USA Technologies, Inc.
USA TECHNOLOGIES INC (Form: 8-K, Received: 02/10/2017 16:23:00)

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934



Date of report (Date of earliest event reported): February 8, 2017

USA TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania
001-33365
23‑2679963
     
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)

100 Deerfield Lane, Suite 300
Malvern, Pennsylvania 19355
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: 610-989-0340

n/a
Former name or former address, if changed since last report
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


Item 2.02.
Results of Operations and Financial Condition

On February 8, 2017, USA Technologies, Inc. (the “Company”), issued a press release reporting financial results for the second quarter of its fiscal year ending June 30, 2017, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01.
Financial Statements and Exhibits
 
Exhibit 99.1
Press Release of the Company dated February 8, 2017
 
SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
USA TECHNOLOGIES, INC.
     
Dated: February 10, 2017
By:
/s/ Stephen P. Herbert
   
Stephen P. Herbert,
 
Chairman and Chief Executive Officer
 

Index to Exhibits

Exhibit No.
Description of Exhibit
Press Release of the Company dated February 8, 2017
 
 


Exhibit 99.1
 
 
USA Technologies Announces Second Quarter Fiscal Year 2017 Results
 
MALVERN, Pa. Feb. 8, 2017 – USA Technologies, Inc. (NASDAQ:USAT) (“USAT”), a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market , today reported results for its second quarter ended December 31, 2016.

Second Quarter Financial Highlights:
 
Total quarterly revenue of $21.8 million, a year-over-year increase of 18%
 
469,000 connections to ePort service, representing a year-over-year increase of 27%
 
Added 500 customers to achieve record 11,900 total customers compared to 10,625 as of a year ago, a year-over-year increase of 12%
 
Quarterly record license and transaction fee revenue of $16.6 million, a year-over-year increase of 22%
 
Ended the quarter with $18.0 million in cash
 
Quarterly GAAP net income of $233,000 resulting in earnings of $0.01 per share
 
Quarterly Non-GAAP net income of $241,000
 
Quarterly Adjusted EBITDA of $1.7 million
 

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
Second Quarter and YTD Financial Highlights, Connections & Transaction Data:
 
 
As of and for the three months ended
December 31,
             
(Connections and $'s in thousands, transactions in millions, eps is not rounded)
 
2016
   
2015
   
$ Change
   
% Change
 
Revenues:
                       
License and transaction fees
 
$
16,639
   
$
13,674
   
$
2,965
     
22
%
Equipment Sales
   
5,117
     
4,829
     
288
     
6
%
Total revenues
 
$
21,756
   
$
18,503
   
$
3,253
     
18
%
                                 
License and transaction fee margin
   
31.6
%
   
33.7
%
   
-2.1
%
   
-6
%
                                 
Equipment sales gross margin
   
21.2
%
   
18.1
%
   
3.1
%
   
17
%
                                 
Overall Gross Margin
   
29.1
%
   
29.6
%
   
-0.5
%
   
-2
%
                                 
Operating income
 
$
234
   
$
594
   
$
(360
)
   
-61
%
                                 
Net income/(loss)
 
$
233
   
$
(874
)
 
$
1,107
     
127
%
                                 
Net earnings (loss) per common shares - basic
 
$
0.01
   
$
(0.02
)
 
$
0.03
     
150
%
                                 
Net earnings (loss) per common shares - diluted
 
$
0.01
   
$
(0.02
)
 
$
0.03
     
150
%
                                 
Net cash provided by operating activities
 
$
1,122
   
$
507
   
$
615
     
121
%
                                 
Net New Connections
   
21
     
20
     
1
     
5
%
                                 
Total Connections (at period end)
   
469
     
369
     
100
     
27
%
                                 
Total Number of Transactions (millions)
   
100
     
76
     
24
     
32
%
                                 
Transaction Volume (millions)
 
$
192
   
$
138
   
$
54
     
39
%
                                 
Adjusted EBITDA
 
$
1,738
   
$
2,260
   
$
(522
)
   
-23
%
                                 
Non-GAAP net income
 
$
241
   
$
686
   
$
(445
)
   
-65
%
 
2

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
   
As of and for the six months ended
December 31,
             
(Connections and $'s in thousands, transactions in millions, eps is not rounded)
 
2016
   
2015
   
$ Change
   
% Change
 
Revenues:
                       
License and transaction fees
 
$
33,004
   
$
26,599
   
$
6,405
     
24
%
Equipment Sales
   
10,340
     
8,504
     
1,836
     
22
%
Total revenues
 
$
43,344
   
$
35,103
   
$
8,241
     
23
%
                                 
License and transaction fee margin
   
31.4
%
   
33.2
%
   
-1.8
%
   
-5
%
                                 
Equipment sales gross margin
   
20.6
%
   
20.0
%
   
0.6
%
   
3
%
                                 
Overall Gross Margin
   
28.8
%
   
30.0
%
   
-1.2
%
   
-4
%
                                 
Operating income/(loss)
 
$
(716
)
 
$
706
   
$
(1,422
)
   
-201
%
                                 
Net loss
 
$
(2,231
)
 
$
(514
)
 
$
(1,717
)
   
334
%
                                 
Net loss per common shares - basic
 
$
(0.07
)
 
$
(0.02
)
 
$
(0.05
)
   
250
%
                                 
Net loss per common shares - diluted
 
$
(0.07
)
 
$
(0.02
)
 
$
(0.05
)
   
250
%
                                 
Net cash provided by (used in) operating activities
 
$
(5,143
)
 
$
869
   
$
(6,012
)
   
-692
%
                                 
Net New Connections
   
40
     
36
     
4
     
11
%
                                 
Total Connections (at period end)
   
469
     
369
     
100
     
27
%
                                 
Total Number of Transactions (millions)
   
195
     
145
     
50
     
35
%
                                 
Transaction Volume (millions)
 
$
375
   
$
264
   
$
111
     
42
%
                                 
Adjusted EBITDA
 
$
2,435
   
$
4,011
   
$
(1,576
)
   
-39
%
                                 
Non-GAAP net income (loss)
 
$
(714
)
 
$
747
   
$
(1,461
)
   
-196
%
 
3

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
“With a focus on driving growth through penetration into our existing customer base and by acquiring new customers, we are seeing more adoption of our ePort connect devices and subsequent traction in cashless payment options,” said Stephen P. Herbert, USA Technologies’ chairman and chief executive officer. “USA Technologies is at the forefront of the industry with our payment solutions, and with our customer loyalty programs and interactive point-of-sale devices we are adding increasing value to each connection sold.  Our ePort Interactive platform creates new possibilities at the point of sale and we believe  increases  cashless payment acceptance.”
 
Fiscal 2017 Outlook
 
For full fiscal year 2017, management expects to add between 115,000 and 125,000 net new connections for the year, bringing total connections to our service to a range of 544,000 to 554,000 and expects total revenue to be between $95 million and $100 million. We also expect to have year-over-year increases of adjusted EBITDA and non-GAAP net income.

Webcast and Conference Call
 
Management will host a conference call and webcast the event beginning at 5:00 p.m. Eastern Time today, February 8, 2017.
 
To participate in the conference call, please dial (866) 393-1608 approximately 10 minutes prior to the call. International callers should dial (224) 357-2194. Please reference conference ID # 59727592.
 
A live webcast of the conference call will be available at http://usat.client.shareholder.com/events.cfm. Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.  A telephone replay of the conference call will be available from 8:00 p.m. Eastern Time on February 8, 2017 until 8:00 p.m. Eastern Time on February 11, 2017 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 59727592.  An archived replay of the conference call will also be available in the investor relations section of the company's website.
 
About USA Technologies
 
USA Technologies, Inc. is a premier payment technology service provider of integrated cashless and mobile transactions in the self-service retail market. The company also provides a broad line of cashless acceptance technologies including its NFC-ready ePort® G-series, ePort Mobile™ for customers on the go, ePort® Interactive, and QuickConnect, an API Web service for developers. USA Technologies has 77 United States and foreign patents in force; and has agreements with Verizon, Visa, Chase Paymentech and customers such as Compass, AMI Entertainment and others. For more information, please visit the website at www.usatech.com .
 
4

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
Forward-looking Statements:
 
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: All statements other than statements of historical fact included in this release, including without limitation the business strategy and the plans and objectives of USAT's management for future operations, are forward-looking statements. When used in this release, words such as "anticipate", "believe", "estimate", "expect", "intend", and similar expressions, as they relate to USAT or its management, identify forward looking statements. Such forward-looking statements are based on the beliefs of USAT's management, as well as assumptions made by and information currently available to USAT's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the ability of management to accurately predict or forecast future financial results, including earnings or taxable income of USAT, or increased revenues at a customer location; the incurrence by USAT of any unanticipated or unusual non-operational expenses which would require us to divert our cash resources from achieving our business plan; the ability of USAT to retain key customers from whom a significant portion of its revenues is derived; the ability of USAT to compete with its competitors to obtain market share; whether USAT's customers continue to utilize USAT's transaction processing and related services, as our customer agreements are generally cancelable by the customer on thirty to sixty days' notice; the ability of USAT to raise funds in the future through the sales of securities or debt financings in order to sustain its operations if an unexpected or unusual non-operational event would occur; the ability of USAT to use available data to predict future market conditions, consumer behavior and any level of cashless usage; the ability to prevent a security breach of our systems or services or third party services or systems utilized by us; whether any patents issued to USAT will provide USAT with any competitive advantages or adequate protection for its products, or would be challenged, invalidated or circumvented by others; the ability of USAT to operate without infringing or violating the intellectual property  rights of others; whether USAT would be able to sell sufficient ePort hardware to third party leasing companies as part of the QuickStart program in order to improve  cash flows from operations; whether USAT’s remediation efforts in connection with the control deficiencies that resulted in a material weakness  in USAT’s internal controls over financial reporting as of June 30, 2016 would be effective or successful; whether USAT experiences additional material weaknesses in its internal controls over financial reporting in  future periods, and USAT is not able to accurately or timely report its financial condition or results of operations; and whether USAT's existing or anticipated customers purchase, rent or utilize ePort devices or our other products or services in the future at levels currently anticipated by USAT. Readers are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement made by us in this release speaks only as of the date of this release. Unless required by law, USAT does not undertake to release publicly any revisions to these forward-looking statements to reflect future events or circumstances or to reflect the occurrence of unanticipated events.
 
5

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
Financial Schedules:
A.
Statements of Operations for the 3 Months and 6 Months Ended December 31, 2016 and 2015
B.
Five Quarter Select Key Performance Indicators
C.
Comparative   Balance Sheets as of December 31, 2016 and June 30, 2016
D.
Five Quarter Statements of Operations and Adjusted EBITDA
E.
Five Quarter and YTD Selling, General, & Administrative Expenses
F.
Five Quarter Condensed Balance Sheets
G.
Five Quarter Statements of Cash Flows
H.
Five Quarter Reconciliation of Net Income/(Loss) to Non-GAAP Net Income (Loss) and Net Earnings/(Loss) Per Common Share – Basic and Diluted to Non-GAAP Net Earnings/(Loss) Per Common Share – Basic and Diluted
 
6

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
  (A)
Statement of Operations for the 3 Months and 6 Months Ended December 31, 2016 and 2015
 
   
For the three months ended December 31,
             
($ in thousands, except shares and per share data)
 
2016
   
% of Sales
   
2015
   
% of Sales
   
Change
   
% Change
 
                                     
Revenues:
                                   
License and transaction fees
 
$
16,639
     
76.5
%
 
$
13,674
     
73.9
%
 
$
2,965
     
21.7
%
Equipment sales
   
5,117
     
23.5
%
   
4,829
     
26.1
%
   
288
     
6.0
%
Total revenues
   
21,756
     
100.0
%
   
18,503
     
100.0
%
   
3,253
     
17.6
%
 
                                               
Costs of sales/revenues:
                                               
Cost of services
   
11,389
     
68.4
%
   
9,067
     
66.3
%
   
2,322
     
25.6
%
Cost of equipment
   
4,033
     
78.8
%
   
3,953
     
81.9
%
   
80
     
2.0
%
Total costs of sales/revenues
   
15,422
     
70.9
%
   
13,020
     
70.4
%
   
2,402
     
18.4
%
                                                 
Gross profit
   
6,334
     
29.1
%
   
5,483
     
29.6
%
   
851
     
15.5
%
 
                                               
Operating expenses:
                                               
Selling, general and administrative
   
5,793
     
26.6
%
   
4,762
     
25.7
%
   
1,031
     
21.7
%
Depreciation and amortization
   
307
     
1.4
%
   
127
     
0.7
%
   
180
     
141.7
%
Total operating expenses
   
6,100
     
28.0
%
   
4,889
     
26.4
%
   
1,211
     
24.8
%
                                                 
Operating income (loss)
   
234
     
1.1
%
   
594
     
3.2
%
   
(360
)
   
-60.6
%
 
                                               
Other income (expense):
                                               
Interest income
   
200
     
0.9
%
   
20
     
0.1
%
   
180
     
900.0
%
Interest expense
   
(201
)
   
-0.9
%
   
(104
)
   
-0.6
%
   
(97
)
   
93.3
%
Change in fair value of warrant liabilities
   
     
0.0
%
   
(1,230
)
   
-6.6
%
   
1,230
     
-100.0
%
Total other income (expense), net
   
(1
)
   
0.0
%
   
(1,314
)
   
-7.1
%
   
1,313
     
-99.9
%
                                                 
Income (loss) before income taxes
   
233
     
1.1
%
   
(720
)
   
-3.9
%
   
953
     
132.4
%
Benefit (provision) for income taxes
   
     
0.0
%
   
(154
)
   
-0.8
%
   
154
     
-100.0
%
                                                 
Net income (loss)
   
233
     
1.1
%
   
(874
)
   
-4.7
%
   
1,107
     
126.7
%
Cumulative preferred dividends
   
     
0.0
%
   
     
0.0
%
   
     
0.0
%
Net income (loss) applicable to common shares
 
$
233
     
1.1
%
 
$
(874
)
   
-4.7
%
 
$
1,107
     
127.7
%
                                                 
Net earnings (loss) per common share - basic
 
$
0.01
           
$
(0.02
)
         
$
0.03
     
150
%
Net earnings (loss) per common share - diluted
 
$
0.01
           
$
(0.02
)
         
$
0.03
     
150
%
                                                 
Basic weighted average number of common shares outstanding
   
40,308,934
             
35,909,933
             
4,399,001
     
12.3
%
Diluted weighted average number of common shares outstanding
   
40,730,712
             
35,909,933
             
4,820,779
     
13.4
%
 
7

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
   
For the six months ended December 31,
             
($ in thousands, except shares and per share data)
   
2016
   
% of Sales
     
2015
   
% of Sales
   
Change
   
% Change
 
                                         
Revenues:
                                       
License and transaction fees
  $
33,004
     
76.1
%
 
$
26,599
     
75.8
%
 
$
6,405
     
24.1
%
Equipment sales
   
10,340
     
23.9
%
   
8,504
     
24.2
%
   
1,836
     
21.6
%
Total revenues
   
43,344
     
100.0
%
   
35,103
     
100.0
%
   
8,241
     
23.5
%
 
                                               
Costs of sales/revenues:
                                               
Cost of services
   
22,632
     
68.6
%
   
17,772
     
66.8
%
   
4,860
     
27.3
%
Cost of equipment
   
8,211
     
79.4
%
   
6,801
     
80.0
%
   
1,410
     
20.7
%
Total costs of sales/revenues
   
30,843
     
71.2
%
   
24,573
     
70.0
%
   
6,270
     
25.5
%
                                                 
Gross profit
   
12,501
     
28.8
%
   
10,530
     
30.0
%
   
1,971
     
18.7
%
 
                                               
Operating expenses:
                                               
Selling, general and administrative
   
12,702
     
29.3
%
   
9,558
     
27.2
%
   
3,144
     
32.9
%
Depreciation and amortization
   
515
     
1.2
%
   
266
     
0.8
%
   
249
     
93.6
%
Total operating expenses
   
13,217
     
30.5
%
   
9,824
     
28.0
%
   
3,393
     
34.5
%
                                                 
Operating income (loss)
   
(716
)
   
-1.7
%
   
706
     
2.0
%
   
(1,422
)
   
-201.4
%
 
                                               
Other income (expense):
                                               
Interest income
   
273
     
0.6
%
   
71
     
0.2
%
   
202
     
284.5
%
Interest expense
   
(413
)
   
-1.0
%
   
(223
)
   
-0.6
%
   
(190
)
   
85.2
%
Change in fair value of warrant liabilities
   
(1,490
)
   
-3.4
%
   
(887
)
   
-2.5
%
   
(603
)
   
68.0
%
Total other income (expense), net
   
(1,630
)
   
-3.8
%
   
(1,039
)
   
-3.0
%
   
(591
)
   
56.9
%
                                                 
Income (loss) before provision for income taxes
   
(2,346
)
   
-5.4
%
   
(333
)
   
-0.9
%
   
(2,013
)
   
604.5
%
Benefit (provision) for income taxes
   
115
     
0.3
%
   
(181
)
   
-0.5
%
   
296
     
-163.5
%
                                                 
Net income (loss)
   
(2,231
)
   
-5.1
%
   
(514
)
   
-1.5
%
   
(1,717
)
   
334.0
%
Cumulative preferred dividends
   
(334
)
   
-0.8
%
   
(334
)
   
-1.0
%
   
     
0.0
%
Net income (loss) applicable to common shares
 
$
(2,565
)
   
-5.9
%
 
$
(848
)
   
-2.4
%
 
$
(1,717
)
   
202.5
%
                                                 
Net earnings (loss) per common share - basic
 
$
(0.07
)
         
$
(0.02
)
         
$
(0.05
)
   
250.0
%
Net earnings (loss) per common share - diluted
 
$
(0.07
)
         
$
(0.02
)
         
$
(0.05
)
   
250.0
%
                                                 
Basic weighted average number of common shares outstanding
   
39,398,469
             
35,879,164
             
3,519,305
     
9.8
%
Diluted weighted average number of common shares outstanding
   
39,398,469
             
35,879,164
             
3,519,305
     
9.8
%
 
8

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
(B)
Five Quarter Select Key Performance Indicators

   
As of and for the three months ended
 
   
Dcember 31,
2016
   
September 30,
2016
   
June 30,
2016
   
March 31,
2016
   
December 31,
2015
 
Connections:
                             
Gross New Connections
   
25,000
     
22,000
     
33,000
     
34,000
     
23,000
 
% from Existing Customer Base
   
80
%
   
86
%
   
83
%
   
91
%
   
89
%
Net New Connections
   
21,000
     
19,000
     
28,000
     
32,000
     
20,000
 
Total Connections
   
469,000
     
448,000
     
429,000
     
401,000
     
369,000
 
                                         
Customers:
                                       
New Customers Added
   
500
     
350
     
300
     
125
     
350
 
Total Customers
   
11,900
     
11,400
     
11,050
     
10,750
     
10,625
 
                                         
Volumes:
                                       
Total Number of Transactions (millions)
   
100
     
95
     
89
     
82
     
76
 
Transaction Volume (millions)
 
$
192
   
$
183
   
$
169
   
$
151
   
$
138
 
                                         
Financing Structure of Connections:
                                       
JumpStart
   
6.8
%
   
7.7
%
   
6.5
%
   
7.4
%
   
10.1
%
QuickStart & All Others *
   
93.2
%
   
92.3
%
   
93.5
%
   
92.6
%
   
89.9
%
Total
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%
   
100.0
%

*
Includes credit sales with standard trade receivable terms
 
9

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
(C)
Comparative Balance Sheets December 31, 2016 and June 30, 2016
 
($ in thousands)
 
December 31,
2016
   
June 30,
2016
   
Change
   
% Change
 
Assets
                       
Current assets:
                       
Cash
 
$
18,034
   
$
19,272
   
$
(1,238
)
   
-6
%
Accounts receivable, less allowance
   
6,796
     
4,899
     
1,897
     
39
%
Finance receivables, less allowance for credit losses of $29 and $0, respectively
   
1,442
     
3,588
     
(2,146
)
   
-60
%
Inventory, net
   
4,786
     
2,031
     
2,755
     
136
%
Prepaid expenses and other current assets
   
1,764
     
987
     
777
     
79
%
Deferred income taxes
   
2,271
     
2,271
     
     
0
%
Total current assets
   
35,093
     
33,048
     
2,045
     
6
%
                                 
Finance receivables, less current portion
   
3,956
     
3,718
     
238
     
6
%
Other assets
   
145
     
348
     
(203
)
   
-58
%
Property and equipment, net
   
9,433
     
9,765
     
(332
)
   
-3
%
Deferred income taxes
   
25,568
     
25,453
     
115
     
0
%
Intangibles, net
   
711
     
798
     
(87
)
   
-11
%
Goodwill
   
11,492
     
11,703
     
(211
)
   
-2
%
Total assets
 
$
86,398
   
$
84,833
   
$
1,565
     
2
%
                                 
Liabilities and shareholders' equity
                               
Current liabilities:
                               
Accounts payable
 
$
9,090
   
$
12,354
   
$
(3,264
)
   
-26
%
Accrued expenses
   
2,912
     
3,458
     
(546
)
   
-16
%
Line of credit, net
   
7,078
     
7,119
     
(41
)
   
-1
%
Current obligations under long-term debt
   
766
     
629
     
137
     
22
%
Income taxes payable
   
6
     
18
     
(12
)
   
-67
%
Warrant liabilities
   
     
3,739
     
(3,739
)
   
100
%
Deferred gain from sale-leaseback transactions
   
470
     
860
     
(390
)
   
-45
%
Total current liabilities
   
20,322
     
28,177
     
(7,855
)
   
-28
%
Long-term liabilities
                               
Long-term debt, less current portion
   
1,394
     
1,576
     
(182
)
   
-12
%
Accrued expenses, less current portion
   
52
     
15
     
37
     
247
%
Deferred gain from sale-leaseback transactions, less current portion
   
     
40
     
(40
)
   
100
%
Total long-term liabilities
   
1,446
     
1,631
     
(185
)
   
-11
%
Total liabilities
   
21,768
     
29,808
     
(8,040
)
   
-27
%
                                 
Shareholders' equity:
                               
Preferred stock, no par value
   
3,138
     
3,138
     
     
0
%
Common stock, no par value
   
245,230
     
233,394
     
11,836
     
5
%
Accumulated deficit
   
(183,738
)
   
(181,507
)
   
(2,231
)
   
1
%
Total shareholders' equity
   
64,630
     
55,025
     
9,605
     
17
%
Total liabilities and shareholders' equity
 
$
86,398
   
$
84,833
   
$
1,565
     
2
%
                                 
Net working capital
 
$
14,771
   
$
4,871
   
$
9,900
     
203
%
 
10

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
(D)
Five Quarter Statement of Operations and Adjusted EBITDA
 
   
For the three months ended
 
($ in thousands)
(unaudited)
 
December 31,
2016
   
% of Sales
   
September 30,
2016
   
% of Sales
   
June 30,
2016
   
% of Sales
   
March 31,
2016
   
% of Sales
   
December 31,
2015
   
% of Sales
 
Revenues:
                                                                 
License and transaction fees
 
$
16,639
     
76.5
%
 
$
16,365
     
75.8
%
 
$
15,263
     
69.6
%
 
$
14,727
     
72.3
%
 
$
13,674
     
73.9
%
Equipment Sales
   
5,117
     
23.5
%
   
5,223
     
24.2
%
   
6,681
     
30.4
%
   
5,634
     
27.7
%
   
4,829
     
26.1
%
Total revenue
   
21,756
     
100.0
%
   
21,588
     
100.0
%
   
21,944
     
100.0
%
   
20,361
     
100.0
%
   
18,503
     
100.0
%
                                                                                 
Costs of sales/revenues:
                                                                               
License and transaction fees
   
11,389
     
68.4
%
   
11,243
     
68.7
%
   
10,614
     
69.5
%
   
9,703
     
65.9
%
   
9,067
     
66.3
%
Equipment sales
   
4,033
     
78.8
%
   
4,178
     
80.0
%
   
5,547
     
83.0
%
   
4,986
     
88.5
%
   
3,953
     
81.9
%
Total costs of sales/revenues
   
15,422
     
70.9
%
   
15,421
     
71.4
%
   
16,161
     
73.6
%
   
14,689
     
72.1
%
   
13,020
     
70.4
%
                                                                                 
Gross Profit:
                                                                               
License and transaction fees
   
5,250
     
31.6
%
   
5,122
     
31.3
%
   
4,649
     
30.5
%
   
5,024
     
34.1
%
   
4,607
     
33.7
%
Equipment sales
   
1,084
     
21.2
%
   
1,045
     
20.0
%
   
1,134
     
17.0
%
   
648
     
11.5
%
   
876
     
18.1
%
Total gross profit
   
6,334
     
29.1
%
   
6,167
     
28.6
%
   
5,783
     
26.4
%
   
5,672
     
27.9
%
   
5,483
     
29.6
%
                                                                                 
Operating expenses:
                                                                               
Selling, general and administrative
   
5,793
     
26.6
%
   
6,909
     
32.0
%
   
6,721
     
30.6
%
   
6,094
     
29.9
%
   
4,762
     
25.7
%
Depreciation
   
307
     
1.4
%
   
208
     
1.0
%
   
208
     
0.9
%
   
173
     
0.8
%
   
127
     
0.7
%
Impairment of intangible asset
   
     
0.0
%
   
     
0.0
%
   
432
     
2.0
%
   
     
0.0
%
   
     
0.0
%
Total operating expenses
   
6,100
     
28.0
%
   
7,117
     
33.0
%
   
7,361
     
33.5
%
   
6,267
     
30.8
%
   
4,889
     
26.4
%
                                                                                 
Operating income (loss)
   
234
     
1.1
%
   
(950
)
   
-4.4
%
   
(1,578
)
   
-7.2
%
   
(595
)
   
-2.9
%
   
594
     
3.2
%
                                                                                 
Other income (expense):
                                                                               
Interest income
   
200
     
0.9
%
   
73
     
0.3
%
   
182
     
0.8
%
   
67
     
0.3
%
   
20
     
0.1
%
Other income
   
     
0.0
%
   
     
0.0
%
   
     
0.0
%
   
     
0.0
%
   
     
0.0
%
Interest expense
   
(201
)
   
-0.9
%
   
(212
)
   
-1.0
%
   
(197
)
   
-0.9
%
   
(180
)
   
-0.9
%
   
(104
)
   
-0.6
%
Change in fair value of warrant liabilities
   
     
0.0
%
   
(1,490
)
   
-6.9
%
   
18
     
0.1
%
   
(4,805
)
   
-23.6
%
   
(1,230
)
   
-6.6
%
Total other income (expense), net
   
(1
)
   
0.0
%
   
(1,629
)
   
-7.5
%
   
3
     
0.0
%
   
(4,918
)
   
-24.2
%
   
(1,314
)
   
-7.1
%
                                                                                 
Loss before provision for income taxes
   
233
     
1.1
%
   
(2,579
)
   
-11.9
%
   
(1,575
)
   
-7.2
%
   
(5,513
)
   
-27.1
%
   
(720
)
   
-3.9
%
Benefit (provision) for income taxes
   
     
0.0
%
   
115
     
0.5
%
   
703
     
3.2
%
   
93
     
0.5
%
   
(154
)
   
-0.8
%
                                                                                 
Net income (loss)
   
233
     
1.1
%
   
(2,464
)
   
-11.4
%
   
(872
)
   
-4.0
%
   
(5,420
)
   
-26.6
%
   
(874
)
   
-4.7
%
                                                                                 
Less interest income
   
(200
)
   
-0.9
%
   
(73
)
   
-0.3
%
   
(182
)
   
-0.8
%
   
(67
)
   
-0.3
%
   
(20
)
   
-0.1
%
Plus interest expenses
   
201
     
0.9
%
   
212
     
1.0
%
   
197
     
0.9
%
   
180
     
0.9
%
   
104
     
0.6
%
Plus income tax expense
   
     
0.0
%
   
(115
)
   
-0.5
%
   
(703
)
   
-3.2
%
   
(93
)
   
-0.5
%
   
154
     
0.8
%
Plus depreciation expense
   
1,220
     
5.6
%
   
1,257
     
5.8
%
   
1,272
     
5.8
%
   
1,190
     
5.8
%
   
1,323
     
7.2
%
Plus amortization expense
   
43
     
0.2
%
   
44
     
0.2
%
   
44
     
0.2
%
   
44
     
0.2
%
   
     
0.0
%
Plus (less) change in fair value of warrant liabilities
   
     
0.0
%
   
1,490
     
6.9
%
   
(18
)
   
-0.1
%
   
4,805
     
23.6
%
   
1,230
     
6.6
%
Plus stock-based compensation
   
233
     
1.1
%
   
211
     
1.0
%
   
198
     
0.9
%
   
142
     
0.7
%
   
237
     
1.3
%
Plus intangible asset impairment
   
     
0.0
%
   
     
0.0
%
   
432
     
2.0
%
   
     
0.0
%
   
     
0.0
%
Plus VendScreen non-recurring charges
   
8
     
0.0
%
   
101
     
0.5
%
   
258
     
1.2
%
   
461
     
2.3
%
   
106
     
0.6
%
Plus litigation related professional fees
   
     
0.0
%
   
33
     
0.2
%
           
0.0
%
   
105
     
0.5
%
   
     
0.0
%
Adjusted  EBITDA
 
$
1,738
     
8.0
%
 
$
696
     
3.2
%
 
$
626
     
2.9
%
 
$
1,347
     
6.6
%
 
$
2,260
     
12.2
%
 
See discussion of Non-GAAP financial measures later in this document
 
11

USA Technologies Announces Second Quarter Fiscal Year 2017 Financial Results
 
(E)
Five Quarter and YTD Selling, General, & Administrative Expenses
 
   
Three months ended
 
($ in thousands)
 
December 31,
2016
   
% of
SG&A
   
September 30,
2016
   
% of
SG&A
   
June 30,
2016
   
% of
SG&A
   
March 31,
2016
   
% of
SG&A
   
December 31,
2015
   
% of
SG&A
 
Salaries and benefit costs
 
$
2,849
     
49.2
%
 
$
3,129
     
45.3
%
 
$
3,050
     
45.4
%
 
$
2,760
     
45.4
%
 
$
2,786
     
58.6
%
Marketing related expenses
   
578
     
10.0
%
   
329
     
4.8
%
   
635
     
9.4
%
   
362
     
5.9
%
   
335
     
7.0
%
Professional services
   
1,213
     
20.9
%
   
2,520
     
36.5
%
   
1,533
     
22.8
%
   
1,152
     
18.9
%
   
839
     
17.6
%
Bad debt expense
   
352
     
6.1
%
   
97
     
1.4
%
   
470
     
7.0
%
   
505
     
8.3
%
   
239
     
5.0
%
Premises, equipment and insurance costs
   
498
     
8.6
%
   
499
     
7.2
%
   
555
     
8.3
%
   
460
     
7.5
%
   
347
     
7.3
%
Research and development expenses
   
173
     
3.0
%
   
124
     
1.8
%
   
123
     
1.8
%
   
131
     
2.1
%
   
37
     
0.8
%
VendScreen non-recurring charges
   
8
     
0.1
%
   
101
     
1.5
%
   
258
     
3.8
%
   
461
     
7.6
%
   
106
     
2.2
%
Litigation related professional fees
   
     
0.0
%
   
33
     
0.5
%
   
51
     
0.8
%
   
105
     
1.7
%
   
     
0.0
%
Other expenses
   
122
     
2.1
%
   
77
     
1.1
%
   
46
     
0.7
%
   
158
     
2.6
%
   
73