USA Technologies Announces Fourth Quarter and Fiscal Year 2015 Results

September 10, 2015

MALVERN, Pa.--(BUSINESS WIRE)-- 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.

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 Mobile^TM 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

View source version on businesswire.com: http://www.businesswire.com/news/home/20150910006735/en/

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

Source: USA Technologies, Inc.

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USA Technologies Announces Fourth Quarter and Fiscal Year 2015 Results

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