☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
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USA Technologies, Inc.
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||
(Exact name of registrant as specified in its charter)
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Pennsylvania
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23-2679963
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|||||
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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100 Deerfield Lane, Suite 140, Malvern, Pennsylvania
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19355
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|||||
(Address of principal executive offices)
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(Zip Code)
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(610) 989-0340
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||
(Registrant’s telephone number, including area code)
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Large accelerated filer
☐
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Accelerated filer
☐
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Non-accelerated filer
☐
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Smaller reporting company
☒
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Part I - Financial Information
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||||
Item 1.
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Consolidated Financial Statements (Unaudited)
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|||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
7
|
||||
17
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||||
27
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||||
27
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||||
27
|
||||
28
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2 |
December 31,
|
June 30,
|
|||||||
2014
|
2014
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash
|
$ | 6,734,077 | $ | 9,072,320 | ||||
Accounts receivable, less allowance for uncollectible accounts of $197,000 and
$63,000, respectively
|
2,758,475 | 2,683,579 | ||||||
Finance receivables
|
362,898 | 119,793 | ||||||
Inventory
|
3,448,374 | 1,486,777 | ||||||
Prepaid expenses and other current assets
|
586,144 | 363,367 | ||||||
Deferred income taxes
|
907,691 | 907,691 | ||||||
Total current assets
|
14,797,659 | 14,633,527 | ||||||
Finance receivables, less current portion
|
1,643,363 | 352,794 | ||||||
Prepaid expenses and other assets
|
410,838 | 190,703 | ||||||
Property and equipment, net
|
16,450,712 | 21,138,580 | ||||||
Deferred income taxes
|
26,290,424 | 26,353,330 | ||||||
Intangibles, net
|
432,100 | 432,100 | ||||||
Goodwill
|
7,663,208 | 7,663,208 | ||||||
Total assets
|
$ | 67,688,304 | $ | 70,764,242 | ||||
Liabilities and shareholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 5,385,822 | $ | 7,753,911 | ||||
Accrued expenses
|
1,726,614 | 1,915,799 | ||||||
Line of credit
|
4,000,000 | 5,000,000 | ||||||
Current obligations under long-term debt
|
203,621 | 172,911 | ||||||
Income taxes payable
|
- | 21,021 | ||||||
Deferred gain from sale-leaseback transactions
|
860,390 | 380,895 | ||||||
Total current liabilities
|
12,176,447 | 15,244,537 | ||||||
Long-term liabilities:
|
||||||||
Long-term debt, less current portion
|
261,716 | 249,865 | ||||||
Accrued expenses, less current portion
|
102,338 | 186,174 | ||||||
Warrant liabilities
|
139,755 | 585,209 | ||||||
Deferred gain from sale-leaseback transactions, less current portion
|
1,330,544 | 761,790 | ||||||
Total long-term liabilities
|
1,834,353 | 1,783,038 | ||||||
Total liabilities
|
14,010,800 | 17,027,575 | ||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, no par value:
|
||||||||
Authorized shares- 1,800,000 Series A convertible preferred- Authorized shares- 900,000
Issued and outstanding shares- 442,968 (liquidation preference of $17,022,682 and $16,690,456, respectively)
|
3,138,056 | 3,138,056 | ||||||
Common stock, no par value: Authorized shares- 640,000,000 Issued and outstanding
shares- 35,660,345 and 35,514,685, respectively
|
224,472,905 | 224,210,197 | ||||||
Accumulated deficit
|
(173,933,457 | ) | (173,611,586 | ) | ||||
Total shareholders’ equity
|
53,677,504 | 53,736,667 | ||||||
Total liabilities and shareholders’ equity
|
$ | 67,688,304 | $ | 70,764,242 |
Three months ended
|
Six months ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues:
|
||||||||||||||||
License and transaction fees
|
$ | 10,479,496 | $ | 8,671,085 | $ | 20,635,718 | $ | 17,178,129 | ||||||||
Equipment sales
|
2,341,441 | 1,899,429 | 4,437,821 | 3,515,443 | ||||||||||||
Total revenues
|
12,820,937 | 10,570,514 | 25,073,539 | 20,693,572 | ||||||||||||
Cost of services
|
7,157,840 | 5,495,385 | 14,408,947 | 10,904,848 | ||||||||||||
Cost of equipment
|
1,929,841 | 1,244,996 | 3,796,098 | 2,375,820 | ||||||||||||
Gross profit
|
3,733,256 | 3,830,133 | 6,868,494 | 7,412,904 | ||||||||||||
Operating expenses:
|
||||||||||||||||
Selling, general and administrative
|
3,530,064 | 3,193,568 | 7,162,551 | 6,488,912 | ||||||||||||
Depreciation and amortization
|
151,737 | 126,875 | 321,140 | 285,384 | ||||||||||||
Total operating expenses
|
3,681,801 | 3,320,443 | 7,483,691 | 6,774,296 | ||||||||||||
Operating income (loss)
|
51,455 | 509,690 | (615,197 | ) | 638,608 | |||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
4,015 | 4,714 | 14,097 | 18,240 | ||||||||||||
Interest expense
|
(49,429 | ) | (60,405 | ) | (124,340 | ) | (121,381 | ) | ||||||||
Change in fair value of warrant liabilities
|
135,402 | (37,896 | ) | 445,454 | 181,201 | |||||||||||
Total other income (expense), net
|
89,988 | (93,587 | ) | 335,211 | 78,060 | |||||||||||
Income (loss) before provision for income taxes
|
141,443 | 416,103 | (279,986 | ) | 716,668 | |||||||||||
Provision for income taxes
|
(402,358 | ) | (6,912 | ) | (41,885 | ) | (13,823 | ) | ||||||||
Net income (loss)
|
(260,915 | ) | 409,191 | (321,871 | ) | 702,845 | ||||||||||
Cumulative preferred dividends
|
- | - | (332,226 | ) | (332,226 | ) | ||||||||||
Net income (loss) applicable to common shares
|
$ | (260,915 | ) | $ | 409,191 | $ | (654,097 | ) | $ | 370,619 | ||||||
Net earnings (loss) per common share - basic
|
$ | (0.01 | ) | $ | 0.01 | $ | (0.02 | ) | $ | 0.01 | ||||||
Weighted average number of common shares outstanding
|
35,657,519 | 34,136,884 | 35,625,199 | 33,730,590 | ||||||||||||
Net earnings (loss) per common share - diluted
|
$ | (0.01 | ) | $ | 0.01 | $ | (0.02 | ) | $ | 0.01 | ||||||
Diluted weighted average number of common shares outstanding
|
35,657,519 | 34,222,731 | 35,625,199 | 33,730,590 |
4 |
Series A
|
||||||||||||||||||||||||
Convertible
|
||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
Accumulated
|
||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Deficit
|
Total
|
|||||||||||||||||||
Balance, June 30, 2014
|
442,968 | $ | 3,138,056 | 35,514,685 | $ | 224,210,197 | $ | (173,611,586 | ) | $ | 53,736,667 | |||||||||||||
|
||||||||||||||||||||||||
Issuance of fully-vested shares of common stock to
employees and directors and vesting of shares
under the 2011 Stock Incentive Plan
|
- | - | 10,002 | 604 | - | 604 | ||||||||||||||||||
Issuance of fully-vested shares of common stock to
employees and directors and vesting of shares
under the 2012 Stock Incentive Plan
|
- | - | 60,182 | 14,478 | - | 14,478 | ||||||||||||||||||
Issuance of fully-vested shares of common stock to
employees and directors and vesting of shares
under the 2013 Stock Incentive Plan
|
- | - | 107,375 | 155,262 | - | 155,262 | ||||||||||||||||||
Charges incurred under the 2014 Stock
Option Incentive Plan
|
- | - | - | 154,351 | - | 154,351 | ||||||||||||||||||
Retirement of common stock
|
- | - | (31,899 | ) | (61,987 | ) | - | (61,987 | ) | |||||||||||||||
Net loss
|
- | - | - | - | (321,871 | ) | (321,871 | ) | ||||||||||||||||
Balance, December 31, 2014
|
442,968 | $ | 3,138,056 | 35,660,345 | $ | 224,472,905 | $ | (173,933,457 | ) | $ | 53,677,504 |
5 |
Three months ended
|
Six months ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
OPERATING ACTIVITIES:
|
||||||||||||||||
Net income (loss)
|
$ | (260,915 | ) | $ | 409,191 | $ | (321,871 | ) | $ | 702,845 | ||||||
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
|
||||||||||||||||
Charges incurred in connection with the vesting and issuance
of common stock for employee and director compensation
|
185,891 | 104,464 | 324,695 | 188,856 | ||||||||||||
(Gain) loss on disposal of property and equipment
|
(3,794 | ) | (5,451 | ) | (7,078 | ) | 9,484 | |||||||||
Non-cash interest and amortization of debt discount
|
- | - | - | 2,095 | ||||||||||||
Bad debt expense, net
|
140,996 | 51,619 | 299,712 | 78,050 | ||||||||||||
Depreciation
|
1,443,710 | 1,278,518 | 2,917,122 | 2,496,589 | ||||||||||||
Amortization
|
- | - | - | 21,953 | ||||||||||||
Change in fair value of warrant liabilities
|
(135,402 | ) | 37,896 | (445,454 | ) | (181,201 | ) | |||||||||
Deferred income taxes, net
|
423,379 | 6,912 | 62,906 | 13,823 | ||||||||||||
Recognition of deferred gain from sale leaseback transactions
|
(215,097 | ) | - | (403,424 | ) | - | ||||||||||
Changes in operating assets and liabilities:
|
||||||||||||||||
Accounts receivable
|
(363,368 | ) | 344,611 | (283,253 | ) | 1,049,726 | ||||||||||
Finance receivables
|
(778,212 | ) | 104,076 | (1,533,674 | ) | 65,405 | ||||||||||
Inventory
|
(804,629 | ) | 45,903 | (1,942,948 | ) | 123,920 | ||||||||||
Prepaid expenses and other current assets
|
(246,709 | ) | (63,026 | ) | (357,464 | ) | (114,986 | ) | ||||||||
Accounts payable
|
(2,338,176 | ) | (68,081 | ) | (2,459,444 | ) | (1,315,867 | ) | ||||||||
Accrued expenses
|
(87,130 | ) | (503,280 | ) | (273,021 | ) | (485,516 | ) | ||||||||
Income taxes payable
|
- | - | (21,021 | ) | - | |||||||||||
Net cash provided by (used in) operating activities
|
(3,039,456 | ) | 1,743,352 | (4,444,217 | ) | 2,655,176 | ||||||||||
INVESTING ACTIVITIES:
|
||||||||||||||||
Purchase of property and equipment
|
(18,879 | ) | (10,601 | ) | (50,369 | ) | (25,227 | ) | ||||||||
Purchase of property for rental program
|
- | (2,493,247 | ) | (1,641,993 | ) | (4,568,222 | ) | |||||||||
Proceeds from sale of rental equipment under sale leaseback transactions
|
- | - | 4,993,879 | - | ||||||||||||
Proceeds from the sale of property and equipment
|
11,177 | 24,862 | 34,911 | 24,862 | ||||||||||||
Net cash provided by (used in) investing activities
|
(7,702 | ) | (2,478,986 | ) | 3,336,428 | (4,568,587 | ) | |||||||||
FINANCING ACTIVITIES:
|
||||||||||||||||
Net proceeds from the exercise of common stock warrants
and the retirement of common stock
|
(61,987 | ) | 1,679,433 | (61,987 | ) | 1,765,087 | ||||||||||
Proceeds (repayment) from line of credit, net
|
(1,000,000 | ) | - | (1,000,000 | ) | 1,000,000 | ||||||||||
Repayment of long-term debt
|
(72,856 | ) | (100,700 | ) | (168,467 | ) | (177,677 | ) | ||||||||
Net cash provided by (used in) financing activities
|
(1,134,843 | ) | 1,578,733 | (1,230,454 | ) | 2,587,410 | ||||||||||
Net increase (decrease) in cash and cash equivalents
|
(4,182,001 | ) | 843,099 | (2,338,243 | ) | 673,999 | ||||||||||
Cash and cash equivalents at beginning of period
|
10,916,078 | 5,811,900 | 9,072,320 | 5,981,000 | ||||||||||||
Cash and cash equivalents at end of period
|
$ | 6,734,077 | $ | 6,654,999 | $ | 6,734,077 | $ | 6,654,999 | ||||||||
Supplemental disclosures of cash flow information
:
|
||||||||||||||||
Cash paid for interest
|
$ | 55,992 | $ | 60,069 | $ | 135,191 | $ | 129,804 | ||||||||
Depreciation expense allocated to cost of sales
|
$ | 1,282,860 | $ | 1,151,643 | $ | 2,578,305 | $ | 2,233,158 | ||||||||
Reclass of rental program property to inventory, net
|
$ | 14,384 | $ | 7,544 | $ | 18,649 | $ | 13,117 | ||||||||
Prepaid items financed with debt
|
$ | - | $ | - | $ | 103,125 | $ | 101,850 | ||||||||
Equipment and software acquired under capital lease
|
$ | 107,903 | $ | - | $ | 107,903 | $ | 22,036 | ||||||||
Disposal of property and equipment
|
$ | 9,841 | $ | 44,512 | $ | 51,903 | $ | 218,716 | ||||||||
Disposal of property and equipment under sale leaseback transactions
|
$ | - | $ | - | $ | 3,873,275 | $ | - |
6 |
7 |
8 |
December 31,
|
June 30, | |||||||
2014
|
2014 | |||||||
(unaudited)
|
||||||||
Total finance receivables
|
$ | 2,006,261 | $ | 472,587 | ||||
Less current portion
|
362,898 | 119,793 | ||||||
Non-current portion of finance receivables
|
$ | 1,643,363 | $ | 352,794 |
9 |
Credit risk profile based on payment activity:
|
||||
Leases
|
||||
Performing
|
$ | 1,999,444 | ||
Nonperforming
|
6,817 | |||
Total
|
$ | 2,006,261 |
31 – 60 | 61 – 90 |
Greater than
|
Total
|
|||||||||||||||||||||
Days Past
|
Days Past
|
90 Days Past
|
Total Past
|
Finance
|
||||||||||||||||||||
Due
|
Due
|
Due
|
Due
|
Current
|
Receivables
|
|||||||||||||||||||
Leases
|
$ | 1,571 | $ | 1,191 | $ | 4,055 | $ | 6,817 | $ | 1,999,444 | $ | 2,006,261 | ||||||||||||
Total
|
$ | 1,571 | $ | 1,191 | $ | 4,055 | $ | 6,817 | $ | 1,999,444 | $ | 2,006,261 |
December 31,
|
June 30,
|
|||||||
2014
|
2014
|
|||||||
(unaudited)
|
||||||||
Accrued compensation and related sales commissions
|
$ | 311,303 | $ | 545,110 | ||||
Accrued professional fees
|
268,317 | 214,615 | ||||||
Accrued taxes and filing fees
|
629,375 | 640,958 | ||||||
Advanced customer billings
|
324,523 | 370,040 | ||||||
Accrued rent
|
116,514 | 155,712 | ||||||
Accrued other
|
178,920 | 175,538 | ||||||
$ | 1,828,952 | $ | 2,101,973 |
10 |
December 31,
|
June 30,
|
|||||||
2014
|
2014
|
|||||||
(unaudited)
|
||||||||
Capital lease obligations
|
$ | 419,001 | $ | 414,525 | ||||
Loan agreements
|
46,336 | 8,251 | ||||||
465,337 | 422,776 | |||||||
Less current portion
|
203,621 | 172,911 | ||||||
$ | 261,716 | $ | 249,865 |
December 31, 2014 (unaudited)
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Common
stock warrant liability, warrants exercisable at $2.6058 from September 18, 2011 through
September 18, 2016
|
$ | - | $ | - | $ | 139,755 | $ | 139,755 |
June 30, 2014
|
Level 1 | Level 2 |
Level 3
|
Total
|
||||||||||||
Common
stock warrant liability, warrants exercisable at $2.6058 from September 18, 2011 through
September 18, 2016
|
$ | - | $ | - | $ | 585,209 | $ | 585,209 |
11 |
Six months ended
|
||||||||
December 31,
|
||||||||
2014
|
2013
|
|||||||
(unaudited)
|
(unaudited)
|
|||||||
Beginning balance
|
$ | (585,209 | ) | $ | (650,638 | ) | ||
Gain due to change in fair value of warrant liabilities, net
|
445,454 | 181,201 | ||||||
Ending balance
|
$ | (139,755 | ) | $ | (469,437 | ) |
12 |
13 |
September 2014
|
||
Expected volatility
|
79%
|
|
Expected life
|
7 years
|
|
Expected dividends
|
0.00%
|
|
Risk-free interest rate
|
2.04%
|
14 |
Year ended
|
Six months ended
|
|||||||||||
June 30, 2014
|
December 31, 2014
|
Total
|
||||||||||
(unaudited)
|
||||||||||||
Rental equipment sold, cost
|
$ | 1,918,920 | $ | 3,873,275 | $ | 5,792,195 | ||||||
Rental equipment sold, accumulated depreciation upon sale
|
(76,032 | ) | (331,069 | ) | (407,101 | ) | ||||||
Rental equipment sold, net book value
|
1,842,888 | 3,542,206 | 5,385,094 | |||||||||
Proceeds from sale
|
2,995,095 | 4,993,879 | 7,988,974 | |||||||||
Gain on sale of rental equipment
|
$ | 1,152,207 | $ | 1,451,673 | $ | 2,603,880 |
Six months ended
|
||||
December 31, 2014
|
||||
(unaudited)
|
||||
Beginning balance, June 30, 2014
|
$ | 1,142,685 | ||
Gain on sale of rental equipment
|
1,451,673 | |||
Recognition of deferred gain
|
(403,424 | ) | ||
Ending balance, December 31, 2014
|
2,190,934 | |||
Less current portion
|
860,390 | |||
Non-current portion of deferred gain
|
$ | 1,330,544 |
Operating Leases
|
||||
from Sale Leaseback
|
||||
(unaudited)
|
||||
2015 (remaining six months)
|
$ | 1,320,578 | ||
2016
|
2,641,155 | |||
2017
|
2,641,155 | |||
2018
|
137,731 | |||
Total minimum lease payments
|
$ | 6,740,619 |
15 |
16 |
|
●
|
general economic, market or business conditions;
|
|
●
|
the ability of the Company to raise funds in the future through sales of securities or debt financing in order to sustain its operations if an unexpected or unusual event would occur;
|
|
●
|
the ability of the Company to compete with its competitors to obtain market share;
|
|
●
|
whether the Company’s current or future customers purchase, lease, rent or utilize ePort devices or our other products in the future at levels currently anticipated by our Company, including appropriate diversification resulting from sources other than our JumpStart Program;
|
|
●
|
whether the Company’s customers continue to utilize the Company’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 the Company to satisfy its trade obligations included in accounts payable and accrued expenses;
|
|
●
|
the incurrence by us of any unanticipated or unusual non-operating expenses which would require us to divert our cash resources from achieving our business plan;
|
|
●
|
the ability of the Company to predict or estimate its future quarterly or annual revenues and expenses given the developing and unpredictable market for its products;
|
|
●
|
the ability of the Company to retain key customers from whom a significant portion of its revenues are derived;
|
|
●
|
the ability of a key customer to reduce or delay purchasing products from the Company;
|
|
●
|
the ability of the Company to obtain widespread commercial acceptance of its products and service offerings such as ePort QuickConnect, mobile payment and loyalty and prepaid programs;
|
|
●
|
whether any patents issued to the Company will provide the Company with any competitive advantages or adequate protection for its products, or would be challenged, invalidated or circumvented by others;
|
|
●
|
the ability of our products and services to avoid unauthorized hacking or credit card fraud;
|
|
●
|
whether our suppliers would increase their prices, reduce their output or change their terms of sale; and
|
|
●
|
the ability of the Company to operate without infringing the proprietary rights of others.
|
17 |
|
●
|
Recurring license and transaction fee revenue up 21% to $10.5 million; and
|
|
●
|
Total connections to its ePort Connect service base as of December 31, 2014 up 29% as compared to December 31, 2013.
|
|
●
|
Purchasing devices directly from the Company or one of its authorized resellers;
|
|
●
|
Leasing devices under the Company’s QuickStart Program, which are non-cancellable sixty month sales-type leases; and
|
|
●
|
Renting devices under the Company’s JumpStart Program, which are cancellable month-to-month operating leases.
|
|
●
|
Adding 12,000 net connections to our service, consisting of 14,000 new connections to our ePort Connect service in the quarter, offset by 2,000 deactivations, compared to 7,000 net connections added in the same quarter of fiscal 2014;
|
|
●
|
As of December 31, 2014, the Company had approximately 288,000 connections to the ePort Connect service compared to approximately 224,000 connections to the ePort Connect service as of December 31, 2013, an increase of 64,000 connections, or 29%;
|
|
●
|
Increases in the number of small-ticket, credit/debit transactions and dollars handled for the quarter ended December 31, 2014 of 27% and 29%, respectively, compared to the same period a year ago; and
|
|
●
|
ePort Connect customer base grew 39% from December 31, 2013.
|
18 |
19 |
Three months ended
|
||||||||
December 31,
|
||||||||
2014
|
2013
|
|||||||
Net income (loss)
|
$ | (260,915 | ) | $ | 409,191 | |||
Non-GAAP adjustments:
|
||||||||
Fair value of warrant adjustment
|
(135,402 | ) | 37,896 | |||||
Tax provision charge from state tax law changes
|
395,605 | - | ||||||
Non-GAAP net income (loss)
|
$ | (712 | ) | $ | 447,087 | |||
Net income (loss)
|
$ | (260,915 | ) | $ | 409,191 | |||
Non-GAAP net income (loss)
|
$ | (712 | ) | $ | 447,087 | |||
Cumulative preferred dividends
|
- | - | ||||||
Net income (loss) applicable to common shares
|
$ | (260,915 | ) | $ | 409,191 | |||
Non-GAAP net income (loss) applicable to common shares
|
$ | (712 | ) | $ | 447,087 | |||
Net earnings (loss) per common share - basic
|
$ | (0.01 | ) | $ | 0.01 | |||
Non-GAAP net earnings (loss) per common share - basic
|
$ | - | $ | 0.01 | ||||
Weighted average number of common shares outstanding
|
35,657,519 | 34,136,884 | ||||||
Net earnings (loss) per common share - diluted
|
$ | (0.01 | ) | $ | 0.01 | |||
Non-GAAP net earnings (loss) per common share - diluted
|
$ | - | $ | 0.01 | ||||
Diluted weighted average number of common shares outstanding
|
35,657,519 | 34,222,731 |
Three months ended
|
||||||||
December 31,
|
||||||||
2014
|
2013
|
|||||||
Net income (loss)
|
$ | (260,915 | ) | $ | 409,191 | |||
Less interest income
|
(4,015 | ) | (4,714 | ) | ||||
Plus interest expense
|
49,429 | 60,405 | ||||||
Plus income tax expense
|
402,358 | 6,912 | ||||||
Plus depreciation expense
|
1,443,710 | 1,278,518 | ||||||
Plus change in fair value of warrant liabilities
|
(135,402 | ) | 37,896 | |||||
Plus stock-based compensation
|
185,891 | 104,464 | ||||||
Adjusted EBITDA
|
$ | 1,681,056 | $ | 1,892,672 |
20 |
21 |
|
●
|
Recurring license and transaction fee revenue up 20% to $20.6 million; and
|
|
●
|
Total connections to its ePort Connect service base as of December 31, 2014 up 29% as compared to December 31, 2013.
|
|
●
|
Purchasing devices directly from the Company or one of its authorized resellers;
|
|
●
|
Leasing devices under the Company’s QuickStart Program, which are non-cancellable sixty month sales-type leases; and
|
|
●
|
Renting devices under the Company’s JumpStart Program, which are cancellable month-to-month operating leases.
|
|
●
|
Adding 22,000 net connections to our service, consisting of 27,000 new connections to our ePort Connect service in the six month period, offset by 5,000 deactivations, compared to 10,000 net connections added in the same six month period of fiscal 2014;
|
|
●
|
As of December 31, 2014, the Company had approximately 288,000 connections to the ePort Connect service compared to approximately 224,000 connections to the ePort Connect service as of December 31, 2013, an increase of 64,000 connections, or 29%;
|
|
●
|
Increases in the number of small-ticket, credit/debit transactions and dollars handled for the six months ended December 31, 2014 of 27% and 30%, respectively, compared to the same period a year ago; and
|
|
●
|
ePort Connect customer base grew 39% from December 31, 2013.
|
22 |
23 |
Six months ended
|
||||||||
December 31,
|
||||||||
2014
|
2013
|
|||||||
Net income (loss)
|
$ | (321,871 | ) | $ | 702,845 | |||
Non-GAAP adjustments:
|
||||||||
Fair value of warrant adjustment
|
(445,454 | ) | (181,201 | ) | ||||
Tax provision charge from state tax law changes
|
395,605 | - | ||||||
Non-GAAP net income (loss)
|
$ | (371,720 | ) | $ | 521,644 | |||
Net income (loss)
|
$ | (321,871 | ) | $ | 702,845 | |||
Non-GAAP net income (loss)
|
$ | (371,720 | ) | $ | 521,644 | |||
Cumulative preferred dividends
|
(332,226 | ) | (332,226 | ) | ||||
Net income (loss) applicable to common shares
|
$ | (654,097 | ) | $ | 370,619 | |||
Non-GAAP net income (loss) applicable to common shares
|
$ | (703,946 | ) | $ | 189,418 | |||
Net earnings (loss) per common share - basic and diluted
|
$ | (0.02 | ) | $ | 0.01 | |||
Non-GAAP net earnings (loss) per common share - basic and diluted
|
$ | (0.02 | ) | $ | 0.01 | |||
Weighted average number of common shares outstanding - basic
|
35,625,199 | 33,730,590 |
Six months ended
|
||||||||
December 31,
|
||||||||
2014
|
2013
|
|||||||
Net income (loss)
|
$ | (321,871 | ) | $ | 702,845 | |||
Less interest income
|
(14,097 | ) | (18,240 | ) | ||||
Plus interest expense
|
124,340 | 121,381 | ||||||
Plus income tax expense
|
41,885 | 13,823 | ||||||
Plus depreciation expense
|
2,917,122 | 2,496,589 | ||||||
Plus amortization expense
|
- | 21,953 | ||||||
Plus change in fair value of warrant liabilities
|
(445,454 | ) | (181,201 | ) | ||||
Plus stock-based compensation
|
324,695 | 188,856 | ||||||
Adjusted EBITDA
|
$ | 2,626,620 | $ | 3,346,006 |
24 |
25 |
26 |
Exhibit
Number
|
Description
|
|
10.1
|
VISA Incentive Agreement dated as of November 1, 2014 between the Company and VISA U.S.A., Inc. (Portions of this exhibit were redacted pursuant to a confidentiality treatment request)
|
|
31.1
|
Certifications of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
31.2
|
Certifications of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
|
|
32.1
|
Certification of the Chief Executive Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of the Chief Financial Officer pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
27 |
USA TECHNOLOGIES, INC.
|
|||
Date: February 17, 2015
|
/s/ Stephen P. Herbert
|
||
Stephen P. Herbert,
|
|||
Chief Executive Officer
|
|||
Date: February 17, 2015
|
/s/ David M. DeMedio
|
||
David M. DeMedio
|
|||
Chief Financial Officer
|
28 |
Effective Date:
|
This Visa incentive agreement (the “
agreement
”)
is effective as of November 1, 2014 (“
Effective Date
”), but only if Visa has received from USAT an executed counterpart of this agreement on or before November 30, 2014. Otherwise, this agreement will not become effective.
|
|
Term of Agreement:
|
The term of this agreement begins on the Effective Date and will expire on
October 31, 2017
(“
Term
”); unless terminated earlier in accordance with section 5 of schedule A.
|
|
Visa Contact:
|
***
|
|
Visa Phone Number:
|
***
|
|
Visa Facsimile Number:
|
||
USAT Contact:
|
Stephen P. Herbert
|
|
USAT Phone Number:
|
610-989-0340
|
|
USAT Facsimile Number:
|
AGREED:
|
||||||||||||||||
VISA U.S.A. INC. | USA Technologies, Inc. | |||||||||||||||
(“ Visa ” ) | (“ USAT ” ) | |||||||||||||||
By:
|
/s/ *** |
By:
|
/s/David M. DeMedio
|
|||||||||||||
Name:
|
***
|
Name:
|
David M. DeMedio
|
|||||||||||||
Title:
|
***
|
Title:
|
CFO | |||||||||||||
Date:
|
11/14/14
|
Date:
|
11/12/14 |
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