USA Technologies Announces Fourth Quarter and Fiscal Year 2013 Results
Fiscal 2013 Service Revenues Up 29%; Total Revenues Up 24% (year over year)
Connections to ePort Connect Service Up 30% (year over year)
Substantial Improvements in Profitability and Cash Generation
Fiscal 2013 financial highlights, compared to the prior year, included:
-
29% increase in license and transaction fee revenues to
$30.0 million , representing 84% of total revenues for the 2013 fiscal year; -
24% increase in total revenues to
$35.9 million ; -
Adjusted EBITDA of
$5.8 million up from an Adjusted EBITDA loss of($2.8) million ; -
GAAP net income of
$0.9 million from a GAAP net loss of($5.2) million ; and, -
Non-GAAP net income of
$0.9 million , up from a non-GAAP net loss of($3.8) million (fiscal 2013 excludes$0.3 million of Other income for change in fair value of warrants and$0.3 million in proxy expenses and fiscal 2012 excludes$1.8 million Other income for change in fair value of warrants and$3.2 million in proxy and separation expenses).
Total connections to USAT's cashless payment and M2M telemetry service,
ePort Connect®, grew by 30% during fiscal 2013, with 18,000 net
connections achieved in the fourth quarter. In addition, USAT's customer
base expanded to 5,050 customers as of
After accrual for preferred dividends, net earnings per common share,
diluted, for fiscal 2013 was
Cash generated from operations was
"In addition, we took important steps toward leveraging USAT's ePort Connect service platform in several other, equally opportunistic markets such as laundry, transportation and amusement in fiscal 2013. For example, during the fourth quarter, we kicked off our new relationship with Setomatic Systems, a leading provider of cashless payment acceptance devices in the commercial and multi-unit housing laundry markets, with the transfer of over 5,000 of their existing cashless connections to our ePort Connect service. We also coupled the appeal of our ePort Connect service with a unique solution for the taxi and for-hire vehicle industry, called ePortGO™, and we continue to experience a growing demand for our integration capabilities as self-service applications become more ubiquitous," said Herbert.
Fourth Quarter Results
Fourth quarter financial highlights, compared to the prior year, included:
-
23% increase in total revenues to
$9.7 million ; -
28% increase in license and transaction fee revenues to
$8.2 million , representing 84% of total revenues for the quarter; -
Adjusted EBITDA of
$1.6 million , up from an Adjusted EBITDA loss of($1.4) million ; -
GAAP net income of
$1.7 million from a GAAP net loss of($2.8) million ; and, -
Non-GAAP net income of
$0.2 million , up from a non-GAAP net loss of($0.4) million (fiscal 2013 excludes$1.5 million of Other income for the change in fair value of warrants and fiscal 2012 excludes$0.2 million of Other expense for the change in fair value of warrants and$2.2 million in proxy expenses).
Revenues for the fourth quarter of fiscal 2013 were
Equipment sales of
Gross profit was
Operating margin (both GAAP and non-GAAP) expanded to approximately 2% from (33%) and (5%) on a GAAP and non-GAAP basis, respectively, for the same period in the prior year, due largely to stronger revenues and resulting gross profit dollar contribution.
GAAP net income was
Non-GAAP net income removes the impact of the fair value of warrant
adjustment, in addition to other non-operational adjustments noted for
the quarter (see Non-GAAP Reconciliation tables). For the fourth
quarter, non-GAAP net income was
GAAP and non-GAAP net income (loss) applicable to common shares were the
same as GAAP and non-GAAP net income (loss). GAAP net earnings per
common share, diluted, for the fourth quarter was
Outlook
"To date, growth in customers and connections to our ePort Connect service have delivered substantial improvements in our performance and our strengthened service model is delivering visible returns in terms of cash generation," said Herbert. "In fiscal 2014, our priorities include delivering 25%-30% license and transaction fee revenue growth, 20-25% total revenue growth and over 50% growth in non-GAAP profitability, even as we absorb deactivations to our service from a customer in the first quarter of the fiscal year.
"New customers, a stronger presence in complementary market segments, expanded services and promising work underway that makes our ePort Connect service easily accessible to kiosk and other developers, gives us confidence that fiscal 2014 should be another exciting year of financial progress and value creation for USAT in the quickly evolving, small-ticket market for cashless payment," concluded Herbert.
For more information on fiscal 2013 results and fiscal 2014
expectations, including the impact of the deactivations noted above on
its fiscal 2014 results, please access the webcast and conference call
in addition to USAT's Form 10K, which will be filed on
Webcast and Conference Call
About
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 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 obtain widespread commercial acceptance of it products; the ability of USAT to raise funds in the future through the sales of securities 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 of USAT to efficiently and securely integrate cashless payment with new machine technologies; 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.
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| Consolidated Statements of Operations | ||||||||||||||||
| Three months ended | For the year ended | |||||||||||||||
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Revenues: | ||||||||||||||||
| License and transaction fees | $ | 8,172,243 | $ | 6,382,575 | $ | 30,044,429 | $ | 23,370,754 | ||||||||
| Equipment sales | 1,512,599 | 1,520,271 | 5,895,815 | 5,646,489 | ||||||||||||
| Total revenues | 9,684,842 | 7,902,846 | 35,940,244 | 29,017,243 | ||||||||||||
| Cost of services | 5,139,129 | 3,818,276 | 18,219,945 | 15,312,966 | ||||||||||||
| Cost of equipment | 874,901 | 906,231 | 3,623,686 | 3,743,226 | ||||||||||||
| Gross profit | 3,670,812 | 3,178,339 | 14,096,613 | 9,961,051 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 3,150,535 | 5,420,955 | 12,068,566 | 15,460,668 | ||||||||||||
| Depreciation and amortization | 309,989 | 361,275 | 1,314,122 | 1,500,775 | ||||||||||||
| Total operating expenses | 3,460,524 | 5,782,230 | 13,382,688 | 16,961,443 | ||||||||||||
| Operating income (loss) | 210,288 | (2,603,891 | ) | 713,925 | (7,000,392 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 4,212 | 26,877 | 57,121 | 72,059 | ||||||||||||
| Interest expense | (47,804 | ) | (13,237 | ) | (157,205 | ) | (83,993 | ) | ||||||||
| Change in fair value of warrant liabilities | 1,517,384 | (169,755 | ) | 267,928 | 1,813,687 | |||||||||||
| Total other income (expense), net | 1,473,792 | (156,115 | ) | 167,844 | 1,801,753 | |||||||||||
| Income (loss) before provision for income taxes | 1,684,080 | (2,760,006 | ) | 881,769 | (5,198,639 | ) | ||||||||||
| Provision for income taxes | (6,912 | ) | (12,599 | ) | (27,646 | ) | (12,599 | ) | ||||||||
| Net income (loss) | 1,677,168 | (2,772,605 | ) | 854,123 | (5,211,238 | ) | ||||||||||
| Cumulative preferred dividends | - | - | (664,452 | ) | (664,452 | ) | ||||||||||
| Net income (loss) applicable to common shares | $ | 1,677,168 | $ | (2,772,605 | ) | $ | 189,671 | $ | (5,875,690 | ) | ||||||
| Net earnings (loss) per common share - basic | $ | 0.05 | $ | (0.09 | ) | $ | 0.01 | $ | (0.18 | ) | ||||||
| Weighted average number of common shares outstanding | 33,080,641 | 32,496,327 | 32,787,673 | 32,423,987 | ||||||||||||
| Net earnings (loss) applicable to common shares - diluted | $ | 0.05 | $ | (0.09 | ) | $ | 0.01 | $ | (0.18 | ) | ||||||
| Diluted weighted average number of common shares outstanding | 34,115,444 | 32,496,327 | 33,613,346 | 32,423,987 | ||||||||||||
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| Consolidated Balance Sheets | ||||||||
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| 2013 | 2012 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,981,000 | $ | 6,426,645 | ||||
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Accounts receivable, less allowance for uncollectible accounts of
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| 2,620,684 | 2,441,941 | |||||||
| Finance receivables | 116,444 | 206,649 | ||||||
| Inventory | 1,823,615 | 2,511,748 | ||||||
| Prepaid expenses and other current assets | 184,336 | 555,823 | ||||||
| Total current assets | 10,726,079 | 12,142,806 | ||||||
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Finance receivables, less current portion |
408,674 | 336,198 | ||||||
| Property and equipment, net | 17,240,065 | 11,800,108 | ||||||
| Intangibles, net | 454,053 | 1,196,453 | ||||||
| Goodwill | 7,663,208 | 7,663,208 | ||||||
| Other assets | 84,117 | 80,884 | ||||||
| Total assets | $ | 36,576,196 | $ | 33,219,657 | ||||
| Liabilities and shareholders' equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 7,301,247 | $ | 6,136,443 | ||||
| Accrued expenses | 1,468,184 | 3,342,456 | ||||||
| Line of credit | 3,000,000 | - | ||||||
| Current obligations under long-term debt | 247,152 | 466,056 | ||||||
| Total current liabilities | 12,016,583 | 9,944,955 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, less current portion | 122,754 | 262,274 | ||||||
| Accrued expenses, less current portion | 366,785 | 426,241 | ||||||
| Deferred tax liabilities | 40,245 | 12,599 | ||||||
| Warrant liabilities, non-current | 650,638 | 918,566 | ||||||
| Total long-term liabilities | 1,180,422 | 1,619,680 | ||||||
| Total liabilities | 13,197,005 | 11,564,635 | ||||||
| Commitments and contingencies | ||||||||
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| Shareholders' equity: | ||||||||
| Preferred stock, no par value: | ||||||||
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Authorized shares- 1,800,000 Series A convertible preferred-
Authorized shares- 900,000 |
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| 3,138,056 | 3,138,056 | |||||||
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Common stock, no par value: Authorized shares- 640,000,000 Issued
and outstanding |
||||||||
| 221,383,373 | 220,513,327 | |||||||
| Accumulated deficit | (201,142,238 | ) | (201,996,361 | ) | ||||
| Total shareholders' equity | 23,379,191 | 21,655,022 | ||||||
| Total liabilities and shareholders' equity | $ | 36,576,196 | $ | 33,219,657 | ||||
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| Consolidated Statements of Cash Flows | ||||||||||||||||
| Three months ended | For the year ended | |||||||||||||||
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||||
| Net income (loss) | $ | 1,677,168 | $ | (2,772,605 | ) | $ | 854,123 | $ | (5,211,238 | ) | ||||||
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Adjustments to reconcile net income (loss) to net cash provided by |
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Charges incurred in connection with the vesting and issuance |
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| 133,674 | 271,303 | 502,907 | 782,100 | |||||||||||||
| Charges incurred in connection with the Long-term Equity Incentive Plan | - | - | - | - | ||||||||||||
| (Gain) Loss on disposal of property and equipment | (1,928 | ) | 132,509 | (20,343 | ) | 134,350 | ||||||||||
| Non-cash interest and amortization of debt discount | 26,933 | - | 53,867 | - | ||||||||||||
| Bad debt expense (recoveries), net | 61,156 | (2,914 | ) | 68,615 | (48,270 | ) | ||||||||||
| Depreciation | 1,094,978 | 695,609 | 3,837,174 | 2,443,054 | ||||||||||||
| Amortization | 185,600 | 222,100 | 742,400 | 997,900 | ||||||||||||
| Change in fair value of warrant liabilities | (1,517,384 | ) | 169,755 | (267,928 | ) | (1,813,687 | ) | |||||||||
| Provision for deferred tax liability | 6,912 | 12,599 | 27,646 | 12,599 | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | (310,846 | ) | (307,182 | ) | (247,358 | ) | (758,952 | ) | ||||||||
| Finance receivables | (29,687 | ) | 16,755 | 17,729 | (61,460 | ) | ||||||||||
| Inventory | 31,356 | 721,572 | 716,470 | 158,584 | ||||||||||||
| Prepaid expenses and other current assets | 452,207 | 722,159 | 503,937 | 431,276 | ||||||||||||
| Accounts payable | 1,968,677 | 1,528,861 | 1,164,804 | 498,082 | ||||||||||||
| Accrued expenses | (122,612 | ) | 1,459,430 | (1,915,091 | ) | 2,513,898 | ||||||||||
| Net cash provided by operating activities | 3,656,204 | 2,869,951 | 6,038,952 | 78,236 | ||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||||
| Purchase of property and equipment | (25,660 | ) | (74,041 | ) | (107,351 | ) | (478,144 | ) | ||||||||
| Purchase of property for rental program | (2,771,880 | ) | (2,472,158 | ) | (9,092,394 | ) | (5,754,670 | ) | ||||||||
| Proceeds from sale of property and equipment | - | - | 18,908 | - | ||||||||||||
| Net cash used in investing activities | (2,797,540 | ) | (2,546,199 | ) | (9,180,837 | ) | (6,232,814 | ) | ||||||||
| FINANCING ACTIVITIES: | ||||||||||||||||
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Net proceeds from the issuance (retirement) of common stock and |
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| 323,652 | (39,340 | ) | 311,177 | (41,371 | ) | |||||||||||
| Proceeds from line of credit, net of repayments | 1,000,000 | - | 3,000,000 | - | ||||||||||||
| Repayment of long-term debt | (149,853 | ) | (51,802 | ) | (614,937 | ) | (368,917 | ) | ||||||||
| Net cash provided by (used in) financing activities | 1,173,799 | (91,142 | ) | 2,696,240 | (410,288 | ) | ||||||||||
| Net increase (decrease) in cash and cash equivalents | 2,032,463 | 232,610 | (445,645 | ) | (6,564,866 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | 3,948,537 | 6,194,035 | 6,426,645 | 12,991,511 | ||||||||||||
| Cash and cash equivalents at end of year | $ | 5,981,000 | $ | 6,426,645 | $ | 5,981,000 | $ | 6,426,645 | ||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||||||
| Cash paid for interest | $ | 34,714 | $ | 10,472 | $ | 118,934 | $ | 38,891 | ||||||||
| Depreciation expense allocated to cost of sales | $ | 970,590 | $ | 556,434 | $ | 3,265,452 | $ | 1,940,179 | ||||||||
| Prepaid interest from issuance of warrants for debt costs | $ | - | $ | - | $ | 55,962 | $ | - | ||||||||
| Reclass of rental program property to inventory | $ | 16,414 | $ | - | $ | 28,337 | $ | - | ||||||||
| Prepaid items financed with debt | $ | 3,186 | $ | 66,844 | $ | 133,588 | $ | 95,263 | ||||||||
| Equipment and software acquired under capital lease | $ | 44,034 | $ | - | $ | 124,917 | $ | 495,955 | ||||||||
| Equipment and software financed with long-term debt | $ | - | $ | 212,097 | $ | - | $ | 252,968 | ||||||||
| Disposal of property and equipment | $ | 91,228 | $ | 597,455 | $ | 98,928 | $ | 652,093 | ||||||||
Discussion of Non-GAAP Financial Measures
This press release includes the following measures defined as non-GAAP
financial measures by the
As used herein, non-GAAP net income (loss) represents GAAP net income (loss) excluding any adjustment for fair value of warrant liabilities and proxy contest and separation expenses. As used herein, non-GAAP diluted earnings (loss) per common share is calculated by dividing non-GAAP net income (loss) applicable to common shares by the diluted weighted average number of shares outstanding.
Management believes that non-GAAP net income (loss) and non-GAAP diluted earnings (loss) per common share 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.
As used herein, 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 item, change in fair value of warrant liabilities, because it represents a non-cash charge that is not related to USAT's operations. We have excluded the non-cash expenses and stock-based compensation as they do 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.
As used herein, operating margin represents operating income or loss divided by revenues and non-GAAP operating margin represents operating income or loss excluding any adjustments for proxy contest and separation expenses divided by revenues.
| Non GAAP Reconciliation | |||||||||||||||||
|
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
(Loss) and Net |
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| Three Months Ended | Fiscal Year Ended | ||||||||||||||||
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| Net income (loss) | $ | 1,677,168 | $ | (2,772,605 | ) | $ | 854,123 | $ | (5,211,238 | ) | |||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Operating expenses | |||||||||||||||||
| Selling, general and administrative: | |||||||||||||||||
| Proxy related costs | - | 2,229,000 | 328,000 | 2,229,000 | |||||||||||||
| CEO separation | - | - | - | 975,000 | |||||||||||||
| Fair value of warrant adjustment | (1,517,384 | ) | 169,755 | (267,928 | ) | (1,813,687 | ) | ||||||||||
| Non-GAAP net income (loss) | $ | 159,784 | $ | (373,850 | ) | $ | 914,195 | $ | (3,820,925 | ) | |||||||
| Net income (loss) | $ | 1,677,168 | $ | (2,772,605 | ) | $ | 854,123 | $ | (5,211,238 | ) | |||||||
| Non-GAAP net income (loss) | $ | 159,784 | $ | (373,850 | ) | $ | 914,195 | $ | (3,820,925 | ) | |||||||
| Cumulative preferred dividends | - | - | (664,452 | ) | (664,452 | ) | |||||||||||
| Net income (loss) applicable to common shares | $ | 1,677,168 | $ | (2,772,605 | ) | $ | 189,671 | $ | (5,875,690 | ) | |||||||
| Non-GAAP net income (loss) applicable to common shares | $ | 159,784 | $ | (373,850 | ) | $ | 249,743 | $ | (4,485,377 | ) | |||||||
| Weighted average number of common shares outstanding | 33,080,641 | 32,496,327 | 32,787,673 | 32,423,987 | |||||||||||||
|
Diluted weighted average number of common shares |
34,115,444 | 32,496,327 | 33,613,346 | 32,423,987 | |||||||||||||
| Net earnings (loss) per common share - diluted | $ | 0.05 | $ | (0.09 | ) | $ | 0.01 | $ | (0.18 | ) | |||||||
| Non-GAAP net earnings (loss) per common share - diluted | $ | 0.00 | $ | (0.01 | ) | $ | 0.01 | $ | (0.14 | ) | |||||||
| Non GAAP Reconciliation | |||||||||||||||||
| Reconciliation of Operating Margin to Non-GAAP Operating Margin | |||||||||||||||||
| Three Months Ended | Fiscal Year Ended | ||||||||||||||||
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| Operating income (loss) | $ | 210,288 | $ | (2,603,891 | ) | $ | 713,925 | $ | (7,000,392 | ) | |||||||
| Non-GAAP adjustments: | |||||||||||||||||
| Operating expenses | |||||||||||||||||
| Selling, general and administrative | |||||||||||||||||
| Proxy related costs | - | 2,229,000 | 328,000 | 2,229,000 | |||||||||||||
| CEO Seperation | - | - | - | 975,000 | |||||||||||||
| Operating income (loss), Non-GAAP | $ | 210,288 | $ | (374,891 | ) | $ | 1,041,925 | $ | (3,796,392 | ) | |||||||
| Revenues | $ | 9,684,842 | $ | 7,902,846 | $ | 35,940,244 | $ | 29,017,243 | |||||||||
| Operating Margin | 2.2 | % | -32.9 | % | 2.0 | % | -24.1 | % | |||||||||
| Operating Margin, Non-GAAP | 2.2 | % | -4.7 | % | 2.9 | % | -13.1 | % | |||||||||
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Reconciliation of GAAP Net Earnings to Adjusted Earnings |
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| Three months ended | Fiscal year ended | ||||||||||||||||
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| Net income (loss) | $ | 1,677,168 | $ | (2,772,605 | ) | $ | 854,123 | $ | (5,211,238 | ) | |||||||
| Less interest income | (4,212 | ) | (26,877 | ) | (57,121 | ) | (72,059 | ) | |||||||||
| Plus interest expenses | 47,804 | 13,237 | 157,205 | 83,993 | |||||||||||||
| Plus income tax expense | 6,911 | 12,599 | 27,646 | 12,599 | |||||||||||||
| Plus depreciation expense | 1,094,978 | 695,609 | 3,837,174 | 2,443,054 | |||||||||||||
| Plus amortization expense | 185,600 | 222,100 | 742,400 | 997,900 | |||||||||||||
| Less change in fair value of warrant liabilities | (1,517,384 | ) | 169,755 | (267,928 | ) | (1,813,687 | ) | ||||||||||
| Plus stock-based compensation | 133,674 | 271,303 | 502,907 | 782,100 | |||||||||||||
| Adjusted EBITDA | $ | 1,624,539 | $ | (1,414,879 | ) | $ | 5,796,406 | $ | (2,777,338 | ) | |||||||
F-USAT
Veronica Rosa, 484-359-2138
VP Corp.
Comm. & Investor Relations
vrosa@usatech.com
Source:
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