UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934
Filed by
the Registrant x
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a Party other than the Registrant o
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appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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x
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Definitive
Additional Materials
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o
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Soliciting
Material Under Rule 14a-12
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USA
TECHNOLOGIES, INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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of Filing Fee (Check the appropriate box):
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computed on table below per Exchange Act Rules 14a-6(I)(1) and
0-11.
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of each class of securities to which transaction applies:
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box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously filing
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1) Amount
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4) Date
Filed: December 1, 2009
USA Technologies, Inc. (the "Company")
issued the following press release on December 1, 2009.
News
Release
For
Immediate Release
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USA Technologies Contact:
George
Jensen, Chairman & CEO
Stephen
P. Herbert, President & COO
e-mail: gjensen@usatech.com
sherbert@usatech.com
Phone:
(800) 633-0340
|
Proxy Solicitor:
Mark
Harnett / Jeanne Carr
MacKenzie
Partners, Inc.
(212)
929-5500
USAT@mackenziepartners.com
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Investor Relations Contact:
Marlon
Nurse, Vice President
Porter,
LeVay & Rose
Phone:
(212) 564-4700
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USA
Technologies Sends Letter to Shareholders
USA
TECHNOLOGIES URGES SHAREHOLDERS TO VOTE THE WHITE PROXY CARD FOR RE-ELECTION OF
EXPERIENCED DIRECTORS WHO ARE DELIVERING SHAREHOLDER VALUE
Company
Achieving Accelerated ePort®
Customer Growth and Record Cashless Vending Transactions
On
Track to Meet Benchmarks and Timetable for Profitability and Responds to
Dissidents’ Misleading Assertions
December 1, 2009, Malvern, PA: USA
Technologies, Inc. (NASDAQ: USAT) (the “Company”) today issued the
following letter to shareholders urging its shareholders to vote the WHITE proxy
card for the re-election of experienced directors at the December 15, 2009
Annual Meeting and to disregard any blue proxy card sent to them by the
dissident shareholders, Bradley Tirpak and Craig Thomas. The complete text of
the Company’s letter to shareholders follows.
December
1, 2009
Dear
Fellow Shareholders:
I am pleased to report to you that our
Company has increased its customer base to approximately 700 customers,
servicing approximately 60,000 connections. We attribute much of the increase to
the successful execution of our strategic plan by management, the Board, and our
employees.
The
rapidly growing number of vending machine and point-of-sale (POS) operators
installing ePort®,
supported by recent record numbers of consumer transactions, we believe puts
USAT on course to achieve positive net income by the quarter ended December 31,
2010. As previously stated, we anticipate growing the ePort®
installed base to approximately 114,000 connections by the end of December
2010.
1
The Company is focused on increasing
customer connections to the network to drive quarter over quarter increases in
recurring revenues from license and transaction fees, coupled with revenue from
equipment sales, and by making further planned cost savings in the Company. We
increased the installed base of devices connected to the USALive®
Network by 36% to 57,000 in the first quarter of fiscal 2010 compared to the
first quarter of fiscal 2009. This followed a 37% year-over-year increase in
installed base in fiscal 2009 compared with fiscal 2008. In addition, we
increased the number of transactions processed, which in the first quarter of
fiscal 2010 increased to 7.4 million, a 57% year-over-year quarterly increase;
this is following a 97% year-over-year increase in fiscal year 2009
versus fiscal year 2008 when transactions processed reached 22.3 million.
Finally, we increased the dollar value of transactions processed for the first
quarter of fiscal year 2010 by 26% to $14.6 million over first quarter of fiscal
year 2009.
USAT is experiencing success as a
result of the successful implementation of the strategic plan, reporting
improving quarterly results, the development of new products and services that
are responding to customer needs and market trends, and a broader customer
base.
Consumers increasingly are demanding
the ability to use credit and debit cards at vending machines and kiosks,
and operators, small and large, are responding by installing cashless
payment technology in their machines in greater numbers, and faster than
before.
USAT is facilitating further customer
adoption by its development of innovative and lower-cost products, such as the
ePort EDGETM, the
cashless technology priced under $200, and ePort SDKTM, the
software version of the ePort®
hardware, especially designed for the kiosk market.
The strategic plan we are executing is
evidence of our commitment to grow shareholder value. We have a skilled, highly
professional and experienced team in place to accomplish this.
It is unfortunate that
dissident shareholders
Bradley Tirpak and Craig Thomas (the “Dissidents”) launched a disruptive and
costly proxy contest for the Company, seeking to elect three opposition and less
qualified candidates to the USAT board. Their actions are disruptive to the
execution of our strategic plan and erode shareholder value.
The Dissidents Suggest That They Have
a Better Plan To Generate Value for Shareholders – They Do
Not.
The Dissidents have no credible
business plan for USAT’s continued growth, except for a poor and ill-informed
set of “bullet points”, including a reference to the need to
renegotiate contracts, one of which we have already renegotiated for the
Company’s benefit. As we recently announced, the Company successfully
negotiated an amended contract with one of its largest and important suppliers
which we anticipate will result in immediate and significant increase in gross
profits. If this amendment had been in place for the quarter ended September 30,
2009, gross profits would have been approximately 34% rather than
27%.
2
The Dissidents’ self serving mission
and disingenuous statements and actions have the potential to slow down the pace
of, or reverse, the Company’s recent operational and financial
gains.
We have a
seamless plan in place for improving USAT’s performance, based on effective and
workable business and financial strategies. The management team and employees,
guided by our Board, are committed to achieving our plan.
We believe that the Dissidents continue
to mislead our shareholders on their basic intent, the background of their
candidates, and with the data which they choose to state their
case.
The Dissidents Claim That They are
Acting on Behalf of Shareholders – They Are Not.
We believe the move by the Dissidents
to attempt to elect three directors is blatant opportunism as USAT begins to
post record business performance and approaches profitability after years of
building up the business. Simply put, it is our view that they are seeking
employment and additional equity in USAT, and are using a disruptive and costly
proxy contest to achieve their goals.
The Dissidents State That They Do Not
Seek a Change In Control. We Believe That This Is Simply Not
True.
Their repeated statements that they are
not interested in a change in control of the Company are contradicted by the
stated goals in a document selectively circulated by the Dissidents to certain
of our shareholders but not filed with the Securities and Exchange Commission.
In this document, among other things, it is stated that their candidates,
including Mr. Tirpak, are prepared to step into USAT management roles and run
our Company. This document sheds light on the true intentions of the Dissidents,
and also may explain why shareholders with a relatively small stake in the
Company such as the Dissidents would spend an estimated $350,000 on a proxy
fight.
Mr. Tirpak has Attempted to Minimize
his Involvement as a Defendant in a Securities Class Action Lawsuit which was
Settled for $2,250,000.
Section 29(b) of the class action
complaint filed against Mr. Tirpak states that “Tirpak, by virtue of his position as
an employee of CS FBC’s equity trading department, knew of CS FBC’s short
positions in Data Dimensions and Viasoft stock. Notwithstanding such knowledge,
as well as the fact that he was not a research analyst, Tirpak authored and
disseminated the materially false and misleading Trading Notes. Tirpak lacked a
reasonable basis for the sell recommendation and target prices contained in the
Trading Notes but prepared and disseminated the false and misleading Trading
Notes anyway because he knew it would cause the price of Data Dimensions and
Viasoft stock to drop and allow CS FBC to profit on its short
positions.”
The press release of Credit Suisse
First Boston dated June 23, 1997 states: “The Trading Notes were not a
product of the Firm’s standard operating procedures, and should not have been
circulated in their original form .... Credit Suisse First Boston regrets any
confusion that may have been caused by the circulation of the original Trading
Notes.”
3
The Opinion of Judge Koeltl, refusing
to dismiss the complaint against Mr. Tirpak, states on page 24 that: “Additional facts pleaded with
particularity by the plaintiffs similarly give rise to a strong inference of
scienter….The plaintiffs allege that defendant Tirpak, who wrote the original
Trading Notes, worked in the equity trading department and not in the firm’s
research department.”
Complete copies of these
documents are available at http://www.usatech.com/dl/class
action litigation.pdf.
Alan
Gotcher was Forced to Resign From Altair Nanotechnologies (ALTI), Which had
Posted Approximately $77 Million in Losses over the Last Three
Years
Until
February 2008, Mr. Gotcher was President and CEO of Altair Nanotechnologies,
Inc. During his stewardship, Altair’s net losses steadily increased. On February
27, 2008, he agreed to resign as President and CEO of Altair. According to a
press account, the company’s board “determined that the level of progress made
at this point in the development timeline of the company did not keep pace with
the expectations that were set.” See: “Altairnano CEO Alan Gotcher Ousted,”
Cleantech Group News report dated February 29, 2008. http://www.usatech.com/dl/Article on Gotcher and Altairnano.pdf.
During
the 2007 calendar year, Altair lost $31,470,621 and had revenues of only
$9,108,483. At the time of his resignation, Gotcher directly owned
only 0.19% of the issued and outstanding shares of Altair. Further, in the year
2007, when Altair lost over $31 million, Gotcher received a bonus of
$776,318 ($428,600
of which was cash and $347,718 of which was stock). $459,451 of this bonus was
discretionary.
Mr.
Gotcher does not even own any shares of USAT.
Peter
Michel Presides Over iSECUREtrac Corp (ISEC.OB), an OTC Bulletin
Board Company With Only a $4.3 Million Market Cap and $22.4 Million
In Negative Shareholder Equity
Since
August 4, 2006, Mr. Peter Michel has been the CEO and President of iSECUREtrac
Corp., a bulletin board company. On January 3, 2006, public records
indicate that the price of the stock was $1.85. As of November 25, 2009, the
stock was trading at $0.40. During the calendar year ended December 31, 2008,
iSECUREtrac had a loss of $5,825,000, and had revenues of only $9,702,000. Mr.
Michel currently directly owns only 0.69% of the issued and outstanding shares
of iSECUREtrac Corp.
From May
23, 2005 to July 8, 2005, Mr. Michel served as the President and CEO of General
Fiber Communications. On July 8, 2005, that company filed for Chapter 7
bankruptcy protection.
Mr.
Michel does not even own any shares of USAT.
4
The
Company’s Board believes that an alleged securities law violator, a corporate
executive of a bankrupt company and a corporate executive who was ousted from
his job would not serve our shareholders well as directors of USAT.
Stock Price. We believe that
the manner in which the Dissidents have characterized the USAT stock price is
self-serving and misleading. They have chosen to highlight the stock price in
2003, when USAT was still in the research and development stage of its growth,
with only $2,853,068 in annual revenues for the fiscal year ended June 30,
2003. At the time, the USAT stock price (OTCBB) had a short term
spike. To base their calculations related to stock price from a short term spike
six years ago, while the Company was a penny stock on the OTC Bulletin Board, is
misleading, and a blatant attempt to sensationalize the data to suit their
agenda.
The
Dissidents Propose to Remove the Staggered Board only to Serve their Own
Interests.
We believe the removal of the Company’s
staggered Board
would not be in the best interests of you or the Company. If our experienced
Board were declassified, it could be entirely replaced in a single election by
directors who are unfamiliar with our Company and its business strategies, thus
jeopardizing the achievement of our strategic plan. A classified board structure also
restricts persons, such as the Dissidents, focused on short-term gain at the
expense of long-term value, from taking rapid control of our company without
paying an appropriate premium to all of our shareholders. If the
Company’s Board were not classified, a potential acquirer whose nominees receive
a plurality of the votes cast at an annual meeting could replace all or a
majority of the directors with its own nominees, who could then approve a
takeover proposal from that acquirer even if the price did not adequately value
the Company.
Our
Board Has Added Two New Highly Qualified Directors.
In October 2009, we added two new
independent directors, Steven Barnhart and Jack Price. These and other actions
taken by the Company’s Board are the antithesis of an “entrenched” Board and
demonstrate the Board’s proactive thinking. Our Board believes that our
experienced directors benefit from the new perspectives and viewpoints added by
Messrs. Price and Barnhart. At the same time, new directors benefit from
interaction with our existing directors who have much longer experience with our
Company. From 2007 until January 2009, Mr. Barnhart was the President and CEO of
Orbitz Worldwide, Inc., a publicly-traded, online travel business. Prior thereto
and since 2003, Mr. Barnhart held various positions with Orbitz, including Chief
Financial Officer. From 1990 to 2003, Mr. Barnhart held various positions with
PepsiCo, Inc. From 2007 through March 2009, Mr. Price was President and CEO of
NovaRay Medical, Inc., a medical imaging systems business. From 2003 to 2006,
Mr. Price was the President and CEO of VSM MedTech Ltd. From 1996 through 2003,
Mr. Price was the President and Division Chief Executive Officer of Philips
Medical Systems, North America. Each of Mr. Barnhart and Mr. Price has on point
knowledge and experience with our business model.
YOUR
VOTE IS IMPORTANT – RE-ELECT YOUR DIRECTORS BY VOTING THE WHITE PROXY
CARD
5
As explained in detail in our proxy
materials, the directors of the Company’s Board are elected by a plurality of
votes. In other words, the nominees with the most votes will be elected.
Therefore, we urge you to take action and send in the Company’s enclosed WHITE
proxy card and discard the Dissidents’ blue proxy card. Our Board recommends
that you not sign or return any proxy card sent to you by the Dissidents, even
as a protest, since doing so may invalidate any previous vote you may have cast
on our WHITE proxy card.
Your vote is important, no matter how
many or how few shares you own. To vote your shares, please sign,
date and return the enclosed WHITE proxy card by mailing it in the enclosed
pre-addressed, stamped envelope. You may also vote by phone or the
Internet by following the instruction on the enclosed proxy card.
If you have any questions or need any
assistance voting your shares, please contact MacKenzie Partners, Inc., which is
assisting the Company in this matter, toll-free at (800) 322-2885, (212)
929-5500 or USAT@mackenziepartners.com.
We will continue to keep you informed
on this matter. Thank you for your continued support and
confidence.
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Sincerely,
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George
R. Jensen, Jr.
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Chief
Executive Officer
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6
About USA
Technologies:
USA
Technologies is a leader in the networking of wireless non-cash transactions,
associated financial/network services and energy management. USA
Technologies provides networked credit card and other non-cash systems in the
vending, commercial laundry, hospitality and digital imaging
industries. The Company has agreements with AT&T, VISA,
MasterCard, First Data, Compass and others.
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 financial position, business strategy
and the plans and objectives of the company'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 the company or its management, identify
forward-looking statements. Such forward-looking statements are based
on the beliefs of the company's management, as well as assumptions made by and
information currently available to the company'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,
business, financial market and economic conditions, including but not limited
to, the ability of the Company to retain key customers from whom a significant
portion of its revenues is derived; the ability of the Company to compete with
its competitors to obtain market share; the ability of the Company to obtain
widespread commercial acceptance of it products; and the outcome of the pending
proxy contest. Readers are cautioned not to place undue reliance on these
forward-looking statements. Any forward-looking statement made by us in this
shareholder letter speaks only as of the date of this shareholder letter. Unless
required by law, the Company 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.
Important Additional
Information
USA
Technologies, Inc. (“USAT” or the “Company”) filed a definitive proxy statement
with the Securities and Exchange Commission (the “SEC”) on October 27, 2009 in
connection with the Annual Meeting of Shareholders to be held on December 15,
2009, and mailed the definitive proxy statement and a WHITE proxy card to
shareholders, as well as additional soliciting materials. USAT and
its directors and executive officers may be deemed to be participants in the
solicitation of proxies in connection with such meeting. The
Company’s shareholders are strongly advised to read USAT’s proxy statement as it
contains important information. Shareholders may obtain an additional
copy of USAT’s definitive proxy statement and any other documents filed by the
Company with the SEC for free at the SEC’s website at http://www.sec.gov. Copies
of the definitive proxy statement are available for free at
http://www.amstock.com/Proxy Services/ViewMaterial.asp?Co
Number=14591. In addition, copies of the Company’s proxy materials
may be requested at no charge by contacting MacKenzie Partners, Inc. at
1-800-322-2885 or via email at USAT@mackenziepartners.com. Detailed
information regarding the names, affiliations and interests of individuals who
are participants in the solicitation of proxies of USAT’s shareholders is
available in USAT’s definitive proxy statement filed with SEC on October 27,
2009.
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