 569,557 65,249 (671 ) 634,135 572,486 72,027 (434 ) 644,079 Value-added services 9,203 2,486 — 11,689 9,088 7,249 — 16,337 578,760 67,735 (671 ) 645,824 581,574 79,276 (434 ) 660,416 Net revenues (1) Transportation 175,540 14,841 — 190,381 193,800 19,683 — 213,483 Value-added services 4,939 14,053 — 18,992 4,297 12,321 — 16,618 $ 180,479 $ 28,894 $ — $ 209,373 $ 198,097 $ 32,004 $ — $ 230,101 Net margin Transportation 23.6 % 18.5 % N/A 23.1 % 25.3 % 21.5 % N/A 24.9 % Value-added services 34.9 % 85.0 % N/A 61.9 % 32.1 % 63.0 % N/A 50.4 % (1) Net revenue s are revenues net of cost of transportation and other services. Transportation revenue was $824.5 million and $857.6 million for the years ended June 30, 2020 and 2019 , respectively. The decrease of $33.1 million, or 3.9%, is primarily attributable to general market softness exacerbated by the impact of the COVID-19 pandemic, and somewhat offset by significant increases in disaster relief project work for transportation of highly demanded personal protective equipment (“PPE”) the company enjoyed particularly in the fourth quarter. It is uncertain what the demand for PPE will be in the future. Net transportation revenue was $190.4 million and $213.5 million for the years ended June 30, 2020 and 2019 , respectively. Net transportation revenue margins decreased slightly from 24.9% to 23.1%, primarily due to a significant increase in low margin disaster relief business as well as shifts in product mix. Value added services revenue was $30.7 million and $33.0 million for the years ended June 30, 2020 and 2019 , respectively. The decrease of $2.3 million, or 6.9%, is primarily attributable to slowdown in our contract logistics and custom brokerage services offerings, exacerbated by COVID-19 . Net value added services revenue was $19.0 million for the year ended June 30, 2020, compared to $16.6 million for the comparable prior year period. Net value added services revenue margins increased from 50.4% to 61.9%, primarily due to lower personnel and warehousing costs as a percentage of revenue. The following table provides a reconciliation for the fiscal years ended June 30, 2020 and 2019 of net revenues to gross profit, the most directly comparable GAAP measure: (In thousands) Year Ended June 30, Reconciliation of net revenues to GAAP gross profit 2020 2019 Revenues $ 855,197 $ 890,517 Cost of transportation and other services (exclusive of depreciation and amortization, shown separately below) (645,824 ) (660,416 ) Depreciation and amortization (12,056 ) (11,370 ) GAAP gross profit $ 197,317 $ 218,731 Depreciation and amortization 12,056 11,370 Net revenues $ 209,373 $ 230,101 GAAP gross margin (GAAP gross profit as a percentage of revenues) 23.1 % 24.6 % Net margin (net revenues as a percentage of revenues) 24.5 % 25.8 % 30 The following table compares consolidated statements of comprehensive income data by reportable operating segments for the fiscal years ended June 30, 2020 and 2019 : Year Ended June 30, 2020 Year Ended June 30, 2019 (In thousands) United States Canada Corporate/ Eliminations Total United States Canada Corporate/ Eliminations Total Net revenues (1) $ 180,479 $ 28,894 $ — $ 209,373 $ 198,097 $ 32,004 $ — $ 230,101 Operating expenses: Operating partner commissions 85,821 — — 85,821 102,553 — — 102,553 Personnel costs 41,426 12,880 3,373 57,679 42,777 13,930 3,668 60,375 Selling, general and administrative expenses 19,953 5,528 4,067 29,548 18,473 6,799 3,191 28,463 Depreciation and amortization 4,300 2,001 10,270 16,571 3,623 1,560 10,026 15,209 Transition, lease termination, and other costs 474 26 — 500 (11 ) — — (11 ) Change in fair value of contingent consideration — — 1,752 1,752 — — (1,207 ) (1,207 ) Total operating expenses 151,974 20,435 19,462 191,871 167,415 22,289 15,678 205,382 Income (loss) from operations 28,505 8,459 (19,462 ) 17,502 30,682 9,715 (15,678 ) 24,719 Other income (expense) 215 30 (2,226 ) (1,981 ) 521 (87 ) (2,973 ) (2,539 ) Income (loss) before income taxes 28,720 8,489 (21,688 ) 15,521 31,203 9,628 (18,651 ) 22,180 Income tax expense — — (3,157 ) (3,157 ) — — (4,800 ) (4,800 ) Net income (loss) 28,720 8,489 (24,845 ) 12,364 31,203 9,628 (23,451 ) 17,380 Less: net income attributable to non- controlling interest (1,823 ) — — (1,823 ) (1,034 ) — — (1,034 ) Net income (loss) attributable to Radiant Logistics, Inc. 26,897 8,489 (24,845 ) 10,541 30,169 9,628 (23,451 ) 16,346 Less: preferred stock dividends — — — — — — (956 ) (956 ) Less: issuance costs for preferred stock redemption — — — — — — (1,659 ) (1,659 ) Net income (loss) attributable to common stockholders $ 26,897 $ 8,489 $ (24,845 ) $ 10,541 $ 30,169 $ 9,628 $ (26,066 ) $ 13,731 Year Ended June 30, 2020 Year Ended June 30, 2019 Operating expenses as a percent of net revenues (1) : United States Canada Corporate/ Eliminations Total United States Canada Corporate/ Eliminations Total Operating partner commissions 47.6 % 0.0 % N/A 41.0 % 51.8 % 0.0 % N/A 44.6 % Personnel costs 23.0 % 44.6 % N/A 27.5 % 21.6 % 43.5 % N/A 26.2 % Selling, general and administrative expenses 11.1 % 19.1 % N/A 14.1 % 9.3 % 21.2 % N/A 12.4 % Depreciation and amortization 2.4 % 6.9 % N/A 7.9 % 1.8 % 4.9 % N/A 6.6 % (1) Net revenue s are revenues net of cost of transportation and other services. Operating partner commissions decreased $16.8 million, or 16.3%, to $85.8 million for the year ended June 30, 2020. The decrease is primarily due to decreased net revenues from operating partners, including the conversion of the DCA and PIT locations to Radiant owned stores . As a percentage of net revenues, operating partner commissions decreased 358 basis points to 41.0% from 44.6% for the years ended June 30, 2020 and 2019 , respectively. Personnel costs decreased $2.7 million, or 4.5%, to $57.7 million for the year ended June 30, 2020. The decrease is primarily due to increased cost controls resulting in reduced headcount, hours, and compensation as a result of the COVID-19 pandemic . As a percentage of net revenues, personnel costs increased 131 basis points to 27.5% from 26.2% for the years ended June 30, 2020 and 2019 , respectively. Selling, general and administrative (“SG&A”) expenses increased $1.1 million, or 3.8%, to $29.5 million for the year ended June 30, 2020. The increase is primarily attributable to increased bad debt expense, technology and professional services for the period. As a percentage of net revenues, SG&A increased 174 basis points to 14.1% from 12.4% for the years ended June 30, 2020 and 2019 , respectively. 31 Depreciation and amortization costs increased $1.4 million, or 9.0%, to $16.6 million for the year ended June 30, 2020 . The increase is due to investments in technology infrastructure and increased amortizable intangible assets associated with recent acquisitions of two operating partner locations. As a percentage of net revenue s , depreciation and amortization increased 130 basis points to 7.9% from 6.6% for the years ended June 30, 2020 and 2019 , respectively. The transition, lease termination, and other costs increased $0.5 million for the year ended June 30, 2020. Change in fair value of contingent consideration was a loss of $1.8 million for the year ended June 30, 2020, compared to a gain of $1.2 million for the year ended June 30, 2019. The change in each year is attributable to a change in management’s estimates of future earn-out payments through the remainder of the respective earn-out periods. Other expenses decreased $0.6 million, or 22.0%, to $2.0 million for the year ended June 30, 2020. Our change in net income is driven principally by decreased net revenues, partially offset by decreased operating expenses and decreased income taxes compared to the prior year. Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions as well as gains or losses from changes in fair value of contingent consideration that are difficult to predict. The following table provides a reconciliation for the fiscal years ended June 30, 2020 and 2019 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure: Year Ended June 30, 2020 Year Ended June 30, 2019 (In thousands) United States Canada Corporate/ Eliminations Total United States Canada Corporate/ Eliminations Total Net income (loss) attributable to common stockholders $ 26,897 $ 8,489 $ (24,845 ) $ 10,541 $ 30,169 $ 9,628 $ (26,066 ) $ 13,731 Plus: preferred stock dividends — — — — — — 956 956 Plus: issuance costs for preferred stock redemption — — — — — — 1,659 1,659 Net income (loss) attributable to Radiant Logistics, Inc. 26,897 8,489 (24,845 ) 10,541 30,169 9,628 (23,451 ) 16,346 Income tax expense — — 3,157 3,157 — — 4,800 4,800 Depreciation and amortization 4,300 2,001 10,270 16,571 3,623 1,560 10,026 15,209 Net interest expense — — 2,826 2,826 — — 2,973 2,973 EBITDA 31,197 10,490 (8,592 ) 33,095 33,792 11,188 (5,652 ) 39,328 Share-based compensation 894 212 557 1,663 985 98 529 1,612 Change in fair value of contingent consideration — — 1,752 1,752 — — (1,207 ) (1,207 ) Acquisition related costs — — 577 577 — 75 241 316 Litigation costs — — 1,061 1,061 — — 754 754 Transition, lease termination, and other costs 560 26 — 586 (11 ) — 128 117 Change in fair value of interest rate swap contracts — — (600 ) (600 ) — — — — Foreign currency transaction loss (gain) 155 (30 ) — 125 (248 ) 88 — (160 ) Adjusted EBITDA $ 32,806 $ 10,698 $ (5,245 ) $ 38,259 $ 34,518 $ 11,449 $ (5,207 ) $ 40,760 Adjusted EBITDA as a % of net revenues (1) 18.2 % 37.0 % N/A 18.3 % 17.4 % 35.8 % N/A 17.7 % (1) Net revenues are revenues net of cost of transportation and other services. Adjusted EBITDA decreased $2.5 million, or 6.1% to $38.3 million for the year ended June 30, 2020. Liquidity and Capital Resources Generally, our primary sources of liquidity are cash generated from operating activities and borrowings under our Revolving Credit Facility, as described below. These sources also fund a portion of our capital expenditures and contractual contingent consideration obligations. Adapting to COVID-19, we have curtailed mergers and acquisitions activities and suspended stock buy-back. Our level of cash and financing capabilities along with cash flows from operations have historically been sufficient to meet our operating and capital needs. As of June 30, 2020, we have $34.8 million in cash on hand to serve as adequate working capital. 32 We believe that during the next twelve months the COVID-19 pandemic is likely to impact general economic activity and demand in our markets, which if continued unabated could continue to have an adverse effect on our results of operations; which, in turn, could cause the amounts available to us under the Revolving Credit Facility to be limited and cause us to seek other external financing sources to meet our operating and capital needs. However, in this case, conditions in the credit markets may also deteriorate and the availability of alternative sources of credit on commercially reasonable terms may be reduced. The Company believes access to capital markets has tightened and that accessing such markets at this time would be significantly detrimental to the business. Fiscal year ended June 30, 2020 compared to fiscal year ended June 30, 2019 Net cash provided by operating activities were $29.9 million and $39.8 million for the fiscal years ended June 30, 2020 and 2019, respectively. The cash provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts payable and accounts receivable. Compared to the prior fiscal year, cash provided by operating activities decreased mainly due to lower net income, reduced collections from customers and increased payments for operating partner commissions. Net cash used for investing activities were $14.1 million and $6.2 million for the years ended June 30, 2020 and 2019, respectively. The primary uses of cash were for acquisition and purchases of technology and equipment. Cash paid for acquisitions were $9.2 million and $0.3 million for the fiscal years ended June 30, 2020 and 2019, respectively. Cash paid for purchases of technology and equipment were $5.2 million and $6.4 million for the years ended June 30, 2020 and 2019, respectively. Net cash provided by financing activities was $12.3 million and net cash used for financing activities was $35.1 million for the fiscal years ended June 30, 2020 and 2019, respectively. Gross proceeds from the credit facility was $586.3 million and gross repayments from the credit facility was $570.1 million during the fiscal year ended June 30, 2020. Gross proceeds from the credit facility was $859.2 million and gross repayments to the credit facility was $866.9 million for the fiscal year ended June 30, 2019. Proceeds from the PPP loans was $5.9 million received during the fiscal year ended June 30, 2020. Payments of debt issuance costs was $1.9 million for the fiscal year ended June 30, 2020. Repayments of notes payable and finance lease liability were $4.3 million and $3.7 million for the years ended June 30, 2020 and 2019, respectively. Repurchases of common stock were $2.5 million for the fiscal year ended June 30, 2020. Payments of contingent consideration was $0.2 million for the year ended June 30, 2019. Payments of preferred stock dividends was $1.3 million for the fiscal year ended June 30, 2019. Payment for the redemption of preferred stock was $21.0 million for the year ended June 30, 2019. Distributions to non-controlling interest were $1.3 million and $0.9 million for the fiscal years ended June 30, 2020 and 2019, respectively. Payments of employee tax withholdings related to vesting of restricted stock awards were $0.3 million for the fiscal year ended June 30, 2020. Proceeds from employees’ exercise of stock options was $0.6 million for the fiscal year ended June 30, 2020. Payments of employee tax withholdings related to the cashless exercise of stock option were $0.2 million and $0.3 million for the fiscal years ended June 30, 2020 and 2019, respectively. Working Capital The outbreak of COVID-19 has had an adverse impact on the Company’s results of operations during the fiscal year ended June 30, 2020. If these conditions continue unabated for more than the short-term, as most industry sources are predicting, the impact of COVID-19 is expected to significantly reduce our revenue, earnings and operating cash flow in future quarters. Since continued growth through strategic acquisitions would normally require additional draws from our sources of financing, the Company’s search for new, potential acquisitions has been temporarily paused. Furthermore, the Company has temporarily suspended its stock repurchase program. Acquisitions Below are descriptions of recent material acquisitions in the last two fiscal years. We define “material acquisitions” as those with aggregate projected consideration of $14 million or more. On February 7, 2020 the Company acquired the assets and operations of two of its Adcom agency locations: Alexandria, Virginia based Friedway Enterprises, Inc. (“Friedway”) and Pittsburgh, Pennsylvania based CIC2, Inc. (“CIC2”). The acquired agencies are expected to strengthen and diversify Radiant’s network of Company-owned operations and will continue to provide a full range of hyper-care domestic and international transportation and logistics service to customers in medical device, high-tech and trade-show industries. As consideration for the acquisition, the Company paid $9.2 million in cash upon closing and issued 45,086 shares of common stock recorded at fair value, and the seller is entitled to additional contingent consideration payable in subsequent periods based on future performance of the acquired operation. The maximum contingent consideration payable is $10 million. 33 Technology A primary component of our business strategy is to provide robust and advanced technology offerings to our customers, while providing advanced technology to our operations, strategic operating partners and management. To accomplish this, we will continuously develop and enhance our technology platform to align with current and future business requirements. During the year ended June 30, 2020, we spent approximately $3.9 million on technology enhancements and software systems in order to increase our operating efficiency and improve technology offerings. We intend to spend in excess of $3.5 million during the fiscal year ended June 30, 2021 in order to continue enhancing our technology platform, which we expect will include elements focused on customer facing, vendor facing, and user facing tools and systems that will be integrated into our existing platform and support our continued growth. Revolving Credit Facility The Company entered into a $150 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of March 13, 2020. On June 30, 2020, the borrowings outstanding on the Revolving Credit Facility was $30 million. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation agent and Bank of America, N. A., KeyBank National Association and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”). This replaces the Company’s $75 million facility dated June 14, 2017. The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company. Borrowings under the Revolving Credit Facility accrue interest (at the Company’s option), at the Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and can be subsequently adjusted based on the Company’s consolidated leverage ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%. The Revolving Credit Facility includes a $50 million accordion feature to support future acquisition opportunities. For general borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum consolidated fixed charge coverage ratio of 1.25. Additional minimum availability requirements and financial covenants apply in the event the Company seeks to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its common stock. In conjunction with the Revolving Credit Facility, Radiant entered into two interest rate swap contracts. On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20 million notional amount, for fixed interest cash outflows at 0.635%. On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10 million notional amount, for fixed interest cash outflows at 0.5865%. Both interest rate swap contracts mature and terminate on March 13, 2025. Senior Secured Loan On April 2, 2015, Radiant Canada obtained a CAD$29.0 million senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement (the “FPD IV Loan Agreement”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum. We made interest-only payments for the first 12 months and blended principal and interest payments through maturity. In connection with the loan, we paid an amount equal to five months of interest payments into a debt service reserve account controlled by FPD IV. In connection with our acquisition of Lomas, Radiant Canada obtained a CAD$10.0 million senior secured Canadian term loan from Fiera Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan Agreement (the “FPD V Loan Agreement,” and together with the FPD IV Loan Agreement, the “FPD Loan Agreements”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on June 1, 2024 and accrues interest at a rate of 6.65% per annum. The loan repayment consists of monthly blended principal and interest payments. The loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid. For additional information regarding our indebtedness, see Note 8 to the consolidated financial statements. 34 Paycheck Protection Program Loans On May 4, 2020, the Company received loan proceeds of $5.9 million pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to take into account our current business activity and our ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. On April 28, 2020, the Secretary of the U.S. Department of the Treasury stated that the Small Business Administration will perform a full review of any PPP loan over $2 million before forgiving the loan. The certification made by the Company did not contain any objective criteria and is subject to interpretation. Despite the good-faith belief that given the Company’s circumstances all eligibility requirements for the PPP Loans were satisfied, if it is later determined that the Company had violated any applicable laws or regulations or it is otherwise determined the Company was ineligible to receive the PPP Loans, it may be required to repay the PPP Loans in its entirety and/or be subject to additional penalties. The term of the Company’s PPP Loans is two years. The annual interest rate on the PPP Loans is 1% and no payments of principal or interest are due during the six-month period beginning on the date of the PPP Loans. Under the terms of the PPP, all or a portion of the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities. No assurance is provided that the Company will obtain forgiveness of the Loan in whole or in part. With respect to any portion of the PPP Loans that is not forgiven, the PPP Loans will be repayable on the terms set forth above. The PPP Loans are recognized on the Company’s June 30, 2020 consolidated balance sheet as notes payable and will be derecognized if and when forgiven. Off Balance Sheet Arrangements As of June 30, 2020, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, which had been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. Recent Accounting Guidance The recent accounting guidance is discussed in Note 2 to the consolidated financial statements contained in this report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, the Company is not required to provide the information called for by this Item 7A.