USA Technologies Announces Fourth Quarter and Fiscal Year 2015 Results

MALVERN, Pa.--()--USA Technologies, Inc. (NASDAQ:USAT) ("USAT"), a leader of wireless, cashless payment and M2M/IoT solutions for small-ticket, self-serve retailing industries, today reported results for the fourth quarter and fiscal year ended June 30, 2015.

“Our leadership position in mobile and NFC payments, combined with our extensive experience with the self-service retail market, is fueling our growth and propels us toward achieving our long-term goals”

Fourth Quarter Financial Highlights:

  • Record net connections of 31,000 for a total on the service of 333,000
  • Record total revenue of $17.6 million, a year-over-year increase of 57%
  • Record license and transaction fee revenue of $11.9 million, a year-over-year increase of 26%
  • Free cashflow of $2.7 million*

*(defined as cash flow from operations less cash used for the purchase of property for the JumpStart rental program.)

Fourth Quarter Financial Results:

  Three months ended      
June 30,    
2015   2014 $ Change % Change  
($ in thousands except-per share data)
 
Revenues:
License and transaction fees $ 11,938 $ 9,460 $ 2,478 26 %
Equipment sales $ 5,708   $ 1,747   $ 3,961 227 %
Total revenues $ 17,646   $ 11,207   $ 6,439 57 %
 
Operating income (loss) $ 93   $ (568 ) $ 661 116 %
Adjusted EBITDA $ 1,701   $ 1,266   $ 435 34 %
Net income (loss) $ 69   $ (39 ) $ 108 277 %
Non-GAAP net income (loss) $ 58   $ (619 ) $ 677 109 %
Net earnings (loss) per common share - diluted $ (0.01 ) $ -   $

(0.01

)

-100

%

Non-GAAP net earnings (loss) per common share - diluted $ -   $ (0.02 ) $

0.02

100 %
 

"Our leadership position in mobile and NFC payments, combined with our extensive experience with the self-service retail market, is fueling our growth and propels us toward achieving our long-term goals," said Stephen P. Herbert, USA Technologies' chairman and chief executive officer. "With Google's launch of Android Pay, and our collaboration with them, it is another validation of the broader market acceptance of the mobile payments technology we have championed for more than 10 years. With a record number of gross connections this quarter coupled with an increase in equipment sales, we ended the quarter with a year-over-year revenue increase of 57%. We continue to strengthen our balance sheet with the success of the QuickStart program which has increased our cash position significantly and are focused on expanding our presence with our current customers and developing a growing list of new customers."

Fourth Quarter Connection and Transaction Data:

  Three Months Ended  
June 30  
2015   2014 % Change
Gross New Connections ('000s) 34 25 36%
% from Existing Customer Base 89% 84% 5%
Net New Connections ('000s) 31 22 41%
Total Connections ('000s) 333 266 25%
 
New Customers Added 675 650 4%
Total Customers 9,600 7,300 32%
 
Total Number of Transactions (millions) 62 47 32%
Transaction Volume ($millions) $112.8 $82.9 36%
 

Fiscal 2015 Financial Highlights:

  • Record net connections of 67,000 for the year
  • Record total revenue of $58.1 million, a year-over-year increase of 37%
  • Year end cash position of $11.4 million

Fiscal 2015 Financial Results:

  Year ended      
June 30,    
2015   2014 $ Change % Change  
($ in thousands except-per share data)
 
Revenues:
License and transaction fees $ 43,633 $ 35,638 $ 7,995 22 %
Equipment sales $ 14,444   $ 6,707   $ 7,737 115 %
Total revenues $ 58,077   $ 42,345   $ 15,732 37 %
 

Operating income

$ 210   $ 436   $

(226

) -52 %
Adjusted EBITDA $ 6,709   $ 6,451   $ 258 4 %
Net income (loss) $ (819 ) $ 27,531   $ (28,350 ) -103 %
Non-GAAP net income (loss) $ (20 ) $ 189   $ (209 ) -111 %
Net earnings (loss) per common share - diluted $ (0.04 ) $ 0.78   $

(0.82

) -105 %

Non-GAAP net loss per common share - diluted

$ (0.02 ) $ (0.01 ) $

(0.01

) -100 %
 

Fiscal 2016 Outlook

For full year fiscal 2016, management expects to add more than 75,000 net new connections, bringing total connections on the service to over 400,000 and expects total revenue to be between $69 million and $71 million. Additionally, QuickStart will remain a popular program for customers, and management expects it to drive positive free cash flows in 2016.

Webcast and Conference Call

Management will host a conference call today, September 10, 2015 at 5:00 pm EST. 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 # 25774520.

A live webcast of the conference call will be available at http://investor.usatech.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 10:00 p.m. Eastern Time on September 10, 2015 until 11:59 p.m. Eastern Time on September 13, 2015 and may be accessed by calling (855) 859-2056 (domestic dial-in) or (404) 537-3406 (international dial-in) and reference conference ID # 25774520. 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 is a leader of wireless, cashless payment and M2M telemetry flagship service platform, a PCI-compliant, end-to-end suite of cashless payment and telemetry services specially tailored to fit the needs of small ticket, self-service retailing industries. USA Technologies also provides a broad line of cashless acceptance technologies including its NFC- ready ePortG-series, ePort MobileTM for customers on the go, and QuickConnect, an API Web service for developers. USA Technologies has been granted 87 patents; and has agreements with Verizon, Visa, Chase Paymentech and customers such as Compass, AMI Entertainment and others. Visit the website at www.usatech.com.

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 earnings or taxable income of USAT; the incurrence by us 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 the proprietary 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 significantly increase cash flows from 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.

 

USA Technologies, Inc.

Consolidated Statement of Operations

     
Three months ended Year ended
June 30, June 30,
2015   2014 2015 2014
 
Revenues:
License and transaction fees $ 11,937,898 $ 9,460,303 $ 43,633,462 $ 35,638,121
Equipment sales   5,708,297     1,747,157     14,444,012     6,706,843  
Total revenues 17,646,195 11,207,460 58,077,474 42,344,964
 
Cost of services 7,863,105 6,327,432 29,429,385 23,018,001
Cost of equipment   4,975,089     1,217,884     11,825,455     4,254,127  
Gross profit 4,808,001 3,662,144 16,822,634 15,072,836
 
Operating expenses:
Selling, general and administrative 4,558,816 4,067,804 16,001,255 14,036,016
Depreciation and amortization   155,697     162,151     611,682     600,488  
Total operating expenses   4,714,513     4,229,955     16,612,937     14,636,504  
Operating income (loss) 93,488 (567,811 ) 209,697 436,332
 
Other income (expense):
Interest income 42,204 8,995 82,695 30,337
Other income 52,178 - 52,178 -
Interest expense (92,078 ) (74,529 ) (301,767 ) (256,844 )
Change in fair value of warrant liabilities   262,643     53,125     (393,144 )   65,429  
Total other income (expense), net   264,947     (12,409 )   (560,038 )   (161,078 )
 
Income (loss) before provision for income taxes 358,435 (580,220 ) (350,341 ) 275,254
Benefit (provision) for income taxes   (289,436 )   541,501     (469,141 )   27,255,398  
 
Net income (loss) 68,999 (38,719 ) (819,482 ) 27,530,652
Cumulative preferred dividends   -     -     (664,452 )   (664,452 )
Net income (loss) applicable to common shares $ 68,999   $ (38,719 ) $ (1,483,934 ) $ 26,866,200  
Net earnings (loss) per common share - basic $ -   $ -   $ (0.04 ) $ 0.78  
Basic weighted average number of common shares outstanding 35,716,603 35,517,099 35,663,386 34,613,497
Net earnings (loss) per common share - diluted $ (0.01 ) $ -   $ (0.04 ) $ 0.78  
Diluted weighted average number of common shares outstanding 36,310,919 35,517,099 35,663,386 34,613,497
   
USA Technologies, Inc.
Consolidated Balance Sheets
 
June 30,
2015 2014
 
Assets
Current assets:
Cash and cash equivalents $ 11,373,973 $ 9,072,320

Accounts receivable, less allowance for uncollectible accounts of $494,000 and $63,000, respectively

4,671,544 2,683,579
Finance receivables 941,150 119,793
Inventory 4,216,396 1,486,777
Prepaid expenses and other current assets 574,479 363,367
Deferred income taxes   1,257,796     907,691  
Total current assets 23,035,338 14,633,527
 
Finance receivables, less current portion 3,697,513 352,794
Other assets 350,041 190,703
Property and equipment, net 12,868,808 21,138,580
Deferred income taxes 25,608,187 26,353,330
Intangibles, net 432,100 432,100
Goodwill   7,663,208     7,663,208  
 
Total assets $ 73,655,195   $ 70,764,242  
 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable $ 8,792,672 $ 7,753,911
Accrued expenses 2,107,530 1,915,799
Line of credit 4,000,000 5,000,000
Current obligations under long-term debt 477,522 172,911
Income taxes payable 54,086 21,021
Deferred gain from sale-leaseback transactions   860,391     380,895  
Total current liabilities 16,292,201 15,244,537
 
Long-term liabilities:
Long-term debt, less current portion 1,854,424 249,865
Accrued expenses, less current portion 49,160 186,174
Warrant liabilities 978,353 585,209
Deferred gain from sale-leaseback transactions, less current portion   900,348     761,790  
Total long-term liabilities   3,782,285     1,783,038  
Total liabilities   20,074,486     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 $17,354,908 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- 35,747,242 and 35,514,685, respectively

224,873,721 224,210,197
Accumulated deficit   (174,431,068 )   (173,611,586 )
 
Total shareholders’ equity   53,580,709     53,736,667  
 
Total liabilities and shareholders’ equity $ 73,655,195   $ 70,764,242  
     
USA Technologies, Inc.
Consolidated Statements of Cash Flows
 

Three months ended June 30

Year ended June 30

2015   2014 2015   2014
OPERATING ACTIVITIES:
Net income (loss) $ 68,999 $ (38,719 ) $ (819,482 ) $ 27,530,652

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Charges incurred in connection with the vesting and issuance of common stock for employee and director compensation

174,598 280,161 715,762 529,041

(Gain) loss on disposal of property and equipment

(3,926 ) (2,808 ) (17,357 ) 4,245
Non-cash interest and amortization of debt discount - - - 2,095
Bad debt expense 47,184 67,403 649,528 134,176
Depreciation 1,380,983 1,553,875 5,731,356 5,463,985
Amortization - - - 21,953
Change in fair value of warrant liabilities (262,643 ) (53,125 ) 393,144 (65,429 )
Deferred income taxes, net 211,086 (587,369 ) 395,038 (27,301,266 )
Gain on sale of finance receivables (52,178 ) - (52,178 ) -
Recognition of deferred gain from sale-leaseback transactions (215,097 ) (9,522 ) (833,619 ) (9,522 )
Changes in operating assets and liabilities:
Accounts receivable (1,260,064 ) (736,633 ) (2,517,493 ) (157,071 )
Finance receivables (331,606 ) (39,938 ) (4,113,898 ) 52,531
Inventory (638,693 ) 31,689 (1,930,857 ) 370,104
Prepaid expenses and other current assets (96,924 ) (128,280 ) (304,229 ) (190,783 )
Accounts payable 3,528,851 1,341,699 918,761 412,664
Accrued expenses 93,273 567,988 54,717 267,004
Income taxes payable   37,312     21,021     33,065     21,021  
 
Net cash provided by (used in) operating activities 2,681,155 2,267,442 (1,697,742 ) 7,085,400
 
INVESTING ACTIVITIES:
Purchase of property and equipment (6,080 ) (50,760 ) (60,309 ) (111,121 )
Purchase of property for rental program - (3,671,812 ) (1,641,993 ) (10,883,473 )
Proceeds from sale of rental equipment under sale-leaseback transaction - 2,995,095 4,993,879 2,995,095
Proceeds from sale of property and equipment   7,676     51,672     61,914     82,047  
 
Net cash provided by (used in) investing activities 1,596 (675,805 ) 3,353,491 (7,917,452 )
 
FINANCING ACTIVITIES:

Net proceeds from the issuance (retirement) of common stock and exercise of common stock warrants

- (13,913 ) (61,987 ) 2,272,936
Excess tax benefits from share-based compensation 9,749 24,847 9,749 24,847
Proceeds from (repayment of) line of credit - 1,000,000 (1,000,000 ) 2,000,000
Proceeds from long-term debt 304,007 - 2,056,724 -
Repayment of long-term debt   (97,240 )   (107,368 )   (358,582 )   (374,411 )
 
Net cash provided by financing activities   216,516     903,566     645,904     3,923,372  
 
Net increase (decrease) in cash and cash equivalents 2,899,267 2,495,203 2,301,653 3,091,320
Cash and cash equivalents at beginning of period   8,474,706     6,577,117     9,072,320     5,981,000  
Cash and cash equivalents at end of period $ 11,373,973   $ 9,072,320   $ 11,373,973   $ 9,072,320  
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 99,474   $ 70,617   $ 301,767   $ 259,820  
Depreciation expense allocated to cost of services $ 1,252,485   $ 1,386,803   $ 5,119,674   $ 4,880,529  
Reclass of rental program property to inventory, net $ (718,816 ) $ 6,463   $ 674,280   $ 33,266  
Prepaid items financed with debt $ -   $ -   $ 103,125   $ 101,850  
Equipment and software acquired under capital lease $ -   $ 107,670   $ 107,903   $ 325,431  
Disposal of property and equipment $ 447,338   $ 475,781   $ 842,204   $ 709,638  
Disposal of property and equipment under sale-leaseback transactions $ -   $ 1,918,920   $ 3,873,275   $ 1,918,920  

Discussion of Non-GAAP Financial Measures:

This press release contains certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Reconciliations between non-GAAP and GAAP measures are set forth below.

The following non-GAAP financial measures are discussed herein: adjusted EBITDA, non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share – basic and diluted. The presentation of these additional financial measures are not intended to be considered in isolation from, or superior to, or as a substitute for the financial measures prepared and presented in accordance with GAAP (Generally Accepted Accounting Principles), including the net income or net loss of USAT or net cash used in operating activities. Management recognizes that non-GAAP financial measures have limitations in that they do not reflect all of the items associated with USAT's net income or net loss as determined in accordance with GAAP. These non-GAAP financial measures are not required by or defined under GAAP and may be materially different from the non-GAAP financial measures used by other companies. USAT has provided below the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.

As used herein, non-GAAP net income represents GAAP net income (loss) excluding costs or benefits relating to any adjustment for fair value of warrant liabilities and non-cash portions of the Company’s income tax benefit (provision).

Non-GAAP net earnings (loss) per common share - diluted is calculated by dividing non-GAAP net income (loss) applicable to common shares by the number of diluted weighted average shares outstanding.

Adjusted EBITDA represents net income (loss) before interest income, interest expense, income taxes, depreciation, amortization, and change in fair value of warrant liabilities and stock-based compensation expense. We have excluded the non-operating change in fair value of warrant liabilities, because it represents a non-cash gain or (charge) that is not related to USAT's operations. We have excluded the non-cash expense stock-based compensation as it does not reflect the cash-based operations of USAT. Adjusted EBITDA is presented because we believe it is useful to investors as a measure of comparative operating performance and liquidity, and because it is less susceptible to variances in actual performance resulting from depreciation and amortization and non-cash charges for changes in fair value of warrant liabilities and stock-based compensation expense.

Management believes that non-GAAP net income (loss) and non-GAAP net earnings (loss) per common share - diluted are important measures of USAT's business. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of our comparative operating performance. We believe that these non-GAAP financial measures serve as useful metrics for our management and investors because they enable a better understanding of the long-term performance of our core business and facilitate comparisons of our operating results over multiple periods, and when taken together with the corresponding GAAP financial measures and our reconciliations, enhance investors' overall understanding of our current and future financial performance.

         

Non GAAP Reconciliation

Reconciliation of Net Income (Loss) to Non-GAAP Net Income (loss) and Earnings (loss) Per Common Share to Non-GAAP Earnings (loss) Per Common Share

 
Three months ended Three months ended Three months ended Three months ended Three months ended
June 30, March 31, December 31, September 30, June 30,
2015   2015   2014   2014   2014
 
Net income (loss) $ 68,999 $ (566,610 ) $ (260,915 ) $ (60,956 ) $ (38,719 )
Non-GAAP adjustments:
Non-cash portion of income tax provision/benefit 252,124 121,046 402,358 (369,452 ) (527,001 )
Fair value of warrant adjustment   (262,643 )     1,101,241       (135,402 )     (310,052 )     (53,125 )
Non-GAAP net income (loss) $ 58,480     $ 655,677     $ 6,041     $ (740,460 )   $ (618,845 )
 
Net income (loss) $ 68,999 $ (566,610 ) $ (260,915 ) $ (60,956 ) $ (38,719 )
Cumulative preferred dividends $ -     $ (332,226 )   $ -     $ (332,226 )   $ -  
Net income (loss) applicable to common shares $ 68,999     $ (898,836 )   $ (260,915 )   $ (393,182 )   $ (38,719 )
 
Non-GAAP net income (loss) $ 58,480 $ 655,677 $ 6,041 $ (740,460 ) $ (618,845 )
Cumulative preferred dividends   -       (332,226 )     -       (332,226 )     -  
Non-GAAP net income (loss) applicable to common shares $ 58,480     $ 323,451     $ 6,041     $ (1,072,686 )   $ (618,845 )
 
Net earnings (loss) per common share - basic $ -     $ (0.03 )   $ (0.01 )   $ (0.01 )   $ -  
 
Non-GAAP net earnings (loss) per common share - basic $ -     $ 0.01     $ -     $ (0.03 )   $ (0.02 )
 

Basic weighted average number of common shares outstanding

35,716,603 35,687,650 35,657,519 35,586,455 35,517,099
 

Net loss per common share - diluted

$ (0.01 )   $ (0.03 )   $ (0.01 )   $ (0.01 )   $ -  
 
Non-GAAP net earnings (loss) per common share - diluted $ -     $ 0.01     $ -     $ (0.03 )   $ (0.02 )
 
Diluted weighted average number of common shares outstanding 36,310,919 35,687,650 35,657,519 35,586,455 35,517,099
 

Reconciliation of Net Income (Loss) to Non-GAAP Net Income (Loss) and Income (Loss) Per Common Share to Non-GAAP Loss Per Common Share

 
Year ended June 30,
2015 2014
Net income (loss) $ (819,482 ) $ 27,530,652
Non-GAAP adjustments:
Non-cash portion of income tax provision/benefit 406,076 (27,276,419 )
Fair value of warrant adjustment   393,144     (65,429 )
Non-GAAP net income (loss) $ (20,262 ) $ 188,804  
 
Net income (loss) $ (819,482 ) $ 27,530,652
Cumulative preferred dividends   (664,452 )   (664,452 )
Net income (loss) applicable to common shares $ (1,483,934 ) $ 26,866,200  
 
Non-GAAP net income (loss) $ (20,262 ) $ 188,804
Cumulative preferred dividends   (664,452 )   (664,452 )
Non-GAAP net loss applicable to common shares $ (684,714 ) $ (475,648 )
 
Net earnings (loss) per common share - basic and diluted $ (0.04 ) $ 0.78  
 
Non-GAAP net loss per common share - basic and diluted $ (0.02 ) $ (0.01 )
 
Weighted average number of common shares outstanding - basic and diluted 35,663,386 34,613,497
 

Reconciliation of GAAP Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation
and Amortization (Adjusted EBITDA)

         
Three months ended Three months ended Three months ended Three months ended Three months ended
June 30, March 31, December 31, September 30, June 30,
  2015       2015       2014       2014       2014  
 
Net income (loss) $ 68,999 $ (566,610 ) $ (260,915 ) $ (60,956 ) $ (38,719 )
 
Less interest income (42,204 ) (26,394 ) (4,015 ) (10,082 ) (8,995 )
 
Plus interest expense 92,078 85,349 49,429 74,911 74,529
 
Plus income tax expense (benefit) 289,436 137,820 402,358 (360,473 ) (541,501 )
 
Plus depreciation expense 1,380,983 1,433,251 1,443,710 1,473,412 1,553,875
 
Plus change in fair value of warrant liabilities (262,643 ) 1,101,241 (135,402 ) (310,052 ) (53,125 )
 
Plus stock-based compensation   174,598       216,469       185,891       138,804       280,161  
 
Adjusted EBITDA $ 1,701,247     $ 2,381,126     $ 1,681,056     $ 945,564     $ 1,266,225  
 

Reconciliation of GAAP Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

 
Year ended June 30,
2015   2014
Net income (loss) $ (819,482 ) $ 27,530,652
 
Less interest income (82,695 ) (30,337 )
 
Plus interest expense 301,767 256,844
 
Plus income tax expense (benefit) 469,141 (27,255,398 )
 
Plus depreciation expense 5,731,356 5,463,985
 
Plus amortization expense - 21,953
 
Plus change in fair value of warrant liabilities 393,144 (65,429 )
 
Plus stock-based compensation 715,762 529,041
   
Adjusted EBITDA $ 6,708,993   $ 6,451,311  

Supplemental Tables:

         
USA Technologies, Inc.
Consolidated Statement of Operations
 
Three months ended Three months ended Three months ended Three months ended Three months ended
June 30, March 31, December 31, September 30, June 30,
2015   2015   2014   2014   2014
 
Revenues:
License and transaction fees $ 11,937,898 $ 11,059,846 $ 10,479,496 $ 10,156,222 $ 9,460,303
Equipment sales   5,708,297       4,297,894       2,341,441       2,096,380       1,747,157  
Total revenues 17,646,195 15,357,740 12,820,937 12,252,602 11,207,460
 
Cost of services 7,863,105 7,157,333 7,157,840 7,251,107 6,327,432
Cost of equipment   4,975,089       3,054,268       1,929,841       1,866,257       1,217,884  
Gross profit 4,808,001 5,146,139 3,733,256 3,135,238 3,662,144
 
Operating expenses:
Selling, general and administrative 4,558,816 4,279,888 3,530,064 3,632,487 4,067,804
Depreciation and amortization   155,697       134,845       151,737       169,403       162,151  
Total operating expenses   4,714,513       4,414,733       3,681,801       3,801,890       4,229,955  
Operating income (loss) 93,488 731,406 51,455 (666,652 ) (567,811 )
 
Other income (expense):
Interest income 42,204 26,394 4,015 10,082 8,995
Other income 52,178 - - - -
Interest expense (92,078 ) (85,349 ) (49,429 ) (74,911 ) (74,529 )
Change in fair value of warrant liabilities   262,643       (1,101,241 )     135,402       310,052       53,125  
Total other income (expense), net   264,947       (1,160,196 )     89,988       245,223       (12,409 )
 
Income (loss) before provision for income taxes 358,435 (428,790 ) 141,443 (421,429 ) (580,220 )
Benefit (provision) for income taxes   (289,436 )     (137,820 )     (402,358 )     360,473       541,501  
 
Net income (loss) 68,999 (566,610 ) (260,915 ) (60,956 ) (38,719 )
Cumulative preferred dividends   -       (332,226 )     -       (332,226 )     -  
Net income (loss) applicable to common shares $ 68,999     $ (898,836 )   $ (260,915 )   $ (393,182 )   $ (38,719 )
Net earnings (loss) per common share - basic $ -     $ (0.03 )   $ (0.01 )   $ (0.01 )   $ -  
Basic weighted average number of common shares outstanding 35,716,603 35,687,650 35,657,519 35,586,455 35,517,099
Net earnings (loss) per common share - diluted $ (0.01 )   $ (0.03 )   $ (0.01 )   $ (0.01 )   $ -  
Diluted weighted average number of common shares outstanding 36,310,919 35,687,650 35,657,519 35,586,455 35,517,099
         
USA Technologies, Inc.
Consolidated Balance Sheets
 
June 30, March 31, December 31, September 30, June 30,
2015   2015   2014   2014   2014
 
Assets
Current assets:
Cash $ 11,373,973 $ 8,474,706 $ 6,734,077 $ 10,916,078 $ 9,072,320
Accounts receivable, less allowance for uncollectible accounts 4,671,544 3,403,489 2,758,475 2,444,748 2,683,579
Finance receivables 941,150 749,631 362,898 279,216 119,793
Inventory 4,216,396 4,241,057 3,448,374 2,629,361 1,486,777
Prepaid expenses and other current assets 574,479 414,046 586,144 376,823 363,367
Deferred income taxes   1,257,796     907,691     907,691     907,691     907,691
Total current assets 23,035,338 18,190,620 14,797,659 17,553,917 14,633,527
 
Finance receivables, less current portion 3,697,513 3,505,248 1,643,363 948,833 352,794
Prepaid expenses and other assets 350,041 423,255 410,838 382,563 190,703
Property and equipment, net 12,868,808 13,574,402 16,450,712 17,780,294 21,138,580
Deferred income taxes 25,608,187 26,169,378 26,290,424 26,713,803 26,353,330
Intangibles, net 432,100 432,100 432,100 432,100 432,100
Goodwill   7,663,208     7,663,208     7,663,208     7,663,208     7,663,208
 
Total assets $ 73,655,195   $ 69,958,211   $ 67,688,304   $ 71,474,718   $ 70,764,242
 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable $ 8,792,672 $ 5,208,646 $ 5,385,822 $ 7,632,643 $ 7,753,911
Accrued expenses 2,107,530 1,994,746 1,726,614 1,779,037 1,915,799
Line of credit 4,000,000 4,000,000 4,000,000 5,000,000 5,000,000
Current obligations under long-term debt 477,522 416,695 203,621 207,383 172,911
Income taxes payable 54,086 16,774 - - 21,021
Deferred gain from sale-leaseback transactions   860,391     860,390     860,390     860,390     380,895
Total current liabilities 16,292,201 12,497,251 12,176,447 15,479,453 15,244,537
 
Long-term liabilities:
Long-term debt, less current portion 1,854,424 1,708,484 261,716 222,907 249,865
Accrued expenses, less current portion 49,160 68,671 102,338 137,045 186,174
Warrant liabilities 978,353 1,240,996 139,755 275,157 585,209
Deferred gain from sale-leaseback transactions, less current portion   900,348     1,115,446     1,330,544     1,545,641     761,790
Total long-term liabilities 3,782,285 4,133,597 1,834,353 2,180,750 1,783,038
                 
Total liabilities   20,074,486     16,630,848     14,010,800     17,660,203     17,027,575
 
Commitments and contingencies
 
Shareholders’ equity:
Total shareholders’ equity   53,580,709     53,327,363     53,677,504     53,814,515     53,736,667
 
Total liabilities and shareholders’ equity $ 73,655,195   $ 69,958,211   $ 67,688,304   $ 71,474,718   $ 70,764,242
         
USA Technologies, Inc.
Consolidated Statements of Cash Flows
 
Three months ended Three months ended Three months ended Three months ended Three months ended
June 30, March 31, December 31, September 30, June 30,
2015   2015   2014   2014   2014
 
 
OPERATING ACTIVITIES:
Net income (loss) $ 68,999 $ (566,610 ) $ (260,915 ) $ (60,956 ) (38,719 )

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

174,598 216,469 185,891 138,804 280,161
(Gain) loss on disposal of property and equipment (3,926 ) (6,353 ) (3,794 ) (3,284 ) (2,808 )
Non-cash interest and amortization of debt discount - - - - -
Bad debt expense (recoveries), net 47,184 302,632 140,996 158,716 67,403
Depreciation 1,380,983 1,433,251 1,443,710 1,473,412 1,553,875
Amortization - - - - -
Change in fair value of warrant liabilities (262,643 ) 1,101,241 (135,402 ) (310,052 ) (53,125 )
Deferred income taxes, net 211,086 121,046 423,379 (360,473 ) (551,848 )
Gain on sale of finance receivables (52,178 ) - - - -
Recognition of deferred gain from sale-leaseback transactions (215,097 ) (215,098 ) (215,097 ) (188,327 ) (9,522 )
Changes in operating assets and liabilities:
Accounts receivable (1,260,064 ) (974,176 ) (363,368 ) 80,115 (736,633 )
Finance receivables (331,606 ) (2,248,618 ) (778,212 ) (755,462 ) (39,938 )
Inventory (638,693 ) 650,784 (804,629 ) (1,138,319 ) 31,689
Prepaid expenses and other current assets (96,924 ) 150,159 (246,709 ) (110,755 ) (128,280 )
Accounts payable 3,528,851 (150,646 ) (2,338,176 ) (121,268 ) 1,341,699
Accrued expenses 93,273 234,465 (87,130 ) (185,891 ) 567,988
Income taxes payable   37,312       16,774       -       (21,021 )     (14,500 )
 
Net cash provided by (used in) operating activities 2,681,155 65,320 (3,039,456 ) (1,404,761 ) 2,267,442
 
INVESTING ACTIVITIES:
Purchase of property and equipment (6,080 ) (3,860 ) (18,879 ) (31,490 ) (50,760 )
Purchase of property for rental program - - - (1,641,993 ) (3,671,812 )
Proceeds from sale of rental equipment under sale-leaseback transaction - - - 4,993,879 2,995,095
Proceeds from sale of property and equipment   7,676       19,327       11,177       23,734       51,672  
 
Net cash provided by (used in) investing activities 1,596 15,467 (7,702 ) 3,344,130 (675,805 )
 
FINANCING ACTIVITIES:

Net proceeds from the issuance (retirement) of common stock and exercise of common stock warrants

- - (61,987 ) - (13,913 )
Excess tax benefits from share-based compensation 9,749 - - - 24,847
Proceeds from (repayment of) line of credit - - (1,000,000 ) - 1,000,000
Proceeds from long-term debt 304,007 1,752,717 - - -
Repayment of long-term debt   (97,240 )     (92,875 )     (72,856 )     (95,611 )     (107,368 )
 
Net cash provided by (used in) financing activities   216,516       1,659,842       (1,134,843 )     (95,611 )     903,566  
 
Net increase (decrease) in cash 2,899,267 1,740,629 (4,182,001 ) 1,843,758 2,495,203
Cash at beginning of period   8,474,706       6,734,077       10,916,078       9,072,320       6,577,117  
Cash at end of period $ 11,373,973     $ 8,474,706     $ 6,734,077     $ 10,916,078     $ 9,072,320  
 
Supplemental disclosures of cash flow information:
Cash paid for interest $ 99,474     $ 67,102     $ 55,992     $ 79,199     $ 70,617  
Depreciation expense allocated to cost of services $ 1,252,485     $ 1,288,884     $ 1,282,860     $ 1,295,445     $ 1,386,803  
Reclass of rental program property to inventory, net $ (718,816 )   $ 1,374,447     $ 14,384     $ 4,265     $ 6,463  
Prepaid items financed with debt $ -     $ -     $ -     $ 103,125     $ (144,312 )
Equipment and software acquired under capital lease $ -     $ -     $ 107,903     $ -     $ 107,670  
Disposal of property and equipment $ 447,338     $ 342,963     $ (755 )   $ 52,658     $ 475,781  
Disposal of property and equipment under sale-leaseback transactions $ -     $ -     $ -     $ 3,873,275     $ 1,918,920  
 

F-USAT

Contacts

Investor Contact:
The Blueshirt Group
Mike Bishop, +1 415-217-4968
mike@blueshirtgroup.com

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